New York Wiki

NYC Co-op

"Let's say there's some 38-year-old guy on Wall Street who makes $1.2 million a
year in salary, has three kids and wants to buy a $5 million condo," Ms. Brainerd
said. To qualify for a co-op, she said, the buyer would probably have to show that
he had $10 million to $15 million in liquid assets. "He hasn't had enough time to
sock away $10 million or $15 million in cash," she said. "But if you're buying a
condo, you just need enough money for a down payment and to be able to pay
your monthly mortgage. The higher the prices get, the higher the stakes are with
the co-op boards."

From NYT.

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2004 January 15: TURF

One Bedroom, Many Bids
By MOTOKO RICH

FOR around $470,000, recent listings show, you could buy a four-bedroom,
four-bathroom traditional house in Dallas with granite kitchen countertops and
vaulted living room ceilings. In Columbus, Ohio, you could buy a sprawling
four-bedroom house with two fireplaces, a whirlpool and a ravine outside your
front door.

Or you could buy a one-bedroom apartment in Manhattan.

Buyers paid an average of $469,960 in the final quarter of 2003 for one-bedroom
apartments in Manhattan below 96th Street on the East Side and below 112th
Street on the West Side, according to the Douglas Elliman Manhattan Market
Overview, one of the most comprehensive surveys of the real estate market in
that area.

Despite such high prices, demand heated up: though two-bedrooms still
represented the highest proportion of sales — 43 percent — one-bedrooms grew
from 32 percent of all sales in the last quarter of 2002 to 39 percent in 2003,
according to Miller Samuel Inc., the real estate appraisal company that compiles
the report.

The average price of one-bedroom co-ops vaulted, to an average of $444,373,
up 7.2 percent from the previous quarter.

"There's just not enough inventory out there," said Sheila Lokitz, an agent with
the Corcoran Group in Manhattan. "And what comes on just absolutely flies off
the market." Condos, a much smaller part of the one-bedroom market, fell to
$536,634, from $574,580 in the third quarter.

Buyers could take some relief from the fact that the average price of all co-ops
and condos — a measure strongly affected by extremes at either the high or the
low end — was down 1.5 percent, to $903,259, compared with $916,959 in the
previous quarter. But the third-quarter figure was inflated by the record-setting
$45 million sale of a penthouse at the Time Warner Center.

Basically, said Jonathan Miller, president of Miller Samuel, "all the indicators are
up," as low interest rates, a rebound on Wall Street and a growth of confidence in
the economy prompted more New Yorkers to pour money into a dwindling supply
of apartments.

The number of apartments on the market dropped 7.3 percent, to 4,843 at the
end of the fourth quarter, from 5,224 at the end of the third — the first time in
seven quarters that inventories fell below 5,000. "All of our brokers are
scrounging around and fighting over the same number of listings," said Steven
James, director of sales at Douglas Elliman, one of the city's largest brokerage
firms.

One of his firm's chief rivals, Corcoran, will also release figures today, showing
that the average price of condos and co-ops rose nearly 9 percent, to $854,000
in the fourth quarter, compared with $784,000 the quarter before. Corcoran's
figures cover Manhattan sales below West 125th Street and East 96th Street.

"I think the story of the year was coulda, shoulda, woulda," said Pamela
Liebman, chief executive of the Corcoran Group. "If you didn't buy in the first
half of the year, you spent a lot more money in the second half for the same
type of apartment."

Buyers of one-bedroom co-ops certainly were learning that lesson all year. With
mortgage rates low, the monthly cost of buying an apartment was often close to
the cost of renting one, or even lower, even though rents dropped by nearly 30
percent, said Neil Binder, a principal at the Bellmarc Companies, a real estate
firm in Manhattan.

"Based on the monthly carrying costs, for the one-bedroom buyer it became a
very exciting alternative," Mr. Binder said.

Then, toward the end of the year, apartment buyers started to panic at the
prospect that interest rates might increase or that the improving economy would
draw out even more buyers. As a result, bidding wars were common, and those
who hesitated or made lowball offers suddenly found themselves priced out of
the market.

For sellers, who just a few years ago were worrying that one-bedrooms were not
a good investment, the buying boom has turned into a boon. In September,
when MaryJo Palumbo, an agent at Douglas Elliman, took on a listing for a
one-bedroom co-op apartment in Chelsea, she advised the seller to price it at
$399,000. But the seller decided to ask $425,000.

At first, offers trickled in: $385,000, $395,000, $400,000. The seller turned them
all down.

Then, in the first week of December, Ms. Palumbo said, four buyers offered the
asking price, and one raised it by $11,000. The seller accepted an offer at the
asking price, Ms. Palumbo said.

"People who have been on the fence about buying one-bedrooms are looking at
the economy improving and believe that prices and interest rates are going to go
up this spring," Ms. Palumbo said. "So they're buying right this second, before
anything happens."

The trend appears to be continuing. Ms. Lokitz of Corcoran said she was
supposed to take a client to an open house for a "charming and quaint" co-op on
the Upper West Side on Sunday. But with the temperatures icy, the client, who
was feeling ill, decided to wait. When Ms. Lokitz called the seller's broker on
Monday to arrange a visit, "they already had four offers," she said.

According to the Elliman Market Overview, the average size of an apartment sold
in Manhattan last quarter shrank to 1,280 square feet, from 1,302 in the third
quarter and 1,437 square feet in the fourth quarter of 2000.

"People realize they have to be more receptive to things that normally they
might not have been able to accept before," Ms. Lokitz said. "A few years ago, if
you said to somebody that you had a one-bedroom for 600 square feet, they
were appalled and said, `I can't live in that amount of space.' "

At the other end of the market, the shrinking supply of two- and three-bedroom
apartments hurt buyers hoping to upgrade from their one- or two-bedroom
homes.

The average price of a two-bedroom rose 9 percent in the fourth quarter, to
$1,140,377, from $1,045,648 a year earlier.

In the condo market, the price increases for larger places were even more
striking. The average for a two-bedroom apartment rose 7.2 percent, to
$1,450,640 in the fourth quarter, from $1,353,520 in the third quarter. A
three-bedroom condo averaged $3,278,823 in the fourth quarter, up 13.2
percent from $2,895,705 in the quarter before.

Amanda Brainerd, an agent at Warburg Realty, said condo prices were driven in
part by the fact that the supply was limited, but also by an increase in demand
from relatively young buyers who were finding it difficult to meet the financial
requirements of co-op boards.

"Let's say there's some 38-year-old guy on Wall Street who makes $1.2 million a
year in salary, has three kids and wants to buy a $5 million condo," Ms. Brainerd
said. To qualify for a co-op, she said, the buyer would probably have to show
that he had $10 million to $15 million in liquid assets. "He hasn't had enough time
to sock away $10 million or $15 million in cash," she said. "But if you're buying a
condo, you just need enough money for a down payment and to be able to pay
your monthly mortgage. The higher the prices get, the higher the stakes are with
the co-op boards."

Sales of two- and three-bedroom condos picked up in the last quarter of the
year. For example, Robert E. Doernberg, director of condominium sales at
Warburg Realty, said that at Bridge Tower Place, a 38-story skyscraper at 401
East 60th Street, five three-bedroom apartments sold in the fourth quarter, with
price rises of more than 10 percent within just three months.

"Some of them were languishing on the market, and all of a sudden — boom,
boom, boom! — they sold in the fourth quarter," Mr. Doernberg said. He said one
sold for $1.85 million at the beginning of the quarter, and an identical unit on a
different floor sold for $2.1 million in December.

Although brokers have been exchanging hyperbolic anecdotes about the return
of the "super luxury" category — above $3 million — the Elliman Market
Overview showed that in the fourth quarter the average sale price of luxury
apartments fell 7.8 percent, to $3.19 million, from the prior quarter. But that
might have been in part because buyers were having to make do with slightly
smaller apartments: the average square footage of a luxury apartment dropped
to 2,516 square feet, from 2,702.

That's almost an incentive to move to Dallas. That four-bedroom, four-bathroom
house with granite countertops and vaulted ceilings, for $470,000? It's 3,189
square feet.

Posted by dc at January 17, 2004 01:44 PM