It’s no use pretending that the top of the Manhattan real estate food chain is a direct corrollary to the art market. But the parallels between the two markets—discretionary buys made with cash often for the purpose of parking unusable capital—are enough to make it worthwhile to keep a weather eye on how property is selling.
Last week, Bloomberg had a tour of the waterfront, so to speak, that included this foreboding comment from a developer of pricey condos.
“The next two years will be the year of the deal,” [Kevin Maloney, principal and founder of co-developer Property Markets Group] said. “If you have cash, I can’t imagine there’s not a condo project that’s coming out of the ground where you can’t walk into the sales office and say ‘This is the deal I’m willing to offer.’”
Now, art doesn’t transact like real estate which cannot be easily mothballed. When buyers flee, art doesn’t go on sale for a discount; (though it may trade privately at a loss for the cash-strapped.) Real estate does as Bloomberg illustrates here:
For the first 35 weeks of the year, contracts to buy Manhattan homes at $4 million or higher tumbled 21 percent from the same period in 2015, data compiled by luxury brokerage Olshan Realty Inc. show. The 758 properties in those deals spent an average of 291 days on the market, or 54 more days than a year earlier.
Developers have postponed plans to add even more apartments. The 3,574 units slated to reach the market this year are 38 percent fewer than what was estimated in January, according to brokerage Corcoran Sunshine Marketing Group. Of the units that have or will be listed in 2016, more than half are considered luxury, or priced at more than $2,400 a square foot.
“We’ve never had a buildup of housing inventory that has been so skewed to the high end,” said Jonathan Miller, president of appraiser Miller Samuel Inc. “There’s too much development being built at 2014 prices, and that buyer isn’t there. Conditions have changed quite a bit since then.”