(Bloomberg) -- Luxury homes in Manhattan are selling at the biggest discounts on record as owners grow tired of waiting for buyers to match their price.
Homes priced at $4 million or more that went into contract in the first 12 weeks of the year had their asking prices cut by an average of 10 percent, the most in data going back to 2012, according to Olshan Realty Inc. Final sale prices, which won’t be known until the deals close, will probably reflect even greater reductions, said Donna Olshan, president of the brokerage that compiled the report.
“Most things at $4 million and above are selling 15 to 20 percent below the original ask,” Olshan said. “It’s a data point that screams: The market is overpriced!”
Owners who prevail in selling their homes are conceding that Manhattan’s luxury market is brimming with choices, and that even well-heeled buyers are sensitive to price. Shoppers with cash are no longer bidding up properties to record levels, and sellers who recognize the new reality are the likeliest to succeed, Olshan said.
This year, 4,600 newly developed apartments are expected to be listed for sale, with almost half of them priced at $2,400 a square foot or more, according to brokerage Corcoran Sunshine Marketing Group. That’s on top of the 3,323 new units that reached the market last year, as all well as older properties listed for resale.
A total of 230 luxury units went into contract this year through March 18, a 17 percent decline from the same period in 2017, according to Olshan. Before finding takers, those homes spent an average of 466 days on the market, the longest stretch for the beginning of a year in data going back to 2012.
One property in Olshan’s tally is a seven-bedroom townhouse on East 65th Street that was put up for sale in October at $18 million, according to listings website StreetEasy. The seller reduced the price twice since then, eventually asking $14 million for the 10,253-square-foot home. It went into contract on March 14.
This week’s biggest deal was for a 6,360-square-foot apartment at 1 Central Park West, also known as Trump International, Olshan said. The apartment was listed for sale in May 2016 for $40 million and, over time, had its price lowered to $27.5 million before finding a buyer, according to StreetEasy.
More sellers need to follow their lead, Olshan said.
“The biggest problem right now is just straight-up overpricing,” she said. “People are still being delusional about their real estate.”
©2018 Bloomberg L.P.