The Edge

jimstreeteasy: about 2 weeks ago

They also told me quite emphatically that it was irrelevant to them if you pay cash or not

jimstreeteasy: about 2 weeks ago

I wonder if this is semantics with them. When I asked -- two weeks ago -- "what if I offer 25% discount, or some very large discount, am I going to get a discussion going?" They answered: "Yes, we will consider offers." BUT...then she said, you should be realistic and be "nearer" to the level we are currently giving, which she seemed to hint was like 10% plus closing costs.I had the strong impression 25% was no go, and basically it was 10 percent plus closing costs.

jasonkyle: about 2 weeks ago

I popped into the sales office over the weekend. the person i spoke with was super nice and upfront. she said the developer will "consider" offers of 20 percent below ask and is covering closing costs. She also reaffirmed that they are 30 percent sold (not counting anyone who might back out of course).

bjw2103: about 3 weeks ago

This relates more to NSP and Toll, but surprising preliminary Q4 numbers there:
http://www.sec.gov/Archives/edgar/data/794170/000095012309060842/c92381exv99w1.htm

bjw2103: about 3 weeks ago

milkman, I do think it'll be less restrictive, but I don't think anyone knows when exactly. Maybe after the '10 elections? But you make an excellent point that until then, this environment does impact pricing. I'm not convinced it's impacting the Edge's pricing right now though, for a few reasons: no underlying mortgage, and no closings scheduled anytime soon. They must recognize that no one buys off floorplans anymore, and even though they've just opened the model unit, that's not enough to really entice buyers who want to see the finished product they'll be buying. But I think all your points are valid and really underscore how little information we have about what's going on here, unfortunately. That's why I think interested buyers (ie: jimstreeteasy) would do well to sit tight until the picture comes into focus a bit more, but be ready to act accordingly (ie: offer or pass) when it does.

milkmanjones: about 3 weeks ago

bjw, is your thought that the current lending environment will become less restrictive in the near future? if not and tight lending remains the norm, that factor becomes part of market pricing.

i guess it's possible that lending will loosen up again, but with upcoming losses in commercial RE and the possible winding down of the govt's mortgage purchase program, i have my doubts. so i think that we can draw some conclusions based on current sales rates

closings will definitely provide useful information, but they are a while away. and most of them will be based on old prices (unless sales really pick up), so people will have to factor in deposits when trying to ascertain what those closings say about market value.

bjw2103: about 3 weeks ago

"bjw, i am not sure i totally understand the point you are trying to get across. in the real estate market, there is usually a middle man (except for cash purchases, which i believe represent a relatively small percentage of purchases). so are you saying that supply and demand is generally inappropriate or only inappropriate in these circumstances?"

milkman, I'm not saying ignore supply-and-demand; I'm saying because of the restricted lending environment, there will undoubtedly be a lag between "correct" pricing and clearing of inventory, which makes it difficult for those of us surveying the market to know when that mark's been attained. It's not as simple as saying: "Ok, nothing's selling now, so it must be overpriced." I happen to think it is overpriced still, but it's just my opinion in the end, and the market speaks for itself of course. As has been said before, we'll know a bit more when closings start.

jimstreeteasy: about 3 weeks ago

Milkman as you put it I guess I agree. If the edge sells significant units at the current minus 10% range then I guess as some point we will have to accept that that is the market, however overpriced it may seem to many on here, BUT unless they sell out (unlikely), there will be a debate about whether sales are brisk enough to reflect reasonable market clearing levels.

marco_m: about 4 weeks ago

I wouldnt even think abt the edge unles we're talking about 20% off current ask.

milkmanjones: about 4 weeks ago

jim, are you directing your statement to me? because if you are, i wish you would read my comment more carefully.

i wrote "if a 10% discount led to the market clearing, i would agree that walking away wouldn't make much sense." i don't really see how that differs from what you are saying.

as you say "(assuming a significant number of units selling)" which is similar to my "market clearing" conditional. currently we don't know whether your assumption is true.

when surveying the available information, i don't believe it's just one person's view of the market that 10% off edge's asking price is the market clearing. well respected sources, e.g. Miller, has came out and said manhattan has fallen at least 20% off of peak. if i were a betting man, i would not wager that WB has fallen significantly less than manhattan, especially considering factors like its excess supply.

given that the edge's prices are priced near WB's peak with many units north of $900 psf, i would think that a rational person could think that 10% off of the edge's asks are not near market. in that case, it might make sense to walk away.

here, we are not discussing whether it makes sense to walk away when market has fallen 10% or less, which i think everyone can agree. but we are discussing whether the market has fallen 10% or less.

we need more time to figure this one out, but given that the edge is now willing to negotiate 10% down (according to people on SE), we'll see if the market clears at this price level. my suspicion is that it will not, and the market will require more than 10% of edge's peak asks. if my suspicions are correct, then it may be perfectly rational for people to walk away from their deposits.

jimstreeteasy: about 4 weeks ago

Geez, There has to be a limit to stupidity. If any asset is currently selling at x price (assuming a significant number of units selling), which is more or less similar to the deposit amount, as in within the percent or so that the deposit represents, it is not logical to walk away from the deposit. It is a ridiculous distraction to even debate this. The market view of one person that the market may fall in the future is irrelevant. Now, the bar on re-selling within one year might,,,,just might,,impact this issue but probably not. SE glibness interferes with a logical discussion too often.

milkmanjones: about 4 weeks ago

tanker, my bad. the first part should have been directed to jim

tinkun: about 4 weeks ago

It's beginning to sound like auction time for the Edge...

falcogold1: about 4 weeks ago

I had this dream that I was the Edge. People talked about me behind my back, bad mouthing the neighborhood I'm from and saying things like, no one will ever love me. No one will ever live with me. People in Manhattan will point their finger at me and say, there's the problem. In my dream I start to swallow water...lots of it...I panic...I'm being water boarded by the CIA in some deep basement in Iraq but, somehow I'm relieved that I'm not the EDGE.

tanker: about 4 weeks ago

milkman - I did NOT write this. So direct your response at the author please . . .

milkmanjones: about 4 weeks ago

> If someone walks away from The Edge contract when the new units are only being discounted by 10%
> or so, wouldn't that be strange?...

tanker, if a 10% discount led to the market clearing, i would agree that walking away wouldn't make much sense. however, here i agree with bjw because there will probably be people who think that the correct valuation is going to be significantly south of 10% off asking (since manhattan is at least 20% off of peak). so if you think that actual value is more than 20% off, walking away is at least something to think about.

> It was my somewhat convoluted way of explaining that this is not such a simple
> supply-meets-demand problem when you've got a middleman (lenders) involved.
> What this means is that even if they do lower prices considerably right now, they may
> not get the boost in sales they're looking for because of how tough it is to get a
> mortgage. I'm sure Douglaston realizes this, hence the feeling no real pressure to capitulate.

bjw, i am not sure i totally understand the point you are trying to get across. in the real estate market, there is usually a middle man (except for cash purchases, which i believe represent a relatively small percentage of purchases). so are you saying that supply and demand is generally inappropriate or only inappropriate in these circumstances?

also, even though it is generally tougher to get a mortgage these days, when i went to get my pre-approval, i was told by my broker that it is no problem for someone with a good credit history to get a mortgage if you put down 20-25% (depending on mortgage size). if this is true, then the people who are not able to bid up the edge's prices are people who do not have a record of fiscal responsibility and do not have sufficient equity to invest. and though such people can set the market (as we have seen in the past several years), i would be a little skeptical of their valuations.

also, thought credit requirements are tighter, they may stay this way for the forseeable future. unemployment is high, there is a lot of uncertainty regarding the long-term ability of the government to prop up housing, commercial RE is looking like it's going to put a sizable dent in bank's balance sheets. maybe a restrictive lending environment is the correct state of the market. douglaston seems to be betting on certain things that seem overly optimistic to me, but they have time until closings are supposed to start.

> comparing them to nsp, 80 met, and 125 n 10th, i think they are priced in line, maybe about
> 5% -10% psf higher. i do think that they offer superior quality and that the higher prices
> are justified for that reason.

polisson, i don't think you can lump all these buildings into one bucket as you have done.

edge quality > nsp quality. but is it worth 5-10%? that's for the market to decide.
80 met and edge is roughly equal in terms of quality in my opinion. but the edge is on the water.
edge may be a tad better than 125 n 10th in quality, but 125 n 10th is less than 10% after price cuts.

also, even assuming the edge is priced in line with comps. the comps as a whole are not really selling. so all you are saying is that the edge is priced in line with other overpriced developments.

tobytoby: about 4 weeks ago

Polisson,
800/sqf for no view in a building that is only 20% in contract - do you think this is a reasonable deal in this market. I really think you should look around as other developments are offering much better deals.

polisson: about 4 weeks ago

jimstreeteasy: they won't let you rent out for less than 12 months.

they have a lender (home mortgage express) that is willing to finance even at 0% sold.

those units whose views will be blocked by phase ii are priced as no-view units, i.e., they are asking about 800 psf. concerning the criticism that they haven't moved with the market, well, their original prices where intended to be non-negotiable; that has changed and they will now give a discount. comparing them to nsp, 80 met, and 125 n 10th, i think they are priced in line, maybe about 5% -10% psf higher. i do think that they offer superior quality and that the higher prices are justified for that reason.

i don't need all the amenities, but the pool is nice and common charges are still lower than what one would pay in most co-ops. and virtually no taxes for 20 years. so, along the same lines of what mikolinski has said: maybe they will come down further in price, but where they are selling right now nets out at about the same as renting (a place that isn't nearly as nice). so, i might as well just consider what works out best for me rather than trying to time the market.

bjw2103: about 4 weeks ago

tanker, I agree that it's a fruitless excercise. It was my somewhat convoluted way of explaining that this is not such a simple supply-meets-demand problem when you've got a middleman (lenders) involved. What this means is that even if they do lower prices considerably right now, they may not get the boost in sales they're looking for because of how tough it is to get a mortgage. I'm sure Douglaston realizes this, hence the feeling no real pressure to capitulate.

tanker: about 4 weeks ago

jim - source on sales was an article (Crain's? can't remember) a few months ago. I also know from my experience in summer '08 that Douglaston exaggerates its sales - they were publicly claiming 110 units sold at the same as their own salesperson, with a spreadsheet in front of her, told me it was 96.

bjw - what use is it imagining how many units Douglaston would sell if lending were higher? We could also imagine how many they'd sell if unemployment were at 5%, but it's not. The point is that prices must come down significantly to reduce their massive inventory.

mikolinski: about 4 weeks ago

From what we have been told by the Edge Sales office, since we were obviously concerned about the 70% sales requirement, is that they are closing in phases which I guess somehow allows them to skirt around the sold %s...someone correct me if thats not the case. As I've stated earlier BofA as a preferred lender has told me they are willing to provide financing for 85% of the purchase price. Next year should be "interesting" to say the least, but am fairly comfortable in my ability to obtain financing.

Also I've been told that they are at or above 30% sold now. Again, this is from the Sales office so I don't have any solid evidence of this.

SDNYC: about 4 weeks ago

I have to say, I am actually enjoying the discussion going on here. Typically, these threads do turn into third grade insults and pointless observations from anonymous trolls who really think what they are saying is relevant. With respect to % sold, one thing that has not been factored into this discussion is NOBODY is buying pre-completion. Why would they in today's environment? The real test is going to be when units are available to close. From there, financing and pricing will present a much clearer picture and we will truly see where supply and demand converge.

jimstreeteasy: about 4 weeks ago

bjw...my point is that people are (logically) unlikely to walk away unless a significant differential emerges between new contract prices at the time of closing vs. what they contracted for

lending -- maybe they are lying, but I understood the office to say that they have lenders who will def provide financing even if not at x% ; perhaps this is only partly true , or won't apply to all potential buyers, I don't know

tanker - what is the source of the 20% number

bjw2103: about 4 weeks ago

tanker, that last sentence is really my point - we have no idea how many people would otherwise be ready to buy at the Edge if we were in a less restricted lending environment.

jim, I don't think it would be strange. People have a host of reasons why they'd walk away - job situation, found a better deal elsewhere, feel confident they can come back to the same development later for significantly less, etc. Patience is really essential with such a large-scale development.

jimstreeteasy: about 4 weeks ago

Tanker -- the Edge office says it is 30% sold (of the 565 apartments). I think they said about 10 units sold in the two week period that ended last week. If they sell 20 a month up to march 31 (they sort of say some ready for occupancy by then), they would still be below 50% at that time, which I guess isn't good, but I don't know if it will make them panic.

bjw -- If someone walks away from The Edge contract when the new units are only being discounted by 10% or so, wouldn't that be strange?...

tanker: about 4 weeks ago

bjw - even if no contracts are broken (which, of course requires walking away from the deposit and other sunk costs), the developers still have over 80% of the units to sell. What buyers were willing to pay when they contracted in spring 2008 bears little relation with what different buyers are willing to pay today. As for restricted lending, the biggest restriction in the case of Edge is the fact that they are less than 20% sold, when Fannie and Freddie won't touch a loan from a new construction under 70% sold.

bjw2103: about 4 weeks ago

tanker, I certainly agree that it's overpriced, but I think part of this has to do with the restricted lending environment. I think we'll have a much clearer picture of what people are willing to pay once closings start and we see how many contracts are broken.

tanker: about 4 weeks ago

With regard to the debate on pricing, we all love cherrypicking comparables, but in this case there's an objective measure - is demand meeting supply at current prices? In the case of Edge, they are less than 20% sold and, more importantly, have sold virtually nothing since summer of 2008. If that's not a sign of significant overpricing, I need to give back my economics phd . . .

jimstreeteasy: about 4 weeks ago

The EDGE OFFICE told me emphatically that so far as they understood it and knew there are virtually no restrictions on renting out the units. I glanced at the offering document on a desk and didn't find anything quickly. Does this 1) seem normal and correct, 2) is this a negative about the buidling, 3) would a condo associatioin likely eventually put in some restrictions??? Does this mean that someone could rent out for two week stints or even two days off of Craigslist? In such a large building, and at least until it fills up and stabilizes, would anyone have a clue anyway on what was going on? (For example, I lived in a condo in Chelsea that had a rule saying no more than one rental per year or minimum one year tenor or something like that.)

bjw2103: about 4 weeks ago

tobytoby, the nightmares really begin at 8:30. I've never had a problem from 7:30-8:15 or so.

tobytoby: about 4 weeks ago

The subway ride into the city between 7:30 and 8:30 is a nightmare. One line on the last stop before you enter Manhattan. Good luck....

ofbrooklyn: about 4 weeks ago

Miko - it's not only loss of views that i would worry about, but the daily sound of jackhammers and trucks for a period of no less than 16 months, as Phase II structure will equal South Tower in size. Hope you are not purchasing as an investment, but rather for the short term views and ammenities. Phase II will certainly block North Tower to apartments below the 9th floor facing the river.

murray888: about 4 weeks ago

just can't take it - "hustle and bustle"

bjw2103: about 4 weeks ago

"They are the New Yorkers that make this city better for all of us. They are the one's willing to live far from public transport, far from hustel and bussel of the big city. Content to view the city, a far, from their purch. Resistant to what lies under the ground, hexanes and schmexanes, carcinogens as large as cats, as well as what's above.
They take one for the team and we fail to applaud them.
Go ahead, get a tattoo...that's not what's gonna kill you.
Benzene hexocloride....Life sometimes smells like a bowl of cherries"

Well, whatever it is, it's definitely much better than whatever taught you to spell like that. Also, I didn't know a 5 minute walk to a train station 1 stop out of Manhattan was "far from public transport" and "hustel and bussel." Where do you live? 42nd and Broadway?

mikolinski: about 4 weeks ago

milkman...agreed, and apologies on how my initial post may have come off, certainly was not my intent to generalize or sound elitist or especially put anyone down.

In meeting with the Edge recently they have openly said that Phase II will be delayed for a while(not sure on any exact timing around that). Enough so that they are planning on sodding the whole Phase II area so that its not an open construction site which leads me to believe, especially based on the current market, that they are in no rush to flood the real estate market with more apartments. Lucky for me I guess.

concerning my 730/sq ft, I think it may be a combination of it not being a true 2 bedroom in addition to the future possibility of Phase II going up directly in front of us and blocking our view. I've got to believe they priced that into the price of the North Tower apartments. For now, and until phase II goes forward I just consider myself lucky and on borrowed time. That being said we still purchased in full knowledge that our views would one day be blocked and took that into consideration before moving forward.

I firmly believe, and maybe it is specific to the price we got on our place, or that I've just become delusional, that the Edge started pricing the apartments at a more reasonable level from the beginning. You look at NSP and 1 Brooklyn...yes they have come down tremendously over the past few months, but in absolute terms they are basically in line with the Edge now.

Edge = 35 @ $905/sq ft
2 NSP = 42 @ $854/sq ft
1 BRKLYN = 61 @ $903/sq ft

The obvious outlier is 1 NSP @ $764/sq ft. That being said 1) the Edge is pretty much in line with a terrific amenities package, and 2) the 730/sq ft I am paying is in line with, and actually lower than 1 NSP which is now priced as such given the blocked views by 2 NSP. This is what leads me to believe that the Edge may have priced "right" from the beginning.

Sorry for the long post...I'll try not to let it happen again

jimstreeteasy: about 4 weeks ago

I dont get how miko bought at 730 psf. Was that the original offer price on some units, or were they discounting way back then. It seems strange. The market is much worse now but everything I saw there was much more psf.

jimstreeteasy: about 4 weeks ago

I agree that on a direct comparable basis obviously anything in Manhattan should have similar finish, amenities, new, etc. However, if people generally say that Manhattan is roughly speaking down 20% or more on average (yes, it depends what, where, etc....but is anyone claiming that the polished new high-end is down LESS than the average in Manhattan), then why wouldn't something priced at the peak in Wmburg be down at least as much?. But, in fact, it isn't as the Edge is only offering a discount of say 10% or so (plus maybe 5% closing costs), so...so...apparently either the Edge is in denial and will be forced to discount more (how many units not sold as a % should cause them to panic by say end of March) 2) or the Wmburg doomsayers are wrong, even though there is tons of inventory out there. I really don't know.

milkmanjones: about 4 weeks ago

miko, i appreciate that you would like a thoughtful discussion and i too wish that people didn't make certain statements without justification. i also think that some of your points are valid. i just feel that starting off by calling things "mindless dribble" and then making an elitist statement about income to be not conducive to starting productive discourse.

bjw2103, based on economics. they already have the land, so that is a sunk cost. from the research i've done and the people i've talked to, it costs $100-$200 per sqft to put up a high rise. so even if you are really conservative and say $300 per sqft to build and you can only sell for $500 per sqft (which is also super-conservative), it still makes economic sense to build. when i pressed the sales agent, she acknowledged it was a matter of when and not if.

to your question of when, only the developer knows. the sales agent told me like 7 years. so i took that to mean 5-10 years. i too think that it will be a while, but there are things like the looming increase in interest rates and higher inflation that might convince the developer to start a little sooner than planned.

falcogold1: about 4 weeks ago

Defending the Edge....
Now that's a tough one.
I so want it to work out for the folks that bought there. They are the New Yorkers that make this city better for all of us. They are the one's willing to live far from public transport, far from hustel and bussel of the big city. Content to view the city, a far, from their purch. Resistant to what lies under the ground, hexanes and schmexanes, carcinogens as large as cats, as well as what's above.
They take one for the team and we fail to applaud them.
Go ahead, get a tattoo...that's not what's gonna kill you.
Benzene hexocloride....Life sometimes smells like a bowl of cherries

bjw2103: about 4 weeks ago

"and there is no way that phase II will not be built."

Based on what? When? I haven't seen any info on this, and I'm not saying it will definitely not be built, but if it does, I think it's a long way down the road at this point.