(PHOTO, ABOVE) LIVE WIRES: Sheffield57 and 5th on the Park, Warehouse 11 in Brooklyn and Manhattan House (clockwise from top right) are among the properties benefiting from a buying boom.

Home is where the sales are: Condo deals suddenly spring up

Discounts, marble counters work their magic, with 181% surge in Manhattan signings

By Amanda Fung

April 26, 2010

What a difference a few weeks can make. Early this year, a 120-unit condo conversion in Williamsburg, Brooklyn, known as Warehouse 11 stood on the verge of foreclosure. Today, now that the developers have come to terms with their lenders—and cut asking prices by as much as 35%—nearly three-fourths of the units have been sold, and the rest are going fast.

“We are seeing a lot of buyers,” says David Maundrell, president of Aptsandlofts.com, which is handling sales at Warehouse 11.

All across the city, homebuyers are emerging from a yearlong hibernation, lured back into the market for new condos by price cuts of up to 40% and by a growing sense that prices are now at or near the bottom. Low mortgage rates and the abundance of shiny new condos with marble counters, Viking appliances and striking views are also helping.

During the first quarter, nearly 460 deals in Manhattan were either closed or in contract. That's up 181% from the depressed year-earlier period, and the highest level since the second quarter of 2008, according to Corcoran Sunshine Marketing Group, a brokerage that specializes in new developments.

Those gains coincide with a 13% decline in median sales prices in Manhattan—to $1.2 million—between the first quarter of last year and March 2010, according to real estate site StreetEasy.com. Meanwhile, the average size of units sold has increased.

“Today, buyers are getting more space for their money,” says Kelly Mack, president of Corcoran Sunshine.

Ms. Mack notes that two years ago, the average size of an apartment sold in a new Manhattan development was 1,250 square feet; it is now 1,475, an increase of 18%.

In a still-fragile housing market, price cuts can work wonders. Earlier this month, the developers of 5th on the Park, a new 150-unit development in Harlem, slashed prices by as much as 15% to move their 70 unsold units. While most developers shy away from official discounting, they're willing to negotiate with serious buyers.

“It's a different world now,” says Shaun Osher, founder and chief executive of CORE, a residential brokerage. “It depends on the project, but there has to be a discount.”

Out of the closet

In a sign of growing confidence, more developers are putting their units on the market officially, or reintroducing sales at troubled properties. Griffin Court, a 95-unit luxury condo in the Clinton area of Manhattan, debuted last month. Meanwhile, apartments at the huge Sheffield57 midtown condo conversion, which was sold last year in a foreclosure auction, are quietly being sold by the new exclusive sales and marketing agent, Marketing Directors Inc.

Even at Extell Development's The Rushmore on the Upper West Side, where a judge recently ordered the developer to release 41 buyers from their contracts because it missed the closing date, $100 million in sales were recorded in the past six months. While Extell, which is challenging the ruling, may lose roughly $13.5 million in down payments and $95 million in apartment sales, it appears that the setback will be short-lived. Corcoran Sunshine, the Rushmore's exclusive marketing agent, is confident that it will be able to resell units if they are released.

“It's one of our best-selling new developments,” says Ms. Mack.

Traffic at open houses is also promising. The most recent open house at The Cammeyer in Chelsea—the 67-unit condo conversion of the former home to the world's largest shoe store, a landmarked property—attracted 100 visitors, according to Mr. Osher, whose firm is handling sales there.

Sunshine in a downpour

Last month, Corcoran Sunshine recorded its most successful semiannual open-house weekend in the event's two-year history. Although the event took place during a downpour, it drew 400 brokers and prospective buyers and generated 11 accepted offers for apartments at a dozen properties, including The Laurel and Manhattan House. The total value of those contracts came to $30.3 million.

While most brokers are optimistic about sales prospects for the crucial spring house-hunting season, some big obstacles loom. Most important, the federal government stopped its massive purchases of mortgage-backed securities at the end of last month. There is growing concern that as a result, and in light of the strengthening economy, mortgage rates may rise.

Others warn that if the stock market falls back or if unemployment rates start climbing again, homebuyers' confidence could take a major hit.

“The worst is behind us, but in some cases, prices still need to be lowered,” says Jorden Tepper, executive director of sales at Century 21 NY Metro. At some buildings, he says, prices need to go down another 5% to 10% to spur sales.