Ultraluxury Levels Rise in New York, L.A.

Prices for ultraluxury real estate in New York and Los Angeles rose sharply last year, fueled by new development, rising land costs and interest from international buyers. In Manhattan, the ultraluxury entry point was $12.5 million in 2014, up from $9.4 million the prior year and a nominal increase of 4% over the prior highpoint in 2008, according to a new luxury-market report from realtor.com. In sections of Manhattan, the price of luxury was at a whole other level. The Midtown ZIP Code 10019, home to the new and famously expensive One57 condo tower, had a threshold of close to $32 million for the top 1% of homes. The ultraluxury threshold for Los Angeles County hit almost $4.1 million in 2014, 16% higher than the prior year. The ultraluxury entry point is much higher in some exclusive parts of Los Angeles. In a ZIP Code covering Bel Air and Holmby Hills, the entry point in 2014 for the top 1% of homes was $34 million. In a prime section of Malibu, Calif., the threshold was $25 million. Realtor.com is launching a regular market update on the state of U.S. luxury housing. The first report examines the country’s two largest luxury markets—New York and Los Angeles. Other cities will be included in future reports. Realtor.com is a part of Move Inc., which is a subsidiary of News Corp. Mansion Global is a part of Dow Jones, which is also owned by News Corp. For its report, realtor.com analyzed transactions from 2006 to 2014 in both markets. It used the top 5% of sales to define luxury and the top 1% to denote ultraluxury. The data analyzed covers the New York and Los Angeles metropolitan statistical areas, which are large swaths with a range of high- and low-cost cities and towns. Realtor.com examined county and ZIP Code-level data in Manhattan and Los Angeles for a closer look at the high-end market. In the New York metropolitan area, it takes $3.7 million to buy into the top 1% of housing—a price of just under $1,000 a square foot. In the Los Angeles metro area, a buyer will need $3.9 million, or $750 a square foot, to crack the top 1% of the housing market. As of the second week of May, there were 64 homes in New York City and 19 homes in Los Angeles County listed for $30 million or more on realtor.com. “The luxury end of the market has been outperforming the housing market overall,” said Jonathan Smoke, chief economist at realtor.com. “But like the market overall, the biggest difference from the peak is that the level of activity is nowhere near the level of activity in 2006.” In the New York metro area, luxury transactions are down nearly 25% compared with 2006, and in the Los Angeles metro area, they’ve dropped by nearly 19%. But strong price growth has raised the total value of the luxury markets in both cities. The total luxury market value in New York in 2014 was $23 billion, up 9% from 2006. It was $17.3 billion in L.A. last year, up 19.4% from 2006. “Prices have never been higher,” said Gary Gold, executive vice president at Hilton & Hyland in Beverly Hills. He said Los Angeles carries wide appeal with international buyers for its single-family homes with yards — often a rarity in large international financial centers. Gold said that speculative builders are paying millions — as much as $15 million for a lot — just to tear down the existing home and build new. Those new homes are then hitting the market for multimillion-dollar prices, he said. In New York, Jonathan Miller, president and CEO of Miller Samuel, a real estate appraisal and consulting firm, said land prices are at record highs, so developers are creating super-tall luxury condo towers to maximize value. At One57, a penthouse closed in December for $100.5 million, the most expensive sale ever in Manhattan for a single residential unit, Miller said. The previous record was an $88 million sale at 15 Central Park West in 2012. 432 Park Avenue, one of the newest ultraluxury developments, is the tallest residential tower in New York at 1,396 feet. It is scheduled to be completed this year. “We are building a lot of new product skewed to the very high end of the market,” Miller said, “and really nothing else.” Read more on the realtor.com report