The Real Deal New York

Luxury Manhattan sales market set to slip following Wall Street’s compensation declines

March 13, 2012 09:00AM

The high-end Manhattan real estate that has propped up an otherwise stagnant sales market, is likely to begin a decline of its own in 2013 and 2014. According to data from the New York State Comptroller’s office and Miller Samuel CEO Jonathan Miller cited by Bloomberg News, the top 10 percent of the Manhattan condominium and co-op market tends to follow the pattern set by Wall Street bonuses two years earlier (see chart above).

Considering that the average bonus fell 13 percent last year to $121,150, nearly 40 percent below the 2006 peak of $191,360, luxury home prices are probably on their way down.

The peak of Manhattan’s high-end market occurred in 20008 — exactly two years after the height of Wall Street compensation — when the average price of a transaction in the top 10 percent was $6.33 million. Last year the average price was $5.49 million, according to Miller.

“People are making decisions a year or more down the road because they’re getting their deferred cash,” he said. “We may see a little weakness in 2012,” and “next year could be weaker based on this trend of lower compensation.” [Bloomberg]