Billionaires’ Row sellers are taking some steep losses
Luxury residential resales have been some of the biggest loss-makers in recent years, according to StreetEasy. While only 7.7 percent of the 16,000 apartments resold in New York from 2014 to 2018 sold for an outright loss, that percentage jumped to 39 percent for luxury apartment resales in Midtown. Some of those sales were at notable high-end properties such as 15 Central Park West and 432 Park Avenue. Extell Development’s One57, for example, saw 10 resales go for a loss. They included a foreclosure sale on a 79th-floor penthouse and Canadian billionaire Lawrence Stroll’s $1.4 million loss on a unit he bought for $55.6 million in 2014. “One of the things that I struggle to wrap my head around is why people continue to park money in high-end New York real estate when it’s not a very lucrative asset class,” said StreetEasy senior economist Grant Long. Foreign buyers have been willing to take large losses as long as they’re allowed to move funds out of their home countries. Elevated price tags — and losses — often don’t deter upmarket sellers, said Compass’ Leonard Steinberg. “When you have billions, millions don’t matter as much,” he said. “These are very rich people. This is a tiny fraction of their assets.”
Half the homes listed in Manhattan last spring didn’t sell
For those doubtful about any residential market downturn, there is another indicator to sound the alarm. Fewer than half of the 12,000 homes listed for sale last year on StreetEasy during the peak listing months of March, April and May have sold, the online listing portal said in a report. Less than half of those homes — 48 percent — found buyers as of early 2019. And those homes that did sell went for significant discounts. The trend presented itself across price points: 61 percent of all homes listed for $1 million or more failed to sell, as did 45 percent of all homes priced under $1 million. The sluggish market also led many sellers to pull their listings. Of those created last spring, 40 percent are either paused, delisted or otherwise no longer available on StreetEasy, its report said. And with spring looming on the horizon, some of that inventory could soon find itself back on the market.
Townhouse prices have risen twice as fast as apartments
Although Manhattan’s townhouse supply hasn’t surged dramatically in the past decade, the median sales price has climbed twice as fast as apartments. In 2018, townhouses accounted for 2.2 percent of all Manhattan residential sales, with 232 deals. That market share has been consistent over the past 10 years, according to a Douglas Elliman report. But the median sales price last year was $5.2 million — a 53 percent increase compared to a decade ago. Meanwhile, the median sales price for apartments rose 26.5 percent in 2018, to just over $1 million. “Townhouses are a niche luxury market with limited supply, which outperformed the overall residential market over the decade,” said Jonathan Miller, CEO of appraisal firm Miller Samuel and author of the Elliman report. He noted that townhouses peaked in 2014 and 2015, just like Manhattan’s overall luxury market. Since 2017, townhouse prices have fallen 9 percent. The high-end of the townhouse spectrum also saw slower growth in sales than lower-priced properties.
Brokers gain confidence despite a soft luxury market
In the midst of a prolonged luxury market slowdown, there have been a few encouraging signs. In February, both Manhattan and Brooklyn’s high-end markets had their strongest weeks of the year. After a lackluster start to 2019, Manhattan’s luxury market saw 26 contracts signed the week of Feb. 11 — the first this year to see more than 20 deals — valued at roughly $245 million, according to Olshan Realty. In Brooklyn, 17 contracts were signed for a total of $54.58 million, according to Stribling & Associates. That was up from the first week in February, which saw 13 contracts for a total of $37.95 million in contract volume. It’s unclear, however, whether the uptick is a one-off change or part of a broader shift. “Are we experiencing a one-week wonder or the start of a spring season rebound? Stay tuned,” said the Olshan report. Nonetheless, brokers are feeling more confident for the first time since 2017. REBNY’s Real Estate Broker Confidence Index for residential agents reached 5.25 in the fourth quarter of 2018, an increase of 1.28 points, a bump brokers have attributed to a positive view of current conditions for residential financing and leasing.