It’s safe to say there is a fair share of uncertainty and pessimism looking towards the future of Manhattan’s luxury real estate market. Negative headlines are indicative of record price cuts and staggering sales numbers within what were some of the city’s most anticipated luxury developments, raising red flags within the industry.
According to a recent article from The New York Times, which cited Compass’ Q4 market report in the last four months of 2015, roughly 1,040 available listings in Manhattan cut their asking prices. That’s equivalent to 20 percent of the approximate 5,120 properties on the market. This represented a significant increase in cuts from last year’s figures.
According to many Manhattan-based brokers I’ve spoken with, there is a momentous divide in the units being relative to consumer demand. The luxury market – mostly properties that cost $10 million or more – seems to be oversaturated and outweighing demand, while there is pent up demand for units priced under $3 million—and little supply. Curbed New York posted an article towards the end of last year that reported 45 new developments coming to market in the fourth quarter alone. Many of these developments have pricing that starts at the $3 million mark—but then far exceeds that price. Some even start in the tens of millions, like JDS Development Group and Property Markets Group’s 111 West 57th Street, with prices starting at an aweing $14 million!
Prospective buyers in the luxury market are no longer feeling the pressure to make quick decisions or provide above-ask offers and hefty down payments with so much new inventory flooding the market. Additionally, luxury resales have been affected in that they are competing with all of the new inventory and will likely settle for more realistic offers, as opposed to the above-asks they’ve been graced with over the past year or so.
Despite the uncertainty, Manhattan’s real estate is changing at a pace that one wouldn’t have been able to predict a decade ago. Construction cranes and towers stretching their way to the clouds continue to adorn New York’s already impressive skyline. The truth is that even in a softening market, developers are continuing to introduce inventory with price tags that far outweigh what the majority of consumers in Manhattan can afford.