Luxury Condo Contracts Jump To 4-Year Weekly High As Sellers Slash Prices

Manhattan’s high-end residential market received a boost last week, with the number of contracts signed on luxury homes reaching their highest number in more than four years.

Buyers inked a total of 40 contracts on units asking $4M and above, according to Olshan Realty data. The last time weekly contracts signed surpassed 40 was back in August 2016, when 43 were signed. In the last month, a total of 144 residential properties sold above the $4M price point.

The market is partly moving because sellers are slashing prices, in some cases taking a loss. The priciest deal of the week, two apartments to be combined at 551 West 21st St., went under contract at an asking price of just shy of $26M. It previously sold for more than $31M in 2016 and was first listed at $40M in 2017. The second-most-expensive deal was another resale unit at 80 Columbus Circle, which went under contract at an asking price of $25M, down from the $29M it was listed for in fall 2019.

“The cocktail is COVID vaccines on the way, low interest rates, a robust stock market and discounts on inventory,” Olshan Realty’s Donna Olshan said. “I think the New Yorkers have come back out to buy and try to get a deal before the rest of the city opens.”

A total of 26 condominiums sold during the week with an average asking price of $9.2M. During the month of February, units were on the market for an average of 663 days before going under contract. For four weeks straight, at least 30 units have gone under contract each week, which Olshan describes as a “dazzling” streak.

Still, the average discount on original asking price to last asking price on the units under contract last week was 11%, the data showed.

“The really intrepid [buyers] came out last summer, but the market started to pick up once we got past the election,” Olshan said, noting new development sales are making up a bulk of the deals.

Over the last 10 weeks, a total of 185 condos have sold, and more than half were new development deals. Last week four units across Related Cos.' two new Hudson Yards residential towers went under contract, with some notable discounts.

Apartment 78E at 15 Hudson Yards sold with an asking price of $5.9M, but was originally listed at more than $7M in the offering plan, Olshan said. Meanwhile, apartment 5603 at 35 Hudson Yards was first asking nearly $5.8M, but last week went under contract with the most recent asking price at less than $4.3M.

“The one trend that I am seeing is that the condos that are selling are 7% larger in size than in 2020,” she added. “This is a pandemic reaction, people buying bigger space, and at the same time we’ve seen many developers discount their inventory, and that is appealing.”

The luxury market in Manhattan has been challenged for years, and it is now dealing with the loss of foreign buyers as quarantine measures and travel restrictions have kept visitors away for nearly a year. The city was already swimming in luxury inventory, and the uncertainty of election years make it notoriously hard to sell pricey residential.

A suite of regulations considered unpalatable to high-end buyers have also been introduced, possibly chilling the market, and more could be on the way. In 2019, the state enacted a "mansion tax" that meant buyers of multimillion-dollar homes are charged two one-off sums at the time of the sale. A so-called pied-à-terre tax, which would be an annual fee for pricey NYC condos that aren't a primary residence, is said to be a priority for the state legislative session this year. Brokers previously said the tax would "kill demand."

Investors have already begun to look for deals on bulk condo sales, with some searching to buy between three and 100 units at one time, in exchange for a big reduction in price. But Olshan said there aren't many bulk sales deals materializing yet.

“The lenders are not letting that stuff go, they are not discounted enough to be attractive,” she said.