In a prior post, we highlighted the perceived slide in New York City's luxury home market. Essentially, the market appeared “particularly sluggish” according to the Federal Reserve's Beige Book. While this may be alarming to those putting real estate up for sale, there could be a perfectly reasonable explanation for this trend.
Basically, Old Man Winter may have something to do with the recent slide. The snow storms the Northeast experienced in January and February may have kept potential buyers at home. Unless a person absolutely has to find a new place to live, treacherous wintry conditions do not make for good settings for real estate sales; especially high end real estate.
Because of this, real estate contracts are not expected to be signed in earnest during the first two months of the year. In fact, the National Association of Realtors recently reported that sales of previously owned homes dropped by seven percent in February across the country. The drop was particularly dramatic in the Northeast, where sales dropped 17 percent.
Nevertheless, sellers can take solace in the fact that average real estate prices have risen compared to last year at this time. A recent Forbes.com report showed that prices have risen by 4.4 percent, and February marks the 48th straight month of year-over-year gains. However, the supply of homes has not reached the ideal point that economists would consider a healthy market. With a four-month supply of available homes, and home prices and rents outpacing wages, buyers may still have the upper hand in the market.