Posted by Leonard Steinberg of URBAN COMPASS on July 25th, 2014
The entire USA real estate market is revealing a trend that we have witnessed in New York for some time now: brand newly constructed properties are selling for a significant premium over re-sale existing homes. The pricing variable is large. The supply is not great, but in Manhattan it is growing. Concerns exist over how many developers seem to be going after the exact same market….very high end, even in areas that are over-supplied or do not warrant a premium. Several brand new buildings, some complete and ready for move in even, are not selling mostly because they are priced too high. Some brokers in their desperation to represent a smaller inventory are over-pricing, or are succumbing to the forceful nature of some developer to price high or else.
Now more than ever it is critical for smaller building to have a completed, furnished model apartment to compete with the large buildings whose sales offices are exquisite and extensive in there ability to demonstrate what they will be delivering……often the fantasy is better than the reality.
As a broker I feel it is my obligation to price where the market is, not where I would like it to be. Pricing based on unrealistic expectations is bound for failure and disappointment. Waiting years for inflation to escalate pricing can be extremely costly, especially once interest rates start to rise.