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."
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."