It’s a circus!

How Manhattan’s luxury “sideshow” is changing — and skewing — perception of the city’s overall real estate market

TRD New York /
Mar.March 06, 2015 07:00 AM

In the world of New York City real estate, über-luxury apartments can seem like the only game in town.

But despite the buzz about big-ticket sales, deals above the $5 million and $10 million mark are not as prevalent as some might think, a study of recent closed deals on the website StreetEasy shows.

The numbers show that only about 1 percent of all Manhattan co-op and condo sales — or about 370 out of 30,900 sales between January 2013 and January 2015 — fetched $10 million or more. Meanwhile, only about 1,300 sales, or 4 percent of all sales, went for $5 million or more during that same time.

Even sales priced at $3 million and up — which is considered the starting point for the luxury housing market — accounted for only 3,230 deals, or just over 10 percent of all transactions.

Insiders say that while the luxury market is a growing percent of the overall market, it is still rather small — adding that the obsession with colossally large deals obscures what’s going on with the vast majority of the market, including in the “lower-end” sweet spot between $1.5 million and $3.5 million.

Jonathan Miller, president of appraisal firm Miller Samuel, pointed to some troubling signs that are not getting much attention, like fewer sales going through at the year’s end and a shortage of listings in the resale market. For example, while the number of deals is up in the $10 million-plus world, overall sales activity in the fourth quarter plummeted 18 percent compared to the same period in the previous year, according to Douglas Elliman’s marketing report, which is prepared by Miller.

“One percent of the market is getting 99 percent of the eyeballs,” he said. “We’re zeroing in on the wrong things, things that are shiny and sparkle.”

Still, luxury deals account for a large (and growing) chunk of the dollars. With the exception of early 2008, the last decade has rarely logged more than 15 or so deals a quarter in excess of $10 million, according to Miller Samuel. That is, until 2013, when sales of condo units in a crop of pricey new condo towers began closing. Since then, the $10-million-plus sector has grown and leapt upward so dramatically that in the last year Miller began charting a new category: $30 million and up. There were eight of those monster deals in the fourth quarter, up from one during the same time the year before.

In addition to skewing the overall market statistics, the growth of the high-end market is creating some problems in its own particular niche. For starters, Fred Peters, president of Warburg Realty, echoed other observers when  he noted the city is “moving to a bit of a glut in the ultra-luxury market.”

And that can knock pricing out of whack, causing sellers to overprice their properties. “You have a very visible circus sideshow dominating the discussion about the housing market, which has the tendency to influence unsupported optimism,” Miller said.

Meanwhile, even high-end sellers sometimes have to pull the plug. Until early this year, Raphael De Niro, a top agent at Douglas Elliman was marketing a $20 million duplex co-op at 969 Fifth Avenue that’s been listed since 2012. “No one knows how deep the market is for apartments for more than $10 million,” he said. The duplex is now off the market.

Leonard Steinberg, president of Compass, pointed out that it’s only human nature to focus on the sexy deals with mega price tags. “It’s a societal norm today to talk about the Kardashians instead of the millions and millions of other people on the planet,” said Steinberg. “Dreams are much more exciting than reality.”

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