These are certainly good times for the buyers in the land of new development condominiums here in NYC. That is if you have 20% down, good credit, a job and you are looking to buy in a building that is nearly, if not 100 percent complete. Prices are down precipitously, high inventory is providing abundant choices, interest rates are at a 45 year low, and developers are providing incentives on top of their incentives. As a broker leading one of these projects, 125 North 10th Street, it feels like running a booth at the bazaar in a third world country. Every weekend I am not sure if people are showing up to practice their haggling skills or are actually looking for a new home.
It is extremely hard to get buyers to focus on the important things; like the quality of the construction, the mechanical systems( they are not all created equal), and the way they imagine themselves feeling and living in their prospective new home. Buyers come in to 125 so full of ideas crammed into their smart/informed brains by Rush radio voices, the talking heads (not the band-I wish it were so), the print news, the local real estate rags or the blogosphere; but, what is incredible is that buyers have actually convinced themselves that what they are hearing and reading, which is largely opinion, is the absolute truth and that they are now somehow the experts. It is really amazing. It would be like me showing up to the emergency room after reading some good instructions online about a gall bladder operation, suiting up and giving it a go. I was a practicing carpenter for 17 years and good one; I think that I can handle it!
There is a basic rule in real estate in NYC, at least in the best and already past the point of no return areas like Williamsburg, Brooklyn, EVERYTHING SELLS!! They are not creating anymore “Greatest City in The World” and there has and will always be demand for NYC real estate. All those buildings that are not filled and are actually getting completed WILL BE FILLED, mark my words. As for timing the bottom of the real estate bubble-BEWARE! It is the same for the greedy sellers in this last up market who did not price their homes realistically and waited too long. Now, having laid the groundwork for their next transition in housing, many of these sellers that passed up on offers before last September are wishing that they had listened to their brokers. Remember, it is not an easy time out there for brokers, they have to sell more properties at lower prices to earn a living and there are far fewer deals to go around. The good brokers are working their butts off and are extremely knowledgeable about the different segments of the NYC housing markets and where to find a great deal. For buyers to think that they know more than these everyday players is simply absurd. Greedy buyers will inevitable suffer the same fate as the greedy sellers by either missing the bottom and getting caught in the upswing or missing out on the apartment that they really want because they were waiting for a further decline in prices.
It is tough times for the developers. These high profile starchitect affiliated new development condominiums that helped to run up the NYC real estate markets to stratosphere highs have now run into a pretty severe case of the troubs. In Manhattan, the 1000/sf number was replaced by the 2000/sf number in a matter of about 2 years and guesses what, 1000/sf is the new 2000/ft and we may be going from 4 digits to 3 digits in the coming months. Manhattan being the barometer, this same scenario is reflected in the prime Brooklyn markets, Williamsburg being a great example. This has put an enormous burden on the developers who were mid process on their projects and even those who had just completed the land acquisition before the s— hit the fan with Lehman. The developers of course have other investors and banks, all of whom worked out incredibly complicated contracts to spread the risk around, but the fact is that no one could possibly have anticipated what happened when the post Lehman aftermath continued with the now familiar tale of woe . It has really been a perfect storm in many ways with these new developments buildings. Pre-selling a building, a common place practice for many years, a kind of “take the temperature” approach that kept money flowing and investors happy, is now a thing of the past. Lenders put these new developments at the top of the “do not lend” list, the crane collapse trafficked a bunch of keystone inspectors that slowed things down further on the building sites, the media found a hot disaster story to sell and the buyers froze. Everything turned to ice.
Hmmm, someone smell an opportunity? Now that we have a new President and new Country, spoken like a true optimist, the thaw is on. Banks are lending again, there is a serious uptick on Wall Street and open houses have been very busy for about the last 2 months. People are definitely buying on the Northside of Williamsburg as is evidenced by the recent article More Sales for Less Money. In addition to all the incentives, developers have also realized that they have to finish strong and have upped the ante on quality of the buildings. Since that crane toppled a year ago, the process for delivering finished buildings into the market place has also changed dramatically. In the good ole days of yore, developers could pre-sell a building, cut corners as they built because they were already mostly sold and then get to the finish line( i.e. people closing and moving into the building) without having to complete various amenity spaces or even the lobby. Now, if you do not substantially complete all these items, and by that I mean 90 plus percent complete, you will not get the clearance from either the Department of Buildings or the bank or both to close. All this is good for the buyers in these buildings as they will move into better quality buildings and more completely finished buildings.
In short, there is opportunity out there. Many projects, not all, are well designed with very good layouts and they are basically selling at 2-3 year old prices. In the case of Williamsburg, this has been coupled with a flight to quality on the construction side, especially on the Northside, that further puts the buyer in the driver seat. You get an apartment in the very best location in the area, at the same price as people paid 2-3 years ago for a lesser product. You get a better designed building, likely with better amenities or at least more completed amenities. And you get it while interest rates are at a 45 year low. Williamsburg is one example of an area well on its way to being one of the premiere places to live in NYC. It is like an extension of the East Village and LES, only cleaner, with more open space and the take-it down a notch lifestyle that has brought masses of people over to the BOOM Borough. Expect the trend to continue.
For you buyers, be choosy, but do not be foolish. Ask the important questions, the people selling property really do want to help you make a good and informed decision. You are in what is essentially the best buyers market in more than 2 decades. Get advice from the experts, they will help you. If you find something that really speaks to you, that you can afford and want to call home, go ahead and try and get your great deal. You may be surprised.