The luxury real estate market north of New York City ended 2022 with an uneven performance as luxury sales in Westchester, Putnam and Duchess counties were largely unchanged, while Greenwich, Darien and New Canaan posted sharp declines, according to the Houlihan Lawrence Luxury Q4 Market Report released Thursday, Jan. 5.
Westchester (sales $2 million and higher) showed a slight uptick in closed sales in 2022, making it the only area north of the Big Apple to exceed 2021. Westchester performed solidly in the lower end of the market (below $5 million), but sales in the higher end dipped by nearly 20%. In a rare bright spot for buyers, inventory is building in Northern Westchester and pending sales are down.
The story in Putnam and Dutchess counties is unchanged from last year. Pending sales are down significantly, and first quarter sales will likely land in negative territory. “These longer-commute-time markets became the darling of New York City buyers seeking low-density areas during the height of the Covid boom, when work from home seemed here to stay,” said Anthony P. Cutugno, senior vice president of private brokerage at Houlihan Lawrence. “Now, pressure from employers to return to the office, layoffs at technology companies and smaller Wall Street bonuses may temper this once white-hot market.”
Luxury markets in Greenwich (sales $3 million and higher) and New Canaan and Darien (sales $2 million and higher) reported closed sales down by double digits.
“At first glance, the logical conclusion is a slowdown in the luxury market,” Cutugno said. “However, the data suggest strong buyer demand in a sharply supply-constrained market. Homes are selling faster at closer to list price at a higheraverage price per square foot than last year. Persistent inventory shortage keeps demand high as the scarcity principal kicks in.”
Cutugno said the supply issue will not correct itself anytime soon, noting that in the luxury market rising interest rates have a greater effect on sellers than buyers. He added that many homeowners who want to sell are unwilling to give up a low-rate
mortgage to purchase a new home at higher rate in a tight market. Consequently, they decide to hold on to their house and wait for more favorable conditions, fueling the imbalance in the market.
“The market is admittedly complicated. The first half of 2023 will likely see a decline in sales north of New York City, though even a sharp drop does not mean the market is collapsing,” said Cutugno. He explained that the past two years of luxury sales in Westchester are about equal to the aggregate homes sold in 2016, 2017, 2018 and 2019. “Perhaps 2023 will recalibrate our expectations of a healthy real estate market as the shadow of the pandemic recedes,” he added.
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