Tag Archives: New York City Real Estate

Real Estate On New York City’s “Billionaire’s Row” 40% Unsold Due To “Unrealistic” Prices

The area known as “Billionaire’s Row” in Manhattan is becoming one of the biggest real estate gluts in all of the city. 40% of apartments in the area are now sitting unsold in towers that top out at 100 stories, according to the New York Post.

Only half a decade after the One57 building became the city’s first “supertall” residential skyscraper, only 84 of its 132 condos have been purchased. This means that more than a third of them are still on the market and none of them are under contract.

The story is the same down the road – six nearby buildings have as much of 80% of their units available, according to data, with the total value of all unsold inventory estimated to be between $5 billion and $7 billion.

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And the supply glut is only going to get worse, as Central Park Tower, at 217-225 W. 57th St. is set to put an additional 179 apartments on the market next year. No deals for the new building have closed, which means if it opened today it would push the overall unsold percentage in the area to nearly 65%. Listings online show asking prices for units between $2.1 million and $64 million. Brokers are blaming the high prices for the sales drought.

Top broker Dolly Lenz said: 

“When people come here from other parts of the country and from around the world, the first thing they want to see is Billionaires’ Row. We toured them through the properties but many felt they were too pricey for the market — $7,000, $8,000 and $10,000 a square foot.”

Lenz also said that these prices were caused by a combination of costs of property, construction, financing and high-end marketing, in addition to developers who have clauses in their contracts that keep lenders from forcing them to drop prices.

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Many brokers feel pessimistic, expressing that the drought in Billionaire’s Row could telegraph a coming drought for the entire market. The Post provided a host of pessimistic quotes from brokers:

  • “Empty buildings are never good for the city,” one broker said.
  • “This happened in 1988 to 1992, when there were a glut of condos that didn’t sell. They were smaller and less expensive, but it led to bad times.”
  • Another broker said the prospects for selling the vacant apartments were grim.
  • “They are priced out of the constellation of buyers out there now,” the broker said.
  • “It’s all a function of price. You can do the most spectacular marketing and offer the most incredible amenities, but it all comes down to price.”
  • “There’s a whole food chain that relies on people living in these buildings,” one broker said.

One local resident said of the vacancies:

“To find out that people aren’t living in the condos is just, ugh. I wish this was all affordable housing. This really upsets me. So many are struggling in the city.”

An Extell spokeswoman disputed some data provided in the article, stating that One57 “is over 85 percent sold in units and over 90 percent sold in value.”

About one month ago, we reported that Manhattan’s housing market was on its “worst cold streak in 30 years”. We also took note of the rising prices that are pricing potential buyers – even the billionaires – out of the market.  

By one broker’s count, Q1 marked the sixth straight quarterly drop in sales volume, the worst streak in at least 30 years.

Per the FT, sales tumbled by 11%, according to broker Stribling & Associates, by 5%, according to Corcoran, and by 2.7% for co-ops and condominium apartments, according to Douglas Elliman and real estate appraisal firm Miller Samuel.

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While the average sales price for new developments climbed a staggering 89.4% to $7.6 million, that figure was exaggerated by a single purchase: Ken Griffin’s purchase of a $240 million penthouse at 220 Central Park South, which, according to some, was the most expensive home ever sold in America. But depending on the report, the median sales price ranged from 2% lower to 3.2% higher. And although the entry level market in Manhattan – that is, apartments priced at $1 million and below – had held up for most of the past year, it has recently started to suffer.

“It’s like a layer cake,” Jonathan Miller, CEO of Miller Samuel, told CNBC. “When you have softening at the top, it starts to melt into the next layer and the next layer after that, because those buyers further down have to compete on price.”

According to one broker, sellers with unrealistic expectations are the biggest barrier to sales, because they’re refusing to adjust for the fact that listings have been piling up and sitting on the market for longer periods, giving buyers more room to negotiate, and more options.

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Inventory has climbed 9% over the past nine months, and there’s a glut in new developments that’s only going to get worse.

Source: ZeroHedge

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NYC Home Sellers Are Slashing Prices “Like It’s 2009”

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The crumbling New York City real estate market has continued apace during the third quarter, after more than half of homes sold in Manhattan during the second quarter closed below asking price – the worst Q2 tally since 2009. And while real-estate brokers had hoped that the seasonal shift during Q3 would help lift sales as a flood of higher-quality offers hit the market, it appears canny buyers – wary of being left holding the bag after nearly a decade of asset appreciation – are refusing to indulge sellers’ lofty asks.

To wit, NYC home sellers slashed prices on almost 800 listings during a single week this month, the largest wave of discounts in at least 12 years, per Bloomberg.

In the week through Sept. 9, there were 774 homes in Manhattan, Brooklyn and Queens that got a price cut, the most for any seven-day period in data going back to 2006, according to a report Friday by listings website StreetEasy. The previous weekly record was in March 2009, during the global recession, when 713 properties were reduced.

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With another post-Labor Day wave of listings expected, sellers are experiencing a “gut check” as they realize they must lower  prices to the point of demand, because the days of foreign (mostly Chinese) buyers willing to pay the “Chinese premium” are over.

Sellers with older listings are adjusting expectations just as a wave of newer properties hits the market – customary in New York after Labor Day. In that same September week, Manhattan got 662 additional listings, the third-highest total for any week in StreetEasy’s data.

“It’s a big gut-check for sellers,” said Grant Long, senior economist at StreetEasy. “We’re at a period in the sales market where sellers have been incredibly ambitious with the prices they’re asking. They’re having to come down and bring prices to where demand actually exists.”

As we pointed out earlier this year, sales of luxury apartments (those that cost $5 million or more) plummeted more than 31% over the first six months of this year, forcing sellers to slash price (and developers, who have neglected the sub-luxury market in favor of supposed higher margins at the top end, to eat losses).

Steven James, CEO of Douglas Elliman, provided an apt summary of the dynamics at play in the contemporary NYC housing market.

“It’s about perception – that the market went way up, and it went way up real fast, and it’s not happening anymore, and I am not going to be the fool who gets burned by overpaying,” said Douglas Ellman CEO Steven James, who adds that buyers “do believe that over time, the market will go up, but it’s not going up right now.”

Meanwhile, in the real world outside of New York, the familiar problems remain: with housing starts still lagging expectations, the housing market appears stuck in a vicious cycle. Low development and supply are squeezing prices higher, which are rising more than 2x faster than wage growth across the nation, and as a result most working and middle-class Americans still can’t afford to buy a home.

Source: ZeroHedge

 

Did Trump’s SALT Deduction Limit Trigger A New Housing Glut In NYC?

In April, an op-ed in The Wall Street Journal titled “So Long, California. Sayonara, New York,” published by conservative economists Arthur Laffer and Stephen Moore, warned about a provision within the brand- new tax bill that could trigger a mass migration of roughly 800,000 people — fleeing California and New York for low-tax states over the next several years.

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Now that the SALT subsidy is passed, how bad will it get for high-tax blue states, and more specifically New York?

New evidence suggests that New York City could be the first visible region where the mass migration could begin. Take, for example, the number of homes listed for sale in Manhattan, Brooklyn, and Queens had a parabolic spike in May, with inventory across 60 percent of the boroughs reaching all-time highs, according to the latest StreetEasy Market Report. While residential inventory traditionally peaks at the end of May, this year — the supply set new record highs and could continue through summer.

Laffer and Moore’s prophecy (above) of the great migration from New York – triggered by Trump’s new tax bill could be the most logical explanation of why NYC homeowners are rushing all at once to sell their homes.

Housing inventory in Manhattan rose 16.7 percent compared to last year, the largest y/y increase on StreetEasy record. Brooklyn and Queens saw similar spikes, with inventory up 23.4 percent and 42.8 percent, respectively.

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With housing inventory piling up across much of the boroughs, the total number of sales declined for the third consecutive month. StreetEasy said sales plummeted in every submarket across Brooklyn, Manhattan, and Queens; with more significant declines visible in the Upper East Side, Midtown and the Rockaways. Despite the flood of new inventory threatening to stall the market, the StreetEasy Price Index advanced in all three boroughs since last year.

“Sellers are betting on a wave of demand from the peak shopping season, but this summer’s market has turned out to be a crowded one,” says StreetEasy Senior Economist Grant Long.

“However, prices are high and continue to rise. More affordable homes are the hardest to find, and are sure to sell quickly. But higher-end homes, particularly those joining the market from the ongoing stream of new development, will be pressured to lower prices or linger on the market.

This summer is poised to offer an excellent negotiating opportunity for buyers with big budgets.”

As Bloomberg notes, the abnormal amount of supply hitting the NYC residential markets is not sufficiently being met with demand, which could eventually be problematic for prices and serve as a potential turning point. Recently, the mainstream media cleverly changed their narrative and called the ‘housing shortage,’ a ‘housing affordability crisis,’ as it sure seems that the housing bubble, or whatever you want to call it, is in the later innings.

May 2018 Key Findings — Manhattan

  • Sale prices rose in all submarkets but one. The StreetEasy Manhattan Price Index increased 0.6 percent to $1,157,995. Prices rose in four of the five submarkets, led by an increase in the Upper East Side, where the median home price rose 1.9 percent to $1,038,046. Prices in Downtown Manhattan remained flat at $1,691,204.
  • Inventory rose at a record pace. Sales inventory in Manhattan rose 16.7 percent year-over-year. The Upper East Side experienced the largest increase, with inventory up 20.2 percent since last year.
  • One out of every six homes received a discount. Sixteen percent of homes for sale were discounted, an increase of 3.6 percentage points year-over-year.
  • For-sale homes spent less time on the market. Units in the borough spent a median of 55 days on the market, a three-day dip from last year. The Upper East Side and Upper West Side were the only submarkets where homes lingered longer — up 10 days and 17 days, respectively.
  • Rents rose in every Manhattan submarket. The StreetEasy Manhattan Rent Index [iv] rose 1.4 percent to $3,183. Rents in Upper Manhattan rose the most — up 2.5 percent to $2,307.
  • Fewer rentals offered a discount. Sixteen percent of rentals in Manhattan were discounted in May, a decrease of 1.6 percentage points from last year.

May 2018 Key Findings — Brooklyn

  • Prices reached new highs in North Brooklyn. The StreetEasy North Brooklyn Price Index increased 11.1 percent to $1,229,838, a record high for the submarket despite the looming L train shutdown. Borough-wide, prices rose by just 1.1. percent since last year, to $720,555.
  • The number of homes with a price cut reached an all-time high. The share of sales with a price cut reached an all-time high of 12.4 percent, a rise of 3.3 percentage points from May 2017.
  • Sales inventory continued to climb, except in North Brooklyn. Sales inventory in the borough reached a record high — up 23.4 percent over last year. Inventory rose the most in South Brooklyn, which saw a 44.7 percent increase over last year. North Brooklyn was the only submarket where inventory dropped, by 6.7 percent since last year.
  • Brooklyn homes spent more time on the market. Homes stayed on the market for a median of 53 days in the borough, 6 more days than last year. North Brooklyn homes are coming off the market after an average of 43 days — 26 days faster than last year.
  • Rents rose in all submarkets except North Brooklyn. The StreetEasy Brooklyn Rent Index increased 1.4 percent year-over-year to $2,562. South Brooklyn experienced the largest spike: up 2.6 percent to a median rent of $1,885. North Brooklyn was the only submarket where rents stagnated, likely because of the L train shutdown starting in April 2019. Rents in the submarket remained flat at $3,062.

May 2018 Key Findings — Queens

  • Price cuts rose to an all-time high. The share of homes with a price cut reached a new high in Queens at 11.1 percent, an increase of 3.5 percentage points over last year.
  • Sales inventory swelled. Queens saw the largest year-over-year increase in inventory, rising 42.8 percent. All five submarkets in the borough saw a surge in inventory.
  • Queens homes are selling slightly faster than last year. The median number of days on market for Queens homes was 56, down 2 days from last year. Homes in Northeast Queens and Northwest Queens took longer to sell than last year, with an increase of 12 days and 6 days on the market, respectively.
  • Rents remained flat. The StreetEasy Queens Rent Index held at $2,113. But rents in South Queens rose 6.9 percent year-over-year, to a median of $1,775.
  • Queens was the only borough with an increase in the share of discounted rentals. Seventeen percent of Queens rentals offered discounts: up 2.9 percentage points over last year, and the highest share of the three boroughs analyzed.

Source: ZeroHedge