Why are new developments undesirable?

Well, in 5 years that'll only be 3-5 years and the new development won't be that new. In 10 years the tax break will be gone and the development won't be new at all. So your resale value is going to, by then, reflect the higher taxes and the fact that whoever is into new construction and paying 500% markups on good looking appliances won't be looking at it.

There are other reasons such as construction delays, kinks with various building systems (e.g. heating, doormen) to be worked out, and in certain market condition a higher probability that you are going to be the one who has to compensate for certain cut corners (e.g. crappy windows, floors, leaks, etc.)

On the other hand, it's new and you don't have the upstairs neighbors' radiator leaking into your electic outlets.

What you're saying makes sense but it still doesn't address the savings I'd get in 10 years after saving about $7200 per year in real estate taxes.

Yes the tax savings offset the higher closing costs somewhat - you have to work it out case by case to see if they net off exactly because the 421 abatment is a sliding scale towards zero (it's not all there in year 9 and gone in year 10) and some are 25 year abatments like the Kalahari in Harlem. You also have the time value of money to factor in - the present value of a dollar recieved in ten years is a lot less than a dollar. Closing costs are paid now. I think most people who don't like new devs say they like the 'character' of the older buildings. I saw 10 open houses on sunday. It was a painful experience. All prewar. UWS. I was somewhat against new devs before this but i finally realise that the floorplans and features of new developments just suit modern living much more. My maid can sleep with me - she doesnt need her own bedroom. I'm a busy man but I dont need the sink so close to the toilet that i can brush my teeth while i shit. I shower at times other than christmans and easter so i can justify a bit more floorspace on the bathroom. I'm not overly offended if my guests fail to wait in the foyer for the lady of the house before proceeding to the dining room. 100 sqft on a foyer? One eight of one million dollars on an entry way ? I came home and started looking at new devs.

I see your point. Thanks for the input. I was reading so much on this website about higher costs with new developments but I guess I'll just have to investigate it when the time comes. I've read that the transfer tax falls on the buyer in new developments- about 2% of the cost of the apt.- but the builder will sometimes negotiate the cost if you catch them at the right time. Are there other closing costs unique to new developments that I don't know about?

some devolpers will ,but few do.if hte new dev is almost finished and they have units to sel they might otherwise they sell off plan and hope t get all costs covered

Just out of curiosity -- there's a lot of anecodtal evidence about why new developments are undesirable, but does anyone know of any sort of "satisfaction survey" or anything done 6 months after closing? Seems like some broker or marketing agent must have done some kind of survey like that to compare co-ops vs condos, and old-development vs new-development...

New developments are well, NEW. No worries about old electric, elevators, plumbing, and you also get modern technology in lighting, AC / Heat, appliances, etc. Sure anything new gets old, but comparing it to old, what is the real premium? I don’t see much luring anyone to older apartments if you can have the added benefit of an abatement.

New is always desirable - sure in all the rest of the country there is a ton of supply, but this is NYC, and this Island is not expanding form what I hear, unless global warming has a very immediate impact, in which case I would think he island would actually shrink, and increase property prices!!

I love prewar buildings but hate the roaches.

I'm thinking about get a new dev condo and I was reading the offering plan and it indicates that the tax abatement is not guaranteed. The sponsor is still applying for the abatement and it won't be known if it goes through until the building is completed. If they don't receive the tax abatement then I would have to pay the taxes. Based on the breakdown sheet, the taxes without the abatement would be $967! Does this sound right?

Link to article in November 2007 issue of The Cooperator-The Co-op & Condo Montly: "Smart Buying in New Construction-Do Your Due Diligence".
http://cooperator.com/articles/1531/1/Smart-Buying-in-New-Construction/Page1.html

new construction isnt that desirable if the apartments are not finished. In general delays can see you waiting to move in from 6 months to even 18 months!

New buildings aren't built well. They maximize profit by trying to build with the lowest cost and market it as being luxury. A lot of new construction falls apart, leaving buyers in the lurch. It's also in very fringe neighborhoods. I think if you have the money, it is great if you don't want to be bothered with renovating. However, if you want to spend a a third of the price, buy a bigger apt in a neighborhood you like and renovate it yourself. You will get the exact look you want, prime location and more space. I bought a 1000 sf apt and I am renovating it to my taste. If I bought in new construction, I could only afford a tiny studio in a neighborhood that isn't good.

And, for what it's worth, any new building in BPC has a PILOT tax instead of RE taxes. Very very scary when you read the fine print.

OP...fringe neighborhoods? what are you talking about? There's new construction all over the city, many great locations. As for your comments re price, yes you probably pay a premium for not having to go through renovation but you overstate the cost dramatically.

Here is a ranking of neighborhood vulnerability in this housing climate. 95% of the new condos are in areas that are tanking. http://nymag.com/realestate/features/37656/

The New York Mag article seems generally right. One area I'd disagree is the Financial District. From what I can see, though rent prices are lagging there, sales are going very, very strongly. Also, in 5-7 years that area is going to be absolutely booming once the financial center is redeveloped and by then the national economy should be back on track. But prices are a bit lower there now, so I think it is a great place to buy to live, or for a medium or longer term investment. Probably not a great place for a short term investor or flipper.

This is why new developments are undesirable: They are literally crumbling to the ground!

http://curbed.com/archives/2008/01/14/breaking_curbedwire_accident_at_trump_soho.php

The generalizations that are flung around this thread are amazing.

Do you know how many awful, crappy older (including pre-wars!) buildings there are in Manhattan?

And many of the new builds, large and small, are quite well done and will be just as desirable many years from now as the day they were built (15 CPW, 88 Washington Place, Gramercy Park North, 40 Bond, The Meier Towers, etc.). Of course, lots and lots of new builds are awful as well.

It's a case-by-case basis, and not an "all older buildings are great and all newer buildigs suck" dynamic. In ANY building, old OR new, you really have to go through it with a fine tooth comb (and that includes getting a razor sharp building inspector who will take the time to do a thorough walk-through with you) - including walking through and reviewing all the various building plants (heat, water, sewage, electric, etc.), the stairwells, basements, hallways, roof, exterior, everything.

Then, and ONLY then, can you make any kind of informed decision about whether a building (and specific unit) is desirable enough to purchase or not.

The only two things that are undesirable are poorly built buildings of any age, and people who make broad generalizations about them rather than expending the energy to do the nuts-and-bolts work to come to an informed decision.

i agree with malraux. i love my newly built condo and have no complaints - it's all about the developer.

"95% of the new condos are in areas that are tanking"

Put aside that to this point area's aren't "tanking", even giving you the benefit of the doubt and say you were referring to areas that are vulnerable, your number is still grossly incorrect. So 95% of the new condo's are in the financial district and midtown (not to say I agree that these areas are either vulnerable or undesirable)? As I said before, there are lots of new condos in almost every neighborhood in the city.

Pay - you may love your newly built condo and have no complaints now, while it's still new, but how will you feel if, in two years, the building starts deteriorating? As one construction litigator recently said, shoddy design and poor construction in new condo development is an epidemic in NYC.

well, we won't know for another 2 years or possibly 5...only time will tell. again, it's case by case and there's no right or wrong as long as you do your due diligence.
Mel - are you telling me that no one should buy new dev in nyc since it's an epidemic in NYC?

The Richard Meier buildings on Perry Street were called "Faulty Towers" by Vanity Fair. The ceilings leaked, the heating failed and the balcony floors buckled.

Here we go again with the "If i can tank new construction, maybe i can tank nyc real estate" line of thought again.

Mel and OriginalPoster:

"... how will you feel if, in two years, the building starts deteriorating?..."

I could make the same exact comment about a unit bought in an older existing building. How many people have bought units in pre-war buildings, where after 2-3 years, the roof collapses and leaks or the boiler goes or the electrical system is shot or the terracotta facade buckles and needs to be completely redone or or or or or or....

Your basic argument(s) is (are) specious. Yes, there are new builds that are done in a very shoddy manner. There are also old shoddily built buildings or older buildings where the systems could fail at any moment right after you move in. Stuff happens.

As I said above, broad generalizations are completely useless. One must expend the energy to do the nuts-and-bolts work to come to an informed decision on each building and unit you're considering as acase-by-case basis.

And interestingly enough, now the Meier building are considered classics of the West Village after the fact, command very high prices, and any issues that did occur were resolved effectively to the happiness of all - and this I know for a fact, because I know two people living in different units in different towers of the Meier buildings. The issues you raise weren't due to 'shoddy workmanship' or contractors 'cheapening out' (the quality of the buildings is plainly evident from the inside) - they were just issues that can indeed happen in any new build, no matter how deluxe, and they simply need to be rectified effectively and quickly (which they were). And now the units (at least the ones I've seen in person) are rather terrific to my way of thinking, even though the Meier buildings aren't my personal 'style' of building (I have a slightly less minimalist, white sensibility).

but but but malrauz,
prewars and older buildings have such charm... they can't possibly also have wear and tear...
Developers only became shady in the latest real estate boom!

In many cases, would home inspections help? For some reason, they don't seem to be part of the NYC RE landscape, the way they are in other cities. My thought is to get them done for both new and existing properties.

Will: Home inspections are, and definitely should be, a part of ANY NYC/Manhattan home purchase. There's no substitute for a thorough home inspection - not only of the unit you're buying, but also of the entire building from roof to basement and everywhere in between, on the inside and the outside.

Malraux - while we agree that thorough home inspection is a necessity, I don't follow your other comments. The existence of certain poorly constructed buildings in the pre-war and post-war eras has no bearing at all on whether or not poor construction/shoddy design is in fact an epidemic right now.

Okay, Mel, let me try (yet again) to be clear.

I don't believe (contrary to what one litigator says who has a specific point-of-view and ax to grind) there is an epedemic (as you/he put it) of shoddy new construction, any more or any less, than "new" buildings built in Mahattan in the 70's, or in the 60's, or in the 50's, or etc., etc., etc.

As YOU said "...you may love your newly built condo and have no complaints now, while it's still new, but how will you feel if, in two years, the building starts deteriorating?..."

And as I answered "...I could make the same exact comment about a unit bought in an older existing building. How many people have bought units in pre-war buildings, where after 2-3 years, the roof collapses and leaks or the boiler goes or the electrical system is shot or the terracotta facade buckles and needs to be completely redone or or or or or or....Yes, there are new builds that are done in a very shoddy manner. There are also old shoddily built buildings or older buildings where the systems could fail at any moment right after you move in...broad generalizations are completely useless. One must expend the energy to do the nuts-and-bolts work to come to an informed decision on each building and unit you're considering as acase-by-case basis."

Malraux - you are certainly entitled to disbelieve the view that shoddy construction in new NYC developments is an epidemic. However, although I only quoted one anonymous litigator, there are in fact many, many such lawsuits being commenced. I myself have several and it's not really my field. On NYC legal list-serves, the comments about this potential epidemic are legion. In fact, some have suggested a meeting with legislators and the AG's office to discuss it. Thus, while the view that it is an epidemic is based on circumstantial evidence, your opinion that there is no epidemic is based on nothing at all.

Once again, the undoubted existence of old, shoddy buildings has nothing at all to do with whether there is currently an across the board trend, in new construction, of shoddiness.

We do agree that a thorough inspection is essential.

Megadollar Homes, Megapainful Headaches

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