Despite Record Penthouse Sale, Manhattan Real Estate Market Continues To Slip
While hedge fund billionaire Ken Griffin’s record $238 million purchase of a penthouse at 220 Central Park South helped push the average sale price up nearly 10%, the Manhattan real estate market continued to soften, with the number of first quarter closed sales in Manhattan reaching its lowest level in a decade.
The mega sale helped boost the average sale price above $2 million, from $1.933 million in the first quarter of 2018 to $2.119 million in the first three months of this year, according to the market report from Douglas Elliman Real Estate.
However, for the fifth consecutive quarter, the median sale price decreased 0.2%, from $1.077 million at the beginning of 2018 to $1.075 million at the start of this year.
At the same time, the number of first quarter sales reached its lowest level in a decade at more than 16% below the two decade average of all quarters, and with the lowest market share of new development closings in four-and-a-half years.
The median price was up from the end of 2018, when it dipped below $1 million, to $999,000, for the first time in three years.
While the record sale did end up skewing the average price per square foot up about 4% to $1,769, the overall market bore out consumers’ uncertainty about the economy.
The record sale also ended up ushering in a new, one-time mansion tax that’s likely to soften the market even further, says Jonathan Miller, chief executive of Manhattan appraisal firm Miller Samuel, which produced the report in conjunction with Douglas Elliman.
“I’ve always said that one sale doesn’t make a market,” Miller says. “However, that sale was one of the factors that seemed to prompt that new mansion tax. So, in many ways, that one sale did make the market. It’s not catastrophic, but it still will weigh on the market to a certain degree.”
Miller also noted that the number of new development transactions that closed in the first quarter of this year was the lowest number of new development closing since the first quarter of 2003, when Miller Samuel began tracking that metric.
Though the overall economy is strong, uncertainty is still the name of the game in real estate, especially with the results of the new tax law coming to fruition around this time of year.
“The economy seems to be strong and housing seems to be weak,” Miller said. “They usually follow parallel paths. What do consumers do when they’re confused? They take longer to make decisions.”