Makes Sense: Report Shows New Constructions Are Driving Market

Even before 2015 began, real estate news outlets had commented on the beginnings of a cooldown in New York’s real estate market — the market’s growth would continue steadily, albeit at a more even keel than in the few boom years that preceded it.  On Monday, the 4Q 2014 Elliman Report was released, which illustrated a more accurate picture of the market.  The take home message: Manhattan’s ultraluxe new developments are driving the market.

Naturally, the luxury market set new records, and for the overall market, the quarter’s median price was $980,000, which is actually the market’s highest point since it peaked at $1.03 million in 2008.  Interestingly, inventory increased by 20 percent YOY — with new development inventory actually doubling in that span — which means, as Jonathan Miller explained, that the current market is skewed towards the luxury sector.

Anecdotally, sales at One57 have slowed down a bit, still at just over 80 percent occupancy, but the Billionaire’s Row tower is still making headlines.  Again anecdotally, the full-floor unit at the 84th floor of glass-clad One57 was recently sold at a price just shy of $53 million, and was, somewhat expectedly, the most expensive sale of the holiday-bookended week.

Now, the question is which market segment will pick up a response.  To be sure, international buyers are continuing to see NYC’s luxury real estate as a safe bet to maintain their assets, especially since the pied-à-terre tax is no longer on the city administration's docket, and is therefore no longer a barrier to investment.

As for the overall market, Miller Samuel's Jonathan Miller commented, “Slow inventory increase will keep the pressure on prices across the majority of non-luxury, non-new development market”.  It will be interesting to see what happens in the coming months: the market as a whole should pick back up as 1Q 2015 draws to a close, at least if seasonal trends stay true.