The Price of NYC Luxury Real Estate: Has It Become Too High?

The present real estate luxury market in Manhattan is in a kind of a pattern that doesn’t seem to be ending any time soon; that of buildings and prices that are on a continuous ascent. What seems to be the initial cause of this is a hugely expensive building that was developed around the Midtown area. It then seemed as though all hell broke loose, and developers suddenly decided to join the bandwagon to begin developing more and more of such buildings. The scramble by developers for wealthy clients looking to invest in ultra-exclusive property began.

There are a number of tell-tale signs that after several years of this race by developers, the mad dash is dying down. Reports suggest that things are cooling off due to the probability that a supply glut is facing the city, as it certainly seems that there is more supply of these ultra-expensive properties than there is demand for them. This is due to the current global economic uncertainty facing the major foreign buyers of this type of luxury real estate. Here are some pointers that tend to indicate that a supply glut is coming very soon.

At present, there are a whopping 300 luxury real estate apartments in New York City that are either currently on sale or scheduled to go on the market in the next 24 months, with each of them going for a pricey $5,000 or more per square foot. In the year 2014, 55 high end units were sold, but in 2015 the number dropped by 8, to 47 units sold. Units priced at around $5,000 per square foot are alleged to account for a little less than 1 percent of condo sales.

What this almost certainly means is that developers might soon bring an end to the ultra luxury building boom, putting a damper on the whole super-high-end-luxury trend. This assumption supported by recent unsuccessful efforts in the luxury market, such as the dropping of plans to convert some pricey New York City properties to condos.

Developers of a number of the choicest high end apartment buildings have begun reducing the prices of their properties, while others are dividing their larger units into smaller units and selling them off at cheaper rates. These all tend to point to the fact that there is a supply glut in the market. Despite these recent events, there is still a plethora of high end real estate property in the pipeline, and for now the glut continues.

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