Manhattan's skyline is continually evolving. As technology advances, we are seeing many of these new buildings getting taller and skinnier, as technology allows developers to squeeze the most value out of the smallest plots of land. New developments in NYC, however, really come in all shapes and sizes. Whether buying a ground up super-tall, a condo in a 12-story boutique building or a pre-war conversion, every year buyers have a nice array of new construction options to choose from. Some of these new construction properties are still under construction, while others are move-in ready.
Not all new developments are equal, however, as often they might be located in the wrong location or built by a developer with a bad reputation. Accordingly, it is very important to work with an experienced broker even when buying in a new development. Below, we have filtered the best New Development properties for sale in NYC.
With almost 8,000 new units in 2019 alone in New York City, we are definitely in a buyer's market. More and more developments are happening, almost flooding the Manhattan market with new condo choices.
As a buyer considering new construction, that gives you an array of choices.
If you are interested in new construction, you can visit the sales offices with some model units. But, remember, what you see in the sales office and what you get may not be the exact same. Developers will outfit those model units with the very best in add-ons.
You want to know what exactly comes in the unit you're considering. You also want to know how the layout and square footage compare. Sometimes, what developers show and what you get aren't always comparable.
Before you get too excited for one particular unit or development, you want to look closely at the fine print. Will you be expected to cover fees to pay for the super's unit? What kind of reserve fund requirements does the development have?
Another important consideration is if the developer has reserved the right to not sell all the units so they can use some as rentals.
While the idea of new is exciting, the process can take a long time, so you want to research timelines and the developer to see how well they have done on previous projects at meeting their proposed deadlines.
Because new construction timelines can always be risky especially in the city, you want to know what is called the outside date or the drop-dead date.
You'll be expected to provide an upfront deposit, often 10% or more, when you enter in the purchase agreement with the developer. You can have it written into the purchase agreement that your deposit must be returned if your condo is not ready for closing by this set date.
Because of notorious delays and missed timetables, this is something you want in your purchase agreement, as you don't want to lock up your funds indefinitely. It also works as a motivator for the developer to get your condo done and ready for closing.
If you are financing the unit, you want to be aware that developers don't accept mortgage contingencies, so be prepared to pay cash if you can't get a mortgage in time. While banks will finance new developments condos, there are lots of hurdles in terms of sales, etc. that have to be met. If you get approval and the timetable falls behind, your approval can expire. This means you'd have to go through the process again.
In addition to normal closings costs associated with a real estate purchase, there are some costs you want to ask about and watch for. The largest item is the developer's transfer tax, which is approximately 1.8%. Buyers are expected to pay these, so this cost should be used in determining your offer price strategy. In most larger buildings, developers will expect buyers to split the cost of the building superintendent's apartment. Other potential costs might be working capital contributions and the developer's attorneys fees.
Of course, there are plenty of normal closing costs too, such as NYC and state transfer taxes. And, if you obtain a mortgage, then there is mortgage recording tax. The Mansion Tax applies to properties greater than $1 million and is based on a sliding scale from 1% to 3.5% depending upon the sales price.
Concessions and added bonuses are a thing for condo development real estate. Developers like to keep their prices high, so don't offer steep discounts on the selling price. They will want to stick as close to the listed price as much as they can. Many developers, however, will cover costs on the "back end." These costs include closing costs that we discuss above, such as transfer taxes, super's apartment contribution, attorney fees, etc. More seldom, developers will offer to pay common charges for a number of years.
You can get a mortgage for new construction condos but it can also be tricky. Often lenders are leery of loaning on an incomplete property or development. If the common areas are unfinished or few units have been sold, the mainstream lenders may holdback, although alternate financing sources are still available at a higher cost.
As already mentioned, timelines can also create issues. You might get an approval for a mortgage. Those approvals typically come with a time stamp. That means if the closing doesn't happen before the mortgage approval expires, you must start the application process over again and hope the market or economy hasn't changed since your first application.
Some lenders won't write mortgages unless 50% of the building is in contract and the majority of the amenities are built. That being said, there are alternative lenders that don't have such strict restrictions.
The truth is there are good options available for both used and new construction. If you are willing to wait for new construction and do your research, buying in a new development can be nice. You get brand new and you often get a laundry list of amenities.
Yet, there are many available units on the market that are move in ready that don't run the risks associated with a new build.
Of course, the benefit to a new construction condo is that it's new and no one has every lived in it before. You'll have the latest technology incorporated into the apartment, such as the latest air filtration systems, advanced window technology that reduces sound and heating and cooling costs, and other eco friendly aspects. New developments often come with many perks and amenities as part of the condo community.
Some things to consider is that many new developments restrict how soon you can sell your unit. They want to prevent flippers and properties from being for sale that might compete with other unsold units.
Likewise, there are often restrictions on renting a unit. Often, you can't rent out a unit for several years following closing.
Using your own agent is just a smart decision. They will know the ins and outs of making this kind of purchase. They are familiar with different properties and even the potential roadblocks that might arise along the way. For instance, new buildings that are on the drawing board might impact views or dilute the market in a a particular neighborhood. An agent that knows the numbers is also a big plus!
When you hire an agent they represent you, not the seller or the developer. It's a smart move to have a professional who is looking out for your interests.
Are you ready to look at new developments in NYC? It's the right time for a buyer who is looking for a condo to consider taking the leap. As you can see in the list above, there are many new condo developments on the market, there is sure to be a unit that is the right fit for you.
In the meantime, learn more by visiting ours new developments condo guides, break down by neighborhoods: