Sales prices for New York luxury properties are falling fast.
In a city renowned for skyscraper-high real estate prices, property values in many of those skyscrapers are falling. According to a report from Stribling & Associates, median sales price for a New York, New York, apartment has fallen more than eight percent since the first quarter of 2017. Average sales price-per-square-foot has also dropped by six percent during the same period of time, placing the Big Apple’s luxury real estate market in an official correction.
“Buyers currently have many options to choose from, especially when looking at properties priced above $3 million,” said Stribling director of data and reporting, Garrett Derderian. Of course, because the luxury market, specifically, is in a downturn, the numbers are still pretty astronomical. That 8.3 percent loss over the past 12 months, for example, leaves median sales prices around $1.3 million, while the square-footage loss places average cost-per-square-foot at $1,490.
The cooling market is creating some issues for developers. Derderian noted, “In many cases, developers are offering additional incentives to lure would-be buyers to their projects,” including free parking spaces and paying state and city transfer taxes.
Thanks in part to 2017 tax reform passed by Congress at the end of last year, New York City’s real estate market could experience additional cooling over the next 12 months as well. Brokers in the area have been blaming the plan’s lower tax deductibility parameters for weakness in the luxury market since the bill’s passage, although the market was already cooling before tax reform passed. In a recent interview with Think Realty Magazine, National Association of Realtors (NAR) chief economist Lawrence Yun warned of potential “buckling or wobbliness in the upper-end markets in high-tax states,” including New York, Illinois, and Connecticut. However, he also recommended withholding judgment until the effects had some time to play out.
This is the first time average home price in the New York metro area has fallen below $2 million in two years, reported brokerage Douglas Elliman and property appraisal firm Miller Samuel. Jonathan Miller, president and CEO at Miller Samuel, predicted it might take “up to a year-and-a-half to two years to see the full impact [of tax reform on the luxury market].” Analysts also speculate that buyers may hold off on luxury purchases for the time being in order to avoid overpaying when prices are heading downward.