Five "mid-range to high-end" residential condominium projects "in desirable neighborhoods of Manhattan and Brooklyn" will hold auctions starting as early as April "for around half of what they were asking just a year ago," according to a front page article in today's edition of The New York Times by Teri Karush Rogers.
"Developers who are awash in unsold inventory see auctions as a tactic to jolt a paralyzed public to life," the article maintained, adding that "with the economic crisis spreading worldwide, there also seem to be fewer wealthy foreigners buying Manhattan condos."
"Real estate auctions, rarely used in New York, have the potential to both move property," it continued, "and indicate to reluctant buyers what the true market prices are. Given the current sales drought, even a handful of auctions could reset prices for new condominiums citywide, said Jonathan J. Miller, the president of Miller Samuel, a Manhattan research and appraisal company. He said he expects the auctioned properties to sell for 40 to 45 percent below the asking prices of the first quarter of 2008, when the market peaked."
"Buyers who signed contracts long before condo projects were completed are expected to walk away in droves this coming quarter. In many cases, these buyers will be abandoning deposits of $100,000 or more that pale in comparison to the slide in market values," the article said, adding that Jon Gollinger, chief executive of Accelerated Marketing Partners of Boston who is discussing conducting auctions in New York, said that "we're in a deflationary, devaluating market in which no one knows the value of anything anymore."
The article said that there are 8,000 new condos on the market in the city now and 22,000 more expected to come on the market by the end of next year.
While sales prices realized at such proposed auctions may give an indication of current market valuations, they would be specific to their projects and neighborhoods and would probably not constitute "fair market" value as long as financial institutions are not giving mortgages to customers with good credit ratings and resources.
"Developers who are awash in unsold inventory see auctions as a tactic to jolt a paralyzed public to life," the article maintained, adding that "with the economic crisis spreading worldwide, there also seem to be fewer wealthy foreigners buying Manhattan condos."
"Real estate auctions, rarely used in New York, have the potential to both move property," it continued, "and indicate to reluctant buyers what the true market prices are. Given the current sales drought, even a handful of auctions could reset prices for new condominiums citywide, said Jonathan J. Miller, the president of Miller Samuel, a Manhattan research and appraisal company. He said he expects the auctioned properties to sell for 40 to 45 percent below the asking prices of the first quarter of 2008, when the market peaked."
"Buyers who signed contracts long before condo projects were completed are expected to walk away in droves this coming quarter. In many cases, these buyers will be abandoning deposits of $100,000 or more that pale in comparison to the slide in market values," the article said, adding that Jon Gollinger, chief executive of Accelerated Marketing Partners of Boston who is discussing conducting auctions in New York, said that "we're in a deflationary, devaluating market in which no one knows the value of anything anymore."
The article said that there are 8,000 new condos on the market in the city now and 22,000 more expected to come on the market by the end of next year.
While sales prices realized at such proposed auctions may give an indication of current market valuations, they would be specific to their projects and neighborhoods and would probably not constitute "fair market" value as long as financial institutions are not giving mortgages to customers with good credit ratings and resources.
Architecture Critic
Carter Horsley
Since 1997, Carter B. Horsley has been the editorial director of CityRealty. He began his journalistic career at The New York Times in 1961 where he spent 26 years as a reporter specializing in real estate & architectural news. In 1987, he became the architecture critic and real estate editor of The New York Post.
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