Latest Real Estate News - Market Update Manhattan - 4th Quarter 2016

Condos & CO-OPS Overview

A jittery and apprehensive market characterized the nal quarter of 2016, resulting from election anxiety; record-high prices that led to apprehension on the part of buyers; and a low supply of inventory at the lower price points.

Closed sales declined 12%, the average sales price increased 2% and the median sales price dropped 9%. Closed sales for the fourth quarter of 2016 totaled 3,173 compared to 3,606 during the same quarter of the prior year. The overall average sales price was $2,049,000, which represented just a 2% gain after exhibiting several periods
of double-digit increases. There have been some indications that the declining trends we began to see at the very top end of market prices have spread into other price segments.

The under $3mil market made up 83% of all sales activity and this segment had 13% fewer sales, a 2% drop in the average sale price, and a 3% decline in the median sale price. This is a sign of soft market conditions in the nal quarter of the year as prior periods posted gains in this price segment. Overall condo sale prices faired best despite having 22% fewer closed sales.

New construction closings helped keep statistical measures rising with a 13% increase in the average price and a 6% increase in the average price per square foot. In the $3mil to $10mil price bracket, prices were also down with an average sale price of $4,967,000, 2% lower than prior year.

The top price tier segment, units sold over $10mil, had mixed results with 41% more closings, an 8% increase in the average sale price and an 11% drop in the median sale price.

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New York Luxury Apartment Market Loses Some Luster in 2016

Median apartment prices in Manhattan set a record in 2016, but by other measures it was a tough year for residential real estate.

Even as the median price of an apartment rose 9% this year, brokers said, the luxury market slumped. Fewer overall sales closed, and even fewer new contracts were signed.

Overall sales declined, with significant drops in sales of co-ops and older condominiums, which make up 80% of all transactions. Despite the record overall, prices for those categories either fell or rose far more modestly, a Wall Street Journal analysis found.

Much of the price surge in 2016 was limited to purchases of apartments in new developments, with the large windows, high ceilings and designer kitchens coveted by many buyers.

At 432 Park Ave., near East 56th Street, a penthouse sold in September for $87.7 million, the fourth-highest apartment price ever. Over the course of the year, the building’s developers, CIM Group and Harry Macklowe, a New York developer, closed on 75 transactions with an average price of $19.7 million. Although these deals closed in 2016, they were negotiated over three or four years.

That helped lift the median price of Manhattan apartments by the 9%, to a record $1.08 million in 2016. The average price surged almost 15% to $2.04 million, according to a Wall Street Journal analysis of New York City Department of Finance records through Dec. 19.

But the increase was far greater for new developments. As of Dec. 19, more than 2,300 apartment deals closed in new developments in 2016, the most in six years. The median price was $2.55 million, up 42% from new-building closings in 2015.

These included 182 transactions at Carnegie Park, a conversion of a rental development by Related Cos. on East 94th Street in Yorkville, at a median price of $1.44 million. Another development, Greenwich Lane on the site of the former St. Vincent’s Medical Center in Greenwich Village, closed roughly 142 transactions at a median price of $6.2 million.

Of the top 10 sales of 2016, five were at 432 Park Ave., and eight of 10 were in new developments.
The surge in new-development sales in Manhattan, which began in the second half of 2015, is already easing and is likely to slow further in the first half of 2017, brokers say.
The rest of the market, meanwhile, faltered in 2016.

Co-op sales were down 12.3% through Dec. 19. The median price was up 5.4% to $775,000 compared with 2015, but was down 3% since the third quarter.

Resales of older condominiums were down 7.6%, while the median price fell by 1.6% compared with 2015. Overall sales declined 6.1%.

Brokers and analysts attribute the slowdown in 2016 to uncertainty over the presidential election, buyer resistance to high asking prices, dips in the stock market early in the year and global economic uncertainty.

Hall Willkie, president of brokerage Brown Harris Stevens, said “gross overpricing” by many sellers has been a drag on sales, since buyers have been acutely price-sensitive since real-estate prices tumbled after the 2008 financial crisis.

 “Buyers want to know that the prices they are being asked to pay are justifiable based on recent property sales,” he said. “Once you get outside that price range, properties sit.”

Source: The Wall Street Journal

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New York City’s High-End Co-op Market Slumps

Sales of co-ops that sold for $4 million or more plunged 26% last year

When Len Blavatnik, the billionaire investor, paid a record $77.5 million in 2015 for a duplex apartment at 834 Fifth Avenue, it seemed only logical that a bigger cooperative apartment a few floors down would command even more.

That huge apartment is still on the market nine months after it was listed. It is the home of the late John Gutfreund , former chief executive of Salomon Brothers Inc., and it went on the market last April for $120 million.

A sharp slowdown in co-op sales has hit the rarefied upper end of the market especially hard. Sales of all co-ops were down 12% in 2016 compared with 2015, while sales of co-ops that sold for $4 million or more were down about 26%, a Wall Street Journal analysis found.

The decline in activity has been so steep that many real-estate brokers are wondering whether luxury co-ops, with their rigid rules and complex financial reviews for buyers, are permanently losing ground to towering new condominium buildings offering cushy amenities and less-rigorous rules.

The biggest sale of 2016 was the fifth-floor apartment at 4 East 66th Street, on the corner of Fifth Avenue, which fetched $52 million. That was followed by a $35.3 million sale on the West Side at 101 Central Park West.

Luxury co-op sales have boomed in recent years, with the number of co-ops selling for $4 million or more setting a record in 2015. But sales of co-ops selling for $10 million or more have been dwindling since 2014, when 63 changed hands.

At 834 Fifth Avenue, a limestone building opposite the Central Park Zoo, the sellers in September cut the price of the sprawling 20-room apartment, with about 12,000 square feet of space, to $96 million. Mr. Henckels said he believed it was “worth every penny” at that reduced price, but it has yet to find a buyer.

Mary Ann Rothman, executive director of the Council of New York Cooperatives & Condominiums, said co-op boards aren’t likely to change dramatically to make it easier to buy and sell co-ops. “We want a shareholder who understands they are part of a community, and it should be a community they are prepared to contribute to,” she said. “Presumably they will stay there for a while.”

Source: The Wall Street Journal


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