Everything in New York City is going up, up and away these days — rents, gas prices, inflation, interest rates and rat populations. Finally, something is heading down: Manhattan's luxury real estate market. It just had its worst week since the brutal pandemic winter of 2020, Crain's reports, entering bear territory.
Just 12 contracts worth $4 million or more were signed in the borough last week, 13 fewer than the prior week. This marks the slowest week since Dec. 28, 2020, when only 10 contracts were signed, according to the latest report from Olshan Realty. In what is surely related news, last week was also the worst week for the S&P 500 since March 2020, when it dropped by 5.8%, the report says.
Olshan Realty President Donna Olshan pointed to the stock market's troubles as the biggest reason for the slow week. "The S&P 500 declined 11 out of the last 12 weeks. ... It's just a punch to the stomach," she said, noting that, for many prospective luxury buyers, "their net worth is tied up very heavily in the stock market."
Last week's deals were split among nine condos, two townhouses and one co-op, and they were worth about $101 million overall, with the median asking price at about $5.3 million. The average discount from their original to their most recent asking price was 6%, and they spent an average of 446 days on the market.
The priciest deal last week was for a condo at 15 Central Park West that was asking $26 million. The three-bedroom unit spans 3,105 square feet, and the seller bought it for $30 million in 2014. The second-highest deal was for a condo at 155 W. 11th St. with a $15 million asking price. The three-bedroom unit spans roughly 2,500 square feet, and the seller bought it for about $11.3 million in 2017.
Manhattan averaged 12 luxury contracts per week during 2020, when COVID first upended life in the city, but activity dramatically increased in 2021, setting record highs of 1,877 signed contracts worth almost $16 billion, thanks to factors including a strong stock market, lower prices and low interest rates. The borough saw 36 signed luxury contracts per week on average last year.
Indications of a slowdown started to crop up earlier this year when signed contracts fell to 23 per week in mid-May, the lowest total since the beginning of the year and less than the weekly average of 26 from 2013 to 2015, which were strong years for new development in the city.
Although it is difficult to empirically connect stock market activity to New York's luxury real estate market, it makes sense that people would be more willing to spend lavishly on a new home when they feel better about their financial portfolios, says Jonathan Miller, CEO of the appraisal firm Miller Samuel, who adds that the stock market is far from the only issue driving the slowdown.
"The weakness of the luxury market has been a long time coming over the last couple of months with the escalation of the war, the idea that inflation is not as transitory as everybody thought," he said. "There's nothing a housing market hates more than uncertainty."
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