In 2005, any slight change in the real-estate market was typically greeted with an ominous headline or cover story.
When mid-year reports showed massive quarter-to-quarter gains, people warned of a bursting bubble on the horizon.
Then, when the rate of appreciation slowed down in the third quarter—with the average sale price of co-ops and condos dropping 12.7 percent—the data, similarly, led to doomsday scenarios on the front page.
“I think that the year really started with a bang,” said Gregory Heym, the chief economist at Brown Harris Stevens. “We had a tremendous first six months and a phenomenal second quarter.” But as in 2004, Mr. Heym admits that “the second half was kind of flat.”
Despite the “flat” second half, there was still no crash. So will Manhattan’s market bounce back again in 2006?
Not surprisingly, many industry leaders predict increases again in the first half of 2006, but they also appear a bit more wary this time around.
On Tuesday, Jan. 3, three major reports were released that offered data for both the fourth quarter of 2005 and the entire year. Even among the economic experts and the city’s real-estate heavyweights, opinions differed over the specifics.
For instance, the Prudential Douglas Elliman report, prepared by appraisal firm Miller Samuel, showed the average sales price for co-ops and condos increasing slightly (by 3.3 percent) over the last quarter, and by roughly 20 percent for the year. However, both the Corcoran Group and Brown Harris Stevens reports showed decreases in the quarterly category, at 7 percent and 4 percent, respectively.
In all three reports, the annual change in apartment sales was positive. For the Corcoran Group, there was a market-wide 28 percent increase over 2004. That data was closer to the Prudential Douglas Elliman report, but strayed far from the Brown Harris Stevens report of only a 4 percent increase.
“Our numbers are always a little different,” said Mr. Heym. “Never have they been this divergent in just what they’re showing.”
Certainly each firm will have different findings, especially considering that some of the data is debatable, such as co-op sales that aren’t included in public records. Regardless of the empirical differences, however, there is a cautious optimism across the board.
“The language has gone from the bubble talk to phrases like ‘soft landing,’” said Jonathan Miller, the president of Miller Samuel. “If you characterize the last two quarters as compared to the second quarter, that would appear to be what happened. My sense is that there was so much attention paid to the housing market—all the bubble talk last quarter—that a lot of people have taken a pause, a wait-and-see position.”
A “pause” is certainly a gentler way of saying “people aren’t going to buy.” Although viewing the situation as positive overall, industry leaders aren’t predicting double-digit returns every three months.
“I saw a pause in October, early November, and a pickup in December,” said Dottie Herman, the chief executive of Prudential Douglas Elliman. “My prediction for 2006 is a steady, healthy real-estate market. I don’t believe the appreciation will be at 25 percent, but there will still be appreciation.”
If Ms. Herman is correct, personal homebuyers rather than investors looking for a quick flip could still benefit financially in the long run—even if the rate of appreciation is less. And her rival agrees about the state of the market.
“I’ve seen, in the last six weeks of the year, a lot of buyers came back,” said Pamela Liebman, the chief executive of the Corcoran Group. “We saw a lot of property go into contract in December; I think that is going to follow into a strong January. We will also see the bonus money hitting—that has a huge impact on New York.”
Although Wall Street money is a major factor for Ms. Liebman, she concedes that a few areas of the city will be cool when compared with 2005.
“[Some] neighborhoods that were enjoying the party in the beginning of last year will have to work harder,” said Ms. Liebman. “I think buyers won’t be so quick to pay the price and think that it is just going to go up in every area.”
Anatomy of a Townhouse
In 1960, director Otto Preminger was riding high with several critically acclaimed films to his credit, including Anatomy of a Murder, which had received a Best Picture Oscar nomination the previous year.
And though he lost out on the Oscar to Ben-Hur, the director was still living pretty high: Three thousand miles from Hollywood, Preminger purchased a townhouse at 129 East 64th Street.
Now, over four and a half decades later, the 8,000-square-foot townhouse is on the market for $14 million.
After the acclaimed director passed away in 1986, the Preminger estate had difficulty unloading the seven-story building, which was in desperate need of renovations. Luckily, an architect came along to buy it.
In May 1994, architect Alexandra Champalimaud and her husband, Bruce Schnitzer, chairman of a private-equity firm, purchased the townhouse for $2.225 million. Built in 1876, the building had some remarkable features but needed a modern touch.
Over a four-year period, the townhouse was completely overhauled. Now there’s a double-height wood-paneled library with fireplace where Preminger screened 16- and 35-millimeter prints. Among the many alterations, Ms. Champalimaud imported Portuguese tiles and other European relics dating back to the 17th and 18th centuries.
And if the interior gut renovation wasn’t enough, British architect Christopher Smallwood—who worked previously with the British royal family—designed the exterior, which includes an Indiana limestone base with green stucco on the higher floors.
“At a certain point, you are above everything else,” said broker George van der Ploeg, who is listing the apartment with Suzanne Sealy, both of Prudential Douglas Elliman. A couple of stories taller than the surrounding residences, the building offers “light and views that you associate more with apartments than townhouses,” according to Mr. van der Ploeg.
In March 2002, the couple—who call the building “Otto” in remembrance of its former owner—attempted to sell the townhouse, testing the market with a $12.5 million price tag. Eventually, they found a long-term renter to move in, but they now offer the 20-foot-wide townhouse delivered vacant.
Safra Mansion Off the Market
Heading up Park Avenue to 75th Street, Manhattan’s highest-priced townhouse—listed at a whopping $55 million—is now off the market.
In mid-October, high-end brokers began circulating a rumor that banker Jaqui Safra and longtime girlfriend Jean Doumanian—Woody Allen’s former producers—were quietly offering their mansion for $50 million, as reported in The Observer. A few days later, the property was “officially” listed on the market for $55 million with broker Ann Cutbill Lenane of Prudential Douglas Elliman. Now the 50-foot-wide residence is permanently off the market, according to a real-estate source. Ms. Lenane didn’t return calls for comment.
Built in 1896, the mansion was first owned by shipping magnate Nathaniel McCready and later inhabited by former I.B.M. chief Thomas J. Watson Jr. Next the William Hale Harkness Foundation purchased it, and the building became the Harkness House for Ballet Arts.
In 1987, Mr. Safra and Ms. Doumanian bought the house for $6.9 million through a corporate entity. Although the five-story townhouse needs plenty of renovations, according to a couple of Upper East Side brokers, it has attracted some interested parties over the years. In 2000, Mort Zuckerman was reportedly interested, and prior to entering the market, art dealer Larry Gagosian’s name floated around as an interested buyer. At the time, a spokesperson for Mr. Gagosian denied the rumor.
Barbara Farah, an assistant to Mr. Safra, didn’t return calls for comment.
Who Wants an $8 M. Tribeca Condo?
Michael Davies, the British producer best known for importing Who Wants to be a Millionaire to the States, and his wife, Claude, have recently purchased a Tribeca townhouse for $8.172 million, according to deed-transfer records.
But it’s a hybrid townhouse-condo in the Hubert. Built in 2004, the complex includes about 30 condo units and two townhouses. The unique idea offered the advantages of owning a townhouse with all the amenities of a modern luxury building.
In June 2004, the townhouse was listed for $12 million and marketed by the Sunshine Group. Later, the price dropped to $9.85 million, finally dropping again to $8.5 million in June 2005. That price cut apparently made all the difference: In mid-July, a contract was signed, with the deal closing about four months later.
The 29-foot-wide glass-and-steel mansion includes five bedrooms, five and a half baths, a dining room, powder room and private car garage. The 6,435-square-foot townhouse also features a modern kitchen, with appliances by Viking and Miele. In addition, there’s a 1,328-square-foot private garden with roof terrace.
Now that Mr. Davies has a luxurious residence, he can continue working on his next television project, a game show hosted by Jeopardy! champion Ken Jennings. Seriously.