Low inventory and higher mortgage interest rates combined for a sales decline in the luxury market north of New York City in the first half of 2023, according to the Houlihan Lawrence Q2 luxury market report.
Luxury home sales declined in Westchester County (down 43.9% for sales $2 million and higher), Putnam and Dutchess counties (down 53.2% for sales $1 million and higher); Greenwich (down 12.7% for sales $3 million and higher); and New Canaan (down 5.3% for sales $2 million and higher). But sales of $2 million and higher were up 9.7% in Darien.
“A significant majority of homeowners with mortgages are currently paying below the averagerate of 6.7%, the highest observed in 20 years,” said Anthony P. Cutugno, senior vice president, private brokerage. “This ‘golden handcuff’ effect is keeping would-be sellers off the market. Despite limited supply and higher interest rates, the data indicates a resilient luxury market with healthy buyer demand.
Cutugno added that buyers’ sense of urgency has noticeably changed: “During the height of Covid, buyer urgency was at an all-time high. The purchase of a new home in a lower-density area or on a larger parcel was a visceral reaction to Covid and a means to keep one’s family safe.
“As the pandemic moved into the past tense, buyer motivation shifted. Discipline replaced urgency, even as inventory remains low. In fact, low supply gives buyers a reason to wait until the right house becomes available, be it in a month or in a year. This mindset, while practical, squelches urgency and a willingness to compromise.
“The first half of 2023 brought no surprises. The pace of sales is now reflective of a market that is stable. Interest rates are expected to fall in 2023. This should help to correct supply issues that have upset our markets thus far in 2023.”
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