The New York Times has dubbed the 2010s “the decade dominated by the ultra-luxury condo.” That decade is now officially dead, according to a new study by StreetEasy, as prices for Manhattan’s most expensive homes closed 2019 at their lowest level in six years.
This fourth-quarter drop shows that many sellers at the top of the market have finally begun to accept lower prices in order to stand out amid the growing surplus of high-end homes, the report says. Even as price levels fell in the fourth quarter, luxury inventory expanded 12.2 percent over the previous year, with 4,354 homes for sale above the $3.8 million threshold.
Nearly half of new condo units in Manhattan that came to market after 2015 – 3,695 of 7,727 apartments – remain unsold, according to the Times, which calls the number “a staggering estimate and a humbling reversal from the start of the decade.” It’s estimated that it will take more than six years for this inventory to find buyers.
“With so much new construction saturating the Manhattan real estate market, we were bound to see prices start to sink at record paces,” says StreetEasy economist Nancy Wu. “This is happening across all price points and boroughs, as prospective buyers wait out the market from the comfort of their rentals. Market dynamics in 2020 will continue to favor the buyer across all price tiers, and many sellers will have to face the fact that if they want to sell, it may very well be for less than their initial asking price.”
Adds Gary Barnett, the president and founder of Extell Development, which has built some of the priciest condos of the decade: “You have never had this kind of supply in these price ranges. The $5 million to $10 million market is hammered – there’s way too much of it.”
The man speaks from experience. One Manhattan Square, Extell’s massive – and massively unloved – 850-unit condo tower beside the Manhattan Bridge, is offering “rent-to-own” plans and other incentives to wary buyers. Why? Because marketing of the tower began in 2015, but as of last October only about a quarter of the units had been sold. Welcome to the 2020s.
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