The luxury home market in New York City has it all: the most expensive properties in the country, stunning penthouses, condos with lots of amenities, old brownstones, modern townhouses and stylishly updated second homes. What it doesn’t have now is certainty. Sales cooled off over the summer (seasonally as always) and real estate pros are anticipating an uncertain decline on rising interest rates and inflation, coupled with recession fears.
Despite the prevailing macroeconomic conditions, prime real estate in Manhattan and Brooklyn remains a must for industry talent and power players, while aspiring and bottom-line buyers venture further out into red hot neighborhoods of Brooklyn like Bushwick and Bay Ridge and outer Queens (not yet Staten Island) .
It is difficult to predict where the market will go next. Be careful. “It’s safe to say that whatever direction the market takes, it’s not going to be anywhere near as dramatic as it has been or as dramatic as other markets,” says Jeremy Stein of Sotheby’s International Realty of the Stein Group. He sees the market in neutral territory, and unlike 2021 and early 2022, neither buyers nor sellers are favored. This comes after a 16-month run that ended in May, where “the sales volume was historic and epic,” Stein says. High-chip upscale real estate still attracts interest: his firm represents a 5,919-square-foot penthouse in SoHo’s iconic Romanesque Revival-style Puck Building; The five-bedroom, five-and-a-half-bath penthouse with more than 2,000 square feet of outdoor decking is listed for $35 million.
“2021 was the greatest year in the history of real estate in New York City,” says Pamela Liebman, President and CEO of Corcoran, and not a year to make comparisons, she claims (Liebman is a featured real estate agent on Netflix’s reality strand ” Buy My House”). She points out that the city is still ahead of 2019 sales numbers, although rising mortgage rates are already impacting sales. Liebman has seen an increase in interest-rate loans, while the luxury segment has traditionally favored cash purchases. “It there are still bidding wars where such real estate is scarce,” she says, and no bargains when it comes to chasing that dream apartment in New York. Bidding wars aren’t the norm everywhere, though: only 15% of deals were over the month in August List price closed, says Liebman.
“I think people are looking – when they find what they really want, they buy it. If there’s a lot of inventory in a certain price range, they want a deal,” adds Liebman.
Buyers, she claims, can be bold; Smart buyers will use their power now.
She notes that talent is still considering buying downtown Manhattan, preferably in “a sexy new development.” Penthouses continue to appeal to Los Angeles buyers looking for all-encompassing views and entertaining space.
“Entertainment executives are drawn to premium Midtown condos,” she says. Corcoran represents a three story triplex penthouse overlooking Central Park at 111 W. 57th. The 7,130-square-foot residence is listed for $66 million in a 60-unit boutique building that ticks all the boxes: full service, numerous amenities, privacy, views and security. Condominiums are also more attractive to celebrities and other high-net-worth individuals than co-op buildings because annual reports aren’t required and there are fewer rules about renting, Liebman explains.
“I think it would be an understatement to say that New York City is back: luxury renters and buyers are coming home,” says Compass’ Carl Gambino. His experience: There may not be as many bidders on real estate, but there is still a lot of activity. Year-to-date through August, 841 homes were sold in Manhattan valued at over $5 million, according to Compass statistics. This trade in luxury and ultra-luxury homes valued at over $5 million and over $10 million increased by 35.6% in the first eight months of the year compared to the same period last year and the first eight months before the 2019 pandemic , notes Gambino.
Penthouses and particularly well-made terraced houses are always in demand, he explains. He is representing a 1919 stylishly renovated five bedroom, four and a half bath West Village townhouse for $25 million. Jennifer Lawrence is just one of the high profile townhouse owners in the nearby West Village. Other bold names have flocked to the prime Brooklyn enclaves of Brooklyn Heights and Cobble Hill. “Pre-war townhouses are always popular,” says Abdul Muid, founder and CEO of Ivey North, which specializes in Brooklyn real estate. “They’re not building them anymore, so supply is limited,” he notes of the brownstones, which are full of architectural detail and often sit on tree-lined, heritage-listed blocks.
“A year ago I would get emails that could be viewed immediately if a property’s price was push button or aggressive,” he says. Today, inquiries come slower and buyers expect more time. “All-cash buyers are still searching, but sometimes waiting for a price drop,” says Muid. Stock is still relatively low. Those seeking value propositions consider the outer edges of Brooklyn with plenty of activity in Flatbush, East Flatbush and Canarsie. After almost 20 years in real estate sales, he is not surprised by market cycles. Ultimately, “buyers want to see more security,” he notes.
Flexibility also comes into play in one of the most active segments of the luxury market. Erin Boisson Aries of Douglas Elliman Realty specializes in hotel branded residences and the highest quality short term rentals. The pandemic has highlighted the benefits of a more flexible, nomadic lifestyle. Turnkey managed hotel residences meet these needs. “Everyone wants to be in New York City,” says Aries, but not everyone needs a primary or permanent residence. “These shoppers want pampering, convenience and security,” she adds.
Aries is selling the residences at the Ritz-Carlton, New York, where more than half of the 16 fully furnished penthouses have been sold. Currently, a 1,848-square-foot, two-bedroom, two-and-a-half-bath property is priced at $7.2 million. It’s rare to find penthouses with such a relatively modest square footage at such a height; That was intentional, explains Aries. The residences have been designed for those looking to get a foothold in the city without the hassles and worries of a typical homeowner. “The residences are a perfect pied-a-terre, offering exceptional views with personalized amenities. When you leave the Ritz, the staff takes care of everything,” she says. Another advantage for buyers: the penthouse can be included in the Ritz rental pool.
The market appears to be recovering, “We’re gearing up for a busy fall,” says Aries. Creating a media sensation: Ryan Serhant’s listing of the $250 million, 17,545 square foot triplex penthouse atop Central Park Tower and 1,416 feet above the city – the tallest residence in the world. Other real estate professionals are cheering Serhant on for a list price of about $14,249 per square foot.
Sotheby International’s Stein expects New York’s “still undervalued” market to recover within a year. “2015 was the peak, we’ll get there again at some point,” says Stein, referring to the cyclical nature of residential real estate. “New York is always a real estate destination,” he adds. As Corcoran’s Liebman notes, the market is solid: “New York is one of the capitals of the world. People still want a property here.”
