Good news for anyone who listed a $4 million apartment in 2015: You probably found a buyer — finally — in 2017.
Price cuts and protracted marketing times defined this year’s luxury market, according to Olshan Realty’s year-end market report, which found that properties asking $4 million or more took 433 days to sell. That compares to just 318 days in 2016. And this year’s deals also came with an average discount of 8 percent.
“Sellers in general, as long as I’ve been in the business, have had a hard time coming to reality when it comes to pricing their own apartment or their townhouse,” said Donna Olshan, author of the report.
Overall, the report showed modest gains in contract volume in Manhattan’s luxury market. Barring any 11th-hour deals, buyers in 2017 inked 1,172 contracts on luxury properties, up 6.3 percent from last year’s 1,102. (Contracts were still 14.6 percent lower than 2013, when buyers scooped up 1,372 homes over $4 million.)
Jonathan Miller of Miller Samuel chalked up the luxury market’s improvement to aspirational listings that were pulled off the market or discounted. “Sellers finally became aware of existing market conditions,” he said. “The paradox here is by applying sharp cuts to their asking prices, they helped push aggregate market results higher.”
In all, buyers inked deals valued at $9.1 billion in 2017 — up from last year’s $8.9 billion but still far below the high-water mark in 2014, when buyers scooped up $11.5 billion worth of luxury real estate. The average discount in 2017 was 8 percent.
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“These price reductions often veiled the fact that many properties were simply overpriced,” said Compass president Leonard Steinberg.
According to Olshan’s report, there were also fewer deals struck above $10 million. In 2017, the report found 200 contracts signed above $10 million, down 7 percent compared to 2016 and down 26 percent from 270 in 2014.
But Steinberg said the high-end market saw “renewed vigor” during the last quarter of the year. “The investor buyer in new developments is slowly returning as equity markets appear richly valued and the dollar has weakened,” he said. “Several contracts were signed on trophy properties, indicating renewed confidence amongst the ultra-wealthy.”
In fact, Olshan’s report found the condominium market dominated 2017’s contracts over $4 million — accounting for 880 of the year’s 1,172 deals. (Only 100 townhouses went into contract, down 11 percent from 2016.) Of the condo deals, 440 were sponsor units, compared to 435 that went into contract in 2016.
Still, those numbers don’t come close to the “golden years” of new development between 2013 and 2015, Olshan wrote. New development contracts during those years totaled 475 (2013), 486 (2014) and 456 (2015).
Of course, new development contracts don’t necessarily reflect the market reality, since it can take years to close. According to CityRealty’s review of 2017’s sales, new development condos were actually a weak link in the residential market. New development sales were projected to hit $8.1 billion by the end of the year — a 13 percent drop compared with 2016’s $9.3 billion in sales.