🌟 Phenom known as Decay?
Ever wondered why new construction homes sell for such a high price when they’re first put on the market, then quickly lose value?
For years I was perplexed by this dramatic price drop, until I learned about the premium decay phenomenon.
I spoke with John Walkup, the co-founder of Urban Digs, a real estate analytics platform, and he had this to say about the premium decay phenomenon:
Q: What is one thing most people don't know about this phenomenon?
A: The premium decay of new development condos doesn't indicate a loss in property value. Instead, it reflects a reduction in the initial price premium as these buildings transition from new to resale status. This trend typically follows a pattern where the premium for the building's newness remains stable for the first five years, then gradually decreases by 10-15% as the building ages.
Q: What is the most common assumption that is not true?
A: A common misconception is that new dev condos will always command high premiums. In reality, as these buildings age, their prices begin to align more closely with the broader resale market, reducing the premium associated with their newness and modern amenities. Importantly, the new development premium is categorical and evolving; it applies to buildings within the category of new developments, and as they age out of this category, they no longer benefit from the premium. Instead, the premium shifts to a new set of buildings entering the market with the latest features and designs.
Find out more about why new builds tend to lose their premium price boost over time and what you should know before making an investment.
If you are in the market to buy a home in New York City, check out my free “Micky’s Ultimate Buyer’s Guide” which breaks down all of the nuances of buying in the city. https://undividedre.com/ultimate-buye...
Tags: premium decay phenomenon, new construction homes, buying new construction home, new construction home, buying a new construction home, new construction home for sale, real estate market, new construction home process, new construction, questions to ask when buying a new construction home, tips for buying new construction, buying new construction process
This video provides general information about real estate and is not professional advice. Consult with a qualified professional before making any decisions. The creator is not liable for errors, omissions, or outcomes based on the information presented. Compensation may be received for featuring products or services, but it does not influence the content. Viewers agree to seek personalized advice before making any real estate transactions.
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Meet Micky, a top New York City real estate broker on a relentless journey to educate and advise buyers and sellers on how to turn their dreams into an NYC address. He leads Undivided on a mission to curate the most coveted luxury new build condominiums, eco-friendly buildings, and modern homes in Manhattan and Brooklyn.
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