Will prices drop in new developments this winter?

I hope so, but there are other possibilities. Remember that if the building is under 50% sold, then the sponsor controls the condo association, so it can decide to close down pools and party rooms and reduce services in order to cut back everyone's common charges (including its own). If the condo association can somehow get credit then I imagine the sponsor could even force it to run at a loss, thus kicking the can down the road to be covered by future common charge increases.

There may be fiduciary duties or language in the offering plan that would limit the sponsor's ability to push votes through the condo association, but I don't know the exact borders of those limits, and it may vary from building to building.

Seems to me that that would be self-defeating. Close down the pools and party rooms and the condo gets tougher to sell. In addition, such moves just broadcast "financial problems!"

I expect new construction prices will tumble next year as sponsors increasingly try to be the first out the door.

Lots of beautiful new developments - but $1400+ per square foot makes no economic sense for buyers.

Also, if a new condo has a lot of unsold apartments, the sponsor is unlikely to have been able to payoff the construction loan. Thus, the bank may have a say in how much the apartments get sold for. If the sponsor defaults on its construction loan and the bank forecloses, the sponsor is out of the picture and the construction lender may be willing to drop the prices. The sponsor only makes money once the construction lender has been paid out. Anybody know of any cases where this has happened?

Perhaps the Rushmore?

If i were to buy in new construction i would want to be one of the last few in. the discount is not even close to being worth it, imo, and the discount for the last few is often quite substantial as well.

bds, there will be many options, some more attractive than others.

aboutready, what options?

just take a look at the new developments. you want one that got thing going early enough to close many units, one without too many distressed sellers, and one that has a few units left. the charleston, although not my cup of tea, is an example of a building that was almost sold out and lowered prices, wisely i think.

the problem is that this winter will likely not provide what i'm outlining. it will take a bit of time in most cases to discern whether or not the building will be having problems collecting common charges, etc.

patience.

or you get in after the foreclosure, buying on the later side once it is clear the development is a go. peace of mind is priceless.

aboutready if you wait till only a few units are left your gonna end up with only the scraps that might not be suitable for you. Which is why they have substantial discounts for the last few units. What about the lack of peace of mind of owning a unit, which has a lot of flaws but was bought at a great price. So many catch-22s with this situation.

11231, not necessarily true. deals fall through on in contract units all the time. i'm often surprised by a sponsor sale in a building that has appeared sold out for months.

and really, there is a huge surplus of units. to think that you won't find something later when a building's status is a bit less uncertain seems less than reasonable to me.

I doubt it. I would think the biggest hurdle for a condo project is paying off a construction loan; if this has been done already, I don’t see what incentive a sponsor has to lower condo prices just because utilities have just marginally increased.

Remember the shadow inventory. The shadow knows . . .

"Daniel Tishman, CEO of Tishman Construction, joined CNBC this morning to discuss the possible pending commercial real estate crisis. Tishman said that he was glad to hear Larry Summers, director of the National Economic Council, call attention to the tenuous commercial market over the weekend, calling Summers' comments "a bit refreshing." Tishman said that in 2007, $3.7 trillion in commercial mortgages were initiated and that as those come due, the market could face big trouble. "That $3.7 trillion worth of commercial mortgage money is going to have to be refinanced and the capacity just isn't there," Tishman said."

http://therealdeal.com/newyork/articles/tishman-ceo-worries-about-3-7-trillion-in-mortgages-coming-due-larry-summers-tishman-construction-daneil-tishman

Any news on this (what looks like from the outside) new development?

http://www.streeteasy.com/nyc/building/100-west-18-street-new_york#discussions

And how would you like to be the owner of 10B???

I think it depends on whether or not it gets cold.

that was snortastical.

OMG!
If I was living in 10B I'd have all the windows sealed shut plus I'd rid myself of that spiral staircase that leads to the RE suicide gang plank. Do you know how painful it is to kick youself in the ass EVERY DAY! It will retain it's original value the same day we run out of fossil fuels.

Totally agree Falco...OMG!!! $6MM...If I had that kind of money to spend on a residence, this is SO not what I would do with it. And I disagree that this apartment will retain its value when we run out of fossil fuel, unfortunately unless an alternative is discovered very quickly, the end date for fossil fuel will be way in advance of the this apartment ever selling for anywhere near what they paid for it. (Unlesss Weinmar Republic-level inflation totally destroyes the value of the dollar in which case it will be a break-even only on paper).

If a new development is partially occupied(under 50%)and has a lot of common areas that need to be heated, lighted, and maintained due to the cold and shorter days during the winter months; is the increase in utility expenses enough of a financial burden to encourage sponsors to lower prices since they have to pay the common charges for the vacant units?

You paint the picture of a scratched and dented development. But the sponsor may have an asymetric risk profile here. He may have no incentive to lower prices as he may the same outcome and only survives if the 10% scenario occurs. Sold out at high prices.

another idiotic post? time for some more youtube?

http://www.youtube.com/watch?v=VjeoaOxx_Ec ?

I guess the question is whether the sponsor's equityholders keep throwing good money after bad in the hopes that the "10% scenario" materializes or instead just hand the keys to the lender.

Whait till Bloomberg buys the available units in floods it with low rent folk... that will drop the prices...

Riversider or Post87 - What is the "10% scenario"? Thanks.

I read Riversider as just meaning that there is a 90% chance that NYC real estate will either fall further, or stay flat, or increase only modestly, or keep pace with inflation, and a 10% chance of a massive recovery within the next 2 or 3 years that would permit the sponsors to sell at their original offering prices. Or at least that 90/10 split is probably what the sponsors are thinking. (I would put it more at 999/1.)

Are most of the troubled new developments stills stuck in la-la land with unfortunate depositers wondering what to do, uncontracted units not really priced to clear the market, developer and lenders still hoping that this disaster isn't really happening....or what? It seem(ed) to me that until the buildings like Rushmore (so often commented on here) and the biggies over in Wmburg,...and others downtown,,,etc...are more or less sorted out that this market can't be considered to be stabilizing.

Another situation happening is that in order for the sponsors to get rid of the last units, they are making side deals with potential buyers. I know of one situation where they are literally hurting the building by allowing alterations which affect other residents units! Anything to get rid of a property. The sponsor on these new building are condiered The Board and can approve anything! Be very careful when buying a unit in a new building especially built by Ascend who has done this very thing.

what kind of alterations? that sounds crappy. sorry westsider.