Luxury contract signings plunge after brokers ordered to stay home

Dramatic drop in Manhattan raises questions about whether virtual showings will be enough to draw buyers

TRD New York /
Mar.March 30, 2020 09:39 AM
397 West 12th Street (Credit: Coleman Real Estate Group via StreetEasy)

397 West 12th Street (Credit: Coleman Real Estate Group via StreetEasy)

If the real estate industry needed any more proof of the shattering effect of the coronavirus, a tally of last week’s luxury contract signings leaves little room for doubt.

There were just two properties above $4 million that went into contract in Manhattan between March 23 and March 29, according to a market report from Olshan Realty. That was down from 14 the week before, and 21 the week before that. The last time there was a week with just two signings was in August 2009.

The slump came after a stay-home order for non-essential business took effect March 22, ending all in-person home showings. Brokerage firms have since been offering virtual showings, but the latest figures raise questions about how many buyers will have the appetite to enter into contracts without seeing their properties first.

“It’s possible you might get a sale from a virtual showing but it will be the exception rather than the rule,” said Donna Olshan, head of Olshan Realty and author of the report. “Overall, most people want to walk through the space and see it,” she added, “and then there’s a matter of a home inspection, if the buyer wants one. I do not think home inspectors are considered an essential business by New York state.”

The priciest listing last week was for a 6,166-square-foot condo at 397 West 12th Street, which went into contract asking $11.25 million — down from its original asking price of $18.5 million in 2017.

Matthew Coleman of Coleman Real Estate Group told The Real Deal the property had cycled through several brokers before he took over the listing this year and dropped the asking price, taking the coronavirus into consideration.

“We were very well aware of the headwinds of the market and what was happening in Europe and Asia, with the virus, and we priced with that in mind — understanding that the U.S. was not too far behind,” he said.

Coleman said he showed the unit on Wednesday, March 18, received an offer two days later and conducted an inspection that Sunday — right before the statewide stay-home order took effect that night. He declined to say what the final contract price was.

The second priciest listing was a four-bedroom condo at 200 East 66th Street, which went into contract asking $5.25 million, below what the seller paid for it in 2012.

Fiona Dumas of Compass represented both the buyer and the seller in the transaction. She told Olshan the buyer was an investor from California who planned to rent the property out. The buyer viewed the condo over FaceTime, Dumas said, and negotiations went on for weeks, though it’s unclear what the final offer was.

The luxury real estate market has undergone major upheaval in the past two weeks, as the state rolls out a growing number of restrictive measures to stop the spread of coronavirus. Last Friday, new restrictions were imposed on the construction industry, which had previously been deemed essential business. Now, only work on infrastructure, healthcare facilities and affordable housing can proceed, and construction on luxury towers will have to stop.

There are still several unknowns the wider industry is trying to navigate, including the rules around virtual showings. In an email sent out to members last week, the New York State Association of Realtors said it was unable to provide guidance on whether virtual showings were allowed, and had “submitted a request to the state to have this activity deemed permissible.”

Write to Sylvia Varnham O’Regan at [email protected]


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