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Softening Luxury Property in U.S. is all not Bad News

Softening Luxury Property in U.S. is all not Bad News
The message that high end homes prices are clearly losing altitude all around the U.S. were evident from the headlines in the luxury real estate market this year which have been dour if not outright grim.
Hones priced above $1 million dipped four percent from the previous month, reported the National Association of Realtors last month. The downturn has been noticed by more than a few real estate market observers even as it is far from being a correction. Frothy prices are beginning to give way to gravity in certain markets such as New York, Miami and San Francisco.
However the current state of the market has not struck panic among many of the real estate professionals. Philip White, president and CEO of Sotheby's International Realty Affiliates said that there is still a "great deal of activity" in others even as there's a definitive chill in the segment of the ultra high-end market priced for homes above $10 million.
"Some markets are seeing a slowdown in the high end but some aren't," White said. It is sort of a mixed bag and obviously there is some slowing," he said. He however strongly mentioned that among the overall real estate turnover in the U.S., ultra-high end sales were a much smaller slice. His company cranked out $80 billion in U.S. sales volume in 2015.
Tends such as shifting tastes among key demographics, particularly younger buyers like millennials and a flood of foreign buyers are among the several macro and behavioral trends were impacting the market, White explained.
"Estates and farms in the country are a little out of favor because the migration is into the city," White said. Low interest rates and rich buyers have sent median home prices skyrocketing in wealthy enclaves like Silicon Valley and New York City.
He added that "on the other end, the larger houses that were of great appeal in the last decades" have seen a downward price adjustment.
A number of luxury properties have remained on the market for longer than usual before being snapped up at more favorable prices, although not all markets are seeing the same degree of retrenchment. This is a function of a "normalization" effect noted by Sotheby's International's White.
A triplex penthouse and housed in the clock tower of restored industrial building at 1 Main Street in Brooklyn is one example of this. The penthouse described as "exquisite" by its broker actually stayed on the market for more than six years before being snapped up in June despite its quirky pedigree and spectacular view of the New York Harbor and its environs. The asking price tumbled from $25 million to $18 million during that time.
Nick Hovsepian, a broker at The Corcoran Group, confirmed that the property is currently in contract.
"The luxury market ($14 million and above) is seeing very clear indicators that location, spectacular renovations and building prestige" are determining factors that can sway buyers, Douglas Elliman luxury broker Katherine Gauthier explained.

Christopher J. Mitchell

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