Sales of +$5M apartments in New York City fell -31% during the first half of 2018 compared to the same period in 2017, according to a luxury market report by New York-based Stribling and Associates.
“This is simply a market that is adjusting itself to chronic overpricing relative to buyers’ perception of value,” said Kirk Henckels, broker and vice chairman of Stribling.
The deals that are getting done are those that “…sellers are capitulating to reality…” and cutting their prices, said broker Donna Olshan who monitors contract activity in luxury apartments.
Any modest rebound in sales, according to brokers, will have to do with the willingness of sellers to abandon the “dreams of outsize profits when faced with buyers’ resistance.”
Examples of steeply discounted prices abound. A five-bedroom penthouse with a terrace and soaring ceilings in Tribeca was listed in 2014 for $40M. It just recently sold for $20M. More common price reductions range between 10 – 20%.
When the luxury slowdown first hit New York in 2016,brokers blamed the “political uncertainty” at the time. Now, brokers say that buyers are hesitating because of tax changes and reduced deduct-ability.
This dramatic slide in sales is almost entirely concentrated in condominiums rather than co-ops due to a surging supply of both existing and newly built luxury apartments.
Henckels, the broker and vice chair of Stribling, commented that it’s rare to see falling home prices without some catastrophic triggering event such as a major drop in the stock market. He went on to say, “It’s clear that this market, however, is enduring what is the kindest, gentlest major price-correction in memory.”