Luxury home sales on rise in state

2nd quarter sees 50 percent increase over a year ago

Connecticut saw a 50 percent increase in the number of homes over $5 million sold compared to last year.

Sales of Connecticut homes in excess of $5 million during the second quarter of this year increased by 50 percent compared to a year ago, according to a new analysis released by Berkshire Hathaway HomeServices New England Properties.

Two-dozen homes in that price range sold between April and June of this year, including 16 in Greenwich alone, said Candace Adams, president and chief executive officer at Wallingford-based Berkshire Hathaway HomeServices New England Properties. Adams said a combination of factors, including proximity to New York City and lower inventories of homes priced in excess of $5 million, led to the surge in activity.

“It’s a tremendous sign of health in the market,” she said.

The further away a luxury property is from New York City, the more likely there is to be a larger inventory of homes in that price range, according to Adams.

The Berkshire Hathaway HomeServices New England Properties analysis found that while there was plenty of sales activity for homes above $5 million during the second quarter, sales of homes in excess of $2 million or more were essentially flat, she said. Adams said that is due to an excess of homes in that price range that could take more than a year-and-a-half to reduce the oversupply.

“Houses in the $2 million price range tend to cover a broader area of the state than those in the $5 million price range,” she said.

Barbara L. Pearce, president and chief executive officer of the North Havenbased real estate firm Pearce Co., said the oversupply of luxury-priced homes in Fairfield County has a negative impact on similarly priced homes in the New Haven area.

“It’s hard to predict which homes are priced well and will go quickly and which will linger on the market,” Pearce said. “There’s a lot of demand for luxury homes in East Rock (section of New Haven) but the price is pretty much capped at $850,000. The price range for homes on the Shoreline right now is basically between $1 million and $5 million, but a lot of the people you see buying the homes there are only here for the summer and have a permanent address elsewhere.”

Pearce said the first half of 2017 has been more robust than in 2016, a condition she attributed to the 2016 presidential election.

“Homes sales are always effected by elections,” Pearce said. “Now, a lot of people have moved on and sales are better.”

The increase in luxury sales also could be an indicator that well-heeled buyers are getting a sense that growth in the stock market has peaked and that investing in upscale real estate is a way to diversify assets.

Donald Klepper-Smith, chief economist and director of research for New Havenbased DataCore Partners, cautioned against drawing too many conclusions from the luxury home sales numbers.

“What is says to me is that there are pockets of strength and weakness in every market,” Klepper-Smith said. “Beyond that, you can’t really say much because of the sample size (of data).