A once-fiery market for luxury homes in Manhattan cooled to its embers in 2016, marking a major slowdown following several years of recovery-driven growth in high-end development.
The number of contracts signed for homes priced at $4 million and above fell 18% in 2016, with the borough’s once-iconic luxe co-op addresses taking the worst hit, according to Olshan Realty’s year-end report on Manhattan’s luxury housing market released Monday.
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In total, 1,102 luxury Manhattan homes went into contract in the past 12 months, ringing in at $8.938 billion in total sales.
"The numbers are higher than 2012, but below the golden years of new condo development (from) 2013-2015," Donna Olshan, president of Olshan Realty, wrote in the report.
The vast majority of contracts signed, 76%, were for condos, more than half of which were for apartments sold off of floor plans in new developments, according to the report.
Downtown bucked the overall trend and was one of the most popular areas for high-end homes—thanks, in part, to the newly opened condominium designed by Robert A.M. Stern at 30 Park Place in Tribeca. Downtown accounted for 49% of all luxury sales.
Meanwhile, contracts for luxury co-ops fell off by 25% from last year, which Ms. Olshan sees as a bigger trend of buyers looking past these prestigious but exclusive buildings.
For instance, a three-bedroom unit at River House, one of the most highly regarded co-op buildings in the city, has languished on the market for two years and taken more than a 20% price cut. Another well-known co-op building, a one-time home of John D. Rockfeller, at 740 Park Avenue has had four bedroom on the market since 2014 that has also received a steep, $3 million price cut.
Buyers want the freedom of ownership that comes with a new condo, hip architecture (in place of pre-war charm) and robust amenities, according to the report.
In keeping with that trend, townhouse sales have been declining for two years, and fell below 2013 transaction figures, with only 112 contracts signed.
The overall decline in luxury contracts reflects classic price resistance, according to Ms. Olshan. While the overall average asking price rose 2% since last year, luxury homes sat on the market for two months longer in 2016t han they did in 2015.
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The average days on market has skyrocketed since 2013, when it took on average less than six months to sell a high-end home. Now, it takes more than 10 months, according to the report.
Ms. Olshan’s report has signaled a slowdown in the luxury market since the end of 2015. Last year, the total number of contracts signed increased by a paltry four homes from 2014, and total volume of sales fell 4.6%.
Last week, the most expensive apartment to go into contract was for a three-bedroom unit on the 43th floor of 432 Park Avenue, with an asking price of $17.625 million.