It now is evident that the inventory in the market for premium and luxury residences has been increasing over the last several years as noted in a most recent National Association of Realtors existing homes sales report on April 19.
From March 2018 the inventory of premium and luxury homes is up 19.8 percent and the average days on the market is 47 days and longer. Also, price appreciation for those homes has decreased 5.7 percent since that time and is up barely 0.3 percent.
So now this would be considered a buyer’s market for premium and luxury homes, as prices continue to decrease, potentially making for better deals. I have seen this in various high-end areas on Long Island and New York City. More important is the additional effect that the SALT tax (maximum $10,000 deduction on real estate, sales and local taxes on your income tax return) has had on prices on those high-end homes. I am wondering how many buyers have changed their attitude and gotten more conservative about their purchase price points and maybe are trending down to lower priced homes (eliminating the 1 percent luxury tax on those homes sold at or above $1 million), homeowner associations, condos or even co-ops and creating greater demand at the lower level?
On the other hand, inventory for starter and trade-up properties has for the most part, increased by just 2.4 percent during that same period and are only on the market for a mere 36 days. Price appreciation has decreased only 3.7 percent, but still is up 3.8 percent. The greatest demand is still very strong for those starter and trade-up homes and this is the reason that inventory has been very slow to increase. For as fast as those homes are put on the market and priced properly, they are snatched up by aggressive cash-ready and qualified buyers, who want to get out of their rentals to finally stop giving away their wealth, appreciation, future equity and tax deductions to their landlords.
Demand continues to rise with lower-than-normal inventory levels in the starter and trade-up home markets, which has caused prices to climb on a year-over-year basis for 85 consecutive months The good news is that the “American Dream” of ownership and that “white picket fence” is still alive and well going forward.
Even the debt-burdened millennials truly desire to own their own home and from what I have read this past week, there are a few banks that will roll over some of their student loans into a home mortgage. However, every situation is different and there is no guarantee, but if you need assistance, call me and I will try to help you. However, my solution for some of those millennials is to either get another job or two or start a side business (as many who come to the United States do and for some within 5-10 years become millionaires).