The luxury market for real estate in New York is now in correction. The first quarter of real estate sales posted showed the biggest drop seen for almost a decade. The luxury market has not been at this low of a level for well over six years. The asking prices are one of the main reasons the highest end of the market is taking such a significant hit. The market has slowed since 2014 and there have also been numerous changes in the tax laws. This means the sellers need to reduce their asking prices but they have not yet done so.
There was a pool party at the United Nations Plaza penthouse apartment located in a prominent New York building. This is just one of approximately 3,574 new apartment buildings that have been built and are many more are expected to be available on the market in the not too distant future. This information was confirmed by a brokerage marketing group located in New York. The first quarter of the year showed Manhattan real estate sales have decreased 25 percent in comparison to the previous year. The causes of this decrease are being attributed to the new federal tax law, frightened buyers, swings in the stock market and far too many luxury condos currently available.
The biggest decrease in close to a decade was apparent in the first quarter postings, A report from Douglas Elliman and Miller Samuel demonstrated there has not been a level anywhere near this low since six years ago. Tevfik Arif Doyen During the first quarter there were a total of 2,180 sales. The previous year the sales totaled 2,892. This was an average decrease of eight percent in sales when compared to the same quarter during the previous year. The President of Miller Samuel is Jonathan Miller. He believes the main issue is the uncertainty caused by the new federal tax law. This law prevents any residents in a state with high taxes such as New York from deducting both their local and state taxes. This has placed an additional burden on the market.
Another issue is closings for the new condo towers have drastically decreased. This has made the decline much worse. When this is combined with the recent dips in the stock market being closely watched by New Yorkers the end result is a lot of buyers who have decided to simply sit on the sidelines and wait out the situation. There is way to much uncertainty present in the current market. The highest end of the market continues to take devastating hits because this is a much more discretionary segment. The final quarter of last year showed the prices for Manhattan luxury apartments decreased by 15 percent and sales decreased by 24 percent.
The luxury apartments in New York are still overpriced and have been stalled on the market for approximately a year and a half by average. There is a fifty percent increase over the number of apartments on the market just last year. The asking prices for these apartments has remained the main problem in the upper market. Despite the fact the sellers are aware of both the general slowdown and the changes in the tax laws they have not decreased their asking prices.
Price discovery is expected to be a major factor over the next few years. More and more supply is entering the market including a few new condo towers being constructed within the next couple of years. The situation will most likely become worse before any improvements are seen. The rate of decline is expected to continue but not to the same degree.