HomeReal EstateBuy2023 Luxury Real Estate Trends in NYC

2023 Luxury Real Estate Trends in NYC

The luxury real estate market caters to a small but active buyer pool in New York City; offering everything from condos with lux amenities and towering penthouses, to contemporary townhouses and vintage brownstones. 

It seems like the only thing it never has is certainty. Still, it’s useful to identify certain trends that may help inform buyer and seller decisions in the upcoming year.

What is Luxury Real Estate?

Defining luxury real estate across various markets can be challenging. Standards vary depending on the local market. What may be considered a luxury family home in a small Midwest town won’t be the same as a luxury condo in a busy East Coast city.

As a general rule, you can consider the luxury real estate market as the top 5%, or 10% of listings in a given area. In large metro areas such as Dallas and Chicago, high-end properties usually start at $1 million or more. In cities like New York, the top 5% of properties start at around $4 million. 

Recently, 217 W57th, “The One Above All Else” has made headlines due to its large pricetag and unmatched design. Staircase in the penthouse apartment at 217 W57th Street via RealtyHop listing

Luxury Real Estate in NYC

Luxury residential real estate operates a bit differently than the regular market. Although overall sales have been impacted by climbing mortgage rates and persistent inflation, top-tier real estate remains a must for NYC power players. 

“There are still bidding wars where there’s a scarcity of that type of property,” says Pamela Liebman, President and CEO of the Corcoran Group, to Variety Magazine. She finds that no bargains are being made among her clients when it comes to chasing their dream New York apartment. 

Luxury condo for sale in NYC at 22 Mercer. RealtyHop

According to Compass data published by Variety, a total of 841 homes priced at $5 million+ have sold in Manhattan alone through August of this year. That’s a 35.6% increase for the first 8 months of 2022 when compared to the same periods in 2021 and pre-pandemic luxury sales in 2019. 

Jeremy Stein of Sotheby’s International Realty believes the luxury market is entering neutral territory. Unlike 2021 and early 2022, the market is favoring neither buyers nor sellers. “It’s safe to say, whichever way the market heads, it won’t be nearly as dramatic as it has been,” said Stein to Variety Magazine.

In May 2022, we witnessed the end of a volume of sales that was “historic and epic” according to Stein. It marked the end of a 16-month run for luxury real estate in NYC. By August, the market was already showing signs of cooling off, with only 15% of luxury deals closing above list price. 

Liebman adds that “2021 was the greatest year in the history of New York City real estate.” She reiterates it’s not a year to benchmark for comparison in the future.             

Luxury Real Estate Design Trends on the Rise 

Architectural Digest recently published an article on the latest trends being observed in luxury real estate. In terms of design, there were three home features that are expected to increase in popularity this year.  

Luxury Bunkers

A growing number of high-net worth individuals are investing in bunkers. It’s not surprising, given that we’ve experienced a global pandemic, a significant war in Europe, and a bleak economy all within the last three years. In fact, the demand has been so great, there are now entire companies dedicated to developing underground residences, such as the Swiss firm, Oppidum. 

In their search for enhanced security, million-dollar homeowners are building subterranean chalets with reliable off-grid power supply and military-grade technology. Some of these luxury bunkers even come with sophisticated lighting systems that mimic the daily ebb and flow of natural sunlight, as well as art galleries and wine cellars for entertainment.

Above Ground Pools

For a long time, above ground pools were considered tacky but it seems that their appeal is returning within the luxury market. Underground pools are more aesthetically appealing, but they’re also quite a hassle. 

 

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Installing and maintaining an underground pool can be a headache, especially if you don’t have the adequate space for it. As a result, some luxury buyers are choosing for a more simple look for their pools, redesigning shipping containers and stock tanks into above ground swimming pools. 

The Pied-à-Terre—with a twist

The pandemic motivated many city dwellers to move away for some time. They’re now returning, but not 100%. Hybrid living has been on the rise and has popularized the convenient idea of living in a hotel with a personal touch of a home. 

Short-term living was previously linked with unappealing corporate housing that lacked the “homey” feel so many of us want. Now that people have become more transient, working in one part of the country and living in another, short-term rental options have expanded and enhanced their offerings. 

Real Estate Agents are Hopeful for 2023

Luxury Portfolio International conducted a study among 200 member brokers to gain insight on what luxury residential real estate professionals believe is on the horizon for 2023. The report, titled the Business of Luxury Real Estate, polled brokerages, their principles, and top-producing agents. 

The study highlighted a few key findings:

  • 95% reported optimism about their overall market in the next 12 months
  • Signs of a shift towards a buyers’ market are starting to show due to larger inventories, increased days-on-market, and price reductions in certain markets
  • Updated amenities, prime location, and size are the most common factors selling luxury homes at the moment

Across the board, real estate professionals recognized that COVID influenced an unprecedented, yet unsustainable market with most municipalities experiencing historically low levels of inventory. 

More competitive markets experienced as low as one month of available inventory at some point in time. To provide a point of comparison, a stable luxury market will generally have 12-18 months of available inventory.

Taking into account that 2020, 2021, and the first half of 2022 have represented an industry anomaly, the vast majority of professionals surveyed believe that the market will stabilize in 2023. 

The study also found that 76% of likely homebuyers admit that “even in times of personal financial uncertainty, I buy high-quality products.” Even as interest rates continue to rise, the luxury real estate buyer will remain in the market. 

Impact of International Buyers on the Luxury Market

At the time of LPI’s study, international buyers accounted for 18% of total luxury business for 79% of LPI member firms. It’s worth noting that the growth experienced by the luxury residential real estate market in 2020, 2021, and the first half of 2022 occurred without much, if any, impact from international buyers due to COVID travel restrictions.

The fact that luxury homes sales continued to be robust through this period of economic uncertainty with international buyers being largely absent from the market, speaks to the strength and viability of the luxury sector as a whole.

In 2023, international buyers are expected to continue their return to the market and search for homes offering privacy, safety, high-quality private schools, better infrastructure (e.g., medical facilities), safer investments, and cultural enhancements.

The Impact of a Recession on the Luxury Housing Market 

On December 9th, New York-based president of Luxury Portfolio International, Mickey Alam Khan, hosted the Luxury Hour Webinar on the outlook for luxury real estate in 2023. He and his team had the following to share about market expectations for the new year.

Low housing inventory, rising mortgage rates and a peak inflation rate of 9 percent have all contributed to the housing market slowing down. However, the market isn’t necessarily in bad shape. 

Despite public perception, mortgage rates aren’t at a historic high—inflation is, which means that interest rates need to be pushed up to control the money supply.

“The real problem and the real root of inflation is money,” says Gregory Heym, Chief Economist at Brown Harris Stevens in New York. “Our money supply [in the United States] has gone up 40 percent since COVID.” 

Heym also shared that over the last 50 years, the average 30-year conforming rate is at about 8%. There was a time where mortgage rates were as high as 18%. Taking this into account, 6.5% isn’t a high mortgage rate. 

Still, high levels of inflation and stock market lows are enough to plant seeds of doubt in regards to a global recession. But, Heym believes that this may not be a bad thing for the housing market. “Recessions are the only things that reset housing prices.”

Given that the luxury market historically favors all-cash buyers and caters to wealthy Americans who have access to either equity or large sums of cash, the recession isn’t likely to impair their ability to acquire new property. Rather, it may influence their decision to downsize, compromise on certain features, or wait the market out.

Vivian Tejada is a freelance writer living in Cartagena, Colombia. She writes SEO blogs for real estate, travel, and hospitality companies. She's passionate about the future of work and helping female freelancers achieve time, location, and financial freedom. When she’s not writing, you can find her at the gym, a family cookout, or at brunch with her girls. Follow her on Instagram @viviwaves. You can also read more of her work on LinkedIn or Medium.

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