Bradley Hope of The New York Sun reports this morning that the Market Tilts to Buyers of Real Estate. A catchy title indeed but I and my colleagues have plenty of frustrated buyers who sit patiently on the sidelines awaiting some increase in inventory. These buyers and their agents aren’t feeling any "tilt" toward a buyer’s market. Having said that, Mr. Hope could indeed be on to something regarding to predictive nature of developer’s behavior:
Incentives to lure buyers are increasing in new developments in some neighborhoods of Manhattan and Brooklyn. At a new 45-unit development in Hell’s Kitchen — which has seen price tags cut on 11 units by as much as $50,000 since March — the developer is offering to pay the closing costs that are traditionally shouldered by the buyer. Closing costs, which include state and city transfer taxes, and fees for the brokers and lawyers, add up to thousands of dollars. For example, a two-bedroom unit at the building, at 517 W. 46th St., has an asking price of $1.4 million, with closing costs of about $30,000.
At the Lenox Grand in East Harlem, the developer is advertising an even more generous deal: In addition to paying the closing costs, it will pay two months of maintenance and the first month of common charges and insurance, according to the building’s Web site.
In Williamsburg, the Maspeth, a 24-unit condominium, is offering a deal for buyers under which the developer will pick up the closing costs and also help qualified buyers secure a $10,000-down mortgage. (NOW THAT’S FRIGHTENING!!!)
Are these incentives an attempt by some developers to sell their projects out ahead of what some believe could be a national recession? Perhaps these are just anecdotal stories specific to struggling development projects only? The new development projects that I have been visiting aren’t offering such incentives as they have managed to control inventory and maintain a steady stream of buyers for that inventory.
Again, the question here is whether or not these particular developers are panicking or simply adjusting their marketing strategy based on their own economic forecasts for local housing. Developers aren’t immune to anxiety and therefore panic, so that could indeed be the case. I would keep my eyes on the big experienced developers like Related and Extell. If they start offering incentives, cutting prices, or even talking about restructuring buildings into hybrids (combo of rental/condo) to hedge the market, then we should all pay very close attention. As of now, I see no signs of that happening. In the meantime, some buyers will reap the rewards of the small developer’s anxiety.
