More Bad News For NYC Real Estate As Luxury Co-Op Contracts Collapse 25%

Tyler Durden's picture

Luxury real estate broker Olshan Realty, Inc. has some bad news for New York's hedge fund managers looking to dump their luxury $5 million, 1,500 square foot palaces as the market for luxury New York City real estate just might be on the verge of collapse.  Accroding to a year end report published by Olshan, contracts for luxury co-ops (defined as those with an asking price above $4mm) collapsed 25% in 2016 while the average number of days that apartments sat on the market surged 31% and discounts to original listing price also jumped a point to 6%.

The decline reflects classic price resistance. There was a 2% increase in the average asking price, but a 30% increase in the average days on the market—318 days. You read that right—it took more than two months longer to sell a luxury property in 2016 than in 2015. The average price drop from listing to contract signing was 6%, an increase from 5% in 2015. There was also a 5% decline in contracts signed at $10 million and above.

 

The steepest fall from grace was in co-ops: 25% fewer contracts at $4 million and above from 2015, signaling a continuing market shift in the luxury market to new condos that offer freedom of ownership, new infrastructure, robust amenities, and some hip architecture—particularly seen Downtown.

NYC Condos

 

Of course, this news should come as little surprise to our readers as we've frequently written about the unintended consequences of the massive overbuild of luxury apartment inventory over the past several years in Manhattan. 

In fact, a few weeks ago we warned New York City apartment owners to take note of the latest 3Q16 "Elliman Report" that showed the number of apartment closings had plunged 18.6% YoY while apartments sat on the market an average of 8.2% longer.  Inventory also spiked with new development inventory up a massive 27.2%.   

"The number of re-sales has fallen year over year in each of the last four quarters at an increasing rate.  Listing inventory reflected significant differences in the rate of growth between re-sale and new development.  Re-sale inventory expanded 8.2% to 5,290 while new development inventory surged 27.2% to 973 respectively from the same period a year ago."

NYC Real Estate

 

Meanwhile, the re-sale market looked even more bleak, on a standalone basis, as the number of closings collapsed over 20% YoY while days on the market increased 7.5%

NYC Real Estate

 

The lesson seems to be that the marginal New York City buyer has been priced out of the market while sellers have not yet accepted that the bubble has burst deciding instead to maintain listing prices while letting their apartments sit on the market longer amid growing inventory levels...that should work out well...

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rent slave's picture

I'm waiting for 1933 prices.

Paul Kersey's picture

My wife and daughters are visiting NYC for the first time. They told me that there is insane amount of highrises being built. They said they haven't seen this much construction since they visited Denver last year. Sounds like some bank and hedge fund lenders might be in trouble.

Cheka_Mate's picture

40% of property in the Upper East Side from roughly 59th to the 70s is empty except for a couple weeks/months per year.  You can tell since the neighborhood feels like a ghost town by Manhattan standards.  These are people paying millions of dollars for glorified security deposit boxes next to the East River.

junction's picture

Manhattan luxury apartment values have declined a lot less in value than the Euro over the past six years. 

wisehiney's picture

Highly deflationary.

south40_dreams's picture

Blue states are running out of OP bucks

MASTER OF UNIVERSE's picture

New York shitty gets shitty-er!

Ban KKiller's picture

NAR says buy, right? Don't they always say buy? Unless they are saying "buh-bye". I get confused...

L Bean's picture

Good. Fuck all of these rubes pouring into Babylon from flyover country to work as whores for fashion-n-finance. They need a real lesson. The "folks" need a fucking real lesson; the American dream of making it in the big apple is quite simply "no longer a thing".

Government needs you to pay taxes's picture

'Making it in Manhattan' means something very different to the literal drive-by whores that proposition the junior banksters as they come out of their cublicles after midnight.   

L Bean's picture

They're included ofc. Quite often, it's just another Susie Fashion model or aspiring "designer", down on her luck..aka unsponsored.

nmewn's picture

But...but...but...DeBlasio.

WTFUD's picture

I'm positioned that the worse things get the better off am i. Only a Nuclear War could scupper my Plans, and even then . . . yep while my peers were booking luxury trips to Mars, one-stop Recharging Battery on the Moon, in 2040, through Musk & Virgin Discount Space Travel Tour Guides ( one-way only ) i dug 3000 feet downwards in the opposite direction.

brooklinite8's picture

NewYork City is no different than Los Angeles. Debter's living in a prison with an exception of jews and chinese.

401K of Dooom's picture

Wake me up when we need to send in Snake Plissken to work as a process server in Manhattan.