As Condo Sales Languish, Builders Slam 421-a Reform
The Sun has a couple of articles this morning that, taken together, seem slightly contradictory. First off, Mike Stoler writes about how condo sales at many new Brooklyn developments have seen better days. (AKA condo glut.) Developers say that many for-sale condos in Downtown, Dumbo and the Burg are seeing price cuts of 15 to…
The Sun has a couple of articles this morning that, taken together, seem slightly contradictory. First off, Mike Stoler writes about how condo sales at many new Brooklyn developments have seen better days. (AKA condo glut.) Developers say that many for-sale condos in Downtown, Dumbo and the Burg are seeing price cuts of 15 to 20 percent and that many Brooklyn builders are considering turning their projects rental. One unsourced industry leader has this to say: There has been massive overbuilding in the entire borough of Brooklyn. It is like the Wild West, and if you don’t control growth, then at some point it’s going to get out of hand.” The other story in the paper is about how developers are psyched that in December the City Council is going to review the changes to the 421-a program, which, effective in July, requires that projects in many sections of the city (including the Slope, Prospect Heights, and Bushwick) include 20 percent affordable housing in order to get 421-a tax abatements. In other words, while sales are at a standstill at many developments (a whole lot of which benefited from 421-a), developers want 421-a tax breaks reinstated in order to incentivize the construction of more market-rate housing. Yes, 421-a repeal would mean cost-savings for buyers in the future, but right now those buyers aren’t keen on plunking down money for all the condos we already have. So the question is, does is make sense to incentivize the creation of new housing at a time when the existing pipeline isn’t being absorbed? Or is there still plenty of need and demand for new housing, just not at these prices?
The Divide Between Manhattan, Other Boroughs [NY Sun]
Tax Abatement Debate To Be Revived [NY Sun]
The Grand Concourse WAS luxury and (relatively) wealthy people did “arrive” and live there – they just moved when suburbia, crime, Coop City and some racism resulted in massive flight.
All “The What” is, is the other side of the bubble….
eventually alot more people will be saying (and believing) what he is spouting. But just like it was pure hype to say that “prices will only go up”, “if you securitize it it doesnt matter what “it” is”, “Economic cycles don’t matter anymore”, “the world economy has decoupled from the U.S.” etc, etc, etc,
It is pure hype (the other way) to say; “the world is coming to an end”, “banks will all fail”, “the dollar will be worthless” etc, etc, etc,
In fact the negative hype is even “more skewed” because by nature, humans (in a relatively free system like ours) will always strive for more, to learn more and each generation can build on the past – therefore the natural skew is up.
Thats not to say that things can’t go down, and that there won’t be massive pain and social upheaval; but absent a (real) global war, massive terrorist attack, or pandemic – the world is not coming to an end and the U.S will process the excesses (hype) and then move on.
Think of “The What” as the Yang (as in Ying and Yang) to the Mortgage Broker in 2006 telling a guy earning 50,000 a year not to worry about the 2008 interest reset that will result in a $3,000 a month mortgage payment – because “by then you’ll be able refinance your house for double.”
What’s all this nonsense have to do with the 421a. At the end of the day the consumer is getting hit pretty bad. We will need to shell out another couple of hundred dollars a month for taxes. Even if the developers drop prices 20% it still won’t make up for our loss in the long term. Buying a 400k 1 bedroom after maint. and taxes and mortgage will litterly won’t make sense. The only one who profits from this is the ctiy / state.
“Well, the FDIC did mention the other day that they’re bringing folks out of retirement and hiring more bank failure experts for “purposes of preparedness.”
Well, that settles it! You don’t need to hear or read anything else! Just go join the What down in his bunker, eat some Spam and Ramen, and wait for the end to come.
Much of Harlem, and even some of the Bronx (The Grand Concourse for example), was developed as luxury housing, but the people never arrived to pay the prices that the developers expected. Hence the great housing stock. This is known FACT.
Whether the people were Black, White, Green, or Pink makes no darn difference to me. They were poor, and were not the expected occupants.
As I’ve been predicting for quite some time, pre-war will continue to hold its value in NYC.
New construction will suffer most. We already saw in 2007, that condo maint costs went up 38%.
I wonder how many people ACTUALLY READ the Sun article who have posted here. I’m guessing none.
The writer says that in 18 months, prices will go back up, JUST AS THEY ALWAYS HAVE.
Idiots. All of you.
Maybe you should wait till 18 months from now. Sounds like a good plan. Cause buying low would make too much sense.
It is fine that some of these buildings are 50% or even 60% sold. Poeple are already living in some of them. However, with the remaining units languishing, sponsors will rent — effectively lowering the value of the condos that were sold (harder to get mortgages for non-owner occupied buildings, quality of life etc.). And the ones that have not been finished will be in worse shape. Flippers are usually the early contract holders and they will back off.
Older buildings have increased in value because they were such a steal ($500-800 sf compared with $700-100) comapred with new construction. As new construciton prices fall, increases on older units will flatten art best.
Another thing is that people flocked to some of the new buildings due to lower maintenance; while R/E tax abatements will last a while, the unrealistic budgets for labor, energy etc. generally cause those to go up significatly after the first year. So, again, not such a good deal the longer they stick around.
Well, the FDIC did mention the other day that they’re bringing folks out of retirement and hiring more bank failure experts for “purposes of preparedness.”