Manhattan’s Value Menu

So, in a down market like this, the budget would be contracting?

It’ll be naturally contracting. We always have ways to supplement some because, sometimes, at the time you don’t have a budget, you may have a fabulous property; so we’re always able to support you if you can’t. And you can always put your own dollars into it, and we encourage that.


Halstead’s fourth-quarter market reports showed prices flat or starting to drop. What’s going to happen?

I think you’re going to see the prices dropping, but I think people are predicting big drops; and I think, again, we’re going to the value. You’re not going to see huge plummeting of prices. The bargain hunters and the bottom fishers are not buying apartments; it’s people that are looking for a home and are willing to pay a value price for it that are buying now.


When you say ‘big’ price drops, do you mean not 20, 30 percent?

I think in this market it’s very hard to deal with very broad strokes. For instance, under $1 million is very strong, and you’re not seeing very much negotiability or what you call price drops because we don’t have a lot of supply. … As you move up, you’re starting to see a little more product and a little more negotiability. And as you go up the ladder in price points, some of the prices were sky high to start with. So does that mean it’s a price drop? Or does that mean you’re now priced appropriately?


You mean they were priced too high to begin with?

Yes. I think a lot of the very high-end market, where was the value base of the original asking price?


Lifestyle marketing emerged during the boom as the big way of moving new condos. They were marketed as child-friendly for young families; as de facto nightclubs for single people; whatever. What’s the next trend in marketing?

Maybe I’m overusing the word, but I think value and opportunity is going to be the way everyone goes. The paradigm has shifted—it’s no longer ‘I must have it’; it’s ‘Do I need it?’ I think across America you’re seeing people going back to value. … It’s not for the latest/greatest—you know, is there a refrigerator for your Fresh Direct. It’s ‘Is it the space, is it the home I can raise my family in?’ 


Is that enough, though, to sustain the industry as it’s grown? Even in good times, in Manhattan, there’s usually no more than 10,000 apartment trades annually. Are we going to see a lot of brokers leaving the business and the ranks thinning a great deal?

You still have a city that’s growing, if you look at the mayor’s numbers; this is still a city where people are moving. Of course, we have a job-loss issue and that’s a major concern. But I don’t believe that we have overbuilt.

So, therefore, the transactions that happen will be normal transactions. Some of the numbers you’ve seen are developments that were 18 months, two years in development that all of a sudden all closed within a period of time. You’re not going to see that because the cyclical development phase was leaving us before the crisis hit. … The development was leaving us anyway, and certainly will, with the inability to get financing. So you’re not having an infusion of a lot of new product.


You recently told, in response to a question about how the current crisis will affect your grandchildren’s house-hunting, ‘The problem right now is in the market for mortgage products. I think that after all this, what will probably be gone will be the risky products, because this is about people who probably should not have had a mortgage in the first place.’ What is the sort of mortgage-lending situation right now in Manhattan?

[Sellers and lenders] are requiring, pretty much across the board, from what I’m hearing now, about 30 percent down.


Even for the condos?

You can always find a bank that’s going to give you a little more. And, again, the more you have, the less they’re going to want. But across the board, we’re seeing about 30 percent down. So, we’re going into an environment where debt is not going to be what we should all be carrying. … I think people are going to wait until they have a little more equity before they make their purchases, whether it’s for TVs or your home.

Manhattan’s Value Menu