DORCHESTER TOWERS 2018 YEAR IN REVIEW

FIRST, A QUICK SNAPSHOT OF THE OVERALL MARKET NUMBERS, THEN WE’LL DIVE INTO THE DETAILS!

Let’s begin with the Douglas Elliman 4th Quarter Market Report.  A few statistics stood out to us and are definitely worth noting.  With the total number of sales declining for the fifth consecutive quarter, inventory is up 11.8% to just over 6,000 apartments.

When inventory goes up, typically that means prices will go down, and that’s exactly what we’re seeing.  Condo median prices were down 9.5%, new development prices were down 25.5% from the 4th Quarter of 2017, and listing discounts from last list price for condos was 6.7% – the highest quarterly average in 6 years!  In addition, days on market from last list date was 106 days.

According to StreetEasy, more sellers cut asking prices during the week after Labor Day than any other week in StreetEasy history.  Asking prices fell on 774 homes, exceeding the previous record of 713 set during the week of March 22, 2009.

So, what happened in 2018?

Simply stated, 2018 was a “buyers’ market”.  Looking at all the metrics, a clear theme of lower prices, more listings to choose from and more negotiability all told a story of buyers having the advantage.

However, it’s not all bad news.  There’s a silver lining.

Yes, condo median prices were down 9.5%, but even this downswing is nothing like what we saw in 2008.  Another interesting statistic is the fact that in December 2018, 5% of apartments sold for more than the asking price and 9% sold AT the asking price.

That tells us a good portion of listings are selling relatively quickly at or above the asking prices; typically, good news for sellers. So, even though it was a buyer’s market, there was still opportunity for sellers depending on their particular property and how that apartment fit into the larger marketplace.

Now, let’s drill down a little more and see how apartment sales at the Dorchester Towers did in 2018…

We will dive into each category, but a small spoiler up front: They fared well.  Prices were off a bit, but not much.  Apartments did take longer to sell and required more negotiations, but they did sell.  Now, let’s get started!

** Please note: This is our 8th year tracking the Dorchester Towers condo market sales, and this year we added days on market to the report.  This measurement allows you see how long it was taking to sell in each year; something we find very important to track in this type of market.

STUDIOS AT DORCHESTER TOWERS

As we begin with studio apartments, it’s important to keep in mind that there are over nine studio layouts in Dorchester Towers ranging from 530 – 750 square feet.  This is important because the various layouts get priced much differently.

We classify studios as either alcove or jumbo studios.  Alcoves are great because they can often be converted into a one bedroom, and jumbo studios are popular because you get a lot of square feet for the money.

This past year we had a great case study for one of the Jumbo Studios.  It was a 21 line on a higher floor, and it came on the market asking $925,000.  To sell, the seller ended up reducing the price roughly 9.5%, which coincidentally was the exact same amount the 4th quarter Douglas Elliman report said that condo median prices went down.  It also took 124 days for a contract to be signed, much longer than we’ve seen in the past.  This apartment was a good example of how buyers in 2018 reacted to aggressive asking prices and aren’t getting serious until the prices started dropping.

It’s true that studios are generally always in demand because they are great for entry level buyers; however, looking forward into 2019, we believe studios will take even longer to sell unless they are realistically priced.

ONE BEDROOMS AT DORCHESTER TOWERS

In 2018, one bedroom apartments stayed fairly consistent on pricing compared to the previous year.  In 2017, two One bedroom apartments sold; One for 995,000, the other for 998,000.  In 2018, four different one bedroom apartments closed in the range of $910,000-$998,000, with an average price of $959,500.

It’s great news that the pricing stayed steady, but unfortunately the days on market increased significantly in 2018.  Often when days on market increases, it’s the first step in a softening of prices.  Buyers are not acting as quickly, they are taking more time making offers and offer prices tend to taper downward in this scenario.

Currently, there are two one bedroom apartments on the market and both are asking in the mid-800K range.  They are both on a lower floor, which does provide a little explanation for the price, but we haven’t seen one bedroom apartments close in the mid-low 800,000 range since 2014/2015.

Seeing days on market increase puts more pressure on the importance of value pricing right out of the gate.  The first 30 days on the market are now more important than ever.  

THE JUNIOR – 4 (CONVERTIBLE TWO BEDROOM)

Often referred to as the Junior – 4 Layout, because of the total number of rooms, most of these apartments have been converted to have a second smaller bedroom.  Many also refer to this layout as the  ‘convertible two bedroom’ apartment.

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 the 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 bathrooms.

The convertible two-bedroom layout has continued to be a desirable segment of the market because it fits a niche for buyers who likely don’t have the ability to jump up to the price point of a true two bedroom / two bathroom unit, but have outgrown the one bedroom unit they are currently in.

We did not  see any Junior- 4 type apartments sell this past year.  The only activity was a Junior – 4 that had been on the market in 2017 with a starting price of $1,620,000.  After a series of price drops and remaining on the market for over six months, it was taken off the market when the last asking price was $1,468,800. This was another clear example of an ambitious initial asking price turning into prolonged days on market that ultimately didn’t lead to a sale.  

TWO BEDROOM APARTMENTS AT DORCHESTER TOWERS

It’s been a few years since any two-bedroom apartments sold in the building.  The last one was in 2015 and it was a brand new renovation on the 31st floor.  It was a corner apartment with a large floorplan and sold for $2,000,000; down from an asking price of $2,195,000.

The main reason we don’t see two-bedroom apartments come up often is simply because there are not many of them.  They are pretty much found in the tower portion of the building with a few scattered on the lower floors.  The two-bedroom condo market has a lot of demand, so if one comes up for sale, we always anticipate a great turnout.

FOUR BEDROOM APARTMENTS AT DORCHESTER TOWERS

We had the opportunity to list a four-bedroom combination over the Summer.  

Apt. 304/305, located on the SW corner of the building.  The owners created a very nice combination back in 2012, with a beautiful kitchen that impressed a lot of buyers who viewed the apartment.  The apartment was 1849 square feet and we listed it at just under three million.  We had multiple offers within the first month or so and ended up closing at $2,895,000.

Before this sale, the last time a four-bedroom apartment at Dorchester Towers came on the market was back in 2012.  This was another nicely renovated combination unit on the 2nd floor and sold for $2,550,000.

Combination units at the Dorchester Towers are always unique, when and how they were combined is always a big talking point for many buyers.  Often, they are attractively priced versus other competing  apartments in the neighborhood. The fact that it’s so hard to find two apartments to combine in the first place makes them a desirable option for many people.

Looking ahead in 2019:

Last year we ended the report by saying there was a lot of uncertainty in the market.  In 2018 that uncertainty disappeared, and it was clear we were operating in a buyer’s market.  A buyer’s market in NYC is very rare.  We saw it in 2001 and for a few years after 2008.

The key for a seller in 2019 is to decide how your apartment is going to get noticed.

With more inventory to compete against, how will your apartment stand out in a crowd?

Another important lesson for sellers in 2019 is to be patient.  Buyers will take longer to make their decision and they might come back to the apartment a half dozen times before making an offer and ultimately signing the contract.

If you’re planning to sell in 2019, don’t get too worried.  Smart timing, marketing and negotiating can still get you what you want from your property.  As always, if you have any questions about the market in general or Dorchester Towers specifically, we are happy to help.