It is hard to believe, but there is a pocket of weakness in the New York City real estate market. It pays to dig dipper, and you may find yourself in a better bargaining position than you thought if you are in the market for a luxury apartment, which we define as at least $5 million.
The Real Estate Board of New York (REBNY) released its third-quarter report, noting the average Manhattan sales price fell 8% versus a year ago, to $1.84 million, while rising in the other boroughs. Breaking it down, it was a similar story in condos, with Manhattan’s average price falling 14% to $1.92 million while rising in the other boroughs, including reaching a record high in Queens. It was only different in the co-op market, where the average price rose, and it was strong in Manhattan. Averages are influenced by extreme values, and weakness at the high end held the figure down.
Other sources also note the weakness in the luxury market. After a flurry of activity in new luxury developments such as 432 Park Avenue that drove prices higher, experts are indicating this is dissipating. Jonathan Miller notes the luxury median sales price was down nearly 5% to $6.42 million, and a shift to smaller new developments rather than $10 million+ units. Corcoran’s third-quarter report also noted the oversupply, and 52% of the market sold at an average discount of 8%, which excludes other concessions. Still another report stated the number of $10 million+ sales fell to 25 from 43 a year ago.
We know all neighborhoods are not affected the same way. Therefore, we delve deeper to see where the luxury sales are occurring.
Corcoran breaks the luxury sales into Downtown (54% of sales), East Side (24%), West Side (15%), Midtown (7%), Uptown and Financial District (FIDI)/Battery Park City (BPD) (no sales).
Elika Real Estate is here to help. While the luxury market may be weaker, it is not uniformly true across neighborhoods and buildings. Through our years of experience, we have developed a more comprehensive approach for homebuyers. It is our Elika Micro Market Formula that goes beyond the simple method of merely looking at location.
We look at a variety of factors, ranging from the city’s economic fundamentals to the neighborhood, street, curb appeal, unit mix, services, and the individual apartment’s amenities. For new development, we have additional considerations, such as the developer, architect, percentage of end users versus investors, and apartment flow.
It is difficult to assess the entire market based on weakening in the luxury segment, given its different dynamics. Meanwhile, the other parts of Manhattan’s real estate market appear stable, with higher unit volume and prices.
If you are one of those shopping in real estate’s high end, you may find yourself in a better position than a year ago.
Not only may you receive a discount on the list price, but you may also be able to get other items, such as an upgrade or part of your closing costs paid. It’s a buyer’s market at the top end.