The below article in Crain’s New York references an auction of 16 condominium units located in Greenpoint, Brooklyn at a 75% reduction from the original stated sales price. Is this another sign of a bad economy or is it the result of a developer who got into trouble (possibly due to slow or faulty construction) and is required to sell condo units quickly to avoid profits being eaten up by construction loan interest. In bidding on these units, a potential purchaser should be careful to investigate the condition of the building and the condominium units. Any warranty given for defects in construction and materials will only be as good as the developer providing them. There may be a reason why a 75% discount exists. It may be prudent to hire a good engineer to inspect the building and the unit to determine if there are potential defects that will need to be addressed after title to the condominium unit has passed. You may wish to check to see if the developer is involved in any lawsuits. The presence of litigation may be a sign of things to come.
Although there is a 14% decline in the citywide home prices from 2008, there is a 4% increase in prices from last quarter with the number of sales increasing 35% over the 2nd and 3rd quarters which is still 20% below the depressed levels of 2008. The data changes depending on what part of the city you are referring to. The overall prices of condominiums rose 1% over the 2nd and 3rd quarters. Manhattan dropped 5%. That is possibly the result of high priced condo units remaining unsold.
Home prices rose nationally for the third straight month as indicated in the Standard & Poors/Case-Shiller index (see the link below). Why are these figures important? Rising prices mean appreciation in the value of properties which assists people who owe more to the bank than their home is worth. Rising property values also make it more likely that mortgage loans will be funded because the properties will appraise higher. More equity in properties may contribute to the ability to purchase replacement properties rather than participate in a short sale. All aid in the recovery of the economy.
It is uncertain what affect a rise in foreclosures and unemployment paired with the expiration of the tax credit for first time home buyers will have on prices in the future. Talk about a roller coaster . . .
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