Transaction volume on the rise, prices on the decline?
Nationwide, there remains a shortage of inventory compared to pre-pandemic; despite the recently realized price cuts and surge of new listings coming to market. So, while the scales are tipping further towards the favor of buyers, they’re still technically in seller’s territory for most regions.
As always, however, real estate is local and there are parts of the national and international landscape that are trending with more fervor than others.
As we move into the summer travel season, demand for luxury rentals seems to be hovering around 2022 levels. NS agent Elizabeth Bowden describes the current market in the Hamptons, saying “inventory continues to sustain all-time lows. The luxury sector remains robust in both sales and rentals, oceanfront specifically.”
In contrast, would-be buyers who witnessed intense competition in Florida markets over the past few years aren’t seeing such a frenzy now, as strong construction in many of these markets has helped restore inventory levels.
Read more in this Fortune article.
LUXURY MARKET
Transaction volume in the luxury space has picked up; with major sales like 10 Tarpon Isle in Palm Beach ($152,000,000), and the mass market is likely to follow suit.
Luxury prices have increased at 2x the pace of non-luxury over the last twelve months. Much of this could be attributed to the stock market, as luxury home buyers tend to be well-diversified and have seen equity investments grow, thus creating the opportunity to leverage their portfolios or cash out and purchase hard assets like real estate. The DOW closed above 40,000 for the first time ever in mid-May while the S&P 500, and tech-heavy Nasdaq Composite also closed at new record highs after positive inflation news.
INTEREST RATES
The latest Consumer Price Index read showed that prices were up 3.4% for the 12 months ended in April, easing from 3.5% the month before. Taken together with retail sales and the election cycle, this supports a Fed rate cut in the fall.
Rising gasoline and shelter costs accounted for more than 70% of the monthly increase in overall inflation, and grocery prices fell for the first time in a year, dropping 0.2% from March. The housing component of the CPI has proved frustrating because the government’s measurement of shelter costs come with a considerable lag, though private sources of real estate data have shown a cooling rental market.
A separate report mid-month showed that US retail sales were flat in April, which could be an indication of consumers getting tapped out. Retail softening is an indicator that could have a continuing moderating effect on inflation, and thus also support a rate cut in the coming months.
NEW CONSTRUCTION
The new single-family home market has thrived given the lack of resale supply, the narrowing price spread between new and existing homes, and offer of builder incentives. Importantly, though, two different housing markets have emerged; that of larger, mostly public builders, and that of smaller and mid-sized builders. In the immediate market, larger builders have been able to be more aggressive with incentives, including buying down the mortgage interest rates well below what a smaller builder is willing and able to do. Larger builders have also been able to be more aggressive in their land acquisition, intending to increase their community count both this year and next year.
INTERNATIONAL
The current top global destinations for supplemental passports among Americans are Portugal, Malta, Greece and Italy. Below are some notes from our Managing Directors in these offices, offering their thoughts on why the regions are opportunistic for investors.
“Portugal is as a prime destination for relocation and investment, offering a high quality of life with its mild climate, stunning landscapes, and rich cultural heritage. The country’s stable economy, attractive tax incentives, and growing property market make it an ideal choice for investors seeking lucrative opportunities. With its welcoming atmosphere and modern amenities, Portugal seamlessly blends tradition with contemporary living, making it a desirable location for both families and professionals.”
-Nuno Franco, Managing Director NS Portugal
“Greek citizenship opens the gates to a treasure trove of historical, cultural, and natural wonders, granting unrestricted access to the cradle of Western civilization and the stunning landscapes that have inspired poets and philosophers for millennia.”
- Luka Canadi, Managing Director NS Greece
“Italian property prices remain relatively low compared to many other EU destinations, and capital gains tax is not levied on the profits of the properties. Therefore, it is a significant incentive to many investors, allowing them to maximize their return on investment.”
-Luca Traverso, Managing Director NS Italy
MARKET SNAPSHOTS
· The clock is ticking on summer holiday rentals in the Hamptons, Italy, Portugal, Greece, and Croatia. Reminder to lock down your rental ASAP for best selection.
· A bright spot for Commercial RE; the Manhattan office market recorded 5.0 million square feet of new leasing activity in the first quarter of 2024, surpassing the total of one year ago by 2.8% and marking the first YOY quarterly increase since the fourth quarter of 2022.
· Home prices are expected to increase 3-4% over the next year nationwide, based on the Home Price Expectations Survey (HPES), which gathers insights from over 100 experts including economists, real estate professionals, and market strategists.
