New Dev Resale Pricing

I would guess that you could find a similar unit to rent at half the cost. Good luck.

You know it's funny. About a week ago I posted a unit that was listed for $830/FT. on the eastside and the skeptic's were yelling that it was located in am undesirable area because it was listed ALL the way on the eastside. So according to them this is overpriced by about 1.5 Million.

Who said there were no speculators in Manhattan real estate?

Super - please stop using this language. You are not adding anything to this site.

Urban - I agree - especially when this apartment is East of York! I would be surprised if it went for $1.7 now.

This is exactly why "asking-prices" mean nothing. The seller can "ask" anything they want. Hell, why stop at just $2.5MM? If we're going to be aspirational anyway, why not "ask" $3.5MM, $4.5MM or even $5.5MM? You can't fault someone for trying.

There are a few forces at work here:
1) "The Bigger Fool Theory" - Someone starts by paying an unambiguously above-market price to buy an asset (apartment, dot-com stock, whatever) in the hopes of selling the asset quickly at an even higher price to someone even more foolish - someone who is probably looking to do the same thing. Over time, the price of the asset rises higher and higher until the bubble bursts and someone is left holding the bag for an asset that they paid WAY too much for and can't selling without incurring a loss. Kinda like musical chairs meets a pyramid scheme.
2) The seller's broker convinced the seller that $2.5MM is an attainable price to secure the exclusive listing and will suggest to the seller a few months after being on the market that they should cut the price. At the point, the broker has the listing anyway.
3) Pricing high initially exaggerates the perceived value of any price-chops down the road, making the apartment appear to be a better value. "Look, this apartment has just been cut $500k! What a steal!"

Not only will it be interesting to see "where this one goes at" but also when, as in how long on the market before it sells.

Noah, have they started occupancy at 170 EEA? Last I saw they were still building. I went to dinner by myself tonight, sat a the bar of a very good Italian place on the UES, next to a pleasant individual. When we both discovered that we had mutual interests (he a real estate agent, me an avid follower), he said, "what year does this remind you of?" As one we said, "1989".

So this current environment reminds you of out-of-control crime, 2000 murders a year and huge welfare rolls? You've got to be kidding.

No, it reminds us of empty retail spaces, stagnant real estate, horrible economics, and well, yes, if you've been watching the news, escalating crime. How about the shooting at Marcus Garvey Park, right next to those hurting developments, 5th on the Park and Rhapsody? And, many individuals incarcerated for drug offenses are going to be released due to lack of funds for prisons. I personally think the mandatory sentencing laws were grossly unjust, but one cannot deny that locking up all the crackheads did tend to reduce crime.

Most cities (and this one to a lesser extent at this moment) don't have the funds to take care of the upcoming economic issues. If anything, this time might be worse. We're very close to not being able to feed ourselves, and heat our homes. When about 80% of your population, if they were to lose their current housing situation, couldn't afford something within an hour away, you've got some potential issues. Unemployment, and particularly underemployment, is rising, and will continue to do so. Check out the chart at the Big Picture, which shows the numbers for not just unemployment, but for discouraged workers, marginally employed, etc. It's at almost 10%.

Huge numbers of apartments are about to exit the rent stabalization program. Let's not argue the economic justness of rent control measures, but rather, let's just consider where the people who work in positions running our local government, policing our streets, fighting our fires, educating our children, are going to live? Eventually, I understand that the market will have to correct itself as obviously owners of rent-stabalized apartments will adjust and fill the vacancies at a rate reflecting demand, but the next few years have the potential of being quite ugly. Ugly economic times often bring ugly amounts of crime. No, I'm not kidding.

Thanks for detailing your views aboutready, now everyone can see how wacky they are.

Well if they are closing units, I guess they are starting occupancy for the lower floors. Sale gets recorded at closing. Im not buying into the greater fool theory right now, given the publicized state of the macro economy; but I guess there could still be people out there with money to throw around who don't know whats going on or if the price of their purchase is warranted. I would think a lender will no way lend on a property that sells for 2.3M+ when the sale closed 3 months ago for 1.7M. But thats just me.

As per the 1989 comment, I guess you are reffering more to the state of the housing market and potential for early 90's type of softness/correction. Time will tell. No one knows how deep this slowdown will be, only that it will be coming. I dont think NYC will experience crime at the level of those days, but if the slowdown is real bad and tax receivables are hit, who knows what the lagging effect of a crunch in police, fire, etc..may do to a city like this. Retail is def feeling the pinch though, and I am seeing more and more empty spaces and good businesses going out. Its sad.

I hope policy will limit the downturn, I really do, but to be fair, not many of us have seen a combination of such macro forces at the same time before and therefore predicting the near-medium term in terms of asset prices, city quality, jobs, etc.. is very very tough.

As to the purpose of this post, regardless of the reasons why they list for so much, which is fine, I think this behavior will be commonplace throughout 2008 and will lead to continuing trend of rising inventory. Its just not the time to try this strategy, in my opinion. But that doesn't mean they wont try. If they are serious, and have to sell, we all know what they will need to do with pricing,.

Urbandigs, it is sad. I'm not saying this because I want it to happen. I've experienced all three of the last big downturns (although I was still quite young I remember the gas lines during the embargo, I was in college and trying to find summer employment in 1982 and 1983, and I lived in NYC from 1998-2000. Conditions were so awful that I left for four years, returning in 2004 when things were improving and I could afford a decent place to live.)

Economies have cycles, and the unjustifiable expansion in credit availability and subsequent defaults has the potential to create a downward spiral of magnificent proportions.

Actually, my dates (for my own life, no less) were way off. I meant 1988-90, returning in 1994. Way my bad.

Noah, I often see on StreetEasy closed units in buildings that are not close to being ready for closings. All cash, maybe?

really? hmm, strange. You should tell them. I didnt think 170EEA was closing yet, but no reason to think data was wrong until you just brought this up.

I don't know about this building in particular, but I've definitely noticed it in others. The Lucida, for example, has about 8 sales closed listed for some time.

Lucida isnt even close! Strange. Thx though..

STREETEASY, any idea on this?

aboutready, since you have such a pessimistic view of the city and the direction its heading, you may want to consider moving out for a few years again to avoid the crime wave that is about to envelop the city. You and the rest of the ultra-bears sound like you can predict when we'll hit the exact bottom of this cycle, so I'm sure you'll time your move back in the city perfectly.

Jsmith9005- The only ones that can't seem to pick a bottom are the Realtors. Do you know why that is? Because it's always the best time to buy. There are no tops or bottoms according to brokers. When it's a sellers market they say "now's the time to buy before you get priced out" and when it's a buyers market they tell you that "it's a great time to get a good bargain so act fast time is limited". The truth is that it is very possible to pick a bottom. And we are no where near it in NYC. People say it's impossible to pick a bottom, that's just BS propaganda by the real estate marketing machine. Picking a bottom or even coming close can save you tons of money. Just waiting could save you $100,000 on a $500,000 unit. Just as an example. That's about $700/month. That's not counting the $100,000 you saved and invested. I don't buy that BS for nothing. That's the reason the real estate industry spends millions every year to convince you that this is the exact time to go and buy. Every second you wait you are losing money. That's total BS. The truth is the complete opposite.

I was around 170 east end a few times this weekend. It will be beautiful and great if you have girls at the 2 private schools down the street. But at present it is very much still a construction site. I would be very surprised if C.O.s were being given. I did not think you could close without a C.O. Then again, they are very late with their deliveries. The pressure is mounting on the developer to get people moved in. Or else buyers will have every right to walk and get their deposit back.

As I recall, the developer paid a record price for the site (dollar price per usable s.f. and the right to tear down the old hospital) so they need big prices to get a return.