The Real Deal New York

Luxury pads now sitting on the market for an average of 9 months

Discounts also climb to 7%: Olshan

June 28, 2016 07:30AM
By Katherine Clarke

The penthouse apartment at the Baccarat Residences

The penthouse at the Baccarat Hotel and Residences closed for 29 percent less than its original ask

Luxury Manhattan homes are sitting on the market for nearly 20 percent longer and selling for a steeper discount than they did this time last year, according to early data provided to The Real Deal by Olshan Realty.

Residential properties priced at $4 million and up sat on the market for an average of 277 days during the first six months of the year, up from 232 days during the same period last year, Olshan’s data show. They were also discounted by an average of 7 percent from their initial listing prices before finding a buyer, compared to an average discount of 4 percent last year.

And in the highest tier of the luxury market, discounts were even steeper. Consider the penthouse at the Baccarat Hotel and Residences on West 53rd Street, which recently closed for $42.55 million, down 29 percent from its original ask of $60 million, public records show.

Brokers attributed the slowdown to buyers and sellers living in parallel universes.

“Everyone’s tugging at the wheel from both sides and having a hard time settling into this market, especially after such a long period of robustness,” said Douglas Elliman’s Michael Graves. “Sellers feel like they should be getting way more than what they’re being offered and buyers feel like they should be getting great deals. They have very disparate points of view.”

Frances Katzen, also of Elliman, said that “unless you’re pricing almost to a point that’s below where things have recently traded, it’s difficult. There’s a sense among buyers that if they keep waiting, prices will continue to drop.”

Stoking unrealistic expectations in the marketplace are reports of record price growth, sources said. A first-quarter report by Elliman showed average prices in the luxury segment of the market rose by 29.1 percent year-over-year, to $6.6 million. But those numbers are based on closed sales, including those in new developments, meaning the contracts could have been signed as far back as 2013.

“The problem now is the phenomenon of reporting 2013 and 2014 contracts three years later when they close,” said Donna Olshan, founder and CEO of Olshan Realty. “There is the real market and the reported market, and the gap continues to widen as a result of new construction reporting delayed closed sales.”

That “data pollution” may have distorted developers’ calculations when it comes to condo projects, she said. “A lot of developers have built their models on those numbers and now they’re in a totally different financial environment.”

About $4.69 billion worth of contracts were signed on 591 properties priced $4 million and up in the first half of the year, compared to $6.1 billion on 751 properties during the same period last year, according to Olshan.

In lower-priced segments, however, the market is still moving, sources said.

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