The Real Deal New York

Are top-of-the-market condos priced too high? VIDEO

As competition increases, buyer urgency is slowing, says appraiser Jonathan Miller

September 25, 2014 11:00AM

Only two units at Extell Development’s One57 went into contract in the first half of the year, following a three-month period at the end of 2013 when none of the pricey condos sold. Is that simply because they’re priced too high?

The issue is actually less a question of demand than supply, Miller Samuel President and CEO Jonathan Miller said during an appearance on Bloomberg TV. Extell was one of the first developers to dive into top-tier condominiums and was initially very aggressive in pricing. But, they ultimately overshot the market, he said.

“Usually the strategy is, you price at market initially and then you ramp up the prices quickly if you’re the only game in town, and that’s essentially what they did,” Miller said. “It’s very common to see many price increases initially, to sort of foster urgency by the buyers.”

But now, with a number of similar luxury offerings hitting the market, that urgency is dissipating, he added.

“They’re seeking out global demand, and international investors are looking for these properties. The problem is that it’s really addressing the top 1 percent of the market, so it’s a very narrow slice,” Miller said. “Yet this is the only property that can be built right now in Manhattan, because land and assemblage costs are so expensive If you do the math, they really have to sell at record prices to be able to build.” [Bloomberg TV] — Julie Strickland

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