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Bonus Wave Whitecaps Appear
Brokers gave the city's residential sales market mixed reviews in December. Some said they found fussier buyers, while others reported reaping the first wave of Wall Street bonus-inspired buying.
According to real estate appraiser Jonathan Miller of Miller Samuel, who keeps quarterly data on Manhattan's residential market, things are looking up for a decidedly post-boom market.
"We saw a significant surge in transactions that started right after Thanksgiving, and I think that correlates strongly with the mood on Wall Street and the announcement [of record earnings] by Goldman Sachs and the others," Miller said. "We're moving into an optimistic period."
Miller said that -- as is typical of Wall Street bonus-inspired buying -- the high end of the market is seeing more action than the middle and lower end. Properties priced north of $5 million are especially moving well -- as has been the case in the past -- but this time the range of properties seeing a bump extends further down into the center of the market than in the past.
"In the past, maybe only the top 5 or 10 percent of the market would be helped by Wall Street," Miller said. "This time, it's more like the top 40 percent. It's a broader-based change."
For his part, Jeff Wolk doesn't see the market as tanking, yet his view is less rosy than Miller's.
"I say we're seeing a steady sales market in that we're still seeing deals being made," said Wolk, who is president of real estate firm Fenwick Keats Goodstein. "Buyers are certainly negotiating more than they have done before, but if a property is priced right, it will still sell pretty quickly."
Wolk said Manhattan's high inventory rate -- a result of the continued entry of new and converted condo units onto the market -- gives buyers an edge they haven't had in a while. While he stopped short of calling it a buyer's market, noting that low mortgage rates and a strong local economy ultimately provide leverage for sellers, Wolk said many developments now coming onto the market may find it difficult to meet sales goals.
"I think it will be a bit tough for new developments that have very aggressive [prices per square foot] to compete, especially since a lot of the inventory from 2006 has not yet sold," he said. "When new construction comes on the market, it will lower the prices, if anything. I think there will be a lot of choices in new properties and developers may have to modify or offer incentives such as absorbing closing costs to make up the difference."
Michael Signet, director of sales for Bond New York, said some market segments are feeling the weight of new inventory. Signet said prices for new construction are down about 20 percent, but that the rest of the market is still strong.
"Right now, we're averaging between $1,000 and $1,100 per square foot for condominium resales and about $860 per square foot for co-op re-sales. Those are good numbers."
Signet said the market is clearly cooler than it was back in the boom times of a year-and-a-half ago, when buyer-bidding wars were commonplace. He said the current market is actually a better one in which to build business.
"Back when the market was overheating, we had to be very aggressive with buyers, telling them that they should jump at the chance to buy this or that, because if they waited until tomorrow, it'd be gone." Signet said. "Now, we can take more time to show people around, and that's what ultimately builds a relationship and a business."
For her part, broker Sharon Baum said time is a luxury she lacks. Baum, a senior vice president and the director of the exclusive property division at the Corcoran Group, says the high end of the market has been "beyond busy" through November and December as Wall Street executive start thinking about bonus buys.
"I can only imagine how busy we will be once the bonuses actually hit the accounts," which typically happens in February, she said. "We are having trouble finding enough big prewar apartments. This is one of the busiest periods I've ever seen."
Baum said that she had heard of weakness in other, lower-priced market sectors, but that at the high end, activity is brisk despite the fact that buyers have traditionally been too busy with family and holiday events during November and December to shop for real estate.
"They're all managing to find time to get out there and look despite all the distractions," she said.
A bad time to rent
If you're unhappy with your current apartment and considering a rental upgrade, perhaps you should find reasons to love your imperfect pad.
According to numbers from Citi Habitats, rents in Manhattan rose yet again, with the average apartment going for $3,691 a month in November. Vacancy rates remained ultra-low at 0.81 percent.
This translates to a tough rental situation on the ground, according Bruno Ricciotti, principal at Bond New York.
"As there is every year, there's been a reduction in asking rents as the winter comes, but this year the reduction is fairly slight," Ricciotti said. "If you signed a lease two or three years ago, you'll find that you have to pay about 20 or 30 percent more for the same sort of space. For the most part, this isn't the time for recreational browsing. Only move if you have to."