batten down the hatches
"The luxury market is bloated and choking with a lot of over-priced inventory, but once sellers capitulate and adjust to realistic price levels, the market moves. Not coincidentally, the May and June weeks that showed the strongest activity of the year were also those that saw prices slashed" said Donnan Olshan, president at Olshan.
As an example of how far prices are falling on these luxury homes, the number one contract last week was a townhouse at 18 East 69th Street on the Upper East Side, sold for $22 million. Prior to selling, the five-story house with 7,831 square feet was listed at $26 million, meaning a reduction of over 15% in price. For context, the home was purchased in March 2012 for $13.25 million and was renovated. Prices have run up, but now are working their way back down as the supply glut becomes a reality and people begin to realize (especially REITs such as EQR and developers such as the Bauhouse Group) once again that real estate doesn't always rise in perpetuity.
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