The final quarter of 2019 closed the year on a disappointing note for the traditional luxury real estate market. There was a decrease in luxury home sales and an increase in the number of price cuts. The slump is being felt all over the United States, from the Hamptons to Miami.
There is an alternative to beat the slump is choosing a reputable luxury real estate auction firm such as Supreme Auctions. Supreme Auctions can circumvent the challenges of the traditional market to sell your property at auction for a fair market value. To see how the traditional market is affected by the luxury real estate slump, continue reading below.
The Hamptons See Falling Prices
In the final quarter of 2019, the Hamptons on Long Island, New York, saw the sale of 223 luxury homes. These high-end homes, which accounted for an estimated 10% of the luxury properties in the area, sold for an average of $6.2 million.
The number of sales decreased from the final quarter of 2018 by 12.9%, while the median sales price of the same homes decreased by 17.4%.
In the past decade, the Hamptons have seen an upward trend of luxury home sales (an increase of 7.2% compared to 2009), but the average prices have steadily declined by 7%.
Manhattan’s Luxury Home Sales Slump
Manhattan’s luxury real estate market entered 2020 with a slow start and dramatic price cuts. The second week of January saw 15 luxury home sales priced at $4 million or more, which is below the healthy benchmark of 20 high-end property sales per week.
In addition to a decrease in sales, the 15 luxury homes saw average price cuts of 17% by the time the high-end homes went into contract.
Mansion Global believes recent tax hikes play a key role in Manhattan’s languishing luxury property market. The new progressive mansion tax raised the cost of buying homes over $2 million.
A home sale valued at $2 million to $2,999,999 has a total tax rate of 1.65%. Homes that sell between $3 million and $5 million have a tax rate of 2.15%. Big-ticket luxury homes that sell for $25 million or more not have a 4.55% tax liability — an amount that is over $1.1 million.
New York City Sees Declines in Sales
The greater New York City area also saw a disappointing end to 2019 in the luxury real estate market. While sales of homes valued under $5 million were on the rise, the sales of pricier properties fell.
The sales of luxury properties valued at or above $5 million plummeted 38% as compared to 2018. High-end homes valued between $7-10 million were affected the most.
Miami’s Luxury Home Market Stalls
Although Miami is one of the hottest luxury real estate markets in the United States, the area has not been unaffected by the nationwide slump.
The top luxury home destinations in South Florida are in Miami-Dade and Palm Beach Counties. The Miami-Dade areas are Indian Creek, Fisher Island, Bal Harbour, Key Biscayne, and Pinecrest.
Luxury home values averaged $14.32 million in Indian Creek, and $3.01 million in Fisher Island; in 2019.
High-end properties in these areas and others all saw their market values decline between 2018 and 2019. Indian Creek saw an average decrease of 11%; Fisher Island luxury properties declined in value by an average of 8.3%; with Bal Harbour, Key Biscayne and Pinecrest Luxury homes the following suit.
Mansion Global believes the decline is due to the decreased interest in foreign buyers and increased interested in domestic buyers.
Luxury Home Auctions Offer An Alternative
While the traditional market is experiencing a decline in sales and prices, the luxury real estate auction market is seeing continuous success. For example, Supreme Auctions achieved a 96% success rate in 2019 and all of their homes that sold at auction were purchased at or above market value.
The success of Supreme Auctions is due to their Accelerated Marketing Program, integrity, transparency and commitment to excellence, plus that of partnering with luxury real estate agents. Supreme Auctions does not compete with agents, instead, they work with the listing agent, utilizing their Accelerated Marketing Program, to ultimately sell the luxury property in 30-45 days.
All auctions hosted by Supreme Auctions are held live onsite to boost transparency and bidder participation. All of the auctions are conducted by a professional auctioneer and staff that will be available to assist you every step of the way.
For more information about their process, contact Supreme Auctions today.