On Central Park South, retired entrepreneur Ron Pobuda has relisted his two-bedroom apartment for $8.95 million, a dramatic 40% reduction from its first asking price in Sept. 2020. Twenty blocks north, on the Upper East Side, real-estate agent James Morgan found a buyer for an $18 million penthouse before he could even get the property listed online.

In the wake of the Covid pandemic and interest-rate hikes—and amid an AI-driven stock market climb—buyers and sellers are having a hard time deciphering the New York City luxury real-estate market.

Ask a broker in Miami and they’ll say New York is dead. Ask a residential tower developer in New York, they’ll say that is nonsense. Ask a local real-estate agent, and he’ll say the market has rarely felt so hit-or-miss.

“It’s a mixed bag. Some things sell in two days. Other things sit there for two years,” said Leonard Steinberg, a luxury real-estate agent with Compass .

The Manhattan numbers point to a post-Covid luxury market that likely bottomed out in 2023, said appraiser Jonathan Miller . A report he prepared for brokerage Douglas Elliman shows that, in the fourth quarter of 2023, sales of luxury Manhattan homes (defined by the report as the top 10% of all sales ) were down by 5.9% compared with the same period a year prior.

It seems to be improving. So far in 2024, luxury contract activity has ticked up incrementally, according to local agents, who cite a decrease in inventory and a rising stock market. Liquidity pace, a measure of the rolling previous 30 days of signed-contract volume, was up by 9% so far in 2024 through Feb. 26 for apartments priced at $5 million and up, compared with the same period last year, according to real-estate data firm UrbanDigs.

“It looks like 2024 will be better, but it won’t be a boom,” Miller said.

Thanks to higher interest rates, all-cash deals are dominating the market, with roughly 68% of all Manhattan transactions unfinanced in the fourth quarter, according to Miller. That is up from the usual average of around 50%, Miller said.

Here’s a closer look at New York’s contrary, confusing high-end property market.

Where the sales are

The sale of a roughly 12,000-square-foot Greenwich Village mansion owned by Dexter Goei , the former chief executive of telecommunications company Altice USA , set a new price record for Downtown Manhattan. (NYC brokers define Downtown as south of 34th Street. It is more commonly defined as south of 14th Street.) It traded off market for $72.5 million in January. The price was more than double the $30.9 million that Goei paid for it in 2016, records show.

The deal added to a string of major Downtown transactions that propped up the Manhattan market in 2023. In July, a penthouse at 150 Charles Street, a successful West Village condominium project, sold for $52 million . The seller was a company tied to former Credit Suisse executive Robert Shafir . In June, a Soho penthouse tied to Stefan Kaluzny, managing director of the private-equity firm Sycamore Partners, sold for $50 million , one of the largest deals ever recorded in Soho.

Clayton Orrigo, who worked on the $72.5 million Greenwich Village deal, said his team at Compass has closed or signed contracts on more than $500 million in real estate since the beginning of the year, with about 80% located south of 30th Street, and he expects the Goei property to be the first of a handful of major house sales in the neighbourhood. Other major Downtown properties that have been shopped for sale at similarly ambitious price points in recent years include financier Steve Cohen’s fortresslike, single-family mansion on Perry Street, which is said to have asked around $150 million in off-market conversations.

“I do believe that it’s a pioneer,” Orrigo said of the $72.5 million deal, declining to confirm the identity of his clients. “I don’t think it’s the last and I don’t think it will be the most expensive.”

Orrigo attributed the rise of Downtown prices to a lack of available inventory. Sought-after Downtown neighbourhoods like Greenwich Village, the West Village and Tribeca don’t see the same levels of new development as other Manhattan neighbourhoods, thanks in large part to height restrictions tied to their designations as historic districts. He said many of his moneyed clients who visit the city eventually look to buy pieds-a-terre in the area because they are unsatisfied with the hotel offerings. Airbnb listings in New York City have also all but disappeared as the city cracks down on short-term rentals .

In addition to the city’s stepped-up enforcement of short-term rental rules, many condo and co-op boards don’t allow owners to rent their properties at all, even if the rental wouldn’t be subject to the city’s short-term rental regulations. “When they realise how hard it is, they end up buying,” Orrigo said.

Orrigo said the buyer pool is made up of tech titans and “the nepo community,” meaning the children of wealthy individuals. “We’re seeing a tremendous amount of inherited wealth,” he said.

Luxury agent Sarah Williams of Societe Real Estate said she recently had a client sign a $41,000 a month, long-term rental deal when they couldn’t find a home that met their criteria in the West Village or Tribeca.

“There’s this widespread misunderstanding about New York, that it’s struggling,” she said. “New York is so sought after, it’s just that people cannot get what they want.”

One of the most successful new condos of 2023 was also located Downtown at 450 Washington Street. A rental-to-condo conversion by the Related Companies, it posted roughly $240 million in sales across 85 transactions in 2023, the developer said. Units were priced between $1 million to $15 million for studio to four-bedroom homes. Bruce A. Beal Jr., Related’s president, said the project had the “right pricing” and that buyers, the majority of whom were local, “understood the product.”

Where it’s still tough to sell

While Downtown is thriving, Midtown has been hobbled by excess inventory, remote work and a decline in foreign buyers, who have historically gravitated toward Midtown apartments, agents said.

When Pobuda, the entrepreneur with the Central Park South apartment, listed his longtime unit, a sprawling two-bedroom with a large terrace overlooking the park, in late 2020, he first asked $15 million. While ambitious, the price reflected the property’s trophy views and location, next door to 220 Central Park South , the most expensive building in the city. He got no offers.

“It was really obvious very quickly that nothing was going to happen, so I said, ‘Let’s just pull it off the market.’ ” Pobuda said.

The new asking price is a reflection of how the market has moved in response to interest rates and is strategically pegged just under $10 million to put it in a different bracket for New York’s mansion tax, said Peter McLean of the Corcoran Group, who is listing Pobuda’s unit. “We’re throwing as many incentives to the buyers as possible,” McLean said. (The tax, paid by the buyer, starts at 1% beginning with properties of $1 million or more and gradually increases to a maximum of 3.9% for properties purchased for $25 million or more.)

Pobuda’s story is typical of Midtown sellers, many of whom have had to slash prices on luxury properties to make a deal. Compass agent James Morgan said he recently lost a listing for a three-bedroom apartment at Museum Tower on West 53rd Street after the seller refused to consider reducing the $4.25 million price. Meanwhile, his high-end listings on the more inventory-constrained Upper East Side, such as the $18 million sale of a penthouse at 135 East 79th Street, are moving quickly.

“We’re still dealing with the Covid effect in Midtown,” he said. “People are working from home and they want to be in areas that are considered more neighbourhoody.”

Midtown also has the largest concentration of high-end, unsold new development units in Manhattan. Much of the unsold inventory is on the Billionaires’ Row strip south of Central Park. It sits in buildings such as Extell Development’s Central Park Tower, the 1,550-foot-tall glassy behemoth at 217 West 57th Street, which launched sales in 2018 and has roughly 77 unsold units priced at $5 million and up as of late February, according to real-estate data and analytics company MarketProof. While 53w53, the Jean Nouvel-designed tower next to the Museum of Modern Art, which has struggled to find buyers since launching in 2015, has about 65 units remaining priced at $5 million and up as of late February, as per MarketProof.

Units at both towers are routinely selling for significant discounts. A roughly 3,700-square-foot two-bedroom unit at 53w53 recently sold for $7.85 million, 32% less than its original $11.5 million asking price in 2016, records show.

Sales hobbled by rules

While the condo and townhouse markets are generally showing signs of life, agents say the city’s co-op market remains muted. Many of them blame antiquated co-op board rules that restrict a resident’s ability to sublet their units or renovate them. Some posh buildings insist on approving contractors, for instance, or fine residents if their renovations take too long, said luxury agent Donna Olshan.

The subletting rules seem particularly egregious post-Covid, said Williams, the luxury agent, since many high-net-worth individuals moved to Florida and want more flexibility to use their units as pieds-a-terre.

“They want to live in Miami, they want to live in London. They don’t want to be tied down,” she said.

Some of the city’s priciest co-ops have seen their prices reduced in recent months. A Manhattan apartment long owned by the late pharmaceutical executive Martin Howard Solomon is now asking $45 million, down from the original $55 million when it listed in 2022. The longtime Fifth Avenue home of the late oil heiress and philanthropist Anne Hendricks Bass also got a $10 million price chop to $60 million in November. Both remain on the market as of March 18.

“Even the best of these addresses are going for ridiculously low prices,” Olshan said “It’s amazing that the shareholders don’t file activist lawsuits to try to motivate their boards to change.”

A new development drought

For the past few years, the Manhattan market has suffered from a serious oversupply problem, appraiser Miller said. For now, overall inventory remains high outside of a few select neighbourhoods, but that likely won’t last. That is because filings for new luxury condos have plummeted.

Plans approved by the New York Attorney General’s office for units priced $5 million and up peaked in the mid-2010s and have dropped since 2020, according to MarketProof. In 2015, offering plans were approved for 952 units at that price point. In contrast, there were just 57 approved in 2023.

“In the years since Covid, so many things stood in the way of new inventory,” said Kael Goodman, co-founder of MarketProof. “There was supply chain, Covid shutdowns, a perception of oversupply and a high cost of capital. There was also an attention shift from New York to Miami.”

As of the close of February in Manhattan, there were close to 1,400 developer-owned units for sale at prices over $5 million, with an average asking price per square foot of $3,820, according to analytics firm MarketProof.

Outside of Midtown, neighbourhoods with significant new development inventory at that price range include West Chelsea, Lincoln Square and the Financial District. Again, that is thanks to a handful of mega projects, including Chelsea’s One High Line and Macklowe Properties’ One Wall Street.

After a slow start marred by controversy, One High Line was among the top-selling buildings of 2023. It posted 35 closings with an average price per square foot of around $3,000, according to a spokeswoman for the developer. That brought the total number of sales to around 80, she said. Formerly known as the XI, the 235-unit condo project first launched sales in 2018, but the original developer, HFZ Capital Group, faced financial distress and the project stalled. Witkoff and Access Industries took over the project in 2022 and rebranded it.

Meanwhile, industry sources say sales have been slow at One Wall Street, the former headquarters of the Irving Trust Company bank. Sales launched at the 566-unit building in September 2021 and there were still 467 units remaining as of late February, according to MarketProof. A spokeswoman for the project didn’t respond to a request for comment.

Gary Barnett of Extell Development, the firm behind Central Park Tower, said that while “inventory is gradually getting eaten up” across the city, his company is now being “very careful to pick the right projects.”

“You don’t want to be in a situation where your cost basis is so high that you have to make $6,000 or $7,000 a foot to make money,” he said.

While he has plenty of inventory remaining on Billionaires’ Row, another of the company’s projects, 50 West 66th Street, a roughly 125-unit project off Central Park on the Upper West Side, is close to 50% sold without having even formally launched sales, he said.

Barnett pointed to the project as evidence that “if you have the right product in the right location, you can still get very real and serious prices.”

The incidents have been unsettling: a homeowner’s thermostat raised to 90 degrees by hackers with no way to turn it down, baby monitors used by online stalkers to spy on families, webcams and other home devices hijacked to help take down corporate computer networks.

Thanks to the boom in “smart home” devices, we now live with vastly more connected gadgets: internet-linked TVs; camera-equipped doorbells; online thermostats, door locks and lightbulbs; web security cameras; and even refrigerators, dishwashers and ovens with Wi-Fi. Each online link provides a tempting target for a hacker.

The problem isn’t simply that somebody can hack a refrigerator or dishwasher, of course. It’s that once a bad actor breaches one of these devices, he or she potentially could control every other device on your home network. What’s more, these gadgets pose privacy concerns since their cameras, microphones and motion sensors could be used to monitor you.

As sales of smart-home devices continue to grow, consumers need to be cautious. Here are some questions and answers about how to thwart digital vandals.

How big a cybersecurity risk are smart-home devices?

Every new digital device introduced into your home comes with security risks. Most are connected to your Wi-Fi network and many come with an app that links them to your phone via Wi-Fi or your cellphone network. All of these are potential pathways for a hack—and the device with the weakest security could provide a way for hackers to reach the others.

In other words, you are only as safe as your weakest device.

“A lot of these devices don’t even have basic security features or protections,” says Wendy Frank , U.S. cyber internet-of-things leader for consulting firm Deloitte. Most lack virus protection and other security software that is common in personal computers and phones. Many don’t offer automatic updates of software or firmware (the coding that controls devices’ basic functions) from the manufacturer to fix security flaws, also standard with phones and PCs.

What kind of damage could hackers inflict?

Smart-home devices can be exploited to hack into the owners’ private information or attack a website.

In 2016, hackers controlling hundreds of thousands of internet-connected devices, believed to include webcams, smart TVs, printers and even baby monitors, unleashed  several massive attacks  that knocked out dozens of popular websites, including those of Twitter, Netflix , Amazon and Visa. Such “distributed denial-of-service” attacks instruct the devices to send millions of requests in unison to overwhelm a computer system, causing it to shut down.

Considering the enormous number of U.S. homes with smart devices—more than 60 million—and their low levels of security precautions, they are likely to continue to be tempting targets for all kinds of attacks, says Yuvraj Agarwal , an associate professor of computer science at Carnegie Mellon University. It’s “a disaster waiting to happen,” he says.

Among the potential risks experts cite: People could be locked out of their house by hackers who tapped the security system seeking a ransom. Burglars could listen in over smart speakers to figure out when you aren’t home. Smart lightbulbs could be used as a way to break into personal information on a phone.

What steps can we take to protect devices from hackers?

First, make sure your Wi-Fi router is secure—the router is the key to your digital home. Use the website or app that controls your router to check that it isn’t using the default password—that same password could have been given to many other customers. Give the router a unique password you use only for that device.

Next, ensure that the router’s security feature called a firewall is turned on, and that it is using encryption called WPA2 or the newer WPA3. And turn on the control to allow automatic software updates, if provided.

What about settings on the smart devices themselves?

As with routers, don’t use the default password they came with. Instead, use a different password for each device, so that if someone were able to figure out, say, the password for your smart doorbell, he or she wouldn’t have access to everything else.

And if a device allows two-factor authentication, be sure to use it. This means that to log in to the device you will need to type in a code sent by text or email, or generated by a device called an authenticator, in addition to the password. That extra step, while annoying, could keep out a hacker.

Is it risky to put smart devices on the same home Wi-Fi network you use for your computer and phone?

Yes. Someone could hack into one of your smart devices as a way to break into your Wi-Fi router, and from there could attack your computer, phone and everything else on the same network.

Instead, set up a guest network on your router that has its own unique password and use that network to connect your smart devices. Many routers include such a second network, but you may need to take a few steps to turn it on. Guest networks generally are sealed off from the main Wi-Fi network, so a hacker couldn’t leap from it to the main network.

When shopping for these devices, how do you know which are safer than others?

Check the makers’ security policies online before buying. Look for manufacturers’ statements that they periodically send security updates to the devices and encrypt the communications between the devices and their cloud service. Seek out products that offer two-factor authentication.

Are there certain types of smart devices to avoid?

Hundreds of types of internet-connected gadgets are sold online by innumerable companies, often at very low prices. “If it costs $5 for a smart plug, most of it is not going toward thinking about security and privacy first,” says Carnegie Mellon’s Agarwal, who does research on smart-device security.

Stick to devices from mainstream makers, since they are more likely to take security considerations seriously and spend the time and money to periodically update these features, he says. These companies don’t want to risk tarnishing their brands with products of questionable security.

What else can consumers do?

Limit how many smart devices you own—the more you have means more pathways for hackers to try to break in. Get fewer, more-secure devices rather than having insecure, cheaper devices in the whole home, says Deloitte’s Frank.

While you might find an Alexa or Google digital assistant useful on the kitchen counter, avoid putting one in a home office where you might talk about confidential financial or work-related topics that could be a juicy reward for a hacker, she adds.

Moreover, disable functions you don’t use or need on the devices, such as the camera on a digital assistant or the ability of the device to save recordings of your voice commands. “Having those turned on creates a larger attack surface” for a hacker, Frank says.

Do proprietary home networking systems provide more security than plain Wi-Fi?

While networks such as Google Home, Apple HomeKit and Amazon Alexa likely have enhanced security, in most cases they also use your home Wi-Fi to connect to their cloud services that run the networks. That raises the same security concerns as relying solely on Wi-Fi, Agarwal says.

Why don’t device makers build more security into their products?

A big factor is cost, says Deloitte’s Frank. Adding the level of security found in a laptop computer to a $15 internet-controlled lightbulb could make its price uncompetitive.

Moreover, she says, device makers want their products to appeal to ordinary consumers, so “they need to prioritize convenience, prioritize ease of use. Security often takes somewhat of a back seat.”

What is the smart-device industry doing to prevent hacks?

One effort is an industry standard called Matter from a consortium that includes Apple, Amazon, Google, Samsung and others, which works to make networked home products interoperate with each other. The Matter standard has security and privacy safeguards built in, says the group behind the standard. Products that meet the standard are being rolled out gradually and can carry its logo .

What is the government doing?

A project by the Biden administration aims to have makers of digital home devices label their products to indicate their security and privacy protections. Called the Cyber Trust Mark , it’s akin in some ways to the government’s Energy Star certification for the efficiency of home appliances.

The voluntary program, overseen by the Federal Communications Commission, is still under formation; the White House said last year it expected it to be in place in 2024. Under the proposal, device makers seeking to use the label would need to certify that their products meet certain standards by having them tested by an accredited lab. Agarwal says he has provided input to the government effort based on a Carnegie Mellon program to devise a similar label for smart products.