Collapsing New York Real Estate Prices

It feels anecdotal, but it is not as anecdotal as it feels. In essaying to foresee the future of New York City, we keep a close watch on real estate. We know that prices are declining, but, as they say in the stock market, is it a correction or a collapse? Is the market finding a sane level or is demand disappearing? Does it foretell a recession or a depression?

Anyway, among the most elegant condo buildings in the city is the One57 building, which is located, as you guessed, on West 57th Street, in the heart of the toniest shopping district, right next door to the tonier Central Park South.

Zero Hedge describes the apartment thusly.

The property is a 58th floor apartment in New York's One57 building, according to Bloomberg. The building was once viewed as a symbol of a luxury development boom in New York - a "boom" that ran face first into the Covid pandemic, as we have written about on Zero Hedge for the last year. 

The condo in question is a 4,483 sq. foot parcel that was purchased in 2014 for $34 million. It was sold this week for $16.75 million. 

As they say, Ka-ching. The sellers lost more than 50%. That’s quite the haircut. 

But, it’s not the only apartment that has sold at bargain basement give-away prices:

The deal is the biggest loss by an owner at the building since it has been erected. In 2020, there were four other sales in the building in which the owner took a 40% loss, at least, according to Bloomberg.

As for the building itself, here is the story. I like it that one developer calls it a “pricing reset.” And I will note the other comment, that other buildings in the neighborhood will also see their value dropping precipitously. I would add that lower prices also mean lower tax revenues for the city. 

Development for One57 started in 2009 and the building became iconic in representing Manhattan's luxury condo boom that has played out since the Great Recession.

Jonathan Miller, president of Miller Samuel said: “It’s a pricing reset for this building. It shows that the market is continuing to adjust for these properties and it suggests that there’s potential for more.”

Gary Barnett, chairman and founder of Extell, said: “Clearly, over six years ago the buyer understood the value of this unit, Unfortunately, this was an estate sale and they decided to just dump it.”

“It will affect the value in all the surrounding buildings," he concluded.

It is not just on 57th Street that demand is collapsing, along with price:

Similarly, Forbes had estimated this summer that unsold units at The Getty Residences, at 503 West 24th Street, had seen sharp price discounts of more than 40%, as demand collapses.