Last year I took the readers of my blog through a visual tour of the condo market in NY from Chelsea Pier to Prospect Park Brooklyn. Even the born and bred NYers were flabbergasted. See (again) “Who are ya gonna believe, the pundits or your lying eyes?”, “Who are you going to believe, the pundits or your lying eyes, part 2″. Well, things aren’t looking much better a year later. They are still doing construction next to sites that still can’t sell out their inventory next to sites that are falling into disrepair due to unpaid maintenance charges, next to sites that owe the city money, next to… You probably get my drift by now.
Well, the WSJ reports…
Trump SoHo, the flashy 46-story downtown hotel and condominium, is taking another unusual step to boost sluggish condo sales—offering substantial discounts to buyers who have already signed contracts but not yet closed.
These discount offers run to around 25% of the agreed-upon purchase price, according to documents reviewed by The Wall Street Journal. They’re being used as a special encouragement to convince buyers who might be getting cold feet to close their deals.
Discounts are being offered to prod Trump SoHo buyers to close.
Rodrigo Nino, president of Prodigy International, the sales and marketing company for Trump SoHo, declined to discuss the size of the discounts or how many buyers have accepted them. He said Trump SoHo “is not unilaterally offering concessions. The requests have been handled on a case-by-case basis.”
Even taking into account these markdowns, Mr. Nino added, “the average net closing price is in excess of $2,500 per square foot.”
The price cuts aren’t the first measure Trump SoHo has taken to get committed buyers to close on their deals. The developers, the Sapir Organization and Bayrock Group, are putting together a plan to offer direct financing to potential buyers who can’t secure enough credit to purchases condos. Mr. Nino said the program would be implemented “shortly.”
Granted, the condotel market experienced its own mini-bubble which is still being deflated, but it is only a microcosm of the larger condo glut. After benefiting from government bubble blowing, commercial and residential real estate should continue on its downward trajectory until true equilibrium between supply and demand is achieved, affordability being the key, and rental yields come into line with prevailing interest rates - AS ADJUSTED PROPERLY FOR RISK!!!More on commercial real estate:
- Even With Clawbacks, the House Always Wins in Private Equity Funds
- Commercial Real Estate Continues to Dropped into Foreclosure as the Landlords of Said Properties Enjoy Skyrocketing Share Prices? Yep, Makes Plenty of Sense
- The Conundrum of Commercial Real Estate Stocks: In a CRE “Near Depression”, Why Are REIT Shares Still So High and Which Ones to Short?
- The Shortlist of the Shortlisted “Stocks to Short for 2010″: What We See as the Most Profitable Bear Postions for 2010
- Developing Implications on Loan Accounting Law: Mark to Market, Mark to Model, or Mark to Market Crash?
- I Told You Housing Was Going to Take a Downturn for the Worse. I’ll Tell You Something Else, We Are in a Housing Depression! It’ll Get Worse Until Market Forces Rule Over Government Bubble Blowing!
- Anecdotal Evidence That Banks Are Hiding Depressed High End Real Estate
- As I Made Very Clear In March, US Housing Has a Way to Fall
- Australia: The Land Down Under(water in mortgage debt)
- Australia: The Land Down Under(water in mortgage debt), pt. Deux: Which Banks to Short?
- Aussi Bubble Video to Go With You Aussie Bubble Speculation?
- Recent Mortgage Loss and Credit Performance Commentary
Disclosure: Occasionally short REITs