Home sales in the New York City suburbs, where real estate activity exploded as people fled the city amid pandemic-related shutdowns, are starting to cool off.
In October, the number of signed contracts to buy a home in suburban areas like Fairfield County in Connecticut, and Westchester County or Long Island in New York, have come down from summertime peaks, according to a new report from brokerage firm Douglas Elliman and appraiser Miller Samuel.
But sales of luxury homes continue to increase at high rates over last year, the report showed.
“The suburban markets have already peaked,” said Jonathan Miller, president of Miller Samuel. “But even though they are plateauing, in many areas, sales are still up double-digits from last year.”
Signed contracts for single family homes in October were up by 100% in the Hamptons and nearly 200% in Greenwich year-over-year.
Suburban sales plateauing
The suburbs hit their pandemic peak over the summer, the report found.
Westchester County and Long Island saw the highest number of signed contracts in July, Fairfield in June. Since then the number of contracts signed each month have dropped. Westchester and Long Island saw a slight increase in contracts signed from September to October, but are still below the peaks.
The number of signed contracts in Long Island was up 23% in October compared with last year and in Westchester it was up 51% from a year ago.
In some areas, signed contracts for entry level and mid-range homes are down from where they were a year ago, and the number of new listings that came to market in October is lower at those levels than at higher price points.
For example in Fairfield County in Connecticut, contracts signed for homes under $300,000 are down 31% and the number of new listings in that price range was down 74%. While the number of signed contracts for homes between $400,000 and $499,000 was about the same as a year ago, new listings in that price range were down 30%.
But at the upper price levels there have been more available homes and also greater increases in the number of signed contracts.
Signed contracts for homes between $1 million and $1.99 million in Fairfield, for example, are up 105% from last year, while the number of new listings in October was only down 2.2% from last year, according to the report.
Sales remain strong at highest levels
Even with home buying activity slowing, signed contracts for single family homes in October were up year-over-year by 100% in the Hamptons and nearly 200% in Greenwich. Generally, the higher the price point, the stronger the sales activity, said Miller.
“As you rise with every price tranche, the contract volume rises substantially,” Miller said. “Single family contracts at $800,000 and higher in many of these areas are more than double last year, which is highly unusual.”
There are a few reasons for that, said Miller.
Following the coronavirus shutdowns, the suburban home buying activity was initially fueled by outbound migration from the city. But now Miller said buyers are simply realizing they can get more bang for their buck in the suburbs.
“What is a median-priced apartment in Manhattan is high-end in the suburbs,” he said. “Plus you’ve had a tremendous outbound migration from the rental market.”
Add to this, extremely low mortgage rates, which just fell to a 12th record low since the beginning of the year.
But also, many high-end home sales are happening because the luxury suburban market has largely been overlooked in recent years, Miller said.
The pandemic forced buyers to reset their thinking on local real estate markets, he said. Now what the suburbs offer — space and privacy within occasional-commuting distances from New York City — is highly valued.
“The reset is a rethinking of the value of higher-end homes throughout the region,” said Miller.