NYC's luxury real-estate hit worse than 9/11 or Great Depression as properties sell at less than half the price
The Big Apple’s problems have been compounded by the coronavirus pandemic as the city’s real-estate market has been going through a devastating experience. While the city’s wealthy residents have left in the wake of the outbreak of the pandemic with no certainty of returning, putting the city’s revenue collection in peril, it has now been reported that some of New York City’s posh properties are selling for less than half of their original asking prices.
According to Miller Samuel, one of the best real-estate appraisal firms in the NYC area, the number of luxury co-op and condo closings in Manhattan was low by 54 percent compared to last year while the median sales price was down by 11 percent. Total closings remained down in the quarter, even at rates lower than those found in the wake of the 9/11 terror attacks and the economic crisis of 2008, the data has shown.
NYC’s property though has seen a bounce off of the April lows, the recovery has been slow and the future looks uncertain, thanks to not only the pandemic and economic downturn but also the rising crime in the city. Mayor Bill de Blasio has downplayed the fact that the rich residents are not yet convinced about a return but his administration has been slammed for slashing funding of the local police even as criminal activities have surged, including in the posh areas.
The deep discount sales in NYC
To give an example of the sorry state of affairs in the luxury real-estate market, financier Michael Price sold his 9,000-square-foot Upper East Side townhouse last month for less than $19M, which is 51 percent less than its original asking price of $38M in 2016. In 2003, Price, a hedge funder, and his wife Jennifer brought the property for $14M, as per records. The property has seven bedrooms and 8.5 bathrooms among other amenities.
In another case of a deep-discount sale, a five-story Chelsea mansion was sold in early July for less than $15M, which is again 59 percent off its original asking price of $38M as of 2016, records show. This 11,420-square-foot property once spiked the interest of Lady Gaga but was eventually bought by someone else. It features five bedrooms and other amenities.
In West Chelsea, a recent ultra high-end boutique condo development named 'The Getty' saw the prices of its remaining units by as high as 46 percent, the Wall Street Journal reported. "Truth be told, you need to do something drastic and dramatic to attract attention," Ran Korolik, a partner at Victor Group, a developer of the project, was quoted as saying by the WSJ.
"I didn’t want to reduce prices by 15 percent or 20 percent and then have someone come along and try to negotiate another 15 percent or 20 percent," he said.
Terrence Oved, a NY real-estate attorney, told the WSJ that he had listed his nearly 3,000-square-foot triplex Sutton Place penthouse with a large private rooftop terrace for $5.995M on August 1. He paid $5.5M for the property in 2013 and invested nearly $1M for customizing and upgrading it.
Although the city has done well in dealing with the outbreak, lockdowns have continued to hamper the city’s lifestyle and unemployment (double the highs seen during the 2008 crisis) and crime rates have only gone up since May. The wealthy residents have left for their second homes since the early days of the lockdown and they have been followed by people like students, restaurant workers and others, which has left several thousands of rental accommodations empty. Between March 1 and May 1, some 420,000 people deserted the city and the number may have gone past 1M since then.
De Blasio’s plan of housing homeless people in some of the city’s luxury hotels as a measure to prevent the spread of coronavirus has been another controversial issue with local residents complaining about offensive activities being carried out openly. The mayor said on Monday that he would start transferring some of those homeless people back into shelters but did not give specific details.
Some still optimistic about NYC's future
However, while the current state of NYC has left many people worried, some see a silver lining. Fred Wilson, co-founder of Union Square Ventures, said in a blog post penned on August 18 under the title ‘NYC is dead, long live NYC’ that the current crisis would make the Big Apple a better place to live.
“It is certainly the case that many talented people are leaving NYC right now. It is also the case that the city is suffering from rising crime, filth, etc. NYC is not going out of business. It will need a turnaround. It will need new leadership, which it will get. The pandemic will end. Restaurants, museums, broadway, nightclubs, etc, etc, etc will re-open. It won't be the same NYC that existed pre-pandemic. But that is a good thing. NYC has sucked for the last decade or more,” he wrote.