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New York home buyers looking outside Manhattan for new development
WHEN it comes to new development, buyers who are choosing to stay in New York - and have the means to do so - are choosing Brooklyn and Queens.
Five months after Covid-19 crippled the city's real estate market, sales across the city are down, but the boroughs beyond Manhattan are faring better - in some rare cases even exceeding pre-pandemic expectations.
While the New York exodus to the suburbs and beyond has so far been overstated, many of those who have left were affluent residents with second homes and had played a disproportionate role in supporting the overpriced Manhattan condo market, which was already slumping before Covid-19.
City-wide, more than 60 per cent of new condos remain unsold - and much of that supply had accumulated before the virus arrived, said Kael Goodman, the chief executive of Marketproof, a real estate analytics company.
Now the market is leaning once again on first-time and move-up buyers, many of whom are working from home, thinking less about their commute time and more about savings. New York has not been a welcoming market for young buyers. Indeed, some would-be buyers have been pushed out because of rising costs and job loss, while others may have moved elsewhere to wait out the pandemic.
But those who have stayed, lured by near-record-low mortgage rates and an abundance of choices, are betting on the city's long-term revival while they still have some leverage. Discounts remain modest at the lower end of the market, but buyers are getting back-end concessions and first crack at units with better views and layouts that were often the first to sell.
In the process, these sales could reshuffle the priorities of new development for years to come: more outdoor space, fewer bells and whistles and, above all, smaller price tags. The shift could also be a blow to the ultra-luxury skyscraper, as more buyers show a preference for smaller "boutique" buildings and less reliance on cramped elevators.
No market was immune from the slowdown. From the start of New York's stay-at-home order on March 22 till the end of August, there were 488 reported contracts signed for new condos citywide, a 40 per cent drop from the same period last year, said Marketproof.
But the pullback was less severe outside of Manhattan. Seven out of 10 of the neighbourhoods with the most signed contracts for new condos were in Brooklyn and Queens, the real estate website StreetEasy said. The analysis looked only at first-time sales, or so-called sponsor units, in new buildings.
Bedford-Stuyvesant in Brooklyn topped the list with 48 contracts signed in that period, with a median sale price of US$725,000. By contrast, the Upper West Side in Manhattan, which had the most new condos listed in that period - 144 apartments in all - had only 16 contracts and a median sale price of US$1.88 million.
But those deals represented a relative bargain for the Upper West Side, where the median asking price for new condos was US$3.68 million, roughly double the price of what actually sold.
Outdoor space was crucial for Tabrez Haider and Anjuman Ara, who are under contract to buy a two-bedroom apartment with outdoor space at 567 Ocean Ave, a nine-storey condo under construction in Flatbush, Brooklyn. Prices range from US$400,000 for a studio to US$1.375 million for a three-bedroom, said Andrew Barrocas, the chief executive of MNS Real Estate, which is handling sales.
Mr Haider, 33, who works in a bank, and Ms Ara, 32, who is training to become a teacher, had been carefully watching the market from their rental in nearby Midwood.
Even before Covid-19, the couple knew they wanted sun and outdoor space without busting their budget, so Manhattan was ruled out early. It has been months since Mr Haider has worked in his midtown office, and Ms Ara is taking classes virtually.
Despite not being able to move into the new apartment until at least next April, they took a hard-hat tour of the unfinished building soon after showings restarted in June, and were among the first buyers inside the building. He said they got a modest discount, less than 5 per cent in concessions, and perhaps they could have bargained harder if they waited, he said.
But the combination of very low mortgage rates, a lower 10 per cent down payment requirement and the availability of sunny high-floor units persuaded them to seal the deal in July.
"If we let every uncertainty push us back, I don't think we'd ever be able to make a decision," Mr Haider said, and he is accustomed to economic headwinds: He graduated from college at the peak of the Great Recession and began his career in the middle of the European debt crisis.
For Anu-Raga Mahalingashetty and her partner, Patrick O'Donnell, both 36, a six-month search led them to 88 Lexington, a new eight-unit walk-up in Bedford-Stuyvesant, where prices ranged from US$769,000 to US$1.175 million. They browsed nearly 400 apartments online, nearly all of them in new buildings, in search of solid construction, outdoor space and reasonable carrying costs.
Ms Mahalingashetty, who works for a global health firm, and Mr O'Donnell, an engineer, bought a two-bedroom apartment in the building in April, when the city was still grappling with climbing infection rates.
"I think the city will bounce back," she said, even though, in the short term, so much of what they love about New York has changed.
"Half of our friends have moved out of the city - and they were all Manhattan dwellers," she said.
The ones in Brooklyn and Queens stayed. NYTIMES