As we ride the credit cycle of the last three years, it’s not surprising that fresh new development inventory is not coming online soon. Even as previously frozen projects thaw, their units are not likely to come on the market for at least another 12-18 months. This means that the oldies but goodies that have been on the market for a year or two are now beyond the 50% sold mark. Attracted by the newness and amenities that these developments offer, buyers have steadily eaten away at this inventory, with a significant pick-up over the last six months. Now that traditional lenders are therefore able to provide mortgages at attractive rates, those buyers who may have previously had a hard time qualifying for loans are swooping in to absorb what’s left.
If you’re looking at new developments and thinking that you can continue getting double digit discounts, full closing costs and freebies thrown in, think again. We’re not in Kansas anymore and developers know it. Some try to maintain the asking price while providing deep discounts to parking or storage, while others may be willing to consider months of maintenance to sweeten the deal. Try to understand the developer’s perspective in structuring your overall offer. With volume picking up and prices following suit, make sure your offers are reasonable and grounded in today’s reality to get taken seriously.
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You bring up a great point in regards to the expectations of homehunters and their apartment search in Manhattan. A lot of projects were frozen during the recession, and even now that the real estate market is prospering once more, we often forget that development projects take time. It will be interesting to see if the delay on new properties will have any effect on market prices, be it positive or negative.