Trump International tower at 1 Central Park West and the tony 15 Central Park West house the most secret buyers in New York City.
Real estate listing site StreetEasy just released a survey of residential purchases through Limited Liability Companies, or LLCs.
Many buyers form the shell companies to act as the buyer to shield the buyer’s identities from public sales records, often making it impossible to know the identity of the purchaser of a home.
StreetEasy used a custom repeat sales index to make their findings, which revealed that LLC purchases happen most often in Midtown Manhattan and Downtown Manhattan, with 15 Central Park West and Trump International topping the list of buildings with the most LLC purchases.
Homes owned by LLCs have also seen a slower price growth in Manhattan and Brooklyn than all homes.
Between 2005 and 2015, the median resale price of homes bought using an LLC increased 26.1 percent, slightly lower than the 10-year price appreciation of all homes in Manhattan, 31 percent, according to StreetEasy.
The median resale price for properties purchased under an LLC in Manhattan has fallen each month since May 2015, declining 2.3 percent since May, similar to the price drops that the uber-luxury Manhattan market has been experiencing.
In Brooklyn, homes purchased under an LLC experienced negative price growth over the past decade. Between 2005 and 2015, the median resale price of all homes purchased with an LLC dropped 5.6 percent, compared to a 19.5 percent increase among all homes in Brooklyn in the same time period.
However, the report points out that the slower rate of appreciation in Manhattan could be minimized if the owner’s home currency is not in U.S. dollars, and in Brooklyn in particular, the negative appreciation suggests that LLC buyers may have been significantly overpaying during the boom of the late 2000s.
Despite the price lag of LLC purchased homes in Manhattan, these properties are significantly more expensive. In Manhattan, the median resale price of all homes purchased using an LLC is currently more than $1 million higher than the resale price of all homes as of January 2015, according to the StreetEasy Price Indices.
In Brooklyn, the median resale price of LLC-purchased homes is slightly lower than that of the median resale price of all homes. The report points to buyers motives as a possible explanation for the difference – that buyers use LLCs for different objectives when buying in Brooklyn and Manhattan. Those purchasing in Manhattan, which overall have a higher value, may be using the properties as a “store value,” while those buying in Brooklyn have a more traditional plan of using the property as a residence, rental or a renovation project.
With the U.S. Treasury Department’s recent announcement requiring the disclosure of buyer identities for Manhattan transactions that are $3 million or more, it could bring a slowdown at the higher end of the market. StreetEasy reported that the price index for Manhattan is down 2.3 percent from its peak in May 2015.