Losses on Manhattan condos

Not too surprising. People who buy and sell condos in the $10 million plus range aren’t nearly as affected by higher interest rates as many pay cash. Also I think they are less affected by general uncertainty in the economy. In our condo, the last three one bedroom sales, the two owners who sold that had purchased in the last 5 years lost a little money. The one owner who bought in 2014 sold for a modest profit but had they invested somewhere else, they probably could have done better. I think in the price range $700k-$1.5 million, for condos, I think it will be relatively flat for a while. I do feel NYC real estate is more resilient than many, if not most other major North American cities. That’s to say, if i sold now, I’d lose a little money but not nearly as much as most any other major metropolis.

Condo owners who bought before 2010 have fared the best.

The biggest losers were those who bought after 2016.

Here's one that we sold in 2013, assisting the buyer and then resold not too long ago.

9 West 20th Street #7 in Flatiron, Manhattan | StreetEasy https://share.google/OGUo3So5e9HIezCZj

I seriously doubt $10M+ properties fared any better than the rest. Probably a methodology issue in whatever analysis they ran. If you actually look at a sizeable number of resales, $10M+ has gone sideways. Most are flat, and for every one that has had a sizeable gain, there has been one with a sizeable loss.

Price aside, the other interesting characteristic is that sales are moribund. A lot of listings that sit a very long time on market without any bites. You didn’t really see that 10 years ago.

@inoada And if you had to guess, how long will it take to regain momentum? Or will it?

I think long listing times on the market are a consequence of peoples uncertainty regarding the economy and the higher mortgage rates. Although historically current mortgage rates are very reasonable, people think to what they were 2-3 years ago and just can’t get over it. Also, at least for condos in the lower price range, the traditional buyer was a younger person, maybe fresh out of school with a great new job. I don’t think a lot of the “younger” generation really believes in owning real estate as a stepping stone to moving up. They don’t want to be tied down, they prefer to spend their money on “experience” things like eating at the newest, trendiest restaurants every week, exotic vacations and buying crypto currency and/or their own investing in the stock market through apps like Robinhood. They just don’t view owning their own home as part of the American dream, or are willing to postponing it for a while. You’d be surprised how many friends I know who make 6 figures and still rent with roommates. There in their 30’s and living like they lived in college in a dorm. They have money, they could afford a modest studio or one bedroom condo. They just don’t have any interest in that

I have the same reaction. I tried to find the details of the analysis. There was none available in public domain. The source is Brown Harris Stevens. And as you must have noticed, they lumped all pre-2010 purchase together and reported $ gains rather that working in annualized gains. My take is $10mm plus is down much worse with some exceptions like 220 CPS. 157 West 57th will be prime example with data. They you have Rupert's sale. And UES coop are littered with expensive coop sale prices that are way down from their peaks.

-----------
I seriously doubt $10M+ properties fared any better than the rest. Probably a methodology issue in whatever analysis they ran.

When the market is very active let's say for sellers, a bit of irrationality creeps in. Or maybe call it herd mentality and everybody is stepping on top of each other to buy. Recently, think 2006-2007, 2014- 2017ish... Post covid boom. To some extent the brownstone Market in Brooklyn is still very active. This is mostly due to severe lack of inventory.

In those very active, strong markets, anybody that had the ability to buy, wanted to buy, chasing markets higher and higher. That portion of the buyer pool is missing from the New York City market right now. In my opinion, the vast majority of people buying now are those that don't really view renting as an option for various reasons.

One thing I've definitely noticed is a tremendous amount of self-promotion going on by agents through social media platforms like LinkedIn etc. for the most part, newsletters are still painting a fairly Rosy picture for the current market as well as New York City real estate being a very good investment overall.

Currently I don't see anything in the near term that is going to get things moving in a manner similar to some of the markets above. I am feeling like 2026 Will be a pretty vanilla year, I can live with vanilla ; )

Also, comparing this year to last year is kind of a whiff. Personally, we got lucky, and did a handful of very large deals in the last quarter of 2024 which made me feel like we had a great year. But when you look at the numbers for 2024 and I recall some of the conversations I had with agents, it certainly was far from a good year for most. So comparing this year to last year and going all rah-rah over sales numbers that are just slightly higher this year, there really isn't that much to get excited about.

MTH, I don’t have a crystal ball. But right now, all of the following are working against things:

1) Young people coming, old people leaving.
2) Fundamentals of rent vs buy suck.
3) Perception that NYC RE doubles every N years completely dead.
4) Perception that stocks double every N years completely alive.
5) No free money.

I think $10M+ market used to heavily rely on HENRYs masquerading consumption via questionable assumptions of forever-cheap debt and ever-increasing prices. Now all that’s left are the truly rich, and fewer of them as people have moved on from the whole “NYC is the only place on earth” thing.

That’s my totally unscientific take, anyways.

>> And UES coop are littered with expensive coop sale prices that are way down from their peaks.

Adam Neumann’s place is another example:

https://www.6sqft.com/adam-neumann-lists-gramercy-penthouse-for-22-75m/

They spent $27.5M on it , plus a multi-floor combo reno. I’m guessing Rebekah didn’t go cheap, probably $35M all-in. They’ve been trying to sell it for *5* years now, with the current asking price at $22.5M.

If you don’t like Neumann’s place, Leslie Alexander’s place is a stone’s throw away. Bought for $42M in 2013. Has been trying to sell for *10* years now. Current asking price is $35M, after having spent 4 months at $32M because… who knows?

PH at 111 Murray… now in its *7th* year of availability from the sponsor.

https://streeteasy.com/building/111-murray-street/ph1

Could be a good time to make an offer for rent at 111 Murray : )

Am just starting a reno and recognizing real estate makes even less economic sense when you factor in attendant costs like renovation. There are a number of reasons to buy an apartment in prime Manhattan. Money isn't one of them.

Indeed, MTH. Though I’d amend your statement with “these days”.

I think ~30 years ago when cap rates were ~10%, “money” was a good reason. By ~20 years ago when the bubble was in full swing, “money” was a common reason — but ultimately invalid given cap rate compression down to ~3%. Interestingly, ~10 years ago “money” was still a common reason because people perceived the 20% drop as an opportunity given a perception of the prior decade’s meteoric rise as normal. But cap rates still sucked at 3%, and the period pretty much ended up a dead cat bounce. After ~20 years of disappointment, I think people have finally started viewing ~3% cap rates for the raw deal it has always been — no longer fooled by the illusion of unsustainable free money in the short term.

I am glad you finally found a place you were happy with, and I hope you enjoy the process of the renovation. Despite my tilt here, it’s not all about dollars and cents.

>> Could be a good time to make an offer for rent at 111 Murray :)

I’ve sometimes wondered about this but never bothered. I figure the broker, my point of contact, is very much axed against renting. I also figure the owner would name a high price, figuring I must be looking for a specific property. I’m not. So why bother? If/when the owner is ready to rent at a market price, I can meet him/her there. If not, that’s fine — as an owner, it is for them to decide.

@ino thank you. A little appetizer to get started: 6.5K+ to monitor building's electricity usage for two weeks just to find out if an electrical upgrade is feasible. Kind of fascinating at how thorough the process is but also...oy. Love my little cabin aboard the SS Manhattan but any eventual sale will be at a breathtaking loss.

MTH, Do you need electric upgrade as you plan to use electic cooking rather than gas? Otherwise, I would think you don't need upgrade in electric.

“ A little appetizer to get started: 6.5K+ to monitor building's electricity usage for two weeks just to find out if an electrical upgrade is feasible. “

Wow, $6.5k just to monitor electricity usage, and possibly if the upgrade is not feasible, you’ve just lost $6.5k?? Ok, maybe I need to stop complaining about how expensive groceries here are.

I can with100% certainly say our current condo will be our last investment in the Big Apple. Possibly we could consider renting or if I was really hell bent on staying in this area, I’d buy a proper single family home in Jersey City. I weekly look at listings for single family homes in LA county, my dream retirement location. It pains me that my one bedroom condo is about the same price as many single family homes in LA county, albeit not in the most desirable areas. It’s a great time to buy in LA, I just hope it still is when we sell our nyc condo in 1-2 years

Turbo, Why not back to Toronto where you already have a home?

We’ve thought of moving back to Toronto. Healthcare is free which is important since I’m retired. I can do an owner move-in eviction which the current tenants can’t fight, they would only be entitled to one months rent. The major reason, which may seem bizarre to some, is the weather. As long as I am a competitive runner and running is my major hobby, I can’t see myself training through the long, cold Toronto winter, although I’ve done it before. Living in Toronto part time and during the cold season in Florida is possible. Yet out of all the major cities I’ve lived in the last 5 years, Los Angeles has the best mix of weather, reasonable cost of living, and lots to do an explore outside of running. But I was born in Toronto and obviously I feel it’s an amazing city. I will not be able to run and compete at a high level forever. So if I were a betting man ( and I like the occasional trip to Vegas and Atlantic City), I would put the probability of us moving to Toronto at a 33.3% chance. It’s probably the “safest” place to grow old as it has the least crime and best healthcare of the alternatives.

I see. You want year around temperate outdoor weather. California is hard to beat for that.

You lost me at reasonable cost of living in LA

Cost of living in NYC is less expensive than LA? Really???

I guess maybe I should have clarified my initial comment, LA has a reasonable cost of living compared to the other metro areas I am looking at, namely Bay Area, NY/NJ, Toronto and Miami/Fort Lauderdale. Compared to the rest of the country, I would agree, LA and definitely SoCal is definitely not reasonable

I'm surprised Toronto is more expensive than LA. Really? I guess it would also depend on where but still...

@300 it's got very low amperage - sth like 30. So if I want an induction cooktop (I do) and an electric speed oven and to be able to run an appliance like an Intant Pot or the ac, it's a good idea. Very curious what it will cost to get an engineer to interpret the data and then add his stamp to a piece of paper for submission to the DOB.

MTH, What is your guess of percentage of people in your coop who renovated with electrical appliances in the last 20 yeas? Every one will feast off you when it is not a common need in the coop. And if it common need, coop should upgrade income power supply in the building.

I would say in general LA is more expensive than Toronto but certainly the nicest parts of Toronto are quite a bit more than say Compton. Surprisingly Toronto has relatively low property taxes, definitely compared to LA. It is not a “government “ town and has traditionally relied heavily on the financial and entertainment sectors for revenue. Although Torontos mayor is proposing increasing property taxes as well as rent control “everywhere “. Again, LA has much better weather so for me that’s worth paying more, up to a point. Toronto’s winter I would say are similar to Boston. It’s not brutal like the upper Midwest and the lake moderates things and we are on the “right” side of the lake for NOT getting pounded with slow like Buffalo but winter in Toronto is definitely longer than a 3 month season…like I said, if not the weather issue, I could easily see us moving back

@300 - Very good question but not sure how to find out. I have yet to take up residence in the building. Normally the super would know but he's new. Should it surprise me that management doesn't know whether such a minor upgrade is feasible? I was shocked.

@911 Toronto was always one of my favorite cities and as a visitor it seemed relatively inexpensive compared to others in North America. And that might have changed it's been a while. But yes, I can see how if you're a runner that would be no fun.

MTH,

You are trying to convert basic ICE into luxury EV. So the cost and administrative burden is high.

An old coop is just not set up for a 100 amp service for small studio / 1 bedroom apartments due to a desire to use electrical appliances. Imagine if every 2 bed room apartment wanted electrical dryer and electric double oven and induction cook tops. Coned just may not even have the capacity to supply increased power to the building.

Btw, even new developments can't get enough electrical capacity. Con-ed resists giving more than 100 amp per 1000/1500 sq ft with electric heat pump heat etc. The reality is that Coned just doesn't have grid power and infrastructure capacity. They will not acknowledge this publicly as that would mean going against the anti fossil fuel lobby. This was the status last year even before energy hungry AI wave.

The electrician is asking for 80 amps mainly to add a 24'' electric oven and a 2 burner induction cooktop. We'll see. The cooktop no problem but electric ovens are so much better imo.

If that's is the case it sounds like NYC has gotten way over its skis with LL97. How are they planning to achieve that? Maybe another case of luxury beliefs.

MTH,

Well, you know the real cost of electric upgrade now. The choice is yours whether to use electric cooking or stay with gas.

LL97 is crazy and completely disregards increase in electricity prices and related infrastructure enhancement costs. Gas infrastructure already exists and will be significantly under-utilized post LL97 implementation. But then NYC voters elect AOC (more than once) and Mamdani as well and complain about high cost of everything while continuing to pass increased regulations via City Council which increase housing / utility costs.

Let us take an extreme example.
I have 60" gas stove and two ovens underneath. If I downsize a little and go induction 36 inch and 2 electric ovens, I need at least 100amps / 240Amp for just that.
Then I have a gas dryer. If I go electric another 30AMP.
Existing AC uses up 50AMPS already. Heat, if I choose electric may need upgrade by another 50amps.
I believe I have 200AMP connection in my apartment already. But, I know I am going to create issues with the total electric supply of the building if I do all of these. That would be pretty crazy of me to create problems for the building.

electric appliances do not use the rated amps all the time , most of the time that they are running they use a lot less, that's why the total amps needed for an apartment is a lot less than you would get if every appliance used the full amperage while it operates. Electricians have a formula to determine the total amps needed for an apartment

I just gave the elctrician a list of appliances and 80 is what he recommended. Maybe the building will say no. I heard through the grapevine another resident managed to sneak in a washer and dryer (!) How do you do that? She owns a number of units and they didn't go after her, apparently.

I can see running the oven and the cooktop at the same time. And maybe AC.

Yes, it's generally affluent voters who are pushing some of the most progressive causes because they are only marginally affected by the results - an all-electric city is an example. Sometimes progressive voters are downwardly mobile and want to vote their convictions but don't want to pay for them and their answer for everything they don't like including high cost is 'it's the corporations'.

MTH, Let me add a third. They don't bother to calculate real cost and practicality when they virtue signal.

Value, It is called load factor. There is an apartment load factor (can be 50-70% of total with electrical cooking and dryer) and load factor for multiple apartments together which for large buildings can be as low as 30-40% of individual apartment breaker capacity.

>PH at 111 Murray… now in its *7th* year of availability from the sponsor.

Anyone compiled a list of Penthouses that remain available from sponsors?

Don't know about other penthouses but would be interested to hear what people think PH1 at 111 Murray *should* be priced at to sell within a month.

The equivalent PH on the neighboring floor went for $28.1M a few months ago, so that is a reasonable market price. I think “sell within a month” is tough standard, as these sorts of places sell by appointment.

https://streeteasy.com/property/9010916-111-murray-street-ph2

That's quite a chop but makes sense.

What makes someone hold hold on for so long? Wouldn't taxes and maintenance be a deterrent? Unless they're rich as god but even then.

@MTH: It's a sponsor unit, so their underlying cost to carry is lower than it would be were it a resale. If they were to take a big chop, it could signal to buyers of other units in the building that similar percentage chops could be had (is the rest of the building fully sold?), or that the unit is 'damaged goods' for some reason, physically, aesthetically, etc., and thus somewhat undesirable. In a certain set, everybody likes a bargain, but no one wants to admit they got one.

If it’s a sponsor unit, could they not just rent it out for a year or two and see if the market improves? At least maybe it makes sense to list for both sale and rent

Aaron, How so? Their CC and taxes I would think are the same and the financing / capital cost is higher than an individual buyer.
------------------------------------------------
@MTH: It's a sponsor unit, so their underlying cost to carry is lower than it would be were it a resale.

@Aaron - I didn't notice that. Boy - real estate is a form of psyops.

@911 - Exactly. Renting is better than just letting it sit there.

I think 111 Murray must have turned into a financial disaster for the sponsor. From what I could gather, they put in $375M of equity across 2013-2016 and borrowed $450M across the same period. The borrowings were paid off in 2021. Total sales will be (including this unit) $950M.

I figure $50M commissions, $75M interest, $75M other non-land / non-construction (taxes, management fee, professional fees, etc.). So equity lost 20% after being tied up for an average of ~7 years. That’s a pretty horrible investment: I gotta imagine this was penciled in as a “2x in 5 years” sort of thing.

55w at 111 Murray is in contract to rent for $48k per month. Can’t imagine spending that much on rent but clearly there is a market for that. Sometimes I see these incredibly long times on the market for these ultra luxury properties and I just assume the owners have more money than God to keep paying carrying costs. Maybe they use the unit it part time. But I just can’t imagine not even trying to rent it out for $40-50k a month to help defray the carrying costs. In my experience, it’s much easier to rent out any property than to sell it, people just aren’t as picky as it’s not their forever home. And in NYC, for this type of product and neighborhood, I would bet it’s much easier to find a qualified renter than buyer

@300: Yes, taxes and cc would be the same, but I was figuring they had a lower commercial interest rate that originated back when interest rates are lower. But nada's analysis shows that may not be the right assumption.

@911: The very wealthy are different from you and me. Multiple homes which sit empty most of the time (or maybe their kids pop in and out occasionally), but ready to go at a moment's notice. Send one of the housekeepers the day before to fluff up the pillows and arrange flowers, and the family walks in the next day with everything ready to go. A tenant would only complicate things, and these are people who don't like complications. (Their jetting about is not affected by the current air traffic controller problems, as private jets are not exempted from needing to reduce flights.)

Depends. Some very wealthy people choose to live like that. Some don’t. Some not-so-wealthy people choose to live like that. If I had to guess, there are more not-so-wealthy people trying to live large than very wealthy people — for the simple fact that there are so many more of them.

As case in point, let’s take a look at the owner of the apt in question — 111 Murray 55W. They weren’t paying common charges for about a year:

https://streeteasy.com/property/9010903-111-murray-street-55w

I cannot get my head around paying $14.25M for an apt and *ever* being at the point of scrambling around for $6k/mo or whatever. I don’t know the full story, but there it is.

911, renters can be hard on a property, even within the bounds of "normal wear and tear." Skip renting a place out, skip the risk.

“911, renters can be hard on a property, even within the bounds of "normal wear and tear." Skip renting a place out, skip the risk.”

Trust me I know as I’ve been a landlord for over 20 years. And I would say my BEST tenants who actually DID maintain the property as if it were there own were the ones on the lower end of the income scale. I don’t believe at all that a person paying $50k per month in rent is going to take care of a rental any better than a person paying $2k per month (in fact, if anything the opposite). But thankfully even my worst tenants have left properties with no more than typical wear and tear. I just can wrap my head around owning a property and letting it sit mostly vacant for years and continue paying the maintenance fees and carrying cost. But as if said before, I suspect these people have more money than they know what to do with and even if they only use the property a week or two out of 52 weeks, they just don’t care about the costs.

Here's a nice one:
https://streeteasy.com/building/70-vestry-street-new_york/phs?