- Getty Images/Inti St Clair
- One in four luxury apartments in New York City is unsold, according to new data from StreetEasy.
- It’s a sign that investors are worried that an economic downturn is on the horizon, says Grant Long, a senior economist at StreetEasy.
- “Demand for high-priced condos seems likely to be an early casualty of a potential future recession,” he said.
- Read more on Markets Insider.
One in four luxury apartments in New York City is sitting empty because it hasn’t been sold, according to new data from listing website StreetEasy.
That adds up to roughly 4,100 empty apartments. The site’s analysis looked at a mix of both public and proprietary listing and building data to find 16,200 condo units in 682 new buildings completed in New York City since 2013, and how many of them still haven’t been sold.
StreetEasy says it’s a sign that an economic slowdown – or even a recession – could be on the horizon. The reason is simple: when purse strings get tighter, people are less likely to splash for pricey real estate.
“While New York City has gone through an impressive economic expansion in the last five years, demand for high-priced condos seems likely to be an early casualty of a potential future recession,” Grant Long, a senior economist at StreetEasy, wrote in a blog post.
He continued: “If and when that recession comes, buyers of luxury units may elect to park their money in safer assets, or opt for more modest homes – and the same is likely for renters in units costing $10,000 or more per month.”
Luxury buildings have taken the biggest hit, according to StreetEasy. But even as prices on many new condos have fallen to try to attempt the growing glut of unsold units, building continues. There are 63 condo buildings with more than 5,617 total units currently listed on StreetEasy before construction has wrapped.
StreetEasy has also seen apartments bought by investors quietly re-listed as rentals later. Of more than 12,000 new condos sold between January 2013 and August 2019, 38% have been put back on the market as rentals, according to the analysis.
It appears that buyers are placing heavy bets on the future ability to sell for a profit in the future, StreetEasy found.
Here are some other highlights from the StreetEasy report:
- Manhattan had the most unsold condos of all five boroughs.
- For every three condos completed in 2018, only two built since 2013 have sold. This shows that new builds are outpacing sales.
- These condos have a median price of $1.1 million citywide, and $2.3 million in Manhattan. That’s solidly out of reach of most New York homebuyers.
- Investors in some buildings have already started to sell to cash in on purchases – nearly 1 in 10 of 12,133 sold units have been relisted for sale on Street Easy. Of those, only 700 have been resold, and the median annual gain was 6.4%.