New York's Cooperative and Condominium Community
Not so very long ago, paying cash for a luxury condo was the way for the 1 percent to go. Last year, 80 percent of condo buyers in Manhattan paid cash for apartments valued at $5 million and up. In the third quarter of this year, that number plunged almost by half – to 44 percent, according to the appraiser Miller Samuel and the brokerage Douglas Elliman Real Estate. That’s the lowest number since the firms began tracking such data in 2015, Crain’s reports.
Low borrowing costs undoubtedly have something to do with this trend, along with record highs in the stock market, where money might be put to better use. Mostly, though, it’s a reflection of sagging luxury demand in Manhattan, where inventory is piling up and globetrotting foreigners seeking a haven for their cash (ill-gotten and otherwise) have all but disappeared. For buyers who remain, financing is the best way to maximize returns when prices aren’t expected to start climbing anytime soon. And eager sellers don’t mind waiting for them to secure a loan.
“Five years ago, you could wait for a better option to come along, and it might be a better buyer as well,” says Brian Meier, a Christie’s International Real Estate broker who’s pitching a $14.5 million townhouse to a customer relying on a mortgage. Now, “a better offer might not come along, so it’s advantageous to take that financed deal.”
To illustrate the point, consider the supertall luxury condo tower One57 in the heart of Billionaires’ Row. In 2015, two buyers paid cash for apartments that cost $100.5 million and $91.5 million. Last month, a $14.8 million condo in the tower was purchased from the developer with a $10 million mortgage. In 2015, when the bull market was charging and the cash was flying, the apartment was listed for $19 million. There you have two signs of these times: a hefty price chop, and a sizable mortgage.
“In a rising market, cash has more power,” says Stephen Kliegerman, president of Halstead Property Development Marketing. “But in a stable or falling market, it’s not as important.”
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