You wouldn't know it from looking at all of the glass towers going up across Manhattan, but the city is running out of penthouses and other ultra-luxury apartments, and what's on the market may be overpriced.
Sales of multi-million-dollar properties in New York City fell dramatically in the second quarter, due in large part to lower inventory, according to real-estate firm Brown Harris Stevens. Sales of properties priced at $5 million or more fell 25 percent to $679.3 million in the second quarter compared to the same quarter in 2012.
Sales of homes priced at $10 million or more fell by nearly 50 percent to $241.9 million, according to Brown Harris Stevens.
Granted sales were up over the first quarter. But brokers say the year-on-year decline in sales volume is largely due to a lack of supply. The number of properties priced between $5 million and $10 million in New York fell 15 percent between the second quarter of 2012 and the second quarter of 2013.
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But brokers and real-estate executives said the decline in current inventory is actually much greater since much of the inventory added in the second quarter is made up of apartments in buildings still under construction.
"It's the lack of inventory more than anything else," said Hall. F. Willkie, president of Brown Harris Stevens Residential Sales. "It's just so tight."
The inventory problems are made even worse by pricing. Brokers say a large number of the apartments for sale at the very high end are overpriced based on comparable sales. While overpriced real-estate is common throughout the country, executives say it's an especially acute problem at the top of the New York market. They say supply is especially tight and wealthy sellers aren't under much pressure to sell.
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"Many sellers are stretching their asking prices," Willkie said. "But if those prices aren't justified by comparable sales, the buyers won't buy. So many things at that end of the market are overpriced."
I. Dolly Lenz, the New York mega-broker, said the millionaires and billionaires buying at the top of the Manhattan market may be rich-but they are also highly discerning when it comes to price. And they're not willing to overpay.
"The overwhelming majority of buyers in this segment of the market are value buyers," Lenz said. "Value could mean $60 million. It's not about a low price. It's about what you're purchasing and what you're getting for your money. A lot the available inventory is overpriced and somewhat stale."
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Many brokers pointed to the $125 million penthouse of the Pierre Hotel as one apartment with an optimistic price. The $95 million apartment on the 18th floor of the Sherry Netherland and a $44 million apartment downtown on Hudson Street also have aggressive price tags, brokers said.
The mismatch between a lack of supply and buyers who aren't willing to pay the much higher prices has led to a standoff that could continue for the rest of the year. And that could hurt sales-and the New York economy.
"The question is what will free up supply," he said.
Especially, supply at a fair price.
-By CNBC's Robert Frank. Follow him on Twitter @robtfrank.