The Ripple Effect of Northside Piers' Price Cuts
When Toll Brothers slashed prices at Northside Piers’ Tower 1 back in February, the effects rippled through the oversaturated Williamsburg condo market, reports The New York Post. The cuts took prices from a pre-market-slide average of $900 a foot down to about $700. “When they dropped those prices, they made anyone inland have to look…
When Toll Brothers slashed prices at Northside Piers‘ Tower 1 back in February, the effects rippled through the oversaturated Williamsburg condo market, reports The New York Post. The cuts took prices from a pre-market-slide average of $900 a foot down to about $700. “When they dropped those prices, they made anyone inland have to look at their prices,” explains David Maundrell, head of Aptsandlofts.com. “We had to be realistic and do what Toll Brothers is doing because it’s only a matter of time before buyers realize they can buy for $650 [per square foot] near the water.” For, example, at the Evry, a new 14-unit development AptsandLofts is marketing at 273 Manhattan Avenue, prices are under $600 a foot.
Will of the People [NY Post]
“…and housing prices in new construction in brooklyn seem to have nothing to do with the actual cost of construction.”
See – you’re starting to get the hang of this. That’s my point exactly.
It doesn’t matter how wealthy people are or how much they can hold out. The buyers just aren’t there at current asking prices. And frankly I don’t think we will see 2007 prices for many years to come. And no matter how wealthy people may be, sometimes people just need to sell. Job relocation, divorce, death, etc. affect even the wealthy, and then of course there are many people in the slope who keep up appearances but can’t stay above water for more than a few months after they lose their job.
Some people just need to sell. And if they wait for prices to get back up to a level we only saw briefly at the top of a historic bubble, they will probably be disappointed. Inventory may be low at the moment, but trust me, that is very much temporary.
Another thing – and there isn’t any way to sugar coat this, so I will just say it and hope you understand this is not a personal attack at all – I don’t think a flight to quality would benefit anything within a block of 4th Ave. It’s really on the fringe of park slope. It’s a half mile walk just to get to the park, and for me being that close to 4th ave and that far from prospect park is a non-starter.
And as for the Novo: I really think resale values may end up at less than $500 psf within the next couple of years.
…and housing prices in new construction in brooklyn seem to have nothing to do with the actual cost of construction.
Lechacal;
I understand your point, but doesn’t it also relate to the extent and depth of the recession? In any market contraction, there is always a flight to quality, to the benefit of areas like PS. Will this not sustain the pricing there for some period of time? If, for instance, the economy were to suddenly pick up tomorrow (for whatever reason), would it not first work to the benefit of shoring up prices in prime areas?
Clealy there is wealth in PS, and folks there have a greater ability to hold out than in more marginal areas. So again, doesn’t this speak to the issue of the depth and length of the recession, how long one must wait out the cycle?
I will admit that timing the market is not my game. I’m a buy-and-hold type of stock investor, so I do not study market dynamics all that much.
GWH: You are right that high housing costs are not a result of union labor. But high construction costs sure are!
> “Snark…how do you get your keyboard to type that “squared” raised 2????”
I copied and pasted the text from StreetEasy.
Hey lechecal – thanks for once again sharing your rather clear and concise analysis.
benson – Don’t tell me you are out making money today!!! You should be ashamed!
(I’m on your side)
lechacal,
I never said that developers shouldn’t be able to make a profit. At $600 a square foot, I’m sure they’re still making a handsome profit.
I’m just tired of the argument that high housing costs are a result of union labor:
http://www.crainsnewyork.com/article/20080709/FREE/151713859
http://www.gothamgazette.com/article/housing/20080916/10/2647
Thanks for the lesson in market economics.
benson: A lot of electronic ink has been spilled on this board about the relatoinship between volume and price. Classic topping of the bubble behavior is for volume to go way down and prices to hold up for a period while people hold our for the market to “return to normal.” All the while a shadow inventory develops. Eventually prices start to decline as the weakest sellers are forced to sell, and as prices decline more and more sellers have their hands forced. Inventory increases. Prices decrease. Finally, prices go low enough for buyers to start buying in meaningful volume. Transactions increase. Prices bottom.
By the end of the process, I expect that people like your neighbor will regret not selling at a discount at the beginning. They can end up riding the market down all the way and selling much lower than they would have to if they bit the bullet and took a chop to begin with.
All of this has happened before. And all of this will happen again.