A $62 M. Townhouse? In Mad Manhattan, Prices Are Meaningless

EVEN IF BUYERS ULTIMATELY ESTABLISH real estate prices, it’s the soothsaying brokers who know what they’ll pay and who can advise sellers accordingly. So take heed when Paula Del Nunzio, the record-setting Harkness listing broker, says, “I do think that the $100 million house is next.”

It’s called the art of pricing. While conventional appraisers use pragmatic facts like square footage and comparable past sales to decide real estate value, brokers eye assets like social cachet, provenance, tenant list, scale and upcoming rival deals. “A seller at a higher end has to be working with a broker for an appraisal,” Ms. Sloane said, “because they’re familiar with everything that’s going on.”

“No, no, no, no” is what Corcoran Group salesperson of the year Carrie Chiang said when asked if she ever uses a calculator to price her real estate. “We know what’s out there; we know what’s going on.”

So, especially at the fanciest buildings, where street-address status can matter more than objective facts like square footage, there simply aren’t rational explanations for 2007’s prices. “They just aren’t commodities,” Mr. Henckels said about tip-top co-ops. “There are just too many social, financial and architectural subjective issues.”

New York’s climb into this unknown real estate territory feels almost arbitrary, even to brokers. “When money is meaningless it’s hard to price something,” Mr. Henckels said. He brought up Charles Schwab’s purchase at the regal 834 Fifth co-op (where Rupert Murdoch has the triplex). Though the deal hasn’t closed yet, Mr. Schwab is said to have paid as much as $11 million over the $16.5 million asking price.

“So does somebody else in that line suddenly think theirs is worth $27 million? When you have things like that,” Mr. Henckels said, “it makes things very difficult.” But, of course, there are other scenarios that would make business harder for Manhattan brokers: “If the whole hedge fund industry collapses, then, you know, yeah, it’s going to knock the hell out of the high end.”

Will Wall Street have an epic tumble this year before a $100 million house has a chance to hit the market? Either way, it doesn’t seem feasible that the Bronfman brothers’ buyers could ever flip their townhouses at 11 times the purchase price.

“If you look at history, every period like this eventually came to end,” the Elliman broker Mr. van der Ploeg said. “The Gilded Age eventually came to an end. It’s true it will come to an end. But it doesn’t look, it doesn’t feel, like it’s going to be tomorrow.”

“These are unbelievable, unprecedented times we’re living in,” his colleague Mr. Steinberg said. “Sooner or later, a reality check has to set in when things calm back down to normal.”