lic overpriced

I agree, and so I looked at Sunnyside as well. I understand that many LIC'ers come to Sunnyside to go out to eat and shop, and get basic services.

If there is so much at stake for the developers, why don't they set up their own markets already?
I mean, how hard is it to order parmesiano reggiano and keep a sandwich shop open?

Hey, to continue this, from your original post under "The Foundry":

...dco - for starters, with the exception of 2 or 3 buildings (powerhouse, arris and 5SL) most of the buildings are closer to the 600 - 750 psf range (including foundry). And most of the buildings that are in that price range are already over 70% in contract - so I don't know that I agree with your analysis. I do agree that in the few buildings (high-end) they will need to adjust their prices (which the POwerhouse has already started doing).

LOBO- THE BLDGS. THAT ARE ALREADY OVER 70% SOLD IS EXACTLY THE BASIS FOR MY ANALYSIS. ALSO MOST CONDOS ARE MORE IN THE $800/SQ FT RANGE. iMAGIINE THAT THESE CONDOS DID ADJUST THEIR PRICES ABOUT $150 SQ FOOT. wHO IN THEIR RIGHT MIND WOULD AGREE TO CLOSE AN PAY $100,000 MORE THEN THEIR NEIGHBOR WITH THE SAME MOVE IN DATE. AGAIN JUST AN ANALYSIS.

furhter to that, LIC (specifically Hunters point/Vernon Jackson) has just recently experienced a growth spurt. there are probably 20 buildings (in that small area alone) that will not be complete until the end of this year. I would not call that a glut because so many of the units are alreay in contract. With those, as you stated dco, will come shops etc. - all of those new buildings also have planned retail in the lobbies. On top of that, in anticipation there are a ton of new retaurants/stores under construciton that have not opened yet (on Jackson and Vernon).

Anyhow, if you are moving in the next few month, you may need to wait a year. But if you are closing on one of the units that closes in early 2009 it will be a totally different story.

I agree that there is a lot "to come" but it will not be a 7 year rate. People getting in now may not be able to get in in 7 years; hence, why people buy-in to up and coming neighborhoods early. If not, it's not up and coming. it's there.

dco, how could pending contracts bail out? wouldn't you lose your deposit? or are you suggesting people would forfeit their deposit hoping to get a better discount on a different unit?

Yes exactly. Some people would look for other ways out. IE improper quote of Square feet or did not deliver on date agreed. Smart consumers have stared this already for various reasons. Perhaps the buyer can't get a loan. AS long as the developer keeps the prices inflated the buyer assumes that it's worth the money. If the developer begins to cut prices then the buyer begins to look for ways out. The more important reason they don't lower the price is the banks would not lend to the borrowers or would demand more of a down payment. This ofcourse would hurt closings and force buyer to lose their down payment and force the developer to put the condo back on the market with the same problem.

This is exactly the reason why you see left over condos go rental for sometime. Ie Arris lofts. of LIC is the perfect example. Think about it. Why doesn't the developer just lower the price and sell the units? Its all about money. And when I say money I mean the developers money.

Location, location, location, and LIC is not a location. Hold on tight, get a good rental, and watch property values plummet to more affordable levels in the short-term. They've gone up sevenfold in 10 years; completely unsustainable.

And BTW, "70% sold" means they've sold 70% of the units they put up for sale. They withhold units so as not to flood the market. Just let them sweat it out.

Stevejhx- Thats good to know. I didn't know that the % sold was that of only those units made available. That makes a lot of sense. Thanks for the ionfo.

Tons of inventory with lots more to come. "Glut" is used in this article with specific reference to LIC, though other heavily developing outer-borough neighborhoods share the same problems. Things seem bleak even with brokers chiming in:

http://ny.therealdeal.com/articles/new-landlords-not-by-choice

"Sales have dried up in Long Island City even for products in the best locations. Since October, we have only sold five units."

http://www.nysun.com/article/72033?page_no=2

One of many price shops noted on Curbed:

http://curbed.com/archives/2008/03/06/curbed_pricechopper_mucho_cuts_at_casa_vizcaya.php

That's chops. Price chops, dammit.

Hey all, I don't disagree with the fact that someone can make an analysis; however, a few things to point out in my own analysis:

1) Stevejhx - calculating the 70% sold (as I have done) is not based on total listed on streeteasy divided by # in contract. It's based on the number filed with the DOB and/or from the offering plans. I am well aware that apts a released in different stages but you can still find out the total number of planned units in a building - it is not very difficult information to find.

2) Exactly for that same reason (the fact that they are released in different stages) is why I don't agree (fully) with DCO's comment about not wanting to pay more than your neighbor. Take a look at almost any of units in contract from earlier rounds of releases and they are at or below $680 psf, buildings amend prices at each round of releases - that's not anythign new to LIC, it's true of any new building, anywhere. So, these units currently on the market could have considerable price cuts and still not come down to the price of the original units sold. In other words, lets say that unit A on the 5th floor of a building went into contract in September for $500,000 the two floors above for the same unit 6A and 7A each increased by $10,000 (rule of thumb) but then 8A was amended to sell for 610,000 in December (it would not have been previously released and that is why you are unaware of the price increase, becasue that is the price that it was released at). This is a hypothetical, but it's based on real units - so, the one currently on the market at $610,000 could have an $80,000 price cut and it would still be an increase over any of the previously released units.

3) stevejhx (again), it is not an issue that I care tremendously about - and I live in midtown (not a "great" location either) but I don't know what you are comparing LIC to when you say location, location, location... I can agree with you 100% that it is not Manhattan but I paid $950 psf for my place (midtown east) and I thought that I got a great deal. There are plenty of people that can't take on $1000 psf and would be more than happy to look outside of Manhattan. If you take manhattan out of the picture then suddenly LIC (and as I stated previously, Hunters point/vernon jackson - not further out) is "location, location, location" - you are one stop away from Manhattan at a 30% discount (that's considering 700psf).

Now, where I do agree with DCO's analysis is: currently, anythign over $800 psf is pushing it for LIC - at that price you can make the stretch and live in Manhattan. However, in my opinion, if you can find something in LIC for under $750 psf then you it is worth the investment.

If you find a killer penthouse with a great view at $850psf and have some time to wait, then you probably can't go wrong with that either.

...and, if you have an issue with moving out of Manhattan (as I do) then just don't.

and tenemental, I agree that people are seeing price chops, but let's not act (in fairness, as you mentioned) that this is unique to LIC - read thruogh the rest of curbed to find price chops even on most new developments in manhattan.

I am not trying to defend or bash, just trying to offer my own advice.

lobo, I wasn't trying to yell "price chops" at readers here. I was yelling "dammit" at my own sloppy typing towards the end of my previous post ("price shops").

:) I hear you.

ohhh and a last p.s. to dco and stevejhx, beyond my own calculations, when a building states on its website (or any other place) that they are 70% sold (or whatever % sold) it means that they really are X% sold. It is illegal for them to claim otherwise. And that number must be calculated based on # of contracts vs. the total number of units.

I personally like to run the numbers myslef, because illegal or not, I don't always trust marketing. But you can be pretty certain that if a building says that they are X% sold that they are not basing it on the number of released units - it is the total.

lobo, your issue is that you are trying to make sane and justifiable arguments to stevejhx, but stevejhx is a complete moron. stevejhx is the ultimate doomer and continues to rant about how prices in Manhattan will decrease by 30%-50%. Don’t waste your breath, he hasn’t shown one ounce of credible analysis to prove his points and continues to say stupid things like Manhattan is similar to Miami (which by the way, I’m in Miami right now and it ain’t Manhattan).

lobo- If a buyer backs out and the condo is put back on the market. Do they have to change the %? Assuming that the number of failures actually changes the %. It's my befief that many buyiers might find it difficult to get financing in this climate. Remember that most of these buyers signed contracts over 2 years ago. (ie new developments)

Hey dco, yes, they should change the % sold if somone backs out. Many of the new developments in NYC (especially contracts signed further back i.e. 2 years) do not have financing contingencies -- so, not to say that they can force you to buy the place but you could risk not getting your deposit back if you back out. \

Not that everyone does, but you would imagine that a good lawyer would advise clients when projects do not have financing contingencies so that they can either include a rider to the contract (considering the developer allows that) or (most likely) make sure that they have the means to finance the place. almost every new development requires 10% down to sign the contract. If I were a lawyer, I would advise that you get pre-approved, have good credit and make sure that you will be able to come up with a full 20% by the time you close. Remember, all of these individual projects are backed by banks as well. as a last resort, the bank providing finanicng is almost always willing to help because it is in their interest too.

let's remember that this is not Florida where you can get away with buying a new construciton on spec and put down $5,000 to sign the contract, you actually need to have some money upfront to commit to place in NY (at least in a merket like LIC - I am not trying to say that it is ultra luxury over there but it is not subprime either).

It's not a great market these days but Manhattan and the immediate areas surrounding it are not crumbling yet, and for all of our sakes (even if you are renting) let's hope that it does not, because the effects would hit us all in that case (speaking in general tems of the economy). I personally do not feel that the sky is falling and when you look at NYC as a premier global city and compare it to places like London, Paris, Tokyo etc. prices are not grossly inflated. so, personally, I would not be too worried if you are buying a place to live in. If you are looking to make a quick $1000,000 by flipping a property, then this is probably not the right time to be doing that.

lobo- Thanks for the info. I also agree that a bad economy does hurt everybody regardless of ones profession. I still differ a little with your analysis. I agree that LIC and NYC are not "subprime" locations. However it's the over all credit tighting that is the concern. I never thought of the developer's banks as an option for the buyer. I still believe that it will make it more difficult from here on out. It's my understanding that many Banks are requiring much higher downpayment as well as great credit scores. Well sadly we might find out the hard way in 08'. I hope it's not the case. Thanks for the insight.

I agree 100% with your last post dco.
And further to my previous post, it's not that I think that everyone is actually putting 20% down, but people have no business buying a place if they don't have the 20%.

I am not a fan of government regulation but I do not blame the banks for cracking down.

lobo-AMEN

If you don't see the storm brewing, you must be a weather man.

Does anyone have any info of what kind of concessions developers are making in LIC beyond price? What about closing costs/morgage tax, upgrades etc? I am interested in this area, but I do view it as currently overpriced. I get dco's point about their reluctance to lower prices, but then they have to at least be doing something to grease the wheels on the back end, no?

Hey fcorrao, the only place that I have heard of being flexible is The powerhouse. While they have revised prices down (their own decision) - the stories that I have heard where people made lower offers, those offers were not accepted.

The only successful area of negotiation that I have heard of is with optional amenities; for example, if you were to take the optional parking you may be able to convince them to shave a few thousand dollars of of that and lump it in with the price of the apartment. Most of the "price increases" that you see on street easy are not actually because the unit price was raised, it is becasue someone took an option and it was lumped in with the price. Not to say that prices don't ride but they rise before they are released to the public (just as they are lowered).

That is the reason why I think that you may have trouble...the revisions to prices are made before units are released, new developments do not want the public determining the value. They let the market drive, but they want to keep control of the negotiation, and as long as places continue to sell (which they do, even if it is at a slower pace) then it will be very hard to negotiate.

I think that all prices in NY have some room to come down but until the start to fall significantly (across the board) then LIC will probably not be that flexible - remember, it is not manhattan but it is still a 30% discount to most people looking to get out.

Monday the Bear falls and so does the Jobs that fuel the city. Hold on. This won't be the last bank to go under. Things are going to get rough real soon.

I agree with lobo, "Now, where I do agree with DCO's analysis is: currently, anythign over $800 psf is pushing it for LIC - at that price you can make the stretch and live in Manhattan. However, in my opinion, if you can find something in LIC for under $750 psf then you it is worth the investment."

And, on top of that, I love the area and see it continuing to develop as a nieghborhood. I also think it is a prime location, especially if you are on the water or near the Vernon/Jackson area with restaurants and the subway 1 stop to GC.

Moving there in the fall and can't wait!!

If it matters at all as a new comer. I have been studing the economy very closely. The credit problem is well beyond what most people think. There are several indicators that give me these educated opinions. Not all are numbers. Sometimes you have to look at the behavior of those involved to truly understand the magnitude of the problem. For instance. We all know that Bear is no longer. Some say it was taken over. However the truth is that it was worth nothing. After 85 years this Investment Bank went under. People just think of the history. In 85 years this Bank had survived everything else. More Banks were to go under and still may if it were not for the next historic move. Never in the history of the Fed has it opened the discount window to Investment Banks. Our government is the only place that the banks can go to get money. How long at the expense of tax payers is this going to last. At one point it starts to be just as risky for the government as it would any bank. I hope and pray that this problem finds a solution. The biggest lie is that this is a subprime problem. It never was. Greed by Banks, buyers, brokers, developers...... is what caused this meltdown. More Banks will fail and the economy will begin to really start feeling the pinch. Gov'ts are already experiencing terrible budget problems. Indicator---- NYC public school budgets have started to get cut. NYPD has a hiring freeze and will be at its lowest level since 1993. Read the whole paper. Not just the business and real estate sections. You will see many indicators of a more severe problem that most can't imagine.

dco, I agree with most of what you have stated. I was born and raised here in nyc. I have seen neighborhoods come and go, and I myself live here in LIC and work for a bank. With that said, I do believe this credit crisis (if anyone can argument otherwise is just in lala land), WILL affect NYC. We have the financials on one end, and then the people who just screwed ourselves into a credit debt like no other on the other end. Inflation is just plain ridiculous. And the dollar just damn sucks. It's just the thing for stagnation or a double-dip recession waiting to happen. The only thing going for us is for cheap exports. That doesn't help the general US population. Now whoever thinks NYC is an exception is somewhat right. Denial and this constant fancy for everything NYC will keep prices inflated, but man... when out of towners (both domestic and international) go broke, and mommy and daddy says no... THAT MEANS NO! BTW, I think anything in television will be okay. It’s always a good year for them in an election year.

Now in terms of LIC real estate, I have to agree that LIC is worth about $150 less then where it is now. The more desirable locations can command a 25% discount from Manhattan's condo units (non-coop). The rest are at a 50-60% discount. Why so much? That’s because whoever can afford $1000-$2000 prices are not people looking for a discount. They rather rent in Manhattan if they want Manhattan. So the $500-750 per square foot pricing is very much valid. More times not then not, I have met people who bought into LIC purely out of speculation. Not as a home. All those who want to call LIC home are just too damn scared off. Myself included. I pulled out so many times, and these price drops are just confirming my belief. Condos are always the first to be affected by a pull out. So you have to yourself more of a reason that this is a damn good deal.

Good luck people! I really wish for a best for the city I love!