In New York, one of the most expensive places to live, the real estate market is showing signs of growth strain.
CGTN’s Karina Huber reports.
A penthouse condominium by Central Park in New York just fetched $238 million. Bought by hedge fund billionaire Ken Griffin, it is the highest price ever paid for a home in the United States.
But that sale is an outlier. Most luxury properties in New York are not breaking records. Sales are slowing.
“For buyers, it’s a fantastic opportunity,” said Donna Olshan, Founder of Olshan Realty.
Donna Olshan, who tracks sales of properties that go for $4 million and above, said contracts in January fell 16 percent from a year ago to its lowest level in six years.
Appraiser Jonathan Miller says the weakness that started in the high-end market has now spread to all price points.
“2015, 31 percent of the transactions in Manhattan in the third quarter were above asking price. Today, that’s about 7 percent,” said Jonathan Miller, President of Miller Samuel Appraisers.
Some of the weakness is due to oversupply. New York went through a construction boom a few years ago.
But Olshan said the bigger cause is Trump’s new tax bill. It set a $ 10,000 limit on annual local, state and real estate tax deductions.
“The minute they changed the tax law in the end of December 2017, the market went south,”said Donna Olshan, Founder of Olshan Realty.
There are other concerns as well that are making buyers more hesitant.
It’s more expensive to finance a home today than it was a year ago because mortgage rates are rising. Others have been hit by the volatility in the stock market and some are concerned about a recession down the road.
“Whenever there’s uncertainty in anything that an individual looks for they just take longer to process. So the way to think of this housing market is – there’s no sense of urgency. People are waiting and seeing what will happen next,”said Jonathan Miller, President of Miller Samuel Appraisers.
Olshan said sellers are going to have to lower their prices by at least 10 percent to attract buyers. A tough pill for sellers to swallow.
“They believe that if they buy Manhattan real estate they have a god given right to make a profit. Guess what – this is a market that is very humbling. It’s going to show you that we are a sector like others. Sometimes we go up, and sometimes we go down,” said Donna Olshan, Founder of Olshan Realty.
More than 20,000 new units for rent and for sale are expected to hit the New York market this year exacerbating the city’s oversupply problem. That’s only more good news for those in the market to buy.