For most people, the 2017 real estate market will begin with a mark of optimism. For others, it begins an era of uncertainty given the recent interest rate hike by the Fed. For the luxury apartment market in Manhattan, the proverbial “honeymoon” is likely over.
According to therealdeal.com, luxury apartments took an average of two months longer to sell in 2016 compared to 2015. There are a number of theories behind this statement. Of course, the glut of construction is one reason behind this.
If you noticed the number of cranes dotting the skyline over the last few years, you probably could tell that the market for luxury offerings would be crowded. The abundance of luxury offerings ostensibly gave buyers many more options. With that, buyers were not clamoring to buy the latest high-rise apartment.
Also, luxury co-ops, which tend to have tougher criteria for ownership, may not have found qualified buyers for their properties. As such, contract signings for luxury properties fell 25 percent in 2016 compared to 2016. Additionally, contracts for high-end properties fell 18 percent overall.
We also wrote in a prior post that consumer amenities will likely drive real estate spending in 2017, and it likely dictated a shift away from high-end properties. And with the latest interest rate hikes, it remains to be seen whether consumers will continue to spend on such a high level.
Nevertheless, this uncertainty may open the door for more negotiations for buyers. This is where an experienced real estate attorney can help.