On a recent Wednesday night, Antonio Palumbo, a 27-year-old IT manager at Blue Man Productions, and his 25-year-old fiancé, Joanna Cambareri, a digital sales associate at People.com, were sitting in an Upper East Side Starbucks, talking about their decision to buy an apartment in Manhattan, and explaining why they were looking to buy in a market defined by two knee-buckling trends: uncertainty; and falling prices.
The soon-to-be-married couple had already signed an offer on a duplex in a prewar building just a few blocks away from the coffee shop, and in less than an hour they were scheduled to sit down with the co-op board for the interview.
The couple have been engaged for two months, and even though they have spent that time looking for an apartment in the city, they aren’t planning on moving in together until they get married later this summer. They’ve both rented in the city, Mr. Palumbo in the Bronx and Ms. Cambareri on the Upper East Side. Their apartment search took them up and down the east side of Manhattan, including stops in the Lower East Side, Murray Hill and the Upper East Side. They started out in the $450,000 price range, but they jumped to $500,000 once they realized how much negotiating room they had.
Finally, they found the duplex on the Upper East Side and decided to move on it. They ended up chopping about $60,000 off the asking price. And they are not alone. Yes, there are fewer people buying Manhattan apartments than anytime in recent memory; a quick look at fourth-quarter figures from appraisal firm Miller Samuel points to a 9.3 percent drop in condo and co-op sales from 2007 to 2008. Yet in the midst of this great thaw, there are packs of savvy property sharks out there, chasing the scent of blood in the water, looking for something juicy to sink their teeth into.
The market has finally flipped—in some spectacular fashion, huh?—and buyers who for years have played the role of the sickly, three-legged antelope are suddenly the top predator on the food chain. Longtime renters who bore the brunt of the bubble market with no long-term asset to show for it are finally having their revenge. Not only are rents falling fast, but sales prices are tumbling also, leaving those renters fortunate enough to be carrying some extra cash with the best of both worlds.
And to think that about a year ago, right about the time Bear Stearns was marching toward oblivion, the market for apartments was a seller’s paradise. Buyers came in swarms, flush with money and ready to engage in price-escalating bidding wars. And as insane as the sales market got, the rental market followed right behind; according to statistics from the Real Estate Group New York, rents reached their highest point around September 2007, when the average rent for a doorman studio in Manhattan reached $2,780. There was literally nowhere for Manhattan denizens to seek refuge from the aggro market forces, and trying to find a cheap place to live was like betting against the house.
But like Bob Dylan sings in Zack Snyder’s beautifully orchestrated montage at the start of Watchmen, the times they are a-changin’. Only, in New York City circa 2009, they actually are (no irony here).
TAKE SARA PORGES, a 34-year-old insurance broker at Marsh who has lived in Manhattan for 12 years, spending the last eight or so in a rent-stabilized apartment on the Upper East Side. In what ultimately ended up being a wise decision, Ms. Porges spent the boom years in her rental, believing the sales prices were too high. She had friends who bought property, though, and she started looking around to see if she should follow suit. “I felt like a big loser,” Ms. Porges said jokingly. “I either didn’t have enough money or it just didn’t seem right because prices were so insane.”
With the market decidedly saner, Ms. Porges has started aggressively looking for apartments and has noticed a sea change in the sales environment: The open houses she visits are decidedly less crowded; the quality of properties on the market has increased; and prices have become imminently negotiable. “Last year, people were paying the asking prices no question, but now I feel like you can be more brazen and negotiate, especially if you’re renting and not in a rush,” Ms. Porges said.
Like a lot of other fence-sitting consumers, Ms. Porges is keeping her options open. If she finds the place she wants for the right price, she’ll move on it; if not, she can just go on renting. It’s the sort of flexibility homeowners wished they had these days.
But it’s also unleashing an epidemic of sorts, in which apartment hunters of 2009 resemble nothing more than lobotomized zombies of their former freewheeling selves. “It’s a whole different vibe,” Jill Sloane, an executive vice president at Halstead Property, said. “A year ago, people were paying whatever it took to get an apartment and there were frenzies at open houses; now people have stopped being emotional buyers, and if they don’t get the deal they want, they will walk away.”
Unlike Ms. Porges, Monika Malkowski, a 27-year-old jewelry designer, found her perfect apartment. Sick of “throwing her money out the window every month” on rent for her Chelsea apartment, Ms. Malkowski put in an offer on a one-bedroom Greenwich Village apartment. She is savvy enough to know that the price might drop even further, but smart enough to know that a substantial cut in the sales price is likely to spark the sort of bidding war she wants to avoid.
“The truth is that even if the price goes down a little lower and the apartment gets a little cheaper, I might be bidding against 12 other bidders,” Ms. Malkowski said. Although a few competing offers are in, she got there first and is optimistic that she’ll finalize the deal sometime in the next week or two.
BACK AT Antonio Palumbo and Joanna Cambareri’s board interview on the Upper East Side, things went well. Mr. Palumbo was surprised at how welcoming the interviewers were. “It was much less of a drill-down and an interrogation and much more of a conversation that just let us know that we were welcome in the building,” he said.
They think they’re in for sure.