In a city consumed by luxury condominiums, New York City’s residential real estate market is outrageously ostentatious, insanely expensive and riddled with contradictions.
Last year, for example, New York City’s most expensive real estate transaction took place at One57, a new one thousand-foot supertall condo tower on so-called “Billionaires’ Row,” (the stretch of West 57th Street where a spate of spindly towers filled with luxury condominiums is under construction), where a 10,923 square-foot penthouse on the 89th and 90th floors sold for record $100.5 million, shattering the highest price paid for a condominium in America’s largest city. Only a few insiders know the owner’s identity.
At the same time, nearly 60,000 chronically homeless New Yorkers sleep in city shelters on any given night, a shameful crisis in a city stuffed with billionaires.
Indeed, the New York City’s residential real estate market is composed of two markets: the billionaires — and everyone else.
According to Jonathan J. Miller, president and CEO of Miller Samuel Inc., a prominent real estate appraiser, analyst and researcher, the New York City housing scene is a fractured tale of two markets. The condo market, driven in part by new developments favored by foreign billionaires, is booming. The co-op market, favored by U.S. buyers, is mostly older buildings.
“It’s a polarized market,” said Miller, referring to the bifurcation of the Manhattan’s residential real estate market. “At the top 10 percent, it is largely driving buy wealthy buyers of new developments in super-tall condo towers. The remaining 90 percent of the market is re-sale condos and co-ops. We have constrained activity in the majority of the market due to a lack of inventory. It’s hard to gauge what’s going on.”
From Wall Street and Tribeca in the south to the Theater District in Midtown to the Upper West Side further north, Manhattan is dotted with new developments, including some of the most expensive condominiums in the nation.
In the fourth quarter of 2015, the median sales price for real estate in Manhattan hit a record high, rising to $1.15 million, up 15.2 percent from $998,000 in the previous quarter, according to a report prepared by Miller for the brokerage firm Douglas Elliman Real Estate. Meanwhile, the average sales price hit a record $1.9 million, rising 12.1 percent from $1.7 million from the third quarter of 2015.
Miller claimed that market weakness was beginning to appear in the sales numbers, especially on the high-end.
“In 2015, the stronger U.S. dollar has cooled demand for super-luxury product,” Miller said, referring to the rapid appreciation of the U.S. dollar in relation to the world’s other currencies — euros, Japanese yen and British pounds. “Demand has evaporated at the high end. The global economy has weakened. Brazilians, for example, were big players. They are gone because their economy is weak.”
Still, the New York City economy is strong, Miller said. “Our economy is booming,” he said. “The economy is creating a lot of jobs. But we’re not creating enough housing to match the job growth.”
New York City’s unemployment rate was 4.8 percent in November 2015, slightly better than the national rate of 5.0 percent, according to Bureau of Labor Statistics.
At the upper end of the market, which is small segment of the overall market, demand has slowed, according to Miller. He said the sharp rise in Manhattan property values is fueled by newer developments that cater to a high-end clientele and a pronounced influx of wealthy foreign buyers, mostly from Asia, Europe and the Latin America. But interest has slowed.
“Median and average sales price, as well as price per square foot, reached the highest levels recorded in 27 years,” said the Elliman report. “After hovering just below the million-dollar threshold for the past year, median sales price broke through, surging 17.3 percent from a year ago to a record $1.15 million.”
Read the full story in the Housing News Report.
Octavio Nuiry is the managing editor of RealtyTrac.