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Condo slowdown? Worrying price signal at New York’s trophy tower

  • Unit 79 of the New York condo tower called One57 became the biggest foreclosure sale ever in the city.
  • The unit went at auction for $36 million – marking a 30 percent decline from its purchase price of $51 million in 2014.
  • Prices for new condo developments across Manhattan fell 27 percent in the third quarter compared with a year ago, according to Douglas Elliman and Miller Samuel.

New York's 1,000-foot-tall symbol of luxury is becoming a monument to the condo slowdown.

Last week, Unit 79 of the condo tower called One57 became the biggest foreclosure sale ever in New York. It went at auction for $36 million — marking a 30 percent decline from its purchase price of $51 million in 2014.

The owner was Kola Aluko, a Nigerian billionaire who's been charged with money laundering and was in default on a mortgage on the property.

Real estate boosters in New York called it a one-off, and said sales at One57 and the rest of the new glass condo towers popping up in New York remain strong.

Yet an analysis of recent resales at One57 shows that every apartment that has traded since it opened in 2014 or 2015 has declined in value — all by double digits.

Unit One 62A was purchased for $31.6 million in April 2014. In October 2016 it sold for $23.5 million, a 26 percent decline. Unit 65A originally sold for $29.3 million in 2014, but was sold in April 2017 for $22.5 million.

And some of the declines were even faster. Unit 51C sold for $20.4 million in April 2015. It sold eight months later for $17.7 million.

Jonathan Miller of Miller Samuel said the money-losing resales aren't a sign of a condo bust. Rather, he said, sellers are finally coming to grips with the fact that the prices of 2014 were an aberration and aren't coming back anytime soon. One57, he said, was at the right place at the right time to capture those top prices.

"It's clear that 2014 was the peak," he said. "It was a perfect storm. You had capital pouring into the real estate development market from overseas. And we had just come off the financial crisis and you had this new product coming on, with the feeling that everything was skewing toward the wealthy. Everyone thought this was some sort of new world that would go on forever. But it was not sustainable."

Miller said there are currently 16 units at One57 for sale, ranging from $3.85 million for a one-bedroom to $70 million for a unit on the 85th floor. That unit originally sold for $55.5 million.

Yet the troubles aren't confined to One57.

Prices for new condo developments across Manhattan fell 27 percent in the third quarter compared with a year ago, according to Douglas Elliman and Miller Samuel. But they're still no bargain: the average sale price was still $4.3 million.

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