DORCHESTER TOWERS CONDO – 2017 YEAR END REPORT 155 West 68th Street New York NY 10023

In summing up Manhattan Real Estate in 2017, we first have to look back on 2016 which was dominated by the extremely long and intense election year.  Historically, election years typically correspond with some type of slow down in the Real Estate market due to the uncertainties they bring and 2016 followed that same pattern. The year end market reports of 2016 agreed that a shift had occurred, that the bidding wars and price escalations from the last couple of years had run its course. A normalization or plateau of pricing was occurring, which can typically be translated that buyers were gaining more advantage.

In 2017 most people expected the hangover of the deep uncertainty that the election brought to burn off and for activity to normalize. However, that never really happened. We saw extremely strong performance in the financial markets in 2017, but that did not carry over to strong buyer demand for residential Real Estate.  A “wait and see” approach was setting in, apartments were taking longer to sell and often had to be more negotiable to secure a buyer. More uncertainty persisted. Capping off 2017 was the passage of the tax reform bill, which has direct implications to home ownership in New York.  

Hidden in the negative, we find a positive – the Manhattan market is very segmented in that performance and demand had various results, and in our opinion, from what we were seeing in other neighborhoods, sales prices were very respectable at the Dorchester Towers in 2017.  

Let’s look at some overall market numbers and see what happened?

(Data sourced from Elliman Report Q4 2017 Manhattan Sales)

• Median sales prices down 4.7% in the 4th Quarter of 2017 compared to 4th quarter in 2016
• The total number of sales were down 13.9% over the same time period.  
• Active listing inventory was up by 3.2%
• The amount of negotiability from the last listing price was 5.9%, up slightly.
• Approximately 64% of all condo sales were “all-cash” with 90% of the deals above 5 million dollars being all cash and 46% of the deals below $500,000 being all cash

In summary: Prices were down. Total sales were down. Inventory increased from 4th Quarter 2016 to 4th Quarter of 2017.

Headlines and data points are useful to understand trends but the Manhattan Real Estate market is neighborhood and building specific. To effectively understand what effects you as a Dorchester Towers condo owner is to dive in and look at what sold at the building in 2017.

Let’s Dive In! This is our 7th year tracking the Dorchester Towers condo market sales, we don’t know of any other Real Estate agents who have put together a consecutive compilation of this type of information – we find it extremely valuable.

Studios at Dorchester Towers:

With over 9 different studio layouts in the building ranging in size from 530-780 square feet, there is a large variety in terms of what they actually sell for.  

As an example: This past year we sold an alcove studio on the 3rd floor for $775,000. The original asking price was $799,000. At the end of the year one of the larger studio layouts, a 748 sq feet unit came on market, and was asking $925,000.  

The studio market is an interesting segment of the market in that it does not make up a huge amount of the overall inventory and most studio buyers are working with a well-defined budget. When a studio starts to get priced closer to a One Bedroom, the demand decreases significantly because a buyer will always want the true one bedroom if the cost is similar.   

The most demand typically is in the alcove studio layout because of the privacy and flexibility it provides.  Looking at the chart the pricing varies greatly.

However, the price per square foot has seen a gradual rise.  Knowing how to price a studio at the Dorchester, you really have to understand the exact layouts and views because there is so much difference between the different layouts.  

One Bedrooms at Dorchester Towers:

The One Bedroom market at the Dorchester had some very strong prices in 2017.  As mentioned before, different segments of the market performed differently in 2017.  So why did One Bedroom units do well? The sub $1,000,000 doorman condominium has probably the most active buyers looking in it.  There is not a whole lot of inventory to look at so when a properly priced apartment with no major flaws comes available, you should see interest.  What is a major flaw? If the unit needs renovations, it does not have an open view, or it has a unusual layout.

The ceiling for one bedrooms in the building has been that $1,000,000 threshold.  A couple of apartments have sold very close to it, but have not broken it. Probably a function of a few market factors such as the New York mansion tax which is a tax of 1% of anything that sells over the $1,000,000 and that combination of really nice renovation plus a good view which has potential to push that million dollar threshold.

One Bedroom units made up 40% of the market with a median price of $999,000 per the Douglas Elliman 4th Quarter Market Report. You can see that the largest portion of the marketplace is buying a One Bedroom and price wise, Dorchester Tower One Bedrooms are right around the market price.  

Two One bedrooms closed for just under $1,000,000 in 2017. One started above it at asking $1,065,000 and closed just below $1,000,000 at $998,000. Not achieving that asking price definitely reflects that despite strong demand for One Bedroom Condos in the Lincoln Center area, buyers were still looking for value.  The original asking price in our opinion was a bit overpriced since it was not the most newly renovated apartment and it had a Northern Exposure, which tends to not be as popular as the Eastern and Western views. However, $998,000, is a very strong price. The other one bedroom was facing Broadway (tends to be the most desirable view) that was in somewhat of an estate type condition, and it sold for $995,000 – a very good price as well.  

There are at least 10 different One Bedroom Layouts in the building, ranging in size from 571 square feet up to 693 square feet with all variety of different views and exposures.  As a general rule, the more traditional one bedroom layout is straight – forward (a view not looking directly at another building), with less obstructions, therefore more demand from buyers an apartment will receive.  

Comparing 2016 to 2017, the average price went up but the price per square foot went down. It was a $30 sq/ft difference and with just two apartments each year to compare – overall not a whole lot of change over the last year.  

Despite those two apartments selling well, late in the year, we did see a couple of one bedrooms take longer to sell and some price drops were occurring.  We will definitely be on the lookout to see what these one beds will end up selling for.

Junior Four (One Bedroom with Dining Alcove) at Dorchester Towers:

Often referred to as the Junior 4 Layout, because of the total number of rooms, most of these apartments tend to be converted to have a second smaller bedroom.  Many also refer this layout as ‘Convertible Two Bedroom’ units.

The Convertible Two Bedroom at the Dorchester has a number of layouts with square footage ranging from 883 sq ft all the way to 1,100 sq ft, with most of them hovering around that 900 sq ft range.  What typically makes the largest difference in price between these layouts is whether it has a One bathroom or One and a half bathroom.  

The Convertible Two Bedroom layout has continued to be a desirable segment of the market because it fits a niche for buyers who likely do not have the ability to jump up to the price point of a true Two Bedroom and Two Bathroom unit and likely grew out of the One bedroom unit they used to reside in.  

For the type of buyer who was living in a One Bedroom and One Bathroom and maybe their family expanded, or for the second home buyer who is use to having multiple bedrooms and multiple bathrooms in their primary residence, the Convertible Two Bedroom layout is a great fit, and an even better fit is when there are more than one bathrooms.  

In 2017, we saw three Convertible Two Bedrooms sell, two of them had one and half bathrooms and the other was a single bathroom.  There was a pretty big price difference between the apartments when the extra half bathroom was an option.

The Convertible Two Bedrooms with One and Half Bathrooms sold for $1,400,000 and the other sold for $1,460,000.  To note, both of those apartments had converted the dining alcove into a second bedroom and they were corner layouts, facing South and East, which is one of the more popular views.

The other Convertible Two Layout with one bathroom, had not converted the dining alcove into a second bedroom so it was being sold as a very large one bedroom one bathroom.  That apartment sold for $1,240,000.

Is that extra bathroom really that much of a difference maker?  A pretty sizeable price difference occurred between the apartments that had one and a half bathroom as opposed to just one.

The majority of the buyers are always going to prefer that extra half bathroom, the premium for it is going to be a case – by – case basis pending on the exact layout, how renovated the apartment is, what else is on the market and just overall market activity.

We would recommend that in order to maximize price if you are selling your Convertible Two Bedroom, is having the second Bedroom already built out. It will provide more opportunity to attract the largest pool of buyers who are looking for that entry level two bedroom style apartment.  

What found that in 2017 for the Convertible Two Bedroom Category, the price ceiling probably exists for this type of apartment. A Convertible Two Bedroom that had an asking price of over $1,600,000 came on the market and has since undergone two price drops and is still available.  

Despite strong sales in 2017 in the Dorchester, overpricing or aggressive pricing resulted in lack of interest and increased days on market that typically leads to a lower price than what you could have originally achieved.  

Looking Ahead for 2018:

The keyword that seems to being rightfully repeated is “uncertainty.”  It will take time to understand the full implications of tax reform on residential real estate.   The problem with uncertainty is that what usually comes with it is a wait and see approach to making a buying decision. If buyers perception is that prices are going to go down then we start to see days on market go up. There are more price drops and more aggressive negotiations. Whether that is the case or not depends on the specific type of apartment they are looking at.

The key for a seller in 2018 is to create a sense of urgency and to really understand how their apartment fits into the context of what their target buyer is looking for. Within each type of apartment size you have a price range that most buyers will be looking for.  Step outside of that price range and you will very likely see very little interest. We think that is quite evident from the apartments that we have seen linger on the market with price reductions – they were over confident with the initial asking price and the result was the days on market increased and that led to the buyer’s perception that something was wrong with the apartment.  

A specific marketing campaign, expert knowledge and understanding of the market, and years of experience in 2018 will play a larger role in a successful sale.

Did you enjoy reading this 2017 Market Report? If so, we would love for you to share it with our fellow Dorchester neighbors and friends.  As owners ourselves in the Dorchester Tower we take great pride in representing the building and helping achieve maximum prices for our owners whether they are selling or renting.  

We also would love to hear from you on what you thought of the market report. Feel free to give us a call so we can discuss any specifics aspect of the market you may want to know more about. We look forward in hearing from you.