Big sales, big discounts: The luxury market’s tumultuous 2019

Contract signings for properties above $4m suffered lowest dollar volume since 2012

There was a 16% decline in luxury contract signings overall from the previous year.
There was a 16% decline in luxury contract signings overall from the previous year.

It was a testing year for New York City’s luxury market.

While eye-opening closings made headlines — especially Ken Griffin’s $238 million penthouse — there was a 16 percent decline in luxury contract signings overall from the previous year.

According to Olshan Realty’s year-end report, which analyzes contract signings above $4 million, there were 935 of them representing a total value of $7.65 billion in 2019. It was the lowest dollar volume since 2012.

The market was affected by a series of policy changes, including the $10,000 SALT deduction cap, tax increases on multimillion-dollar home sales, a decline in foreign buyers and an oversupply of inventory.

New developments, in particular, felt the pain. The report showed a 35 percent decline in new development condo contracts signed compared with 2018.

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The instability kept some buyers on the sidelines, waiting to see where the market went. As a result, the length of time properties stayed on the market increased to an average of 496 days in 2019 from 447 last year. In 2016, the average was 318 days.

The climate led to price discounts and a raft of creative buyer incentives, including rent-to-own programs, offers to cover mansion and transfer taxes and waivers on common charges for up to 10 years.

But many sellers held out for a while, seeking prices that buyers would no longer pay — resulting in properties sitting on the market longer and some frustration for brokers.

“It’s a fragile market by any measure, and it seems obvious that a sustained uptick in sales can not be realized until the market resets its prices,” Donna Olshan, author of the report, wrote. There have been signs of that happening, as the city’s luxury market needed just three weeks to record its busiest December in three years.

But for the year, the condo market showed a 18 percent decline in the number of contracts signed, and there was an 11 percent decline for properties asking more than $10 million.

Townhouses, however, were steady. This year, 114 townhouse contracts were signed — only slightly fewer than the 119 signed in 2018, and higher than the 100 in 2017. The average asking price, $1,801 per square foot, was virtually unchanged from $1,797 in 2018.

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