NYC suburban homeowners turn to discounts to drive higher sales

Home sellers in the suburbs north of New York City discounted their way to a strong fourth quarter, whittling pricing to levels that even luxury buyers found appealing.

Owners in Westchester County cut an average of 4.1% from their last asking price to strike a deal — the most for any three-month period since the end of 2014, according to a report by appraiser Miller Samuel and brokerage Douglas Elliman Real Estate. That led to the biggest decline in listings since mid-2017 and drew enough high-end buyers to push median prices up 6.4% from a year earlier.

"We're seeing realistic sellers, which has resulted in more transactions," said Scott Elwell, Douglas Elliman's regional manager overseeing sales in Westchester County. "Well-priced homes at pretty much every price point are seeing multiple bids and are moving quickly."

The great discounting of 2019 has blunted the impact of a new federal tax law, which had roiled property sales in Westchester, home to the nation's highest local levies. Those local taxes can no longer be fully written off on federal returns, and house shoppers, wary of even higher carrying costs, held off on deals until they saw price cuts. Then mortgage rates sunk, adding more financial incentives to get deals done.

"The pricing was too high for what buyers were looking for," said Debbie Doern, regional vice president at brokerage Houlihan Lawrence, which released its own report on the Westchester market. "Once that all passed, the buyers started to come out."

In Scarsdale, the median sale price of homes fell in 7% in 2019 from the previous year to $1.4 million, according to Houlihan Lawrence. In Mamaroneck, the decline was 3% to $1.16 million, and in Bronxville, the median price of deals dropped 9% to $1.78 million.

Sales of homes priced at $2 million or higher plunged in the first half of 2019 and recovered some ground in the final six months of the year, Houlihan Lawrence said.

The momentum is poised to continue: As of Dec. 31, there were 22 sales pending for homes priced from $2 million to $2.49 million, up 47% from the prior year. Contracts for homes priced from $3 million to $3.99 million jumped 75%.

"Buyers are educated," Doern said. "They know when something feels like a value."

Meanwhile, homebuying makes sense again in Brooklyn and Queens.

Deals rose in the New York boroughs for the first time since 2017, with purchases in Brooklyn climbing 2.9% in the fourth quarter from a year earlier, according to Miller Samuel and Douglas Elliman. In Queens, the increase was 6.8%, even as the median sale price reached yet another record high.
Buyers are returning after years of escalating prices dimmed Brooklyn's status as a haven from Manhattan's high costs. For a time, leasing was a more-attractive option as a flood of apartment construction helped push down rents. Now, lower mortgage rates and shiny new developments are enticing more renters to become owners, and even luring Manhattanites across the East River.

"That Manhattan purchaser has been priced out of the Manhattan market," said Steven James, chief executive officer of Douglas Elliman's New York City division. "They wanted to own, and they couldn't own at the price they wanted to pay, and they found alternatives in Brooklyn and Queens."

The median price of Brooklyn homes that changed hands in the quarter was $800,000, up 1.9% from a year earlier but still lower than the Manhattan median of $999,000.

The biggest increase in sales was in the $2 million to $3 million range, the firms said. At that price point, Brooklyn offers a greater variety of property options, such as townhouses, which tend to have fewer fees than co-ops, according to Nadia Bartolucci, a broker at Douglas Elliman.

In Queens, the median price climbed to an all-time high of $610,000, up 7.4% from a year earlier.

Bloomberg News