Seller lost $12 million, or 35%, on a condo at One57, on Billionaires Row, adding to the list of big money losers in the condo tower.
By Wolf Richter for WOLF STREET.
File under Yes, but: “Manhattan Luxury Market Continues Fall Rally,” said Mansion Global this morning, based on sales volume of properties at a price of $4 million or higher. Olshan Realty, in its weekly luxury report published this morning, said that 21 contracts for luxury condos, co-ops, and townhouses were signed last week, bringing the total since the beginning of September to 227 contracts, exceeding last year’s 219 signings for the same period. Over the past two weeks, 12 homes went into contract with asking prices of $10 million or more, “the highest total over 2 straight weeks of trophy sales in the last 9 months.” Yes, but prices….
The most expensive unit to go into contract last week was a 4,483-square-foot corner condo with three bedrooms and 4.5 bathrooms on the 58th floor of the 90-story One57, on 157 West 57th Street, or “Billionaires’ Row,” with the living room and dining room overlooking Central Park. After six years of owning it, the sellers took a loss of $12 million loss or 35% to get rid of it (image of the tower via One57):
The seller had bought the condo in October 2014 for $34 million. At the time, One57 was the tallest residential tower in Manhattan, and the luxury craze was in full swing. The condo has been on the market since March, when it was listed at $24.8 million. Eventually, the asking price was cut to 22.5 million.
The brokers aren’t naming names, and neither the purchase price nor the identity of the buyers or sellers have been disclosed.
But on the assumption that the purchase price was below asking price, as has been typical in the current Manhattan market, the sellers would lose about $12 million on the deal, or about 35% of their initial purchase price.
But that $12-million loss is dwarfed by the $20-million loss taken by a seller of a 6,000-plus-square-foot condo on the 88th floor in the same building, reported in early June. The sale closed at $28 million. The seller, an entity affiliated with a New York-based subsidiary of HNA, the collapsed Chinese conglomerate that China’s government has taken over, had acquired the condo in 2015 for over $47 million during Manhattan’s foreign-buyer powered luxury condo craze. The sale amounted to a 40% loss on the purchase price.
In mid-March, in a deal made before the Pandemic, a condo on the 66th floor of the same building sold for $17.2 million. The seller had purchased the unit in 2014 for nearly $30 million, amounting to a loss of about $12 million or 42%. And there had been other big losses at the building.
The lower 18 floors of One57 are occupied by a Park Hyatt. According to StreetEasy, the New York City specialized real estate site owned by Zillow: of the condos on the remaining floors, 19 are currently listed for sale.
The two most expensive units listed for sale have asking prices of $49.8 million (87the floor) and $45 million (86th floor), each with over 6,000 square feet. As mentioned above, the HNA-affiliated seller of the same-size condo on the 88th floor was able to sell the unit for $28 million, generating a $20-million loss.
In addition, there are currently four units in contract at One57, including the one mentioned above on the 58th floor. One of those four units had been on the market off and on since 2016, with an asking price of $27.1 million. There is no data on purchase price.
In addition, StreetEasy lists 15 rental units at One57, with an average asking rent of $32,833 per month.
What these sales show is that there is demand if the price is low enough — despite the Pandemic. Price, if low enough, fixes a lot of market issues. According to the report by Olshan Realty, the average discount from the original asking price to the last asking price of the properties that went into contract last week was 9%, with an average asking price of $8.4 million. And these properties had on average been on the market for 500 days.
And the buyers of the 58th-floor condo were an empty-nest older couple in New York City, according to Olshan’s report, citing the buyers’ brokers – locals.
This is now happening in apartment towers in densely populated cities around the US: Suddenly mind-boggling vacancy rates as a large number of tenants have left. And this is happening even at the best of them. Read… Vacancy Rate at Iconic Manhattan Tower with 899 Apartments Hits 26%: This Shows How Fast & Massive the Exodus Has Been
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Remember the film Trading Places? The scene where Louis is pawning his Swiss watch? “This watch retails for $6,900 !”
In Philadelphia, its worth 50 bucks.
To the owners of Uber Luxury NYC condos- Welcome to Philadelphia….
The condos were most likely purchased with stolen money to begin with.
now consider what happens if they TURN OFF POWER???
no elevators, no NOTHING techies and lots of STAIRS
Have you ever stayed in an AirBnB rental in a high rise when the fire alarm went off at 1:30 AM? It is no fun walking down over 20 floors. Fortunately, it was only October, not January.
Hong Kong in the early 80s when they were going through a panic about the 97 handover, upper-floor condos were going for fire-sale prices because locals expected when China took over electricity and elevators wouldn’t be maintained properly.
Exactly. Foreigners buy up at large all around the world with stolen money at silly prices. When times get tough they sell them, normally to locals, normally for half price. The local gets a bargain, the foreign thief gets to keep half the money they stole. Win win.
Is it a bargain at $17 millions compared to bubble stupid $30 millions price? Were these shacks ever worth that amount? I mean the $17 millions. Even with rent at $32K per month, what is the value at this price? $8 or $9 millions? What will be the property taxes?
This insanity can only happened with money printing and laundering going on globally!
It’s not always stolen money, but it’s often offshore money. A business owner might want to hedge his or her bets but can’t just open a foreign bank account, so they have the business buy a real estate asset in the name of a totally controlled US shell company. It’s an investment expense, not a bolthole. Taking a 50% loss still leaves a lot of f— y– money when it is needed.
Does that include all our printed dollars?
Meanwhile my zip code of 30,000 people has just 18 single family homes for sale at double the price-per-sq-ft from just 5 years ago.
All due to fake market forces, namely eviction moratoriums and prolific credit, not organic supply and deman.
Wake me up when those declines are coming to to the real estate poor schmucks like me buy, people paying 30million for a condo are on a different league, they can afford to lose it.
me thinks they need some special TAXES of the AOC kind
Couldn’t have happened to a nicer Billionaire ;-)
These haircuts couldn’t be happening to a better bunch. I can’t think of anyone who deserves a taste of bitter financial medicine more than the financial grifters and skimmers that purchased these gaudy trophy pads.
Yeah, but how did the new purchaser get his/her money? Same strata, probably the same thievery.
the one curious thing is that buying in this market at a place like NY might be like catching a falling knife. I mean unless there is certainty that NY condo market will right itself in a couple of years, I’m not sure why anyone would buy instead of rent.
I know, technically, people are living in there and building equity. But still….
I think we are paying too much attention to the peregrinations of the tiny carriage trade and too little to the macro import of the 7%/10 million jobs lost yr after yr.
The aggregate impact of the latter is much greater than the former.
10 million jobs lost @40k per is $400 billion in lost direct household income (incl taxes derived from it).
Proles are expandable, if these losers starve, we can always import those no good immigrants when the jobs come back. We need to focus on people who matter, ie the rich. We need to make sure they have sufficient liquidity to buy expensive real estate otherwise this country would a socialist hell hole!
It really is amazing the that the stock market (by valuation) claims we don’t need the lower 90% of the population. But then again the top 10% are doing fine, so they don’t need to sell stock to make the monthly rent. You can expect that as income inequality increases (i.e the 1% will eventually own 99% of all assets), then you can expect stock valuations to have an exponential explosion upward.
This is an interesting area for further thought.
The more disconnected that stock prices get from their underlying business results (roughly reflected in their absurdly zooming PEs) then the more like beanie babies/trading cards/cult sneakers they become…highly volatile in valuation because they are not anchored to an actual, ongoing income stream (from real world business profits).
In a way, this doesn’t directly/immediately impact the real world worse off 90% (unless shareholders *try* to jack product prices to support their idiot overvaluations and can corner the 90% into *having to* pay more.)
That may or may not work – the 90% will certainly endeavor (through purchase cut backs or product substitution) to avoid the overvaluation induced inflation.
And, again, that may or may not work, depending upon access to alternatives.
(Important side note – The higher the PE is on a sustained basis, the harder it is for a company to prop up share price by buybacks…because the companies don’t have as much cash to do so with. Wolf, I think this dynamic has been under commented on, but will bite as time goes on. I would really like to hear your thoughts on it).
Expandable? Well keep pumping and also keep sucking up
If you feed enough oats to the horse, some will pass through to feed the sparrows, it’s the Fed’s “trickle down” economics dogma.
If 10 million jobs are lost, you don’t lose $400 billion of household income. Instead, you gain $100 billion of household income after consideration of excess stimulus, unemployment benefits, etc. The pandemic is causing a big wealth transfer.
The media, Congress, and the Fed are doing an amazing job of transferring wealth without awareness of the general public. The benefits going to stimulus recipients are paid for by wealth owners in the form of reduced interest rates on savings and monetary inflation. When somebody gets a freebie, somebody else pays for it, somehow.
Unfortunately, a big portion of the stimulus is captured by Wall Street and wealthy business owners, so the rich get richer.
“The media, Congress, and the Fed are doing an amazing job of transferring wealth without awareness of the general public. The benefits going to stimulus recipients are paid for by wealth owners in the form of reduced interest rates on savings and monetary inflation. When somebody gets a freebie, somebody else pays for it, somehow.”
I broadly agree with this…it is the essence of ZIRP/staged emergency QE.
I was mainly pointing out the size of the labor mkt hit vs. Carriage trade real estate economics.
But I agree that the G’s giant crypto “stimulus” (version 3.0?) might swamp the underlying labor mkt hit.
As I’ve said elsewhere, the G has “mastered” the black art of converting their own huge debt fiascos into destroyed interest rates/hidden inflation on the general public.
So we are pretty much in agreement.
I figure that NYC can go one of two ways. In the first way, as the pitchfork and torches crowd builds up a head of steam the wealthy and their financial and political lackeys will retreat to Manhattan, posting their own army of guards on the bridges and tunnels to keep them safe. These Luxury buildings will be in high demand as the hedge funders and such will have to retreat from Connecticut and Long Island to their new moated safe zone. The higher up you are, in the center of the island the higher your status and safety will be. The second way is that NYC will deteriorate in to a kind of cross between ” The Warriors” and ” Blade Runner” with various gangsters and warlords controlling most aspects of commerce and daily life. These same Luxurious High-Rise pads may be in great demand as homes of the new “gangster elite”, but the purchase terms may be a bit different. Either way I see that the future will be bright for these gaudy palaces in the sky.
I think we go the “Escape from New York” route. One of the greatest movies ever.
I would like to see a movie where Snake Plissken pays a visit to the Fed to straighten things out.
Escape from NY is of course good. But don’t forget about Land of the Dead, where Zombies rome the suburban and countryside while surviving humans are run by mafia like real estate gangs and developers who hand pick “tenants” and construct fortified luxury high rises surround by securely enclosed mall like structures for recreation and social life. The hired help that supports and supplies these luxury enclosed high rises do heavily armed runs into zombie infested suburbia and raid it’s food booze and medical supplies at great risk to themselves, hoping one day to get on the “list” allowing them to purchase a condo in the fortified city.
Thank you for the reference. I agree!
One trend that is rapidly growing in the Twin Cities is carjacking.
Over priced condos in a crap city run by crap politicians from the local level all the way to the guv’s office.
And here I thought that real estate in the Melbourne CBD was priced too high!!!
A bargain compared to the stuff in NY with only a few of the problems.
There is always money for housing until there isn’t.
1) This building was banged by a loose crane, swinging in the wind, in 2013.
2) NYC RE bubble #1 : 1995 to 2006/07. // bubble #2 : 2010 to 2018/19.
3) The new asking price is 9% below the original price, before a deal is about to happen .
4) The average rent is : 33K/ month.
5) Rent seekers add no value to the economy. At bubble peak they
damage the economy. Rent between Rockefeller center to west 57 st
was too high for business to survive. Landlords backed by bankers are not fair !
6) Prices were rising, profits falling and small business efficiency was down.
7) West of 48 street to 57 street retail space collapsed, mostly occupied by restaurants for office workers and tourists, worth millions before the pandemic.
8) NYC banks are match makers. They connect wealthy small businesses owners, cardio and dentists, to build medical buildings, or few small apartment buildings, as an investment, because the stock market is a crooked casino.
9) If whales can charge 33K/M, why shouldn’t the guppies
charge 2.5K to 3K/m in Bkly’n or Queens.
10) In Dec 2020 small landlords in NYC are dying, because tenants didn’t
pay rent for 11 months.
11) Price of NY high-rise falls because Shirl and furniture girls no longer included.
you have to wonder if the buyers are ” catching a falling knife”?
With Pfizer/Moderna announcing they’ll have no further vaccine supply available for the US until mid-2021(not that I wanted a rushed Trump vaccine), I’d say yes. They’re catching falling knives.
Ay Yes, the Manhattan Smegol Factor – never far does it wain …. remember that, little orcs ..
We wants It! …We gots to have it, Precious!
“Io non mangia a Newa Yorka”(That means me)…….(Taken from the Godfather: “Io non mangia a Las Vegas”….when the “big boys” meet to determine how they will spend their money in building their “enterprise”……)
People who participate in the world described in the sales in the report are way, way away from my world. I could give two twats what they spend, win or lose.
Mr. Richter continues to expose how lopsided the “commons'” world is from the corrupt criminal class running this country.
May we see better days.
You’re right, Sierra. But I wouldn’t trade my common lifestyle for what the article described or who/what I imagine the owners to be.
psst, don’t tell the uber rich many proles are quite happy and just want to be left alone.
pssst, key their cars if you see them driving and park. :-)
“psst, don’t tell the uber rich many proles are quite happy and just want to be left alone.”
Then why would you key their cars? That’s what bitter losers do.
Silly people these losses are like 1$ to average person besides more than made up for it in fake stock market without fed intervention where would Dow be now 9k think about it it’s your pension
My father lives in New York City. One person per elevator. Imagine waiting in line for an elevator to get to the 88th floor or waiting for an empty elevator to go down if you live on say the 12th floor. It would be faster to take the stairs. But hey, at least you could say you live in “Billionairs’ Row.”
They program elevators to just run 1-20, so that problem was solved about 100 years ago.
But your point is taken. There is some trade-off with having to take elevators. But consider the fact that other people spend 2 hours a day in their cars.
I wonder what the monthly condo fee is on Billionaire Row?
Since I have to ask, clearly I can’t afford to live there!
Is the volume of garbage put on the curb down? How about the rat population?
Shiloh1:
That is an easy question to answer!
Garbage, especially restaurant garbage, is way down!
Yes, some rats are starving.
They need to learn to code.
Somebody put a spell on Extell Development co and Michael Dell
who bought the building penthouse for $100M in 2014.
Can someone please remind me….the easiest to sell/buy in Manhattan is (in this order): brownstones & apartments (no other partners), condos, then co-op….is that correct? Meaning the less groups to deal with (condo/co-op boards etc)?
Buying or selling a co-op can be tricky because the board has a lot of say in it. But with condos, the Home Owners Association doesn’t have a say in who is buying or selling. It’s just between the buyer and seller, same as with a house.
However, banks may be getting leery of writing mortgages for condos in a down market, and so sales may fall through because the funding doesn’t materialize.
Did you see Jennifer Lawrence’s condo sale? Literally lost millions
Oops! Pedro forgot to tighten that key nut in the outer corner column at floor 13. Hell, good enough..they’ll never guess.
Meh. Keep it. I’d rather have a ranch somewhere in the country (Wyoming or Idaho) than worry about someone mugging me as soon as I walk outside my fancy, expensive condo. NYC is the pits with de Blasio in charge.
Your use of the Oxford comma is much appreciated.
– “Price, if low enough, fixes a lot of market issues.”
I’ll retain this as a positive key message.
The more money you have the value of it for consumption decreases. The first $100 being enough to buy you some rice and beans and a second hand sleeping bag is the most important. It’s diminishing value per dollar after that.
The Price Reduction Ratio – maybe a leading edge indicator of market sentiment, but could also just reflect the unbridled euphoria of the sellers.
“I was introduced to a new statistic for watching the direction and strength of real estate markets. I call it the “Price Reduction Ratio.” Across the country, one might expect that 30 to 35 percent of the homes put into the MLS to sell will have a price reduction before they eventually sell. For October 2020, of all closed homes in Sonoma County, 25 percent had price reductions before selling. In Napa, the ratio was 27 percent and in Mendocino County it was 22 percent. Conversely, the ratio of homes selling in excess of Original List Price was 43 percent in Sonoma County, 42 percent in Napa County and 32 percent in Mendocino County. Upward or downward movement in these ratios will be a future market indicator.”
Less money for the police means increased crime and more time to respond to crime calls
More on line retail- less in person retail- fewer stores – less attractive
Shopping- more empty storefronts.
More companies using ideas such as Zoom, the less incentive for employees to live in Big cities such as NY- less demand for commercial real estate space-fewer businesses needed to serve working employees.
Fewer employees working in NYC means less sales tax and income tax revenue
More empty office buildings , the lower the tax assessment and lower the amounted collected in real estate taxes
Big cities such as NYC are in a vicious downward cycle . Even after Covid is no longer a factor there are increasingly fewer reasons for people and businesses to locate there. This translates into less government services and more stress upon the system
The only reason for this to happen – a serious disruption of the notion of space by virtual reality tech.
Or the end of oil.
To some extent, the space-time has been already disrupted in 20th century by cars and highways.
Many moons ago I got a plum high-tech s/w job in a small town near Aspen making really good wages. The company was headquartered in Boston and the s/w development manager wanted to live in this small town – beautiful place. They brought out the development team from the city, and we worked in a small office. The manager promptly cut off his thumb doing a home-improvement job.
After a couple of years, the owner decided he wanted everyone back at headquarters. Not one engineer would go, even with higher wages and moving expenses offered. Some of them took crappy jobs in order to stay. Kind of hard to get ’em back in the city after they’ve seen how nice the country really is.