I decided to do a little recreational house-hunting on Sunday afternoon to see if the Manhattan housing market is really as resilient as it’s cracked up to be.
My experience hunting for a rental apartment downtown in August had been thoroughly depressing—I did not see a single inhabitable apartment for under $3,000 a month and even then, the choice was between living in a shoebox or in a grungy, amenity-free condo. After reading all the 2007 year-end market reports released by the brokerage firms during the past few weeks, I braced myself for the house-hunting malaise familiar to most New Yorkers. But it never came.
The list prices of three of the seven randomly chosen condos we visited in Tribeca, SoHo, and the Lower East Side had been reduced after languishing on the market for too long. Meanwhile, aside from the two studios we looked at (one of which had the gall to masquerade as a one-bedroom), the price-per-square foot hovered in the mid-$800 to $1,200 range—all well below the $1,338 per-square-foot downtown average quoted in the Corcoran Group’s 2007 fourth-quarter market report.
The first stop was a “one-bedroom” in a six-floor walk-up at 214 Mulberry Street listed at the recently reduced price of $549,000. We left assuming the market was as irrational as ever, vowing not to visit any more apartments under a million dollars.
Our spirits lifted considerably when we entered the $2.3 million, 2,430-square-foot ($947 per-square-foot), light-filled, two-bedroom loft at 543 Broadway. Granted, the bedrooms had no windows and there was only one bathroom, but the broker indicated that the seller was willing to negotiate since the apartment had been on the market since before Thanksgiving.
“If you’re really interested just put in any serious offer,” she told me conspiratorially when I asked how much the seller might come down from the list price.
The loft nearby at 620 Broadway seemed even more too good to be true. Though the broker said the seller would not negotiate the $2.1 million asking price—a little over $800 per square foot—the apartment had two (interior) bedrooms each with an ensuite bathroom, 11-foot-high ceilings and a lot of closet space, so in the skewed world of Manhattan real estate, it seemed reasonable. Plus, it has been on the market for four or five months, so who knows how long the seller will continue to hold out.
The 1,575-square-foot two-bedroom units in the new Ludlow Lofts building, which opened in September according to the broker, were listed at $1.27 million. That’s just a little over $800 a square foot, for an apartment equipped with central air and under-floor radiant heating, the most efficient home-heating technology. The three-bedroom units were priced at $1.47 million ($895 a foot) and nearly $1.6 million ($924 a foot).
In Tribeca, sellers seemed even more willing to negotiate on the sale price. The newly restored, 2,170-square-foot duplex loft on the second floor of an 1875 landmark building on Thomas Street was by far the most beautiful and crowded open house we attended.
The broker from Stribling told us that the developer had tried to market the three-bedroom apartment before construction was finished last year for $2.9 million, but there was no interest. Last week was its first on the market at $2.6 million (nearly $1,200 a foot), which seems worth it for an apartment with 13-foot ceilings, huge arched windows, and pristine fixtures, albeit with a nearly $1,400 monthly maintenance fee.
In the you-must-be dreaming category was a studio on Greenwich Street in a new condo building with a business-traveler-hotel-style interior. The renovated studio had been on the market for 10 or 11 weeks and the seller/broker had just reduced the list price from $699,000 to $625,000 (still a whopping $1,388 a foot).
Though the open-house hunt was by no means a scientific exploration of Manhattan’s housing market, the apartments we randomly chose to visit conflict sharply with the rosy real estate market depicted by brokerage houses.
The Corcoran report said there was “no apparent market erosion yet after the summer credit crunch” in the fourth quarter of 2007. “Nearly all market indicators in the current quarter showed improvement over the same period in the prior year,” the report concluded. “The increase in the number of sales, rising prices, falling inventory, shorter days on market, and a smaller listing discount showed market improvement over the same period last year.”
So how does one account for what we observed?
Jill Sloane, a senior vice president at Halstead Property, said the two problems in today’s market are “brokers overpricing and owners wanting too much money.
“I’ve had this conversation with a lot of owners recently," she said. "It’s not that the market is going down, it’s that their apartments are not priced appropriately."
Ms. Sloane said she just sold an apartment for $900,000, after three other brokers had given the client estimates as high as $1.25 million. “There is no way it was ever going to sell for that. The market is very strong and busy, but if something is even $25,000 and $50,000 over market value it will sit.”