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Three Cents Worth: Why New Developments Are So Darn Pricey

This week, real estate appraiser, Curbed graph guru, blogger, and podcaster Jonathan Miller looks at the median sale prices of Manhattan condos.

As 2014 winds down I thought I'd break down the year's condo market by splitting up resales and new development closings using median sales price. Since early 2012, the new development and resale price trends have parted ways. That's when the stalled shadow inventory that resulted from the Lehman collapse—a.ka. condos that weren't formally offered yet and went unsold, because first batches of units didn't sell in the midst of the financial downturn—was finally bought up or otherwise absorbed.

There is a lot of new development in the pipeline for 2015, and I suspect the price spread between resales and new development will widen a little further as contracts signed 12 to 18 months ago continue to close.

The current trajectory of new development pricing is not sustainable, so the introduction of next year's new-construction apartments, if it truly targets a lower price point, will extend the new development boom. The new-development marketing mantra for 2015 has already settled on the phrase "affordable luxury" with some of its offerings positioned below the super-luxury, hyper-expensive ones. So that blue line should come down a tad to meet the purple and pink ones. (Editor's note: Thank goodness.)

Happy holidays.
· Miller Samuel [official]
· Three Cents Worth archive [Curbed]