The rise of the $20 million-plus listing

High-end sellers push for unrealistic prices, chasing record sales

Between the lion’s head doorknocker, ornate stone fireplaces and pastel-colored parlor, the mansion at 973 Fifth Avenue looks like something out of an Edith Wharton novel.

But its $42 million contract price, reported late last month after the home spent a year on the market with Brown Harris Stevens’s Paula Del Nunzio, is decidedly contemporary.

The deal is the latest in a string of eye-popping sales in the last quarter that, some brokers say, has prompted sellers at the high end to test their luck with listings priced above $20 million — whether the properties are worth it or not.

“There is a marked increase in the number of $20 million-plus listings, but it seems that many lack the appropriate ‘trophy property’ status necessary to justify the hefty price tag,” said Mickey Conlon, a senior vice president at the brokerage Core. “It appears as if many owners who don’t necessarily need to sell are recklessly trying their luck at unrealistic prices. Would it be unfair to call it Russian roulette?”

This phenomenon is surfacing even as year-over-year Manhattan home sales have remained flat, and entry-level apartments have gained a greater share of the market, according to the latest figures from Prudential Douglas Elliman.

In the second quarter of 2012, there were 2,647 sales of Manhattan condos and co-ops — a 14.5 percent increase over the previous quarter, but unchanged from the same period last year. The median price dropped 2.5 percent, to $829,000, from the second quarter of 2011.

Appraiser Jonathan Miller of Miller Samuel, who prepared the Elliman report, attributed the drop in prices to the high volume of entry-level units and co-ops — which tend to fetch lower prices than condos — that sold in the last three months.

“More first-time buyers moved into the housing market seeking relief from rising rents and taking advantage of falling mortgage rates,” Miller said.

That characterization is unlikely to surprise many brokers, given the oft-cited influx of buyers last season who were willing to jump on available properties.

“People understand that the market is heating up, the inventory is drying [up] and the deals are harder to come by,” said Yukyong “Kianna” Choi, a vice president with Bond New York.

At the high end, the flurry of headlines devoted to mega-deals, combined with the perception of money pouring into the Manhattan housing market from overseas, has given some sellers an even greater sense of confidence.

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“Sellers and their agents are recognizing this demand [for high-end residences] and are aggressively targeting numbers previously unseen in the market,” said Corcoran Sunshine Marketing Group’s Loretta Shanahan-Bradbury, the director of sales at Manhattan House. She noted that there are currently seven listings on the market in Manhattan for more than $50 million, up from three at this time last year.

Among the pricey listings to hit the market in June were art collector John de Neufville’s West Village townhouse, listed for $20 million; a full-floor co-op at 944 Fifth Avenue for $50 million (see “Manhattan’s top 75 listing agents”); financier Eyal Levya’s Millennium Tower combination unit for $27 million; and real estate developer Edward Baron Cohen’s Upper East Side townhouse for $20 million.

But not all properties are worth the eyebrow-raising price tags, brokers said.

“I haven’t seen an increase in $20 million listings. I have seen an increase in $13 million listings that think they are $20 million listings,” quipped Julia Hoagland, a senior vice president with Brown Harris Stevens. “Everyone wants to meet their Russian fertilizer soul mate.”

That, of course, is a reference to Dimitry Rybolovlev, the Russian fertilizer kingpin who famously closed on Sanford Weill’s 15 Central Park West penthouse for the $88 million asking price. The deal wiped out previous Manhattan price records.

But other ultraexpensive transactions have followed, from the $52.5 million spread at 740 Park Avenue that became the most expensive Manhattan co-op sale on record in April, to casino mogul Steve Wynn’s $70 million purchase in May of a palatial pad at the Ritz-Carlton Residences. These deals have skewed what sellers see as legitimate asking prices, brokers said.

“The media frenzy surrounding the high-end market has many convinced that there are an infinite number of ultrawealthy [individuals] who are ready, willing and able to drop whatever is asked of them to snap up these properties,” said Doug Heddings, founder of Heddings Property Group. “That just isn’t the case.”
Plus, as summer officially kicks off, the high end of the market is likely to slow down — a trend that is already apparent in the number of contracts signed for luxury properties.

In the last full week of June, there were 11 contracts signed for Manhattan homes listed at $4 million or more, down from 15 the week before and 17 the week before that, according to market reports from residential brokerage Olshan Realty.

“Summer’s here, and the predictable seasonal slowdown seems to be upon us,” Olshan Realty president Donna Olshan noted in her latest report.

Elizabeth Sample, a luxury broker at Sotheby’s International Realty, said she would never list an ultrapricey residence in July, when potential billionaire buyers are focused on relaxation, not real estate.

“They’re in Monte Carlo,” she said. “They’re in the Hamptons.”