clock menu more-arrow no yes mobile

Filed under:

The ‘Eight Digit Boom’ In New York Real Estate Is Finally Over

New, 6 comments

The boom days of Billionaires' Row—and its überpricey apartments—are officially behind us

RIP, Billionaires’ Row—well, sort of. According to the New York Times, the ultra-pricey housing boom of the past few years—with apartments aimed at only the wealthiest of the wealthy overtaking seemingly every corner of Manhattan—may finally be reaching its final days. (You mean there isn’t an endless stream of billionaires who want to buy ultra-exclusive penthouses in Manhattan? SHOCKING.)

The corridor in Midtown that holds many of these buildings, West 57th Street, has experienced what broker Dolly Lenz calls "a complete halt" in activity from über-wealthy buyers, and there are similar signs of a slowdown happening elsewhere. Frankenpenthouses are being split in two, much-hyped buildings are slowing their procession to the market (see: 111 West 57th Street), and developers are even resorting to creating cheaper turnkey pads in megatowers to entice buyers—and still, developments like One57 or 432 Park Avenue have yet to sell out.

"It’s not that there aren’t any buyers at this level," real estate appraiser (and Curbed columnist) Jonathan Miller told the Times. "It’s that there aren’t buyers willing to pay 2014 prices."

What’s behind the so-called "death knell"? A few factors, most notably the fact that there’s economic instability abroad, and more careful scrutiny of the buyers of these super-pricey pads, who’ve historically paid for places in cash (and often engaged in some shady-ass business). Additionally,

Other global trends that have put the lid on high-end spending include China’s tightened restrictions on capital outflows, uncertainty surrounding Britain’s decision to leave the European Union, lower oil prices curbing wealth in the Middle East, and tax increases and other measures that have driven up property transaction costs in some countries.

Developers, of course, are trying to put a positive spin on the whole thing: Gary Barnett of Extell chalked the lack of signed contracts to the fact that "it’s hard to close deals because people are not in a rush." Suuuuure.

Still, it’s not like this comes as a surprise. Real estate experts have been sounding the alarm on this for some time now; heck, as recently as this spring, the Times ran a story that pointed to a forthcoming "luxury glut" in the New York real estate market.

And the numbers don’t lie: According to the Times, just 107 contracts were signed on apartments asking $10 million or more in the first half of 2016; in 2015, that number was at 130. A difference of 23 contracts may not seem huge, but it's an 18 percent drop. And right now, there are 331 condos listed for $10 million or more on StreetEasy; the likelihood of finding 331 buyers to take them all—much less ones who will snap up the 40 condos listed for more than $35,000,000—seems extremely slim.

But don’t get too excited: The market for apartments priced below $3 million is still "robust," according to the Times, and the latest market reports show that prices aren’t really dropping—in fact, in the outer boroughs, they just keep getting higher. So … no one wins! (Well, except for the people who pushed prices up in the first place. And the billionaires will probably be be fine. But regular New Yorkers? Not so much.)