In need of more ‘regular’ apartments
Published: Oct 17, 2013
In recent months, I talked about new condominium developments being built in New York and Miami. For example, several luxury skyscrapers are coming up on 57th Street in Manhattan. But even adjusting for these new constructions, the market in Manhattan is still in need of new “inventory” – i.e. more apartments for sale.
Many experts say that it will likely be a few years before New York sees a noticeable uptick in the number of homes on the market. To heighten matters, resales seem to be moving at a slower pace since people still want to see more signs of economic recovery before they decide to put their apartment on the market.
The luxury units (priced at $3 million and above) that will hit the market in the next six to 12 months will only affect the upper 10 percent of the population that can afford those kinds of products. There will still be a shortage of “regular” homes ($3 million and below).
The current inventory crunch has its roots in the recession and credit crisis, which halted many under-construction residential projects and scuttled plans for new ones.
At the same time, tight credit, job losses and reduced incomes have prevented many homeowners from putting their homes on the market, since they can’t afford to upgrade to bigger units.
As a result of these factors, inventory is at records lows: In mid-September, there were 4,342 Manhattan homes on the market, down 25.7 percent from 5,847 in the third quarter of 2012, according to data from Miller Samuel. By comparison, when inventory was at its height in the first quarter of 2009, 10,648 units were on the market.
Despite the demand for mid-priced units, Manhattan’s sky-high land costs have made it increasingly difficult for developers to justify building condos that aren’t super-expensive.
Once land hits a certain price point, it makes only financial sense to build with nicer finishes and higher-grade appliances. This explains why the few available mid-priced units in the city are seeing a frenzy of demand.
According to a recent study done by the National Association of Realtors in cooperation with Florida Realtors, a growing number of Asians are joining the throng of foreign investors buying Florida real estate. Asians accounted for 11 percent of foreign purchases in the Fort Lauderdale area over the past year; 10 percent in the greater Orlando area; and 5 percent in Miami.
While still a minor player in Florida real estate, China has joined Canada and Latin American nations like Venezuela, Brazil and Argentina in becoming a growing source of foreign-national buyers in the state. Europeans from the UK, Germany and France “have figured less prominently compared to previous years.’’
The number of Florida real estate transactions by foreign nationals dropped 15.8 percent to 22,572 from 26,806 a year earlier, the survey says. Still total foreign sales rose 3.8 percent to $6.43 billion from $6.20 billion a year earlier, reflecting higher prices.
This is it for today, dear readers. I am available to answer your questions and provide you with more information on New York City, Miami and U.S. real estate.
• Riccardo Ravasini is a real estate maven and an active agent in New York and Miami. He grew up in Italy where he studied business and finance at Bocconi University in Milan before moving to the U.S. He enjoys assisting people in the search for the perfect rental apartment as well as international buyers looking for smart investment properties. Contact him at +1-917-214-2509 or email@example.com.
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