Signed luxury contracts in Manhattan hit a new low during the week ending Aug. 21, according to a report from Olshan Realty Inc. Luxury agents say there are a number of reasons why.
Signed luxury contracts in Manhattan hit a new low during the week ending Aug. 21, according to a report released this week from Olshan Realty Inc.
Just eight contracts were signed on properties priced at $4 million or higher, down from 15 contracts that had been signed the week before. The week marked the slowest for luxury real estate activity in the city since the week of Aug. 3-9, 2020. At that time, just six contracts were signed on properties priced at $4 million or above.
Summer can often mean a sluggish time for real estate, but the stock market’s recent fluctuations, as well as higher prices and uncomfortable interest rates, may also be impacting luxury buyers to an increasing degree these days.
“It’s been eerily quiet,” Abigail Palanca of the Abby Palanca Team at SERHANT. told Inman. “What I’m noticing from my own clients right now is that people really do just want to enjoy these last few weeks of summer, more so than I think in previous years.”
She added that she saw a lot of buyers come through the market in July, and buyers are now likely “taking a breather” before the onset of fall. Some may also be waiting to see where prices adjust to with the change of the seasons.
Similarly, Patricia Vance of The Patricia Vance Team at Douglas Elliman said that buyers aren’t seeing the inventory they want right now, so they’re taking the opportunity to enjoy summer travel while waiting for more options to come to market.
“I truly believe that high-end buyers, and most buyers, have been traveling,” Vance told Inman. “I think more travel has happened over the last couple of weeks and I think it’s because of the pent-up demand to go to Europe and to just be with your family and enjoy taking your leisure activities.”
“I feel a lot of the slowdown is because [buyers] are waiting for new inventory to come on the market, which traditionally does happen after the summer,” she added. “I have seen more buyers wanting outdoor space, and they’re waiting for it … I just think they want to make sure they’re not missing an opportunity.”
Still, eight contracts is pretty paltry, since the 10-year average for contracts signed during the third week of Aug. is 17, Olshan’s report noted. Five out of those contracts were on condos, and three were on townhouses.
The average and median asking prices for the week were also relatively low, with the average asking price sitting at $7.7 million, and the median asking price sitting at $6.75 million. In previous weeks, those prices could have been as high as $20 million or more.
The average discount from a property’s original asking price to its final asking price during the week was 6 percent.
Richard Rosenthal of the Friedman Rosenthal Team at Brown Harris Stevens told Inman that he thought there were a number of factors combined leading to the luxury slowdown right now, including the uncertain state of the global economy, ups and downs in the stock market and a feeling about second-guessing living in New York City, with increased crime rates and high taxes.
He also noted that simply pinning the slowdown on seasonality didn’t cover the full scope of what’s going on in the market.
“That’s what most brokers want to say,” Rosenthal said. “I will tell you that in the last five years, three of those years, August was our busiest month. This year, I have four apartments on the market … and I have shown them a total of three times in the last four weeks. I mean, there’s just nobody looking.”
“I think people are still worried,” he added. “When you see David Solomon [CEO of Goldman Sachs] and Jamie Dimon [CEO of JP Morgan Chase] and Goldman or Morgan Stanley say that they’re expecting there could be some cuts in the fall, maybe buying a $5 million property right now isn’t the best time … So it’s looking at the whole picture. Supply versus demand, for me, is the biggest, economic perspective is No. 2, and then the environment of that location [Manhattan] is No. 3.”
The highest priced contract was for a 8,372-square-foot duplex condo at 100 Eleventh Avenue that asked $14.995 million and had been listed in November. Unfortunately, the seller had purchased the home in the building designed by Pritzker prize winning architect Jean Nouvel for $19.4 million in 2009, yielding a loss on the sale.
The second-priciest contract was for a unit asking $10.5 million at 155 West 11th Street. The 2,398-square-foot condo with 24-foot-wide terrace was purchased by the seller based off of floor plans in 2014 and closed on in November 2016 for $8.42 million.