The Wall Street Journal has an interesting story on the sudden halt to the Manhattan real estate market. Looking at the chart above, you’d be forgiven for thinking it was a record of the global art market. The spending patterns track neatly over the last decade.
The problem seems to be a glut of luxury apartments with ambitious estimates that has provoked owners of lower-tier properties to up their own asking prices. With the top of the market stalling abruptly, the rest of the pricing structure is left in an awkward position.
This pattern might have some bearing on the art market’s current rotation from artists whose markets were simply too successful and created a similar pricing pattern:
The slowdown, which began in the second half of last year among high-price apartments, deepened and widened this year. Many brokers said asking prices were set too high after a run-up in prices a few years ago. Brokers also cited volatility earlier this year in financial markets, which can weigh on wealthy buyers’ decisions.
“The luxury market has been choking on quite a bit of overpriced inventory,” said broker Donna Olshan. “Fantasy and aspirational pricing just doesn’t cut it.”