Westchester’s recently published second quarter real estate reports are both deceptively bleak in some spots and uplifting in others. Looking at the overarching numbers, the trend of decreased real estate sales carried into the second quarter and price indicators showed mixed results in the kinds of sales being made. However, the decrease in big numbers doesn’t represent a sudden lack of interest in Westchester property, but accounts for a disproportionate impact from a decrease in sales of homes over $1 million.
Reports published by William Pitt-Julia B Fee Sotheby’s International Realty and Douglas Elliman Real Estate show that even though these higher priced sales only make up a small percentage of the market, they’ve had an unusual impact on the overall numbers. Most of the market decline in the first and second quarter can be tied to a 45% decrease of sales in the $2.5-plus million price sector, whereas the sub-$2.5-plus, which represents 87% of the market, only saw a 2.5% decrease.
The numbers indicate that the market is still slightly off-kilter, but that things are improving from last year, where the second quarter saw a 7% decrease in the same bracket. The most substantial growth showed in the $800,000 to $1 million range, while average days on the market decreased by one day. Single-family sales rose over the past two quarters, after a six quarter decline, and actually exceeded the listing inventory. The 2,495 sales in the second quarter were a 14.5% increase from this time last year and represent the fourth straight quarter of growth.
While condo, co-op and general sales are continuing to rise, luxury sales are showing a steady decline. Sales on the ultra-high end, meaning $5 million or more, took even bigger hits the first half of the year, as they were down by half or more in Westchester. These numbers indicate a larger trend in a soft luxury, ultra-luxury and second home market in areas like Westchester, which feel the most impact from this phenomenon.
Many market watchers blame the trends, at least partially, on the new tax reform bill that passed a year and a half ago, as well as local taxes implemented by New York and Connecticut. The new tax plan signed by President Donald Trump — the Tax Cuts and Jobs Act — placed a cap on state and local tax (SALT) deductions, maxing them out at $10,000 when there had previously been no limit.
“The luxury market is a bit soft and that can be attributed to a couple of things, but certainly the tax reform … has affected the high end market as far as people considering buying luxury,” said Barry Kramer, principal broker of Westchester Choice Realty. “It makes it harder to afford luxury property, plus the mansion tax that New York has. Someone buying property over $1 million has to pay what used to be 1%, but now it increases on a sliding scale up to 3.9%. Connecticut doesn’t have that.”
Kramer also said that his office on Garth Road has continued to see rising popularity in condos and co-ops and that inventory for high-end property has been down, but he predicted it will even out in the near future.
“I think there’s downward pressure on the overall market in the luxury sector and I think some of this is affected by property taxes. And as they continue to increase, they are increasing greater than the market,” said Gabe Pasquale, managing broker of William Pitt-Julia B Fee Sotheby’s International Realty on Chase Road. “I also think a lot of today’s buyers’ priorities are somewhat different than what they may have been five or even 10 years ago. We’ve seen buyers that instead of buying one very expensive home, they may have multiple dwellings and it’s about how they choose to live their lifestyle, whether that’s a country house, a beach house or a ski house.”
Though Pasquale said the market for Westchester as a whole is down 4% transactionally, Scarsdale proper has seen a very strong uptick in activity, with his agency seeing an 18% in sales increases quarter over quarter. Overall, he thinks the roughly 20% increase in Scarsdale overall is a good uptick that they expect to see continue into Q3 and Q4.
“Today’s buyer is extremely discerning, the amount of research that goes in from the buy side is exponentially at a much higher detail,” said Pasquale. “From a broker perspective, our clients are extremely educated so there’s a lot of preparedness that needs to happen prior to launching a property … I’m optimistic about the market moving forward.”
Ultimately, the bigger picture the numbers make is neither all good nor all bad. While some parts of the market are taking a steep downhill dive, other parts are on a continual uphill tick. While luxury listings struggle, single-family, co-ops and properties under $1 million are spending less and less time on the market. Though Westchester is a place of higher-end real estate, the professionals still seem to think that the county will remain in the clear.