Stock up on canned goods! Ship your kids out of town! The apocalypse is upon us. Manhattan apartment prices are falling, a sure sign that streets will soon run with blood and The Bronx will burn anew.
The third-quarter data from appraising firm Miller Samuel Inc. and Douglas Elliman Real Estate alarmed those who sweat over every hiccup in the market. Just as Tom Brady’s said to be “falling off a cliff” every time he throws a bad pass, the apartment market’s in a “plunge,” according to every headline. OMG, median sale prices of Manhattan co-ops and condos fell 8.2% compared to the same period last year! The number of sales was down 14.2%!
Brokers and media pundits have termed the situation a “free-fall,” “a bloodbath,” “the worst since the 2007 crash” and “a harbinger of a new recession.” The doom and gloom holds sway even though a big reason for the price plunge was a one-time occurrence — namely, the rush to close deals in the spring before a huge hike in the “mansion tax” kicked in, which meant that many sales that otherwise would have waited until the third quarter were completed sooner.
The slump comes on the heels of a New York Times report in September that one-quarter — a “conservative” estimate — of 16,200 new condo units that came to market since 2013 remain unsold.
But falling prices of luxury apartments are hardly unique to the Big Apple. They’re struggling everywhere, including in the Miami area despite a mostly mythical “exodus” of New York money there.
Few New Yorkers will lament the sag if means the oligarch bubble has burst. You don’t have to be a disciple of wealth-hating Rep. Alexandria Ocasio-Cortez to resent the sight of dark windows in “fully sold-out” new apartment towers — not only at super-luxury ones like 15 Central Park West and One57, but in scores of relatively cheaper ones.
Manhattan homes aren’t selling for less because of dirtier streets — the highest-end buyers don’t walk the sidewalks like the rest of us if they’re in town at all. It’s rather because the loose change dropped by foreign zillionaires seeking “safe haven” investments is finite. The regimes in China and Russia are putting screws to moguls trying to move capital out. The Venezuelan money desperate to flee the country is mostly exhausted. Meanwhile, the supply of castles-in-the-sky has mushroomed through new construction, some of it in fringy neighborhoods. As a result, some projects are wooing buyers with every incentive short of hereditary peerage titles — or, in the case of One Manhattan Square in Chinatown, a mere 10-year waiver of common charges on the priciest units.
The slump is supposedly different than previous ones because it also hit “cheaper” apartments under $5 million. Sales fell by 4.7% in the “modest” $1 million to $2 million range. But unless the bottom truly falls out — which isn’t remotely the case — the market fluctuation is a good thing. What’s a bummer for sellers is a feast for affluent renters — people who actually reside, work and raise families in the Big Apple but can’t afford to buy.
A CNN story this week was headlined, “Dream of buying a Manhattan apartment? Now’s your chance.”
I was such a dreamer once. My wife and I bought our high-floor, spacious two-bedroom, Upper East Side co-op with a terrace for peanuts — all right, $255,000 since it’s public record — in 1993, after soaring crime, corporate flight and shock waves from the 1987 stock-market crash wrecked what remained of a short-lived boom.
Today’s slump means we might get less than the near-$2 million that brokers say it’s worth if we were to move. But a few bucks less for us is great news for buyers. That’s the way the market works — and why New York won’t fall off a cliff anytime soon.