Important question for New York City: With the housing market kinda-maybe-sorta stabilizing in the rest of the country, will the Big Apple avoid a monster crash, or will it get its comeuppance several quarters late?
It’s not like NYC hasn’t been hit yet, but the widespread phenomenon of underwater homeowners and foreclosures hasn’t been seen or felt quite so acutely in the city that birthed the financial crisis.
Signs suggest the dam will burst.
Reuters: …the number of sales in new developments dropped a whopping 71 per cent in April from a year earlier as condo developers enmeshed in complicated financing arrangements have been slow to slash prices even as the market corrected all around them, Kim said.
But if prices on these new condo towers do not fall to match the rest of the market and stay empty as a result, then it could eventually trigger foreclosures of entire properties, forcing much bigger price cuts as lenders seek to reduce their liability.
“If you have a property not priced at market, is it going to sell? Something has to give,” said Jonathan Miller, author of real estate broker Prudential Douglas Elliman’s market reports.
This seems to be a pretty widespread thing in New York: denial. Individual homeowners and developers would rather not sell their properties at market, preferring instead to keep their prices high and not make the sale, at least for now.
Others try to keep a brave outward face while bowing to reality:
The developers of the Georgica at 305 East 85th Street, for example, in Manhattan went so far as to address its disappointing sales by relaunching the building in mid-May with a revised marketing and pricing plan, said Beth Fisher, a director at Corcoran Sunshine Marketing Group.
Her group advised the developers not to move forward until they had negotiated the necessary price adjustments with its backers, who agreed to a range of cuts, some as much as 20 per cent.
“You’re not going to outsmart the market,” she said. “You have to give buyers what they want.”
Others maintain appearances but lower the real price — often about 5 per cent — by using concessions such as extra storage or the payment of transfer fees as bargaining chips, said Brown Harris Stevens broker Elaine Clayman.