The Real Deal Webcast: A second look at price reductions at NYC condos.
Kim said that two-bedrooms in both boroughs are seeing more price cuts than any other type of apartment, which suggests there is an oversupply of these units. But lower prices have not necessarily led to more sales, at least in Brooklyn: Perhaps surprisingly, more units in the borough with price increases are going into contract than those with price reductions.
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The Real Deal: StreetEasy collected listing price data for The Real Deal for Manhattan and Brooklyn new developments, and that data was based on pricing information that was sent to the Attorney General's office. You found in your analysis that overall prices had gone down. Tell us first what the breakdown was for Manhattan and Brooklyn.
Sofia Kim: In Manhattan, there were 178 increases versus 208 decreases [in March, April and May], so 54 percent of the listings that saw price changes in Manhattan were decreases; whereas in Brooklyn, 64 percent of the listings that saw price changes were decreases.
TRD: And you mentioned previously that 183 went down versus 103 going up in Brooklyn. That's pretty significant.
SK: Yes, it is significant. And you know, [for] brokers and developers, in general, lowering prices is probably the last thing they would want to do. Developers are more keen on negotiating with the buyer in terms of maybe covering closing costs, paying part of the mortgage tax or requiring a lower down payment, but now developers want to move the units more quickly.
TRD: Let's drill a little bit into the Manhattan neighborhoods. There were more price reductions in some neighborhoods -- Harlem, Upper Manhattan and Chelsea -- than in others. Was that a result of greater inventory, or maybe these neighborhoods aren't as desirable as others?
SK: Well, in Harlem -- in Upper Manhattan -- families who want to move to the Upper West Side and those who were finding they were priced out of that market were moving north, and developers saw that and made a mad rush to put up all these developments in Upper Manhattan and stretch the boundaries of the Upper West Side. So, in a softer market, you know, it's these fringe areas that are going to see more reductions.
TRD: In Brooklyn, there were areas like [the] fringes of Park Slope where you saw some of the same evidence of price reductions. What was happening there?
SK: Yeah, you know, it was very surprising to see price reductions in Park Slope. A lot of the reductions were for last units in a development. There were reductions in the 151-unit building called Nova, and that building has awkward layouts -- much smaller rooms. And there was another one, the Heritage, and that one was a first-floor unit.
TRD: Speaking of those units, is there any kind of relationship you're seeing in the numbers to the sizes of the apartments such as one-bedrooms, two-bedrooms, studios -- anything moving faster, moving slower or more price reduction in one or the other of the two boroughs?
SK: In Manhattan, two-bedrooms had twice as many decreases as they had increases. Brooklyn was a different story. Three-bedrooms had twice as many decreases as increases, and the two-bedrooms had three times as many decreases. It indicates to me that there is an oversupply in two-bedrooms.
TRD: I was going to ask you to look at specific developments like the Lucida and the Rushmore at Lincoln Square; did prices rise or fall at those projects and why?
SK: The Lucida actually had price increases; they had three price increases, I think totaling $2.1 million, whereas the Rushmore, I think, saw four increases totaling $275,000 -- so, not as dramatic -- and one decrease of $116,000.
TRD: You were able to track some of those listings to contracts, and you found that in a percentage of cases the contracts went through when the prices were lowered.
SK: In Brooklyn, it was very surprising -- 6 percent of the units that had price decreases went into contract, whereas 35 percent of the listings that had price increases had contracts. There could be something psychological going on. Developers, you know, when they raise prices, they sometimes create a sense of urgency among buyers.