Living in a penthouse in a New York City skyscraper used to be coveted real estate that only the rich could afford. These wildly popular homes frequently sold for the tens of millions of dollars. They were the pinnacle of what “making it” in NYC meant and were luxurious for not only the stellar views but the upscale finishings and lack of noise that plagues the city that never sleeps. However, in the past few years, penthouses are selling for millions less than what is considered normal, and the rich are opting for options other than penthouses. What does this mean? The wealthy are viewing luxury living in a brand new way.
Luxury penthouse real estate has seen an uptick in listings by over 16% since last year. This surplus means real estate agents must lower prices well below asking price to have buyers even think about buying these penthouses. A representative with Berkshire Hathaway HomeServices attributes these changes to a change in mentality stating that “not everyone needs a penthouse to feel like they got the trophy.”
As the market is flooded with these penthouses, their value declines as they are not a commodity anymore. Amenities and convenience are quickly becoming the prize trophy instead of the top floor or floors of a building. Do luxury homes on lower floors offer more for less money? Some properties are offering gyms, pools, restaurants, etc. on lower floors. These included features may contribute to the decline of the penthouse as well which only offers the view with a high price tag and, usually, next to none of the added amenities.
The wealthy have the luxury of being able to be picky when considering a new home. While real estate prices for luxury penthouses and homes drop, the buyers are more likely to wait to find the perfect home for a bargain price. Congress’s new tax legislation may also have buyers wanting to sell or waiting for the outcome of the new proposed laws. Wealthy consumers are usually cautious about the potential risks and are less likely to buy something with such a large price tag impulsively. The tax policy change impacted the mortgage deductions and local real estate tax write-offs as well which adds another layer of uncertainty to the luxury real estate market.
Overall, the penthouse as a symbol for wealth and affluence may be on the decline as more and more are being put on the market at much lower prices than normal. These once coveted pieces of real estate may not be seen as the trophy they once were in the coming years or even months. As new and exciting developments in real estate begin to emerge with more enticing options, without the penthouse view, the wealthy may be more inclined to choose quantity over what was once normalcy to get more “bang” for their buck.
