Super-Prime Real Estate in New York and Florida Has Hit a Wall

In the last half of 2022the market for homes priced at $10 million and more fell precipitously in New York and South Florida، according to a new report from the brokerage Serhant. “The second half of the year was more affected at the super-prime level than most people initially believed،” says Garrett Derderian، Serhant’s director of market intelligence. “The big takeaway is that this yearthe market is going to slow considerably، and it could be one of the slowest years in the super-prime market in the last decade.”

The report analyzed $10 million-plus sales and signed contracts in Palm Beach، Miami، New Yorkand the Hamptons.While it was already clear that last year’s market success was largely a holdover from2021’s banner year، the Serhant report emphasizes just how far، and how fast، demand has fallen for super-luxury properties in some of the wealthiest parts of the country.

Judging by sales numbers، 2022 was even better than 2021 for super-prime sales. But contracts signed are often considered more representative of a market’s strength than sales، which can carry over from previous years. (Once a contract is signed، it can take months to close، particularly in a new development.) “On a high level، when you look at sales figures، they’re very strong،” says Derderian. “But when you look at contract activity you start to see a drop-off.”

Falling Volume

In fact، in the first half of 2022، signed contracts for condos and co-ops in New York City priced at $10 million or morewere down a modest 15% from the previous year; in the second halfthey plummeted 68%. Townhouses in the city were similarly affected، with contracts falling 41% year over year in the first halfand 58% in the second.

Miami’s decline was nearly as precipitous. There، signed contracts fell 27% year over year in the first half of 2022and 60% in the second half. In the Hamptons، where inventory has remained tight، contracts declined 23% in the first half of the yearand then accelerated their slide، dropping 39% in the second.

Only Palm Beach was comparatively steady، with signed contracts down 6% year over year from January to Juneand then 28% from July to December. “In South Floridathere’s the belief that prices are peaking، so there’s a pullback in sales،” Derderian says. “Still، there’s limited inventory، so well-priced homes، particularly ones that are turnkey and ready to move in، are selling.”

Steady Prices

Indeed، sales prices in the $10 million-plus tier have remained resilient، according to the report، particularly in South Florida، where the median sales price increased 3% year over year in Palm Beachand 2% in Miami. The Hamptons saw even better median sales growth—8% year over year، according to the report.

But in New York، even accounting for 2021 contracts that closed in 2022، the median price for condos at the $10 million-plus level declined2%; for co-opsit fell by 15%، from just over $14 million to just over $12 million. Thecondos sold، which represented the bulk of New Yorktransactions in this highest-pricetier،got smaller—the average size fell to just over 4،000 square feet، down from more than 4،500 square feet the year before. But that’s not the cause of the price slide: Price per square foot fell، too.

“Pricing has certainly come down، which differentiates New York City from other markets،” Derderian says. “When buyers at this level smell blood، especially during uncertain times، they tend to strike. So super-prime is usually one of the last tiers to collapse but the first to recover.”