Can a parking space be worth $1 million?
It’s difficult to imagine paying more for a single parking space than most houses are worth, but some urbanites do.
Like any form of real estate, the sales prices of parking stalls are subject to the laws of supply and demand. If the demand is high and the supply is low, bidders compete with each other for the available spaces and bid prices up. If prices rise high enough, it becomes economical to build more parking garages to add to supply, but in places where adding new supply is difficult or impossible, there is nothing stopping prices from going as high as buyers are willing and able to push them.
Luxury parking spaces are not generally bank financed unless the sale is tied to a home or office; therefore, the market for them is a function of the wealth of those who covet the most precious spaces. Since this is a cash market, parking spaces are worth whatever someone pays for them. Even if the price paid is foolish, it doesn’t matter as long as a greater fool comes along.
But seriously beyond bragging rights, is there any reason to pay $1,000,000 for a place to park your car?
As parking in major cities becomes scarce, developers are charging record prices for parking spaces in luxury condominiums
By Candace Jackson, Aug. 19, 2015
Buyers of luxury condos have a new place to park their cash: in their parking spots.
In cities like San Francisco, New York and Boston, parking prices have reached an all-time high. At least two new developments in Manhattan are asking $1 million for a single parking spot. Condominium developers are touting parking spaces with glossy brochures and promotional videos, marketing the small patches of concrete as luxury amenities.
Price tags are rising as parking options become scarce in major cities. Until recently, the rule of thumb for San Francisco developers in prime, central areas was to build one parking space for every unit, the maximum allowed by the city planning department in some locations, says Alan Mark… . Now, the maximum allowed in many central locations is an average of half a parking space for each unit, after a change in local rules.
Although I am generally pro development, I am not in favor of bad development. Changing weak parking standards to something even weaker benefits developers while creating problems for the people who must live with the results. The lack of mandated parking is creating demand for parking stalls where there is little or no supply, which drives prices up — a high price passed on to everyone in the community.
Prices now run as high as $125,000 for a single parking space in a prime San Francisco neighborhood, compared with $40,000 to $70,000 per spot several years ago, says Mr. Mark.
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For about four times the cost of an average single-family home in the U.S., buyers can purchase a parking space in New York’s Soho. At 42 Crosby Street, a 10-unit luxury building under construction in Soho, 10 underground parking spaces are asking $1 million—more on a price-per-square foot basis than the units upstairs. …
If the parking costs more than the house, I’d park my car in the living room.
Jonathan Miller, president of appraisal firm Miller Samuel, says the highest actual sales price he’s seen for a single parking space in Manhattan is $325,000. Million-dollar parking spaces, he says, aren’t anything close to market rate, but rather are priced proportionally to the high price tags of units in the building. …
At least New Yorkers haven’t completely lost their minds.
The building also has six “man caves” priced from $1.5 million to $2.5 million that hold up to nine cars and have room for a bar and billiard table. Two are still available.
Now that has some possibilities…
I want a nine-car garage man cave, don’t you? But how could we get one?
To make this happen, we need to put Anthony Mozilo back in charge of Option ARM lending to inflate house prices.
Then we need to put Daniel Sadek back in business providing cash-out refinances to every lucky homeowner.
Then we can all have man caves!
What could go wrong?