Manhattan's Luxury Bubble Pricked

After two heirs to the Seagram liquor fortune sold their townhouses last summer for 11 times what each had paid a decade earlier, or after a hedge funder set a co-op record twice this year by buying a penthouse for $46 million and selling it for $2.9 million more, brokers nodded their heads and repeated their eight-word mantra for New York’s absurdly bubbly high-end real estate: So many eager buyers, so few trophy properties.

According to numbers prepared for The Observer by research site StreetEasy, the days of easy luxury apartment sales are over. As of Monday, Manhattan had 168 super-luxury listings (apartments and townhouses asking at least $15 million each). That’s dozens more than just half a year ago, and nearly twice the number from autumn 2006.

It’s a staggering reversal for the tiptop of Manhattan real estate, where ferocious demand is supposed to tower over supply. Apartments asking $15 million are meant to be devoured, not ignored.

Despite that listings glut, and despite the dour quarterly market reports released last week, uptown agents still say they’re calm. “I did $450 million this year. Last year I did $382,” one of the city’s top brokers, Corcoran’s Carrie Chiang, told The Observer on Monday. “You know what, we’re the middleman. If it’s slow, the seller will find me. What do I care?”

(Brokers also say their tallies show fewer big listings; StreetEasy includes some duplicates.)

Of the properties asking at least $15 million, there are about a dozen that first went on the market back in 2006. One, an $18.75 million townhouse on East 81st Street, is Ms. Chiang’s listing. An associate broker, Loy Carlos, explained that they’d been barred from showing the house “many, many, many times” because of the owner’s sleeping children or construction on the first floor: “He wants his house to be completely perfect when we show it. That’s the kind of owner he is.”

According to StreetEasy, the oldest current mega-listing (though others have been on and off for longer) is a 13-room spread at Trump Park Avenue. Despite its five walk-in closets, the listing goes back to at least November 2005: An $18.9 million tag went to $21,784,000 this January, then to $31.12 million in August. Dolly Lenz, the most powerful agent at the enormous brokerage Prudential Douglas Elliman, and Sandra Papale, who shares the listing, did not return e-mails.

Their boss, Howard Lorber, Elliman’s co-owner, said he accepts that this year won’t be as good for his firm. “You’d love to say ’07 is the base year, but who’s to say that’s what it’s supposed to be?” he asked late last week. “What am I going to do? Is it realistic for the biggest company to be up over 40 percent from one year to the next?”

Then he repeated a corporate raider’s advice: “Carl Icahn always used to tell me when the tech market was going crazy—he used to say to me, ‘Howard, everything comes back to economic reality.’”

Last year, New York co-op sales were up 50 percent; condo sales, 66.5 percent. “And you know what? Maybe ’07 was not economic reality,” Mr. Lorber offered. Elliman’s third-quarter market report says the number of luxury listings (around $5 million and up) went from 672 to 1,270 this year. “Was it Lindsay Rosenwald who said, ‘Let me try and get $100 million’? What does that mean?” Dr. Rosenwald, a venture capitalist, closed on his 15 Central Park condo in April for $30 million, then put it on the market for $90 million, higher than any New York apartment has ever sold for. It has not found a buyer.

But the high-end boom had even more surrealistic moments. At a Four Seasons breakfast this June, Ms. Lenz said four apartments in Dr. Rosenwald’s building were asking at least $80 million. In a later interview, she said she had meant to say there were three, including a $150 million sprawl she had heard about from the building’s main broker. He later denied the account.

Last November, that same nine-digit number was sprawled across a New York Post cover story that said the billionaire Len Blavatnik had cut a monolithic triplex penthouse deal at the Mark. It hasn’t happened.

“One of the reasons we are so deceived by bubbles is the same reason that we are deceived by professional magicians,” the Yale economist Robert Shiller wrote in his tome Irrational Exuberance. “When clever persons become professionals at deceiving people, and devote years to perfecting an act, they can put seemingly impossible feats before our eyes and fool us, at least for a while. … When we have the equivalent of professional magicians running some of our companies or acting as some of our real estate brokers, we have to expect that what we see is not reality.”

It will take new magic to sell those 168 super-luxury listings. But bow-tied or silk-scarved brokers don’t lose.

mabelson@observer.com