NYC Luxury Real Estate Weakness Spreading As Lower Pricing Tiers Tank

Tyler Durden's picture

A few weeks back we wrote about how luxury real estate markets around the country were tanking (see ""I’ve Never Seen Anything Like This Before" - The Housing Markets In The Hamptons, Aspen And Miami Are All Crashing").  Turns out other price tiers may be at risk of contagion as lower-priced real estate is also starting to crash, at least in NYC.

Per Bloomberg, the number of listed dwellings, in the top 20% pricing tier, that have experienced price cuts from their original listing price has spiked over the past couple of months.  While most price reductions are only coming in at around the 5% level, that is a huge deterioration for a market where sellers have become accustomed to selling at or above listing price. 

NYC Real Estate

 

But, turns out that the weak real estate pricing market isn't reserved to luxury real estate.  StreetEasy data reveals that price cuts for real estate in the second highest pricing tier (i.e. dwellings priced in the top 60-80% of the market) are also spiking and the cuts are even deeper than the top tier.  In fact, the percentage of NYC real estate in this tier experiencing a 10% or larger reduction in price relative to listing price has doubled YoY. 

NYC Real Estate

 

StreetEasy's economist, Krishna Rao, attributes sinking real estate prices to a "boom in supply as developers rushed to build luxury condos in 2014" as well as economic and political uncertainty that is keeping buyers on the sidelines.  That said, Rao also points out that "prices and amenities in these luxury buildings have reached an unsustainable level" that will result in "some units languishing on the market."

"The luxury market was the first price segment where we began to see slowing price growth, and now we’re seeing other price segments following suit," Rao added.

 

"It may be that economic and political uncertainty have discouraged domestic luxury buyers, while a strong dollar kept foreign buyers at bay and that they will both return to the market when their concerns are assuaged," Rao said. "But it may also be that prices and amenities in these luxury buildings have reached an unsustainable level and we are going to see some units languishing on the market and others quickly falling in price as they struggle to find buyers. That more than anything will determine which way the market swings."

Frankly, we're not sure why consumers are balking at real estate prices in the Big Apple.  After all, this entire 850 square feet of luxury living space can be bought for the bargain basement price of only $2.3 million.  That's only $2,647 per square foot...AND it comes with a dishwasher.

NYC Aparment

 

Or, for the value shoppers, might we suggest this studio on the upper west side that includes a full 600 square feet of living space for only $925,000.  That's only $1,542 per square foot and, get this, it comes with a dishwasher AND elevator access.

NYC Aparment

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knukles's picture

Buy protection on the A rated layers.

Lonesome Crow's picture

The more who cannot afford it, then the less who can hold it.

Where is LOP in the evening?

NoDebt's picture

We're just bringing the whole economy in for a nice, soft belly landing sometime after November 8th.

 

NoDebt's picture

I work for the Federal Reserve.

 

knukles's picture

Looking through the Corcoran ads, one of 'em looks particularly cheap.  It's located smack dab next to the Islamic Cultural Center of NY.

           ... huh ...

bamawatson's picture

open a rib joint
smoked knukles sandwich

Butter-Cup's picture
Butter-Cup (not verified) knukles Sep 8, 2016 1:51 AM

My last month paycheck was for 11000 dollars... All i did was simple online work from comfort at home for 3-4 hours/day that I got from this agency I discovered over the internet and they paid me for it 95 bucks every hour...  Try it yourself... http://www.14earnpath.com

NoWayJose's picture

The only reason prices go up in these booms is - that the price goes up! People buy and hope they can dump at 10% profit or more in a year or two. So what happens when home prices STOP going up? It ain't pretty!

SantaClaws's picture

Fortunately, even in NYC, with a little imagination you can live affordably.  http://nypost.com/2016/08/31/the-crazy-but-true-tales-of-new-yorkers-who...

Tactical Joke's picture

Wait for the city to clamp down for "the health and safety of our citizens."

King Tut's picture
King Tut (not verified) Sep 7, 2016 7:48 PM

Don't let me down, Hymietown

Kasperfx's picture

the market was being held up by insiders groups comprised realtors/hedge funds they would buy units and flip them to each other until they found a sucker outsiders , but now that the sucker outsiders pools are drying up the insiders are starting to dump their inventory . classic strawman pump and dump https://www.fbi.gov/scams-and-safety/common-fraud-schemes

 

NeedleDickTheBugFucker's picture

Spot on.  StreetEasy provides a tremendous amount of information including the identity of the current owner / seller (often times shielded by LLC).  I've noticed on more than a few occasions that the seller is a broker at one of the top NYC real estate firms (BHS, Corcoran, Douglas Elliman, etc.).  I know peddling real estate to the 0.1% is lucrative, but not sure how that equates to broker X at firm Y purchasing a $5-7 million condo.  Those days are coming to an end and it ain't coming back.

New World Chaos's picture

Semi-clueless elites close to the fiat money spigot have been buying luxury apartments for years because they don't know where else to park their loot.  They use the apartments as safe deposit boxes for ridiculously overpriced antiques and art that would not be rescued from the garbageman if it was left by the side of the road.  Maybe now they are starting to realize that the people at the top of the pyramid want WWIII and anything in a Manhattan penthouse is gonna burn like the Great Whore of Babylon.  A Free Shit Army Zombie Apocalypse is also possible and if that happens, the cops will be tied down and the security guards will identify more with the screwed than with the screwers.  The guards will form their own little mafias and rob the bastards blind.  There is an off chance that NYC will be sacked by millions of angry rednecks.

PaperTaperFakerCaper's picture

Dude!!  heh heh .   That's ...  kewl.   heh heh

Reminds me of Gangs of New York.  

Dead Rabbit Society n' shit.  Bring it. 

Bemused Observer's picture

Wait till they start demanding property tax reductions based on the lost valuations.

Dragon HAwk's picture

Yeah NYC is not where you want to be when SHTF.

NoDebt's picture

Ground zero of the zombie apocalypse.  In a two-way tie with Washington, DC.

 

MASTER OF UNIVERSE's picture

Israel will start fortifying with Military now that New York shitty is imploding all around their Synagogue of Satan worshipping blood lines. The BIG recall of Jews around the world to return to Israel will be on immediately due to Israel dependence upon Ponzi America and the debt serfs. When they realize Joo central is imploding they will also realize that the Ponzi will never come back in a thousand years of Kosher beard growing & head bobbing to a wall of mud in a trance state of zombie like stooopidity.

 

Fuck New York shitty, and their greedy racketeer Joos, Mafia, and all round criminali riff raff.

NoDebt's picture

American Jews don't give a shit about Israel.  They care about maintaining their status as a protected minority in America.

 

New World Chaos's picture

What if America stops giving a shit about them?  They might bug out, taking what loot they can, and then get overrun by ISIS.  Reap what you sow, motherfuckers.

brushhog's picture

I know some people who own a small building in NYC, they were selling condo units. They had 50% occupancy. Owner took me to the wondow where he showed me the building next door, he told me that all the windows with generic white shades were empty...it was also about half. These were not the super high luxury condos, but expensive enough at about 1000 per square foot. I asked why he didnt have full occupancy, he told me that it didnt matter, on paper he has an asset worth 1000 per square foot that he can borrow against. Thats the whole paper scheme, they have an asset worth x on paper, borrow money tax free.

Who knows in the end they probably pocket the tax free money and declare bankruptcy. There's so many ins and outs to it, the whole market is driven by these convoluted schemes.

Stanley Lord's picture

Grant's Interest Rate Observer sent somebody around to look at the apartments on a Sunday night to see who had the lights on- there were no lights on-anywhere.

artichoke's picture

We already know there are foreign owners.  But Obama did us no favor by saying he didn't want any dirty foreign money.  Almost all money is dirty, so that was just a way to "fundamentally change America" by making it poorer.

user2011's picture

I wonder what will happen when renters stop paying rents

ParkAveFlasher's picture

The solution, of course, is to move the homeless into these buildings.  No worries, the city will pay top dollar, funded by the taxpayer.

misterbulldops's picture

Just rent,then sit back and watch the market implode. 

assistedliving's picture

so much BS from flyover country.  Priced right, good neighborhood:  it sells.  A husband/wife team bought a unit a year ago in the most beautiful building on the UWS.  $1M.  renovated for additional $250K.  On the market over a year $1.5M...$1.4...now $1.3M (not even break-even) and I still wont touch it.  

As for all the NYsHitty stuff, come for a visit and get educated.

Best City in the World bar none.  

 

misterbulldops's picture

Just rent,then sit back and watch the market implode.