Letter to Santa Claus: "Please help me sell my condo units"
December 23, 2008 11:30AM By Michael Stoler
During this holiday season, developers of residential condominiums in New York City must be sending letters to Santa Claus, asking St. Nick for his assistance in the sale of units.
While many brokers and developers are hyping to the public that there are sales taking place, the truth, according to industry leaders, is that little or no sales activity has taken place since the fall of Lehman Brothers in September. The combination of layoffs, reduction in bonuses, the frantic stock market and the fallout of Bernie Madoff's empire is creating havoc in the fragile market.
And units that are closing, some experts say, are generally those in buildings that have made some headway in terms of construction.
"Sales of condominiums in buildings which are not in final stages of completion of units are far and few," said a managing director at one of New York's leading residential brokerage firms, who asked for anonymity.
Trade sources say that at least 10 percent of scheduled closings are not taking place due to purchasers' inability to secure mortgage financing. In the rare case where closings are taking place,
developers are "overjoyed that closings have finally occurred," the
managing director said.
In these dire times, when sales are scarce, nearly all developers of condos are offering major incentives to purchasers, including payment of closing costs (legal fees, transfer taxes, title insurance), price reductions ranging from 5 percent to as much as 15 percent, free storage units, free in-house health club membership, the payment of common charges and maintenance fees for periods of one to two years, and increased commissions to buyers' agents.
"If a developer really wants to sell a unit, he must provide very attractive incentives as an inducement for the sale," the managing director said. "If the building is under construction, and no actual model can be viewed, you're better off [closing] the sales office until the spring."
In the outer boroughs, sales are slow, especially in Williamsburg, downtown Brooklyn, Park Slope and Long Island City. For example, in many developments in Long Island City, certain developers have not registered a new sales contract for close to a year. Developers of many condos where sales have stalled are now resorting to renting the units.
Real estate leaders do maintain some hope, however, that the recent actions by the Federal Reserve to reduce the discount rate might aid in the sales of condos in various stages of development.
Michael Stoler is a columnist for The Real Deal and host of real estate programs "The Stoler Report" and "Building New York" on CUNY TV and on WEGTV in East Hampton. His radio show, "The Michael Stoler Real Estate Report," airs on 1010 WINS on Saturdays and Sundays. Stoler is a director at Madison Realty Capital as well as an adjunct professor at NYU Real Estate Institute, and a former contributing editor and columnist for the New York Sun.
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Comments
DesperateAgent
BUY NOW OR BE PRICED OUT 4EVER!!
Comment #1 Posted By: DesperateAgent 12/23/08
Anonymous
I don't see prices going up as fast as they came down.
Comment #2 Posted By: Anonymous 12/23/08
NO MORE WEEKEND AT BERNIES
NO MORE WEEKEND AT BERNIES
Comment #3 Posted By: NO MORE WEEKEND AT BERNIES 12/23/08
Anonymous
I didn't have any money to begin with, so what goes up must come down.
Comment #4 Posted By: Anonymous 12/23/08
Anonymous
"Trade sources say that at least 10 percent of scheduled closings are not taking place" Based on my experience, this sentence should say "at least 50 percent of scheduled closings are not taking place"
Comment #5 Posted By: Anonymous 12/23/08
Anonymous
If what you say is true, then that's a lot of forfeited deposits that will go to the developer.
Comment #6 Posted By: Anonymous 12/23/08
Anonymous
Actually, 10% is the real number because people are delaying their closings as long as possible.
Comment #7 Posted By: Anonymous 12/23/08
Anonymous
why would u want to delay a closing? as a buyer i mean
Comment #8 Posted By: Anonymous 12/23/08
Anonymous
#8 unless a buyer has cash burning in their pocket they will try to delay closing.
Comment #9 Posted By: Anonymous 12/23/08
UrbanDigs
do people get it now?
Comment #10 Posted By: UrbanDigs 12/23/08
Anonymous
Folks, please buy have a heart and start buying. These poor developers, such as Young Woo & Associates at 200 Eleventh Ave and BFC Partners at the Toren Condo in Brooklyn, have employed many illegal aliens to build these buildings and need to make a profit now by selling. While they didn't pay the illegals much in terms of hourly wages, they did have to redo their work a number of times which cut into the developers profits. While I might be a little nervous living in some of these buildings, built by unskilled illegals for $12 an hour, try to understand these developers need to make their money back. Please, have a heart over this holiday season.
Comment #11 Posted By: Anonymous 12/24/08
Anonymous
#11 is right. Most developers don't want to waste money on two corporate jets, like Mr Madoff. All they want is one Jet. And again, just one yacht. Maybe three or four homes with servants, but they deserve that, given the amazing creativity they bring to projects, such as dog runs on the roof, wine cellars in the cellar of buildings, and free access to a concierge that can book you a jet or a yacht.
Comment #12 Posted By: Anonymous 12/24/08
Anonymous
I understand #11 and #12's bitterness and resentment. It comes from selective information and general ignorance. Maybe when they leave school and get a job they can start getting over their obsession with anyone ever earning more than minimum wage. I assume these are the kind of people who will end up in a rent controlled apartment and spend their life being bitter to anyone who comes up with a deposit for a condo because they are part of the "evil"empire. Now go and do your homework and hope Santa brings you the other half of your brain.
Comment #13 Posted By: Anonymous 12/24/08
Anonymous
Hey #13, go watch "It's a Wonderful Life" and lighten up. Unless you are Mark Texiera and have a pile of cash and need a new place to live in New York, nothing you say, or do, is going to change the situation.
Comment #14 Posted By: Anonymous 12/24/08
Anonymous
Sometimes words after the fact can still be a benefit. Hopefully these changes the bigger pitcher...
Comment #15 Posted By: Anonymous 12/25/08
Anonymous
Well I am missing the usual how evil brokers are - where is it ? Any subject even a chicken soup recipe calls for a hateful comment about THE BROKERS. C'mmon people whats going on ?
Comment #16 Posted By: Anonymous 12/26/08
Anonymous
Brokers are not evil. They simply do the bidding of their dark lord-Barbara Corcoran.
Comment #17 Posted By: Anonymous 12/26/08
Anonymous
#13, you know what, why doesn't Young Woo & Associates want to pay their illegal workers decent wages, and why do they cheat them out of their hours? You don't support dirtbag business practices like that do you? If you want to live in a chi-chi $5 million condo built by unskilled illegal workers so you can feel like you're living in "Sex & and City" be my guest, but don't go crying cause I'm calling the developers out on it, you small-brained simpleton.
Comment #18 Posted By: Anonymous 12/27/08
Anonymous
let the prices go down down down! hahaa...better for me when i start looking for a place next year!
Comment #19 Posted By: Anonymous 12/27/08
Anonymous
Who has a bigger condo? Michael Stoler or Barbara Corcoran? Discuss.
Comment #20 Posted By: Anonymous 12/27/08