The leftovers market

A penthouse at 54 Bond Street that had been on and off the market since 2009 finally went into contract last month.
“It’s like being in the desert,” luxury broker Donna Olshan recently said of the inventory in the high-end Downtown Manhattan market.

“There’s nothing to buy,” reiterated agent Alison Rogers of DG Neary Realty, when the fourth-quarter Manhattan market reports were released.

The very beginning of the New Year is always a cyclical low point for residential inventory in New York, as sellers pull their listings from the market in the hopes of re-launching their efforts with vigor in time for the spring buying season.

But this year’s January inventory trough was actually 5.8 percent above its year-ago level, according to the real-time listings tracker on UrbanDigs.com. And at press time, inventory had already risen by 6.5 percent in the three weeks since then.

Nonetheless, brokers swear that the pickings are slimmer than usual. Is it all just broker-babble?

According to industry analysts, it isn’t that there’s “nothing to buy,” per se, it’s that much of what’s out there is stale — and it’s stale because it’s overpriced. Appraiser Jonathan Miller, founder and CEO of Miller Samuel, said some of the sellers out there now likely bought at the peak and are pricing their properties higher than they should because they’ve seen improvement in the market.

“They’re technically on the market, but they’re not in the market, and that’s the distinction,” he said.

Miller estimates that only one-third of Manhattan’s current inventory is priced within 10 percent of its actual value. Typically, he said, that figure hovers around two-thirds.

Meanwhile, the average number of days on the market for Manhattan condos and co-ops plummeted last year to 125, below even the 10-year average of 133, Miller’s data shows, as buyers rushed to snap up the few listings that adjusted their prices to fit the new landscape. In turn, that buying frenzy sparked some overconfidence among sellers, and the gap between asking and sale prices widened as the year came to a close.

What’s listed now are “the leftovers,” as UrbanDigs founder Noah Rosenblatt put it.

“I feel like none of [the inventory is] high quality. … If a listing didn’t sell and was taken off the market in December and put back on [after the New Year], chances are it was passed over before,” he said.

“Right now the market is the stuff that didn’t really sell in the post-Labor Day tick-up in demand.”

Some — who asked not to be named — point to Aby Rosen’s 350 West Broadway to illustrate that effect. The seven-unit condo, which first hit the market in 2008, only saw its first contract signed in November. Prices range from $8.95 million for a 2,875-square-foot, three-bedroom spread to $26 million for the 5,912-square-foot penthouse. And while none of the units currently listed have seen price cuts since Corcoran Sunshine Marketing took over sales a year ago, two units took brief hiatuses from the market for the holidays — and thus contributed to this year’s January inventory bump.

Meanwhile, in other trophy condos Downtown, the selection is suddenly dwindling. Superior Ink has only five units on the market right now, four of which are resales. Annabelle Selldorf’s “Sky Garage” building at 200 11th Avenue, which had sold seven of its 15 units going into the summer, now has only one left — a $12.5 million penthouse. And after a slow start to sales, and a round of 12 to 15 percent price cuts, Albert Laboz’s Soho Mews is now more than 70 percent sold.

“We definitely saw an uptick in the quality of buyers in the second half of 2010, who probably recognized the same thing we did — that sooner or later all the good things will be gone,” said Prudential Douglas Elliman broker Leonard Steinberg.

Steinberg recently found a buyer to take the last remaining unit at Adam Gordon’s 54 Bond Street, a $14.45 million penthouse that had been on and off the market since September 2009 with plenty of celebrity interest, yet ostensibly few bites. But when it finally went into contract last month, Steinberg said he had three other brokers begging him not to let his seller countersign so that they could try to make an offer of their own.

In part, that’s because buyers are worried that a shortage of new high-end Manhattan apartments is on the horizon, even if it hasn’t hit quite yet. As the New York Times reported last month, permits issued last year for new residential buildings in the city amount to only 505 new apartments in the works, down from 1,203 planned in 2009 and 9,448 planned in 2008.

“There’s a big appetite for top-quality construction with good architecture. … There just hasn’t been the development and the lending [money] in the past couple of years,” said Olshan. “There will be, at some point, a shortage. And that market might move a little higher, price-wise.”

To Steinberg, that’s worrisome. “Of course, yes, everyone wants prices to go up, but if the banks cannot find evidence of comparable sales, you might have a gridlock market, which is worse,” he said.