Downtown New York residential real estate inventories are now approaching the levels of 2005…..does this equate to the beginnings of a shortage? With new construction having ground to a virtual halt over the past 2 years, we should not expect any brand new DELIVERABLE quality ultra-luxury apartments for at least 2 years. This may result in two scenarios:
1) Sellers who have been waiting for pricing to recover to sell their homes may list now, thus producing the quantity of inventory to keep the markets balanced.
2) Because rebounding new construction will only be able to deliver product in about 2 years, pricing on ultra-luxe buildings could escalate, possibly dramatically. Ultra-luxe is in pretty limited supply regardless with only a handful of buildings that qualify. New ones are on the way.
In the past weeks we have seen numerous prize apartments sell at premium prices: Wendy Maitland just sold a prize unit at 40 Mercer in Soho for over $ 3,200/sf. Raphael De Niro just sold the penthouse at 166 Perry Street in Greenwich Village, and this is on top of units at Superior Ink, 200 Eleventh Avenue (West Chelsea) and 100 Eleventh Avenue (a non-top-floor penthouse was recently sold by Holly Parker for a premium price, $ 2,700/sf, although the press focused exclusively on the discount off the asking price). With these units gone, sold at premium pricing, and not that many left of this caliber, the next few months could prove to be very interesting indeed. Are we entering an era of LUXE HYPER-INFLATION?