Has ultra-luxury development gone too far?
Cary Tamarkin’s 10 Sullivan
development announced that it is splitting its 8,000 Square foot Soho Penthouse, following CIM Group and Macklowe Properties' late 2015 decision to do the same to some larger unsold units at the ultra-luxury 432 Park Avenue
. Brokers have begun to quietly wonder if we’ve hit the peak of luxury in price point and market saturation.
Starting in 2013, strong demand for downtown luxury new developments combined with extremely low re-sale inventory caused re-sale values to skyrocket. The price-per-square-foot ceiling rose on all sales as local, domestic, and international buyers snapped up properties at a frenetic pace.
Lately, though, I’ve been noticing a shift in buyer patterns and demand
, especially in the $2.5+ million, 2 and 3-bedroom re-sale markets. In Chelsea
and the West Village
, the number of active listings between $2.5-4.5M is increasing. While the top of the market gets most of the press, this micro-market is sensitive to how the rising dollar, lowered equity portfolios, and global variables are affecting buyer decisions, even if temporarily. To win, sellers must be strategic when pricing their homes. Some West Village & Chelsea Market Re-sales Experiencing Price Adjustments
New developments have pulled re-sale price-per-square-foot values up to the $1,700 to $2,600+ per square foot range. That’s a change from a few years ago when only Penthouses and new developments like 150 Charles were achieving those astronomical price points. As enticing as a high listing price may be, choosing to list your home today simply based on averages may cause your home to linger and ultimately need a price adjustment after a month. That’s not a great strategy if you want to achieve the highest sale price. At the upper end of each price category, unless homes are spectacular or unique, they may not capture the coveted $2,000+ per square foot price point that some sellers are seeking. Remember, a high listing price does not guarantee a high sales price.
Today, some 2-bedrooms priced into the mid $3.5+ million marks are seeing empty open houses, even after price cuts. Why? My observation is that many buyers at the top of each category are drawn to the latest designs and features being offered by today’s luxury new developments. Pricing a re-sale solely based on comparison to nearby new developments could be a misstep in this market. From 2013 to mid-2015, pent-up global demand and limited re-sale and development options pushed pricing up. In 2013, I sold a client’s penthouse for 20% higher than he paid for it in 2012. In 2013, you could price high and still be okay because in three months the market had caught up to your asking price. Today’s market is different. How a More Stable Luxury Market is Impacting Sales Prices
Manhattan’s luxury market is more mature and stable. Consequently, sellers cannot expect to simply tag an extra 10-20% onto the price of the last sale in the building and say to a broker, “List it at that number.” Buyers are more cautious. The condo re-sale buyer is now a more deliberate decision-maker than in 2014. Yes, well-priced and stunning properties are still moving very quickly. That said, strategic marketing, staging, and presentation are once again important to your sales success. As a seller, if you recognize the market’s gentle shift, you will sell first. Price too high and you may be disappointed.