The Wall Street JournalJosh Barbanel
Sept. 27, 2017
Apartment, condo sales listed above $10 million fell in latest quarter, but demand for ‘affordable luxury’ continues
Manhattan’s “ultraluxury” residential market—apartments priced at $10 million or more—stumbled in the third quarter while sales strengthened among lower-priced, albeit still expensive, properties.
An analysis by The Wall Street Journal found that overall Manhattan sales picked up in the third quarter following a steep slowdown during the same quarter last year—a time, brokers said, when many potential buyers were caught up in the uncertainties of the presidential election and held off on purchases.
The number of sales rose 14% from the third quarter of 2016, but were still 4.3% below the same quarter in 2015.
Sales were up the most, by 23% for apartments that sold for $1 million to $4 million, a category marketers have taken to calling “affordable luxury.” The number of sales for $10 million or more fell by 25%.
After a run-up in asking prices in 2014 and 2015, sales slowed last year, especially at the high end. Since then, the Manhattan apartment market has been in a period of price correction, with substantial price cuts on many listings and discounts on new buildings, brokers said.
“There has been a correction in prices and that had to happen,” said Eddie Shapiro, founder and chief executive of Nest Seekers International, a New York-based brokerage.
But the price reductions have brought about renewed interest from buyers, he said, especially in the past few weeks, despite the continuing sticker shock of high apartment prices.
“People are saying prices are now ridiculous, but not as obscene as they were a year ago, and there is room to negotiate,” Mr. Shapiro said.
During the third quarter, the median apartment price of $1.15 million was down 3.6% from the second quarter but was up by almost 11% from the third quarter in 2016.
The quarter marked a slowdown in closings at the most expensive new condominiums, such as 432 Park Ave., the city’s tallest residential building, along with a surge in sales of lower-priced apartments in other new and converted buildings.
The shift produced a decline of 24% in the median price of a new condominiums in the third quarter from the same period last year, when a record was set for new-development sale prices.
The Wall Street Journal analysis is based on sales filed with the city’s Department of Finance through Sept. 22.
The priciest transaction for the quarter was the sale of a 16-room triplex penthouse atop the Pierre Hotel on Fifth Avenue and East 61st Street for $44 million. It was listed for $125 million in 2013, but the seller trimmed the asking price several times.
Although the quarterly statistics include a $37.7 million sale at 432 Park Ave., the new developments during the quarter were dominated by closings at more modest buildings like 389 East 89th St. in Yorkville, a conversion of a 31-story rental building near First Avenue that is described itself as providing “condominium ownership within reach.”
The 49 condos that closed during the quarter on East 89th Street had a median price of $1.84 million, or $1,631 a square foot.
At the Style, a new condo development in East Harlem there were 17 closings with an average price $449,000, including many studios at an average price of $1,005 a square foot.
“A lot of the super lux properties have closed already,” said Leonard Steinberg, president of Compass, a New York-based brokerage. “Now you have attainable luxury closing.”
He said the market is focused on the category of “affordable luxury,” in which buyers are driven by the need buy rather than by the desires that drive many trophy buyers.
“I hate to call it affordable, but affordable luxury in Manhattan is where people have a need to buy because there is a need for shelter, or because it compares favorably to the cost of renting,” he said. “When you are looking at $10 million to $15 million to $30 million, that is not a need but a want.”
The strong demand for lower-priced apartments has driven up demand and prices for co-ops, which typically sell at a discount to prices on similar condominiums. Co-op sales rose more than condo sales, and co-op prices rose to $835,000, up 6% from the same quarter in 2016 and up 1.2% from the second quarter of 2017.
The median condo price in the third quarter was $1.7 million, up 4.6% from the third quarter last year, but down 4.5% from the second quarter.