Penthouse flipping reaches new heights

The strong rebound in house flipping has reached a new extreme: penthouse flipping.

In the latest sign of froth in the high-end home market, Manhattan penthouses are being offered for millions more than they sold for just a year or two ago. While brokers say the rise of penthouse flipping is a sign of strength in the market, with tight supply and strong demand from rich overseas buyers, others say it signals excessive expectations for the luxury home market.

"I don't see it as a sign of the strength of the market," said Jonathan Miller of the appraisal firm Miller Samuel. "I think it's buyers testing the market and seeing if they can get their number. If they can't, no harm, no foul."

Read MoreMichael Jackson's Neverland is for sale for $100M

Miller also said the rise of penthouse flipping is a sign of the new wave of buyers—foreign and U.S. rich who see real estate as investments rather than primary residences. Since they are more like safe-deposit boxes than homes, owners are more free to flip them if the market seems attractive.

And some properties bought during the housing slump may be undervalued. Yet he cautioned that pricing homes based on the stratospheric prices for some recent trophy sales—like the $95 million penthouse sold at 432 Park Ave.—may be optimistic.

"It's fuzzy housing logic," he said. "You're coming up with a value based not on a meeting of the minds between a willing buyer and seller but based on product that is coming on the market for much higher."

Penthouse 1 in Walker Tower is back on the market for $70 million.
Source: Jon Dee | Sotheby’s Intl Realty
Penthouse 1 in Walker Tower is back on the market for $70 million.

Consider the penthouse at Walker Tower. The apartment at 212 W. 18th St., which is nearly 6,000 square feet, sold last year for $51 million, which was a record for downtown at the time. Now it's back on the market for $70 million.

Broker Kamali Chandler of Sotheby's International Realty, who has the listing, said there has been no improvement or major changes to the apartment since it was last sold. But she said stronger global demand for safe stores of wealth have made New York even more attractive. She said strong demand in Chelsea from tech firms also has boosted demand.

Read More5 homes that sold for $100M or more in 2014

"You're buying safety and security," she said. "What's happening around the world has made New York City a top choice for investors."

A trophy penthouse in Soho is also being listed at a higher sale price. The apartment, at 94 Thompson St., sold in 2012 for a little more than $10 million. Now it's on the market for $19.8 million—nearly double the price three years ago.

Even Rupert Murdoch is getting into the flipping game. Last year, he bought the top four floors of One Madison for $57 million. He started a massive, top-notch renovation that has cost millions and is nearing completion. But now he's listing three of those floors for $72 million.

CNBC NEWSLETTERS

Get the best of CNBC in your inbox

Please choose a subscription

Please enter a valid email address
Get these newsletters delivered to your inbox, and more info about about our products and service. Privacy Policy.