‘Million Dollar Listing’: What Is Killing the NYC Luxury Housing Market?
This season of Million Dollar Listing New York started with a few shockers. In addition to learning that two new cast members became fathers and the return of Luis D. Ortiz, brokers shared that the New York luxury housing market is drying up.
For years the brokers scored multi-million dollar listings, breaking sales records while amassing quite a personal fortune. However, the days of making an easy sale are long gone. Cameras follow the cast’s struggle to sell even discounted properties.
So what happened? The national landscape shows that overall home sales are also down by 2.2% year over year, according to the National Association of Realtors (NAR). However, homes are still selling, with the average property being on the market for only a month or less. While the rest of the country seems to be humming along, what is happening in the luxury market?
Luxury properties are not moving
During the season 8 premiere, broker Ryan Serhant explains how long a typical Manhattan luxury property remains on the market. “This is no joke,” he revealed in a confessional interview. “Homes over $4 million have an average days-on-market of 450 days. It has never been that way.”
As properties become stale on the multiple listing service, sellers are in panic mode, slashing prices to unload properties. Heavy reports that “11% of sellers in the Manhattan real estate market cut their prices as homes on the market increased by 11.7%. In February 2019, the Street Easy Manhattan Price Index decreased to its lowest level since July 2015. The index dropped by $1,119,183, or 4.3%.”
Even with a price reduction, buyers are still not motivated. Although Serhant reported seeing properties linger for 450 days, the median Manhattan home is typically listed for about 117 days, Heavy reports. This is the longest amount of time in the last seven years.
Why are buyers staying away?
Million Dollar Listing fans may recall that many properties were being purchased by foreign investors. A good number of investments came from Chinese investors, which is drying up. According to The New York Times, distrust between China and the U.S. has resulted in 90% of the Chinese investments taking a nosedive.
“The fact that the foreign direct investment has fallen so sharply is symbolic of how badly the economic relationship between the United States and China has deteriorated,” Eswar Prasad, former head of the International Monetary Fund’s China division told The New York Times. “The U.S. doesn’t trust the Chinese, and China doesn’t trust the U.S.”
Chinese commercial real estate investors in the U.S. are in a “frenzy of disposal activity” according to a report from Cushman & Wakefield. The number of U.S. homes purchased by Chinese investors fell by 56% in the year to March.
The overall outlook is distressing for sellers. “The magnitude of the decline is quite striking, implying less confidence in owning a property in the U.S.,” Lawrence Yun, chief economist from NAR reports. As a result, viewers will see brokers on the show get even more creative to sell properties and offer many homes at a discount. These new efforts may be just the ticket as buyers may see this moment as being an ideal time to strike.