Nancy Packes Inc., an online real estate data services covering the five boroughs of New York City and all residential transactions, reports that nearly half of all new condo units built after 2015 in Manhattan, or about 3,695 of 7,727 apartments, remain unsold.
Despite trillions of dollars printed by global central banks and hundreds of rate cuts since 2015 – Manhattan condos have been unappealing to the wealthy elite and unaffordable to the typical New Yorker.
Also, a confluence of macroeconomic headwinds, as well as SALT deduction caps and transfer taxes, cooled the market even further.
"The extraordinary oddity of the current cycle is that the real estate market has decoupled from the national economy and local economy, where job growth has been steady, and stock market values have been reaching new highs," according to the report.
As it turns out, the stock market isn't the real economy. Developers hooked on low-interest rates overbuilt across the borough with the average sale price more than doubling since 2011.
The report warned about the luxury condo glut with limited buyers willing to purchase homes at prices that have far outpaced wages.
There's even a shadow inventory that lurks on the sidelines, with any market improvement, developers will dispose units into the market - this could produce overhead resistance for years to come.
"You never had this kind of supply in these price ranges," Gary Barnett, the president and founder of Extell Development, who builds luxury condos in the city, told The New York Times.
"The $5 million to $10 million market is hammered — there's way too much of it," Barnett warned. He said developers are now starting to realize the market is oversaturated with limited buyers at these high prices.
The Atlantic notes that developers bet huge on Russian oligarchs, Chinese moguls, Saudi royalty, and Latin American millionaires to soak up the luxury condo supply.
"But the Chinese economy slowed, while declining oil prices dampened the demand for pieds-à-terre among Russian and Middle Eastern zillionaires," The Atlantic said.
With immigration trends lower, a stronger dollar, protectionism, and the U.S. Treasury cracking down on international real estate laundering schemes -- foreign demand for luxury pads in the city has dried up in the last several years.
So, the question remains -- what policies or fundamental shifts in the economy can speed up the purchases of all those unsold Manhattan condos?
It's only a matter of time before one developer, holding an excessive amount of unsold Manhattan condos , is slapped with a crash crunch that would result in the dumping of units on the market at a steep discount would trigger an avalanche in prices.