The credit crunch has not spared Manhattan builders. Midwestern families are having trouble getting loans? Manhattan developers are having trouble getting loans. Many banks have nothing to offer the developers of a building unless they've already sold more than half of its units! This presents two options for builders:
- Sell units for cash (and cash only)
- Sell more units before construction begins
Option 1 is unrealistic. So few buyers have the money for this that profits would plummet. Option 2 is a challenge, but it's all builders have to shoot for.
What this means for buyers
Be a little choosy when looking at new buildings. You'll be able to tell how badly a builder needs to move a unit. Especially if it's in one of those "loan-killer" buildings we talked about (ones with more than half of their units unsold). There's no reason not to offer less money than you normally would. You might be surprised at how much apartment you can get if a builder is desperate.