There has been an awful lot of noise about the Real Estate market in New York in the past few weeks. Is it hot? Is it cooling? Reporters cite plans for one Central Park South being put on hold as conclusion-worthy news. Can we really extrapolate from that to the whole market? What does the Sweet Meteor O’Death have to say?

The $10mm-and-Up Luxury Market

Very recently I was having a market conversation with a seasoned developer whose opinion I respect. “Do you know there were only 114 sales in 2015 over $10mm?” he said to me. “Out of more than 11,000 total sales in New York City. Yet, all the press wants to write about is the market for what’s less than 1% of all the sales!”
I pressed him for more and he continued. “Scott, the ‘market’ over Ten Million doesn’t really exist. It never really exists! It’s so thin, always, and is completely unrepresentative of the greater market. Are there too many of them being built? Perhaps. But the bigger story isn’t about that segment of the market. The story of the market is the massive demand for everything else.”

He’s probably not thinking about the NYC luxury housing market.
Interesting thoughts to consider. I agree with them.
Certainly, I enjoy reading about the engineering marvels and the cheap financing of these big projects through arcane visa projects like EB-5. But there is a total disconnect between this news and where housing is generally.
I probably have been watching The Martian a little bit too much since it came out on video a few weeks ago, and I started tying this conversation and the movie in my mind. In the movie, Matt Damon’s character Mark Watney plans to take advantage of the thin atmosphere of Mars to escape to safety.
Where are you going with this metaphor, Scott?
Well, the market is Watney’s rocket, and the luxury market is the thin atmosphere of Mars. The market has continued to zoom through the air, and the luxury market is ethereal. It is not the power propelling the market, and I would encourage you to navigate your ship through that noise, whether the news is about a really strong luxury sale, or a slowdown in those sales. They are simply anecdotal. If a must-have fabulous apartment comes to market at 740 Park or elsewhere, you can bet your beans that it will make for a great story, and a high price. Essentially independent of the rest of the housing market.

2016 Prices, 2016 Mortgage Rates

I keep banging the drum about this, but it does look to be accurate. We’re seeing price reductions on overpriced units overhanging from 2015, and sellers finally may have gotten the memo that they need to be far more in touch with the market. What does this mean for you, the $1-5mm buyer? Prices should flatten a bit in Manhattan in 2016 from 2015 numbers.
This is quite an opportunity for buyers, in my view. They should have time to understand the market and to take advantage of mortgage rates, which also don’t seem to be going anywhere, anytime soon.
Further, sellers! Don’t be sad. If you are thinking about selling, you have just witnessed five years of straight double digit gains! Take your gains and head for the hills. Or if you’re trying to upsize or downsize, this market, being a bit more static, gives you a better opportunity to make the move without risk of prices jumping on you on the buy side.
Some advice if you’re thinking about buying: you may want to have some assets in cash and out of the stock market while you’re shopping. The stock market is quite volatile at the moment, if you haven’t noticed. No one wants an entire portfolio to drop 25%, risking the liquidity required for a chosen purchase!
The only wrinkle here, which could push prices up a bit, is the lack of inventory. If you look for West Village coops or condos from $1mm-$3.5mm, you will see a grand total of 17 (as of this writing). That doesn’t even begin to satisfy demand.