In New York and Florida, luxury real estate has reached a plateau

There has been a plateauing in the price of superprime real estate in both New York and Florida. A new report that looked at sales of $10 million or more in New York and South Florida showed that the number of signed contracts will drop sharply in 2022.

A new report from the brokerage Serhant says that the market for homes that cost $10 million or more fell sharply in New York and South Florida in the second half of 2022. "The second half of the year was harder on super-prime borrowers than most people thought at first," says Garrett Derderian, director of market intelligence at Serhant. "The most important thing to know is that the market will slow down a lot this year. "It could be one of the slowest years for the super-prime market in the last ten years."

The report looked at sales and contracts worth more than $10 million in Palm Beach, Miami, New York, and the Hamptons. Even though it was already clear that last year's market success was mostly a carryover from 2021, the Serhant report shows how far and how quickly demand for super-luxury properties in some of the wealthiest parts of the country has dropped.

Based on sales, 2022 was even better for super-prime sales than 2021. But contracts signed are often seen as better indicators of the strength of a market than sales, which can be carried over from the previous year. (In a new development, it can take months to close on a deal after a contract is signed.) "When you look at sales numbers from a high level, they're very strong," says Derderian. "But if you look at the number of contracts being signed, you start to see a drop."

Falling Volume
In fact, signed contracts for condos and co-ops in New York City that cost $10 million or more were down only 15% from the previous year in the first half of 2022. In the second half, however, they dropped by 68%. Contracts for townhouses in the city fell by 41% year over year in the first half and by 58% in the second half.

The fall of Miami was almost as sharp. In the first half of 2022, the number of contracts signed dropped by 27% from the previous year and by 60% in the second half. In the Hamptons, where the number of homes for sale has stayed low, contracts dropped 23% in the first half of the year and then fell 39% in the second.

Only Palm Beach was pretty stable, with signed contracts going down 6% from January to June and then 28% from July to December compared to the same time last year. "In South Florida, people think prices are at their peak, so sales are going down," says Derderian. "Still, there aren't many homes on the market, so well-priced homes are selling, especially ones that are turnkey and ready to move in."

Price Stability
According to the report, sales prices for homes that cost $10 million or more have stayed strong. This is especially true in South Florida, where the median sales price went up 3% in Palm Beach and 2% in Miami from one year to the next. The report says that the median sales growth in the Hamptons was even better, at 8% year over year.

But in New York, even when 2021 contracts that closed in 2022 were taken into account, the median price of condos that cost $10 million or more went down by 2%, and the median price of co-ops went down by 15%, from just over $14 million to just over $12 million. The condos that were sold, which made up most of the high-priced deals in New York, got smaller. The average size went from more than 4,500 square feet the year before to just over 4,000 square feet. But that's not why the prices went down. The price per square foot also went down.

"Prices have gone down, which makes New York City different from other markets," says Derderian. "Buyers at this level tend to strike when they smell blood, especially in uncertain times." So super-prime is usually one of the last tiers to fall, but it is also one of the first to come back.