Most stats would say yes, condo construction is slowing. But that doesn’t mean prices have been dropping. Condo prices in Manhattan for both existing developments and new construction are looking up roughly 8% this year. That’s not so shabby considering how weak the housing market has been on a national scale during 2007. Keep in mind that New York is a unique place, sort of a world unto itself, and it likes to break the rules.

As for the hard numbers: In 2006 the city approved roughly 25,000 offering plans (all boroughs) for new residential condos. In 2007 we’ve seen about 17,000 approved so far and the year is just about over. It’s fair to say we’ll have a 25% decline in new condo projects in 2007, and that amount is likely to decrease again in 2008. Why? For starters, say goodbye to the coveted 421a tax abatement. This incredible program kept taxes so low that people were ignoring the logic behind the program and the actual monthly costs looking out 5-10 years. The low taxes have, without question, increased condo sales for the past couple of years.

The other reason is an overall tightening in the credit markets. Anybody reading the papers or watching TV has probably noticed the liquidity issues facing banks, often resulting from bad mortgage loans made back in 2002, 2003, and 2004. As those loans reset and higher payments are due, banks are feeling the pinch—especially now that home prices in many parts of the country are in decline. And while the credit crisis started as a ‘subprime issue’ it’s now climbing the latter and creating problems for even the most prime candidates to buy real estate. It seems we’re getting back to an era in which ‘cash is king’ when it comes to buying property.

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