The world of luxury real estate may seem like a place where transactions are numerous, fast and satisfaction guaranteed.
But that’s not always true, particularly in New York, where slowing demand has made it harder to sell multimillion-dollar condos and townhouses, StreetEasy senior economist Kenny Lee said. to Business Insider.
In many upscale New York neighborhoods, homes are staying on the market longer and sales are falling, indicating that when it comes to a housing market collapse, even the nation’s wealthiest Americans can’t not come out unscathed.
Consider the case of Sonja Morgan, the ex-wife of John Adams Morgan, great-grandson of the founder of JP Morgan Chase. Despite Morgan’s social status and her home’s location on the upscale Upper East Side, she had difficulty selling the five-story, six-bathroom brownstone.
Morgan, a star of Bravo’s “Real Housewives of New York,” has owned the house at 162 E. 63rd St. for 27 years, living there on and off. Since around 2008, she has made numerous attempts to sell it, but has failed to attract any serious buyers.
Now, after years of listing and delisting the property, she has chosen to put it up for auction with an opening bid of $1.75 million, well below her reported purchase price of 9, $1 million in 1997, according to Bridget Read of Curbed.
“I want to be free to garden and travel without having to worry about the house, but I’m not taking anything,” Morgan told Curbed.
Opening of auctions with Concierge Auctions on May 16 and will remain open until May 29. As of May 24, the current highest bid is $4.25 million, according to the company.
Even the ultra-rich lose in the real estate market
Luxury real estate shows like “Million Dollar Listing” or “Buying Beverly Hills” often portray selling high-end homes as easy. However, even with an elite zip code and the pedigree of a famous or wealthy seller, closing the deal can still prove difficult. Michael Jordan, for example, has been unable to sell his mansion outside of Chicago for over 11 years.
There’s also the 105,000-square-foot megamansion in Los Angeles, developed by former film producer Nile Niami. After ten years of construction, the house stagnated on the market without attracting a buyer. It was then placed in court receivership and subsequently went through bankruptcy proceedings. Ultimately, it was sold at auction for $126 million to Fashion Nova’s billionaire CEO, Richard Saghianin 2022.
The crux of the matter is that the more expensive a home is, the fewer potential buyers it has – a problematic scenario amid slowing buyer demand and growing economic uncertainty. A lack of demand from traditional buyers has led a growing number of ultra-wealthy homeowners, including Florida Gov. Ron DeSantis, to rent out their homes or sell them at auction rather than wait for buyers.
“Many luxury buyers may already own a primary residence, so they may be looking for a new investment,” said Lee, StreetEasy’s senior economist. “That’s why, although they are generally less affected by high mortgage rates, they are strongly influenced by the general economic outlook.”
That’s part of the reason why more luxury buyers are considering renting their homes rather than selling them, he added.
Custom features added by sellers and maintenance costs can also put off buyers
One person’s dream renovation might be another’s nightmare.
Lee pointed out another obstacle for luxury home owners: their propensity to elaborately personalize their home with features that may or may not appeal to the average buyer.
“Many houses and apartments in New York were built before the war“, said Lee. “That’s also why it’s common for many homeowners to do renovations, to make it more livable and more to their liking.”
In addition to a koi pond in the backyard, the Morgans also installed a large nautical star in the downstairs entryway during a $3 million renovation, according to Curbed.
The nautical star the Morgans added to their Upper Eastside home. Concierge auctions
Lee pointed to another contributing factor to the difficulty of selling luxury properties: the high costs associated with their upkeep and maintenance.
Morgan’s townhouse carries estimated monthly property taxes of $6,003, according to the StreetEasy listing. This figure does not include additional expenses associated with owning a townhouse, such as insurance, repairs, improvements, landscaping, etc.
Morgan told Curbed she’s ready to get rid of everything.
“I don’t want anyone to think, ‘New York is over and this is why she’s leaving,'” Morgan said. “I’ll always be a New Yorker. I just don’t need all that.”
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