The New York Times is reporting that the market for high-end real estate in Manhattan may have finally hit the wall. Developers who are targeting buyers willing to pay more than $10 million for condominiums and apartments — and in some cases more than $100 million — are having to cut prices and repackage their products.
Even with the changes to meet falling demand in the market, the prices being asked for high-end New York City real estate are beyond the comprehension of everyday people. For example, a skyscraper at 432 Park Avenue was asking $78 million to $85 million for full-floor apartments; now the units have been divided and are being priced for around $40 million. Some poor schmucks who are trying to sell properties they bought during the boom are even listing their units for less than the purchase price they paid. One seller has listed a three-bedroom apartment they bought for $31.67 million in 2014 for the bargain-basement price of $29.95 million. (Incidentally, isn’t it heart-warming to see that, even at these astronomical numbers, the notion still holds that pricing just a bit less than the next whole number might cause some potential buyers to bite? Whether it’s $299,500 or $29.95 million, the rules apparently don’t change.)
Why has the market for ultra high-end properties topped out? Some developers blame uncertainties created by Brexit, some cite Chinese restrictions on cash leaving the country, some point to lower oil prices curbing spending by the sheiks and sultans, and some note that the U.S. government has started to pay attention to people paying cash — cash! — for these pleasure domes. Note that most of these reasons implicitly acknowledge that a lot of the buyers for Manhattan glitter palaces come from overseas. Others involved in the business identify more conventional reasons: real-estate developers have saturated what was always a small market to begin with, there’s little to differentiate the properties, and pricing just hit a ceiling. In short, the laws of supply and demand still hold, and there are only so many jet-setters in the world who can comfortably drop between $50 and $100 million on living space they probably only use once in a while.
Fortunately for those of us worried about the financial health of Manhattan, the Times reports that the real estate market in lower price ranges remains robust, with lots of competition for homes selling for less than $3 million. Less than $3 million? In Manhattan? What does that get you — a one-bedroom efficiency on the lower East side?