While all luxury ($4 million and above) sales in Manhattan are down, co-op sales have fallen the most — a whopping 25 percent down from last year. Bloomberg’s Oshrat Carmiel provides the lowdown on exactly why that is.
Due to a glut of new condo development in the high-end market, it is now a buyer’s market. These properties tend to be newer, offer more amenities and have way less restrictions to buyers. Because owning in a co-op means you own shares in a corporation that owns the building (instead of owning the actual property yourself), buyers must be approved by a board. The buying process is generally far more intrusive, making it harder to not only get approved to buy, but also many co-ops put restrictions on renting out units. Selling can also be a headache, seeing that boards may reject buyers. For this reason, investors almost always head straight to condos for investment opportunities.
Lest you think this is affecting only tony Manhattan, think again. New York City’s boroughs are seeing a spate of luxury condo development as well.
Bottom line: while condos tend to be pricier, buyers with that type of cash prefer them for aesthetics and ease of purchase.