Why Your Next Place May Cost More , The New York Times, January 14, 2011
Brokers, developers and market watchers say that barring any significant economic hiccups, real estate values in Manhattan will continue to grow at a measured rate through 2011. But starting in 2012, after most or all the new projects that were stalled or delayed have finally sold out, the supply of new apartments will take a decided dip, and prices for all apartments could start to rise significantly again.
“Once we work through the existing inventory and there’s nothing new coming on line,” said Kelly Mack, the president of the Corcoran Sunshine Marketing Group, “there’s going to be a major shift in the market. Prices may start going up significantly in 2012, in anticipation of the shift in inventory.”
Yes, the New York Times story is about Manhattan… but, is it really much different anywhere else?! The recession hit builders especially hard, and the traditional wisdom is that they are waiting for the market to squeeze out excess inventory… which is fine, except new construction has a lengthy start-up period. So when the ‘build-again’ light goes ‘green’ again, that won’t mean we will see new construction cranes dotting the skyline anytime soon. It’s a process.