NYC Real Estate: What is Shadow Inventory?

Shadow inventory refers to condos that have been constructed and are legally available for sale by the building’s sponsor but that have not been listed publicly for sale.

For example, a new condo building with 100 units comes on the market, and 10 are listed for sale. The remaining 90 units are shadow inventory.

Accessing and understanding shadow inventory allows you to craft the most competitive offer price possible when buying a condo.

Why do sponsors keep shadow inventory?

Shadow inventory makes the remaining apartments seem more scarce and therefore valuable. It is similar to the common retail strategy of telling customers to buy one of the only remaining items in stock. Scarcity creates urgency, and condo sellers want to make good on their investment as quickly as possible.

In addition, developers typically aim to sell lower-priced condos before more expensive ones. Let’s say the developer has 10 identical apartments on 10 different floors, 11-20. They might aim to sell the condos on floors 11-13 before even showing the ones on 14-20. That encourages them to keep 14-20 as shadow inventory.

However, in today’s buyer’s market, the incentive to keep shadow inventory may be declining. In fact, the opposite may be true — sponsors may be encouraged to show just how many apartments they have not sold.

Marketproof research shows that there are more than 11,000 unsold NYC condos. Moreover, the media has widely covered the abundance of condos available. This could incentivize sponsors to show how many condos they have available in hopes of luring deal seekers.

Why do condo buyers want to know about shadow inventory?

Recall our example from above. Imagine you are considering a great condo on floor 11. Often, there will be another condo just like it on floor 15 for a slightly higher price. But this more expensive condo might be shadow inventory. Most condo buyers will want to see all the options available to them.

Having more information also empowers you to strike a better deal. The scarcity equation works in the opposite direction. If you, the buyer, know that the developer has a lot more inventory to sell, you have a stronger hand. You may be able to get more concessions and lower the price of your condo.

Where can buyers get info on NYC condo shadow inventory?

Marketproof Pro is the only site with comprehensive information on new NYC condo buildings and their shadow inventory. Marketproof uses software to scrape this data from various sources and centralize it in one easy-to-use platform.

With Marketproof, you can see not only shadow inventory but also other rare condo data. This includes comparable condos that have recently closed and sold and a holistic view of your condo building.

Create an account, and get a seven-day free trial.