« Open Thread: Michael Jackson Edition Court Hears Both Sides of House of Detention Debate »

June 26, 2009

Rising Inventory Bad News for Burg

349-Metropolitan-Avenue-0609.jpgWith over 5,000 new apartments (condos and rentals) expected to hit the Williamsburg market this year and next (combined), it doesn't take an Economics PhD to predict what the impact on pricing is likely to be or what it could mean for the number of foreclosures in the area. There are over 1,800 new condos coming online this year and another 1,200 or so scheduled for 2010, according to The Real Deal. A bigger problem than pricing or over-supply, though, is lack of financing. Very few lenders (if any) are willing to finance condo purchases in buildings that don't already have the large majority of their units in contract. "The pace of activity [in Williamsburg] is well off from last year," said Miller Samuels' Jonathan Miller, "not because of lack of demand, but because buyers are having a very difficult time getting financing for projects that aren't 70 to 75 percent sold already." Unless that changes, developers have few options other than to go rental (which their financing partners don't always want to do) or lose their properties. In fact, banks have already begun foreclosure proceedings at the Factory Lofts at 66 North 1st Street, Warehouse 11 at 214 North 11th Street and the Metropolitan at 349 Metropolitan (above). "It used to be enjoyable, exciting to open a new building," said David Maundrell, president of Aptsandlofts.com, who provided the inventory predictions aboe. "Now it's nerve-wracking." Indeed.
More Foreclosures Likely as W'burg Inventory Grows [TRD]




Posted by Brownstoner at 9:31 AM | Comments (21)
Categories: Foreclosure, Market, Williamsburg

Trackback Pings

TrackBack URL for this entry:
http://www.brownstoner.com/mte/mt-tb.cgi/10361

Comments

And The Edge guy says "were not cutting our prices". ...

Posted by: dittoburg at June 26, 2009 9:33 AM

Maybe someone can explain this to me...

We have known for a long time that inventory is just going way way way up in Billyburg and yet people are still buying stuff there. Why? You can get the same rental for cheaper and there is no possible way prices will go up from here in the next two years. Is it because interest rates are low so people figure they will stay there long enough for things to bounce back? Is it because of the potential for inflation? It can't just be the neighb or the apartment since you probably have thousands very similar to choose from? Also, people can buy in the East Village which is similar in make up and grouping to Williamsburg. Thoughts?

Posted by: LincolnSlope at June 26, 2009 9:53 AM

"You can get the same rental for cheaper and there is no possible way prices will go up from here in the next two years."

Actually - the disparity between renting and owning is shrinking. You can buy a 1 bedroom in a building off Bedford (non-waterfront) and your monthly output will be 2,100 (including mortgage, maintenance, PMI, tax)

Rents in prime northside haven't come down that much - 1 bedrooms are still hovering around that range for something much less nice.

I've also seen creative financing - 3.5% fha approved downpayments with preferred lenders, sponsor paying all closing costs.

Posted by: dirty_hipster at June 26, 2009 9:58 AM

5,000 units is half the current inventory of the entire island of Manhattan. And that's just Williamsburg?? Wow.

It will be interesting to see what happens with all of that.

Posted by: 11217 at June 26, 2009 10:14 AM

It's going to be a trainwreck.

Posted by: Heather at June 26, 2009 10:38 AM

Awesome - so in 2 years i'll be able to live in my current apt for free!!

Posted by: dirty_hipster at June 26, 2009 10:53 AM

and that trainwreck will be the L.

*rob*

Posted by: PitbullNYC at June 26, 2009 11:17 AM

um the 5,000 figure includes rentals. only about half of them (2500) are for sale. while that still is a rather large number, if you narrow it down to prime williamsburg i.e. northside you'd be much closer to a 1000 and thats not bad at all. listen, the picture is bleak but not as bad as misinformed people make it to be.

Posted by: borninbk at June 26, 2009 11:39 AM

Bleak, perhaps. But just for now. Smart buyers are lining up and will laugh all the way to the bank.

Buy now or be priced out forever.

Posted by: BOBBY HINES at June 26, 2009 11:45 AM

It's really a stalemate right now - potential buyers know prices will go down and don't want to go in-contract before price cuts.

Properly priced condos in Williamsburg have been moving fast - If non-water front psf is dropped to 600-650 they will move.

Posted by: dirty_hipster at June 26, 2009 11:45 AM

The biggest issue with this inventory spike is the job losses. I dont think any industry in the city is adding jobs except for healthcare(correct me if I am wrong). NYC comptroller is estimating hundreds of thousands of job losses for NYC over the next 2-3 years before bottoming. The prices will have to go low enough for teachers to be able to afford to pay the rent on many of the units coming online. I think we will see 1 beds in Williamsburg for 1200 in the next couple of years and prices plunging. Great time to be a renter.

Posted by: brickoven at June 26, 2009 12:23 PM

Agreed, brickoven. No upward price pressure, rents falling. It's a perfect storm of burgeoning affordability.

We're doomed!

Posted by: JKB at June 26, 2009 12:47 PM

"not because of lack of demand, but because buyers are having a very difficult time getting financing"

Uhhhh...demand = bank approved bid (low LTV if low % sold). If not, I DEMAND that a Lamborghini Diablo be delivered to me IMMEDIATELY with zero percent down, zero interest and a 100 year term!!!

***Bid half off peak comps***

Posted by: Brownstones Half Off at June 26, 2009 2:14 PM

The number of units described in this study for this and next year is based on plans filed with the DOB. That number is far greater than the number that will actually be built. There are many projects yet to begin that will simply be shelved. There are others that have had funding pulled before actual construction began, and there are those that are dead in the water midstream in the process.Thats in addition to those that have shifted from condo to rental. Are conditions bad? Yes. Doomsday? No. Unless you're an architect. It will take years for the backlog to be flushed through the system.

Posted by: HDL at June 26, 2009 2:16 PM

"You can buy a 1 bedroom in a building off Bedford (non-waterfront) and your monthly output will be 2,100 (including mortgage, maintenance, PMI, tax)"

Zero down?

***Bid half off peak comps***

Posted by: Brownstones Half Off at June 26, 2009 2:17 PM

I'm looking forward to those $1200 rents. Paying $1400 in WT "rent stabilized" right now. It would be great even if the place will probably be a lot smaller than the huge pre-war I have now...

Posted by: Joe from Brooklyn at June 26, 2009 2:58 PM

Joe,

Thanks for making the rest of us pay more by you paying less.

Posted by: goodoleboy at June 26, 2009 5:10 PM

"It can't just be the neighb or the apartment since you probably have thousands very similar to choose from? "

I am starting to get serious about buying after years of renting... I live in a new building in LES (LOVE THE HOOD) own by a friend and I love it. I love our central air, I love our W/D, I love our wall to wall windows and I love our shiny wide plank dark wood floors.

While I would LOVE to stay in LES, unfortunately I can't afford to buy in our building. However, in bburg there are inventory that looks like what I live in now (designer condos) for about 500k and a couple blocks from the bedford L. The vibe is the same even if it's a bit over expose, the crowd is creative.. young and certain parts are ethnic chic.

Where would I find something like that in in lower Manhattan with the same vibe and price?

If anyone can enlighten me.. I would really love to know. I would be more than happy to consider it.

I think my point is... while bburg might be over-saturated in terms of housing stock but maybe it's just the right kind of lifestyle choice for some. I am really happy knowing I can actually afford a shiny glass condo close to a metro line in a fun, young and creative neighborhood. What is the downside to that?


Posted by: yummybear at June 26, 2009 6:54 PM

i do know that each person's tax liability based on their income matters when deciding to buy v. rent in any economy. obviously, when you own their are advantages to having your own space in that you can decorate, etc... to your desires and make it your space.

obviously, many burg apts. will go rental and the 5000 number is bogus as stated here because much will not get built or will be delayed.

given the amount of services and amenities and proximity to manhattan won't change, it's a great place to live in the here and now.

one interesting note is that restaurants and also other professional businesses are opening like crazy. Roots, a new photo studio on N.14th, opened and Resource magazine sponsored a party there last night - i went and heard that 2000 people came (it's a giant place!). also, factory studios just opened a 3500 sq ft studio too. already, many many people in the photo industry either already live and/or work in the burg, so there is a movement to make williamsburg the new photo district. many moons ago it was chelsea, but everyone was very priced out. the increase in that kind of commercial development will also help all the stores and restaurants.

had 3 shoots in williamsburg and greenpoint in just the last 2 days. 2 locations shoots in restaurants chosen by an out of state client to shoot in and one in a williamsburg studio. loved it.

Posted by: wine lover at June 26, 2009 7:41 PM

Just spent a few weekends going though open houses in the Burg. Tons and tons of stuff for sale but many still pricing it as if it was 2007. And how about a $1000 maintenance on a 2 bedroom condo in a building with part time doorman, no gym, and no real amenities to speak of. Thanks but somebody has to wake up and smell the roses. I have time on my side - prices are going down big time.

Posted by: loty at June 29, 2009 9:57 AM

5,000 units will hit the market in wburg;
so if you compare with this figure:

New York City grew by more than 53,000 residents for the 12-month period ending July 2008,

http://www.nypost.com/seven/07012009/news/regionalnews/nyc_grows_at_fast_clip_176965.htm

i think that there won't be enough new projects for everybody (LOL)

Posted by: fignar at July 1, 2009 11:28 AM

Post a comment

Please be patient while your comment is published. It may take a moment.

Latest Restaurant Additions