Jun 28, 2022
Demand for $10 Million-Plus Homes Slows in New York, Hamptons
(Bloomberg) -- Homes priced at $10 million and up sold briskly in New York City, the Hamptons, and South Florida during the first half of 2022, according to a new report from the brokerage Serhant.
It wasn’t fast enough to outrun the market decline that’s gripped the entire US.
In a potential indication of a market slowdown, the number of signed contracts declined in comparison to the first half of 2021. This year’s first half brought 127 contracts for homes priced above $10 million in New York; last year, 161 contracts were signed in the same period.
“There is international investment, but it’s not at the level it was pre-Covid,” says Garrett Derderian, director of market intelligence at Serhant who compiled the report. “We’re still seeing a pullback from Asian buyers.”
Overall, Derderian sees signs for optimism in the super luxury market’s slowdown. Supply, he argues, is finally evening out with demand: “We’re heading towards a balanced market for the first time in a decade.”
At first glance, the Serhant report offers a comparatively rosy picture of the market. There were 112 condo sales above $10 million in New York during the first half of the year, 84% more than the same period last year. The average price per square foot in this tier was a hefty $4,123, and the average time these condos spent on the market before selling was just 194 days.
Derderian cautions not to read too much into that figure. “Sales are always a lagging indicator of market performance,” he says. “About half of these [reported] sales took place in 2021,” meaning contracts were signed in 2021 but took several months to close.
“Contracts are the best gauge of real-time activity,” he says. “They’re down from last year in New York, but [condo contracts] are up 28% from their rolling 10-year average. So while the numbers are showing a cooling market at all levels, we’re still running higher than we were.”
Downtown and Midtown Manhattan had the greatest share of this super luxury condo market, encompassing 29% and 28% of sales, respectively. The median price in Midtown was $18.4 million; downtown was significantly less, with a median price of $12.9 million. The Upper East Side was next, with 25% of the condo market’s share. Brooklyn, N.Y., didn’t make it onto the list.
The average discount was just 9%, down dramatically from last year's 18%. It was, the report says, the lowest level since 2017, "Broadly, across all markets, there's no aspirational pricing," says Derderian. "Buyers are keenly aware of the market and their portfolios." If a home is priced appropriately, though, "it's selling," he continues. "That's why discounts are down so much." Buyers—along with sellers—are moving to meet the market.
Despite ominous clouds on the horizon, the vacation destination on the south fork of Long Island recorded a sunny first half of 2022.
The Hamptons notched 32 sales above $10 million, an 11% increase over the same period last year. The median price increased during the same period, from $13.5 million to $14.7 million. Of the various towns in the area, Bridgehampton was the most expensive, according to the Serhant report: Six sales went for an average of $27.9 million.
Put in context, though, the Hamptons sales numbers aren’t dazzling. “Back in 2019, there were 74 sales above $10 million, compared to now, when there were only 32,” says Derderian. The main culprit, he says, is supply of move-in ready properties. “It’s definitely constrained, which will continue to slow [sales] velocity,” he says. “Given the low supply, values are holding, but I would expect the market to slow even further.”
The super luxury South Florida market has the opposite problem: The reality is far more bullish than the numbers, on paper, would suggest.
There were 158 sales over $10 million in the region during the first half of 2022. Miami and Miami Beach made up the bulk of these sales, notching 110 in total, a 33% drop from 2021’s 164. The median price there was down 4%, from $14.9 million in the first half of 2021 to $14.35 million this year. The average price per square foot dropped, from $2,654 to $2,326.
Palm Beach, meanwhile, had 48 sales, down from 66 in 2021, with a modest decline in average price, from $25.9 million to $25.1 million.
Derderian says these declines purely reflect what’s available.
“South Florida is probably one of the most supply-constrained markets” in the country, he says. “We still see buyers flooding into that market, and it’s nearly impossible to buy a home in Palm Beach that’s turnkey for under $10 million.” The entire Palm Beach market, he continues, “is basically super prime, across the board.”
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