Signaling Cooling Market, Prices Cut at New Buildings
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Roughly a dozen new developments have slashed their prices by as much as 13% over the last several weeks, one sign the slowing housing market is reaching New York City.
Developments in areas that began gentrifying in the latest real estate boom cycle, including Central Harlem, Chinatown, DUMBO, and Prospect Heights, are now cutting their prices to compete better, according to brokers representing the developments and statistics from the real estate site Streeteasy.com.
“We are obviously realists,” a vice president at Prudential Douglas Elliman, Larry Michaels, said after reducing the prices on six listings at 50 Orchard St., a new development on the Lower East Side. “In the current environment, people are shopping for apartments, versus six months ago, when people were just out buying apartments.”
Mr. Michaels cut the price on several two-bedroom units at the nine-story building, which has 25 apartments, all with key elevator access, Bosch appliances, maple plank flooring, and washer-dryer units. The largest price reduction came November 9, when a two-bedroom dropped to $1.195 million from $1.295 million, a 7.7% cut.
The market is reacting to a perception that the economy is in trouble, experts said.
“Any time you have a change — meaning a perceived change in psychology of the market between buyers and sellers — the first place you are going to see it is in newly developing markets,” a property appraiser and real estate researcher at Radar Logic, Jonathan Miller, said. For this reason, he said, up-and-coming neighborhoods “tend to have more of an inherent risk. Not all of the residential support services have been built up enough for the neighborhood to have its own legs, so to speak.”
Two buildings each in Central Harlem and Chinatown have recorded significant price cuts. Uptown, the price of a three-bedroom in Graceline Court, at 106 W. 116th St., dropped by $90,000, or more than 10%, to $895,000, and a two-bedroom dropped by $80,000, or nearly 12%, to $595,000. The brokers at Corcoran representing the building did not return calls for comment.
At One Striver’s Row, at 2605 Frederick Douglass Ave., five of the six two-bedroom apartments saw their prices cut by between 6.3% and 7% in the last two weeks. A Prudential Douglas Elliman broker for the building also did not respond to requests for comment.
“When the economics start to get worse, the fringe buildings get hurt first,” a broker at NYC Living, Nic Bottero, said.
Mr. Bottero recently sold an apartment at One Carnegie Hill, at 215 E. 96th St., where the prices of five listings have been reduced in the last two weeks, including a one-bedroom that dropped by $100,000, or more than 10%, to $875,000. The building has a land lease — the land is owned by the mosque next door — and is structured as a cond-op, or a condominium building with co-op rules, which makes it more difficult to sell, Mr. Bottero said.
In the Bushwick section of Brooklyn, prices were cut on seven listings at Evergreen Terrace because of competition, a broker at Citi Habitats, Jamella Swift, said.
“It was on the low end for a $400,000 buyer,” she said of the building. “Now it’s on the high end for a $300,000 buyer. … In the market, people who were willing to spend more were deciding to pass on the project. There is a lot of competition right now.”
But the apartment price reductions are not limited to outlying neighborhoods. The Washington, at 35 Underhill Ave. in the Prospect Heights section of Brooklyn, and the upscale Novare, on West 4th Street in Manhattan, have also cut prices to get sales moving in a cooling market.
“Time is money,” a broker for the Washington, Peggy Aguayo, said. Four of the building’s listings were reduced by between 2.9% and 5%, she said: “We wanted to sell before Christmas.”
Part of the rush to sell are the substantial taxes and loans that developers of new projects must pay, a managing director for new developments at Prudential Douglas Elliman, Andrew Gerringer, said.
“A lot of this is about staying alive,” he said. “You want to hang in the game, give an adjustment to your pricing and keep moving.”