While luxury markets north of New York City registered losses in 2018, the uber-luxury segment of the market demonstrated notable growth, according to the Houlihan Lawrence Luxury Market Report released on January 9.
Sales over $10 million peaked in Westchester County in 2018. Houlihan Lawrence represented David Rockefeller’s country estate, Hudson Pines. Listed for $22 million, Hudson Pines sold for a record-setting $33 million and was the highest recorded sale in Westchester County. In total, five sales closed over $10 million in 2018 -- a monumental gain from a single sale in 2017 -- and exceeded the previous high set in 2005.
These exceptional but finite sales did not make up for the overall decline in luxury sales. In Westchester, Darien and New Canaan, luxury sales ($2 million and higher) declined by double digits in 2018. Fewer luxury homes sold in Putnam/Dutchess ($1 million and higher) and Greenwich ($3 million and higher) ended the year with a slight 3% decline. Fourth quarter declines were especially deep in many markets, dragging down year-end losses and placing even more pressure on pricing.
Many indicators point to a softening market in 2019. Pended sales (expected to close within 60 to 90 days) are down across the board and could impact first quarter sales. The once red-hot market in New York City cooled down in 2018, resulting in a smaller pool of buyers heading north. Houlihan Lawrence’s proprietary data indicates that 25% to 30% of luxury buyers originate from New York City and a significant chunk of losses experienced in 2018 are attributable to this shift.
“The financial markets entered negative territory after a rousing 10-year run. Savvy investors were likely prepared for the inevitable dip but the volatility that accompanied these declines left even the sturdiest investor uneasy. Interest rates are expected to rise again in 2019 and while that does not materially affect the purchasing power of the luxury buyer, it sends a signal about the overall strength of the economy and impacts consumer confidence,” said Anthony Cutugno, Senior Vice President, Director of Private Brokerage of Houlihan Lawrence.
Cutugno said there are economic bright spots and opportunities for the savvy buyer to embrace as we enter 2019 - unemployment is at a record low and the equity markets created extraordinary wealth since 2008, despite 2018 losses. “Tax changes can result in a net positive gain for some and the next three months will provide clarity to those who ultimately benefit. Sellers may have to accept their home could achieve a selling price far less than they imagine, and their motivation to sell and price competitively will drive the market in 2019,” he said.