Luxury Apartment Sales Plummet in New York City

BUSINESS Luxury Apartment Sales Plummet in New York City Sales of such properties costing $5 million or more fell 31% in the first half of the year, pushing sellers to cut asking prices The contracts that are getting done in the luxury end of the market are the result of sellers capitulating to reality, said a broker. Seen above, a marble bathroom in a duplex at One57, a condominium complex in Manhattan. PHOTO: JEENAH MOON/BLOOMBERG NEWS SHARE Page 1 of 9

By Josh Barbanel Aug. 20, 2018 9:00 a.m. ET Sales of the most expensive New York apartments fell sharply in the first half of the year, but many sellers have adjusted by cutting asking prices to make deals, brokers said. This is simply a market that is adjusting itself to chronic overpricing relative to buyers perception of value, said Kirk Henckels, a broker and vice chairman of Stribling & Associates, a New York-based brokerage. Overall sales of apartments priced at $5 million or more fell by 31% during the first half of the year, compared with the same period in 2017, according to a luxury market report by Stribling. But the slide in sales was concentrated entirely in condominiums, including newer such buildings, where the supply of expensive apartments has surged, the report found. Page 2 of 9

Sales of older luxury cooperatives going for $5 million or more rose about 10% in the first half of 2018, compared with a particularly sluggish first half in 2017, the slowest first half since 2013. In co-ops, including many of the most expensive buildings near Central Park, buyers purchase shares in a corporation rather than buying a deed to an apartment. ADVERTISEMENT Page 3 of 9

Brokers said the modest rebound in sales reflected sellers willingness to abandon their dreams of outsize profits in the face of buyer resistance. The contracts that are getting done in the luxury end of the market are the result of sellers capitulating to reality, said Donna Olshan, a broker who monitors contract activity for high-end apartments. Luxury apartment prices rose sharply in 2014 and 2015, but have since stagnated at lower levels. ADVERTISEMENT Page 4 of 9

Examples of steep discounts abound in the rarefied luxury market. A five-bedroom penthouse with a terrace and soaring ceiling sold in August in a new building at 11 North Moore Street in Tribeca. It was first listed in January 2014, for $40 million, but the price was cut three times since, for a final listing price of $22.5 million. A deed filed on Thursday listed a $20 million sale price. Median prices for both co-ops and condominiums were up in the first half of the year, compared with the same period in 2017. But many apartment prices were down 10% to 20% over the last two years, particularly among co-ops, Mr. Henckels said. When the luxury market slowdown began in 2016, brokers blamed it on political uncertainty. More recently they said buyers were hesitating because of federal tax changes that may increase the cost of home ownership and reduce the deductibility of New York s relatively high tax burdens. ADVERTISEMENT Page 5 of 9

With many wealthy New Yorkers working in finance, the fortunes of the luxury housing market have often followed the ups and downs of the stock market but not recently. It is generally rare to see falling home prices without a relatively catastrophic triggering event like a stock market collapse, Mr. Henckels said, adding, It is very clear that this market is enduring what is the kindest, gentlest major price-correction in memory. Write to Josh Barbanel at josh.barbanel@wsj.com ADVERTISEMENT Page 6 of 9

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