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A Market Saturated With Supply Is About To Get Even More Saturated

A report from Real Estate Weekly on New York. “As the super luxury market continues to stagnate, developers are looking to shift towards smaller-scale projects and cheaper areas. While superluxury was a major discussion point several years ago, The Marketing Directors’ Joshua Silverbush, director of market insights, said the spotlight has since shifted away.”

“‘Superluxury was one of the primary themes we talked about and now you don’t hear so much about superluxury,’ Silverbush said. ‘That aspect of the market hasn’t moved the way some developers would’ve hoped.'”

“Andrew Gerringer, The Marketing Directors’ managing director of new business development, explained that the superluxury demand came during a small window of time where there was a lot of foreign capital coming in from Russia and China. The opportunities have since dwindled and Gerringer said new and existing superluxuries might have a hard time selling.”

“As for the new developments such as 111 and 217 West 57th Street that will be coming online soon, Gerringer said ‘I think they’re going to find themselves in a lot of trouble…those are going to be really difficult to sell.'”

“Jonathan Miller, the president and CEO of real estate appraisal firm Miller Samuel, shared those opinions and said the superluxury market was ‘a shadow of its former self.’ ‘What we’re seeing now in 2018 and 2019 is product that was put on hold and is being released now,’ Miller said. ‘But they’re coming into a market that it wasn’t designed for, it was designed for the demand circa 2013 and 2014.'”

“Miller added that during the superluxury heyday, many developers were trying to fill the demand all at the same time and created ‘an oversupply of a very narrow niche.'”

From Habitat Magazine. “These are happy days if you’re hoping to buy an apartment in New York City. On the heels of recent reports that sellers are slashing prices more furiously than at any point since the nadir of the Great Recession, there comes a new report that there are 33,000 apartments in the Manhattan development pipeline, Crain’s reports.”

“The new units are slated to arrive as demand for newly developed product continues to soften. Put another way, a market saturated with supply is about to get even more saturated.”

“New units are expected to be concentrated in three areas, according to the report by the Marketing Directors, a new-development marketing firm: in and around the massive Hudson Yards project on the West Side of Manhattan; East Harlem; and the Lower East Side.”

“The firm predicts that between 4,600 and 5,300 units will be delivered each year between 2019 and 2021.”

From Mansion Global. “A once-$120 million Manhattan penthouse is now asking $68 million, after having another price cut on Wednesday, according to listing records. The latest $8 million cut brings the total amount of discounts on the Fifth Avenue co-op to $52 million.”

“Prior to this, its most recent price cut, from $96 million to $76 million, occurred last September. At the time, former listing agent John Burger, of Brown Harris Stevens, told Mansion Global that September is a good time to regenerate interest on a property. ‘A great part of the audience of this type of property was not in the city over the summer.'”

“Discounts are on the rise in Manhattan’s luxury market. Between Jan. 1 and May 31 of this year, 58.6% of luxury homes sold in Manhattan—defined as those priced at $4 million and over— were discounted between hitting the market and closing, according to data compiled for Mansion Global by StreetEasy.”

This Post Has 22 Comments
  1. ‘the superluxury market was ‘a shadow of its former self.’ ‘What we’re seeing now in 2018 and 2019 is product that was put on hold and is being released now,’ Miller said. ‘But they’re coming into a market that it wasn’t designed for, it was designed for the demand circa 2013 and 2014.’

    Notice no one mentions safe deposit box in the sky, when that was all they could talk about back then. This is an obvious example of the real estate bubble and it’s a global phenomenon.

  2. ‘A once-$120 million Manhattan penthouse is now asking $68 million, after having another price cut on Wednesday, according to listing records. The latest $8 million cut brings the total amount of discounts on the Fifth Avenue co-op to $52 million’

    You gotta be in it to win it. This is a speculative thing. Nobody needs this:

    ‘The 20-room duplex has seven bedrooms, 10 bathrooms, a living room with two fireplaces and a library with 17th-century leather walls. Its monthly maintenance fees run to the tune of $33,924, according to the listing. ‘

  3. The small niche became the entire market. The Yellen dollars did not really exist until someone borrowed them and spent them. The PTB just wanted them in the economy whether they were spent to produce oil shale at a lost or luxury housing virtually no one could afford.

    1. ‘What happens when you bring together an entrepreneur, a product designer and an investment banker who all really love collector vehicles? You get Rally Rd., an app for buying and selling equity shares in classic cars. Launched in 2016, the company’s SEC-compliant platform lets users purchase shares in Ferraris, Porsches, Lamborghinis and other classic models for as little as $50 per share. The company says it has 50,000 members that have invested millions. Currently, there are just 10 cars available to purchase stakes in, though Rally Rd. expects to have 100 available on the app by the end of 2019.’

      ‘The New York-based startup has just closed its second round of funding, a $7 million Series A led by Upfront Ventures, with participation from Anthemis Group, Social Leverage, WndrCo, Nas, Betterment co-founder Eli Broverman and Acorns co-founder Jeff Cruttenden. Earlier this year, it announced a $3 million seed round led by Columbus Nova.’

      ‘Rally Rd.’s co-founders Chris Bruno and Rob Petrozzo told TechCrunch the crypto boom and bust really put digital asset investing in the mainstream, helping to bolster business that would have seemed pretty odd just a few years ago.’

      ‘For now, Rally Rd. isn’t making money. They don’t take any management fees or share of the offering. Bruno says their plan to generate revenue is to adopt the Robinhood model and are building out a subscription service for those interested in premium access.’

      ‘In early 2019, Rally Rd. expects to announce expansions into other verticals, including art and sports memorabilia.’

      1. Hahah…at first I thought they meant you could buy a share to drive them on occasion. Took me a minute to figure out they are no longer cars…just safety deposit boxes in a climate controlled display case.

        1. The storage costs alone will bankrupt this thing. I’ve made the point before that if you look at antiques, for example, they aren’t investments. If you see an old chair on the Roadshow sell for $10,000, you have to think, how much did it cost to keep that thing protected for 200 years?

      2. “…Rally Rd. expects to announce expansions into other verticals, including art and sports memorabilia.’…”

        This is one of those business models that make bitcoin look like a sure thing.

        I at least try to keep an open mind and to each his own and that sort of thing, but I have never understood the fascination with old cars.. I know this sounds a bit politically incorrect, but do some have some sort of fetish about sniffing the seat upholstery ?

        1. ” I have never understood the fascination with old cars”

          For people who love them an old car is a time machine. But as soon as the generation who loves a specific car dies off the value plummets. In my case I didn’t even have to die…now that the new cars have gotten so good I no longer care about 60s muscle cars except as a conversation piece. I predict others will feel the same way soon.

  4. For context, does someone know how many condo apartments there are in NYC. I am wondering how much down pressure these 33K pipeline will impact the market

    “These are happy days if you’re hoping to buy an apartment in New York City. On the heels of recent reports that sellers are slashing prices more furiously than at any point since the nadir of the Great Recession, there comes a new report that there are 33,000 apartments in the Manhattan development pipeline, Crain’s reports.”

  5. ‘Mel Watt, a federal housing finance agency director and former North Carolina congressman, strongly denied Thursday that he sexually harassed an employee.’

    ‘Testifying before the House Finance Committee, Watt refuted claims by Simone Grimes, a special adviser at the agency, and accused her of selectively leaking recorded conversations that she maintains proves that Watt acted improperly.’

    ‘Watt refused to cooperate with investigators, asserting that his legal counsel advised him that as a presidential appointee, he wasn’t subject to FHFA harassment rules. That annoyed Finance Committee Chair Jeb Hensarling, R-Texas.’

    “Here’s the question I have to ask…why wouldn’t you, as leader of this organization, voluntarily bind yourself to a policy that you expect every other employee to be bound by?” Hensarling said.’

    Why is this in front of a finance committee?

  6. On a related note: recently there was a big, brief commotion about the money-laundering, etc, in downtown Boston luxury condos. That lasted for maybe half a day and all is forgotten. Where is Senator Running Dear on this vital issue of inequality?

    1. One would think that Fauxahontus, self-proclaimed champion of the middle class, would make tackling unaffordable housing a top priority. Unless she’s heap big hypocrite.

  7. I just got this email:

    First and Only Time Open | Tuesday 11-2

    924 N. Hillcrest Rd, Beverly Hills, CA | $29,950,000

    “The Skouras Residence”. Sited behind gates with an expansive motor court and beautiful views, this classic 1956 Harold Levitt is timeless. In impeccable condition and remodeled to perfection, this is the antithesis of the proliferation of modern boxes currently flooding the market.’

    Boxes flooding the market?

    ‘expansive motor court’

    Parking lot.

  8. While looking over the property listings for Ventura, CA, I came across something unseen for the past 7 years or so. Fixers. One was a cosmetic fixer and the other one had torn up walls and exposed wires everywhere.
    Looks like some speculators are gittin’ out. And, by my calculations, neither property was priced low enough to cover the renovation costs at current price points.

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