East Harlem condo offers one bed, one and a half baths, private terrace, and 18 months of common charges paid by sponsor (Huxley, #202 - Serhant LLC)
With mortgage rates higher than they have been in well over a decade, many potential buyers are hesitant to go on the market for a new home. In an effort to lure buyers, a growing number of sellers are attempting to sweeten the deal but with an interesting twist.
When mortgage rates spike, price cuts usually follow for an obvious reason. When fewer people buy homes, surplus grows, and prices decline as supply outpaces demand. In the current market, this historical pattern has yet to play out. The unusual situation is primarily the result of the unique conditions that arose during the pandemic. First, before interest rates started to rise, the surplus of resale homes was historically low. Second, a backlogged supply chain, which is only beginning to recover, has simultaneously slowed the completion of new developments. With the surplus of resale and new properties still low, there has been little impetus to introduce significant price cuts. As a result, sellers and developers are increasingly looking for other ways to attract buyers, primarily in the form of lavish gifts.
When mortgage rates spike, price cuts usually follow for an obvious reason. When fewer people buy homes, surplus grows, and prices decline as supply outpaces demand. In the current market, this historical pattern has yet to play out. The unusual situation is primarily the result of the unique conditions that arose during the pandemic. First, before interest rates started to rise, the surplus of resale homes was historically low. Second, a backlogged supply chain, which is only beginning to recover, has simultaneously slowed the completion of new developments. With the surplus of resale and new properties still low, there has been little impetus to introduce significant price cuts. As a result, sellers and developers are increasingly looking for other ways to attract buyers, primarily in the form of lavish gifts.
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Sponsor-paid transfer taxes
In most cases, sellers rather than buyers pay transfer taxes on sales. However, if you’re buying a new condo or a sponsor unit in an existing coop or condo, you will also be on the hook to pay transfer taxes as a buyer. Given that local and state transfer taxes typically add tens of thousands of dollars to one's purchase, this alone dissuades many buyers from purchasing sponsor units. In the current market, at least a few developers, including the owners of Front & York in DUMBO, are giving buyers the gift of covering all applicable transfer taxes.Common charges
Transfer taxes aren’t the only gift that Front & York has thrown in for its prospective buyers. The luxury condo is also offering to cover all common charges for new tenants for the first two years, and the building is not alone in doing so. A growing number of new developments are offering to cover common charges for one year or longer. Of course, this doesn't mean that there will be no additional fees to pay: Unlike coops, common charges and taxes are two separate costs in condos, so buyers still must cover all applicable property taxes.Interest points
Given the current market, there is likely no gift in higher demand than a lower interest rate. In an innovative scheme, a few developers have started to help out potential buyers by buying down their mortgage rates for a set time. For example, in the first quarter of 2023, Extell Development, whose developments include Brooklyn Point and One Manhattan Square, offered to buy down buyers’ rates by two percent annually for the first three years of their mortgages.Memberships
In a real estate market where luxury services are in high demand, it is no surprise that developers are increasingly including memberships to help lure in potential buyers. For example, at One Wall Street, buyers will also receive a complimentary membership to Lifetime Fitness Resort, which has an outpost in the buildingGift certificates
Both on the rental and buying side of the market, gift certificates have long been used as an incentive to close deals when the market is in a slump. For example, at the height of the pandemic, 505 West 43rd Street offered a home office package that offered $10,000 for a virtual consultation with designer Andres Escobar and new furnishings, equipment, or decor for a home office.In the current market, the value of gift cards seems to be increasing. At NOVA in Long Island City, the developer is offering gift cards worth $25,000 for Bumblebee, a modular furniture company. Select apartments at NOVA already feature innovative furnishings by Bumblebee, including a bed that can be elevated and stored on the ceiling when not in use, but this would be of interest to buyers' whose prospective units do not offer this feature.
Bikes, luxury cars, and mopeds
There is nothing new about transportation incentives. In 2018, several rental developments in the East Village and Lower East Side attempted to attract renters by offering free memberships to CitiBike and car-sharing services. A year later, Sutton Place condominium The Revere offered new buyers a choice of common charge rebates or use of a Class A Mercedes. More recently, however, the seller of a penthouse at THREE99 in the East Village decided to take this concept one step further. As stated in the listing, "The Sponsor is including a new sleek and stylish 2023 Vespa with the purchase of the property.”Taylor Swift concert tickets
In 2023, the most surprising giveaway to entice potential buyers has likely been a set of coveted tickets to Taylor Swift's Eras tour. In this case, however, the gift was a one-and-done publicity stunt designed to create a buzz around the launch of sales at The Huron in Greenpoint.
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Whether or not developers' and sellers' growing list of gifts will be enough to help activate sales over the coming months is yet to be seen, but one thing is sure. Although relatively low inventory and steady prices haven't created the conditions necessary for a classic buyers' market, in 2023, everyone is looking for sellers, suggesting that more lavish gifts may be forthcoming over the coming two quarters.
310 West 72nd Street, #1D
$595,000 (-32%)
Riverside Dr./West End Ave. | Cooperative | 2 Bedrooms, 1 Bath
310 West 72nd Street, #1D (Brown Harris Stevens Residential Sales LLC)
The Armory, #4T (Brown Harris Stevens Residential Sales LLC)
Century Tower, #6F (Next Step Realty New York LLC)
Huxley, #202 (Serhant LLC)
547 West 47th Street, #411 (Corcoran Sunshine Marketing Group)
One Manhattan Square, #49F (Corcoran Sunshine Marketing Group)
One Wall Street, #905 (Compass)
132 East 72nd Street, #8FL
$2,675,000 (-2.7%)
Park/Fifth Ave. to 79th St. | Cooperative | 3 Bedrooms, 2.5 Baths
132 East 72nd Street, #8FL (Brown Harris Stevens Residential Sales LLC)
THREE99, #PH9A (Brown Harris Stevens Residential Sales LLC)
53 West 53, #24F (Brown Harris Stevens Residential Sales LLC)
Would you like to tour any of these properties?
Just complete the info below.
Or call us at (212) 755-5544
Would you like to tour any of these properties?
Contributing Writer
Cait Etherington
Cait Etherington has over twenty years of experience working as a journalist and communications consultant. Her articles and reviews have been published in newspapers and magazines across the United States and internationally. An experienced financial writer, Cait is committed to exposing the human side of stories about contemporary business, banking and workplace relations. She also enjoys writing about trends, lifestyles and real estate in New York City where she lives with her family in a cozy apartment on the twentieth floor of a Manhattan high rise.
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