Since the new year began, a burst of activity has broken out in Manhattan
and several Brooklyn neighborhoods as New Yorkers frenetically hunt
for co-ops, condominiums and town houses, sending prices higher despite
sluggish sales in many other cities.
Preliminary indications from real estate firms showed that this increased
activity, with open houses jammed and bidding wars taking place, has
occurred in all price ranges — from tiny studios in the East Village
to red-brick mansions on the Upper East Side — in counterpoint
to the heavily weighted record sales of luxury properties that led the
market in the late summer and fall.
Real estate brokers and statisticians are quick to point out that not
every single apartment is flying into contract. During the last quarter
of 2006, the major real estate agencies differed on which way prices
But now, the three largest real estate companies in the city agree:
for January, at least, both prices and the number of signed contracts
rose in double-digit percentages compared with the same month in 2006.
With higher Wall Street bonuses, a strong regional economy and pent-up
demand from New Yorkers who were once worried that the city’s
real estate market would crash, buyers’ attitudes have done an
about-face. “Their psychology has changed,” said Frederick
W. Peters, the president of the Warburg Realty Partnership. “For
almost two years, they’ve been scared that the market would plummet
and they’d end up like fools who paid too much.”
Real estate experts say they see no reason for the trend to not continue,
with economists predicting stable mortgage rates and a continuing city
budget surplus. However, other factors may alter New Yorkers’
renewed interest in buying real estate, including an expansion of the
Iraq war, a changing employment picture or another terrorist attack.
Yet, there is “cautious exuberance,” according to Steven
L. James, director of Manhattan sales for Prudential Douglas Elliman.
A week ago, one open house attracted 100 people to an Upper West Side
one-bedroom; a $2.475 million house in the Park Slope neighborhood of
Brooklyn sold in a day.
Across the board, the prices of Manhattan apartments are rising. Jonathan
Miller, the president of Miller Samuel, an appraisal firm, said the
number of contracts signed this January was 19.4 percent higher than
in January 2006. Prices were up 14.4 percent in the same time period.
Inventory, which was mounting last summer, is shrinking fast.
Now, according to Mr. Miller, statistics showed that sales of studio
and one-bedroom units, stagnant over the past year, were up 13.7 percent
in January. “It’s not like a lot of huge sales at the high
end skewed the average up.”
According to a report released last week by the National Association
of Realtors, prices are falling in many other metropolitan areas around
the country. The report covered only the last quarter of 2006, and showed
a modest increase of 3.1 percent for the New York area, which includes
parts of northern New Jersey.
Anecdotally, there isn’t much talk of falling prices in Manhattan
and in the most sought-after neighborhoods in Brooklyn, where young
people looking for a break, empty nesters looking for a guest room and
foreigners looking for a pied-à-terre say they want to live.
Katalin Staveley, a 30-year-old bedding designer in Manhattan, devotes
her weekends to scanning the classifieds and attending open houses,
searching for just the right one-bedroom apartment for less than $750,000.
She can’t find it. “I made a mistake,” she said last
week. “I should have started looking before Thanksgiving.”
Mr. Miller said New Yorkers had been reluctant to buy because of the
feeling of an impending crash. “Last summer, a lot of information
was being dumped on the consumer: stories about the glut of condos in
Miami, Washington, D.C., and Las Vegas, exacerbated by the constant
debate on the blogosphere about housing bubbles, mixed together with
a barrage of negative predictions,” he said in a telephone interview.
Although no one can pinpoint the moment when New Yorkers started feverishly
buying again, Kirk Henckels, the director of the private brokerage division
of Stribling & Associates, said he thought the luxury market picked
up after Labor Day.
He and others said the resurgence was partly fueled by the fall’s
record-setting (and well-publicized) sales of a few multimillion-dollar
apartments and town houses, like the Stanford White limestone palazzo
at 25 East 78th Street bought by Mayor Michael R. Bloomberg for $45
million and the Harkness mansion at 4 East 75th Street sold in October
for $53 million.
Then came this year’s stratospheric Wall Street bonuses, and the
market exploded, real estate executives said.
“The plunger that freed up all the hesitation at all price levels
was those bonuses,” said Diane Ramirez, the president of Halstead
Property. “It cleaned the pipes and gave confidence to even small
Within the last month, the Corcoran Group, Halstead and Prudential Douglas
Elliman, three of New York City’s largest real estate sales firms,
say they have recorded double-digit increases in contract prices and
in the number of transactions.
In a real estate market where 18 and 22 percent price increases were
recorded in 2004 and 2005, last year’s 6 percent increase was
depressing, Mr. Miller said.
Pamela Liebman, the president of the Corcoran Group, reported that the
company’s contracts for this January totaled $1.3 billion, an
increase of 53 percent from January 2006.
Prices in many areas of Brooklyn are going up, too. According to Marc
Garstein, the president of Warren Lewis Realty in Park Slope, prices
in what he called the downtown neighborhoods — including Brooklyn
Heights, Park Slope, Carroll Gardens, Cobble Hill, Prospect Heights
and Windsor Terrace — are now approaching 2004 highs, after being
off about 10 percent in the last two years.
A town house at 171 Garfield Place in Park Slope, priced at $2,475,000,
sold for the asking price one day after it was put on the market. Fifty
people had shown up at the open house, Mr. Garstein said.
Customers said they had expected a buyer’s market in which they
could call the shots, but found a race track, instead.
Jane LaFarge Hamill, a 25-year-old painter who lives in a “small,
kind of stinky” studio in Chinatown, said she had looked at 60
apartments over three months, trying to take advantage of the lull she
had noticed. “We decided to look while sellers were still worried
that the market was crashing,” she said.
When she started looking last fall, there was still “wiggle room,”
she said. But now, there is frenzy, said her mother, Leita Hamill, who,
with her husband, Bill, is helping her daughter search for and buy a
new home. The Hamills had gotten into a bidding war, one of many reported
by brokers these days, for a two-bedroom co-op in Gramercy Park. They
had started bidding above the asking price, but it wasn’t enough.
“There were people bidding on the apartment sight-unseen,”
Mrs. Hamill said. The victors got the co-op through a sealed bid, she
said. “It was like a pair of shoes that you absolutely had to
have,” she said.
Real estate executives say they do not know how long the market’s
heat will be turned up, although they say the regional economy looks
They also say that the first two quarters of the year — the spring
market — are traditionally stronger than the last two. Thus, the
average for the whole of 2007 may or may not show the double-digit growth
that the first part of the year is showing. “It’s all about
price now,” Ms. Ramirez said. “The market is not in a spike
mode, when anything, for any price, will sell.”
Ms. Ramirez, who has sold real estate for more than 30 years, said she
expected that the current rocketing growth would be followed by a period
of slower yet steady increases. “I don’t want to hear, ‘Oh
my gosh, the market is slowing up again,’ ” she said. “With
the number of deals we had last week, it has to calm down. But I feel
much more confident than at any time in the last five years when the
market had fits and starts and there was always a certain underlying
Toward the end of 2004, the real estate market in the city was booming.
But then, brokers started seeing “great concern among clients
that mortgage rates were about to jump and that house prices would suffer
a sharp correction,” Mr. Miller said.
Since then, there has been change of leadership in Congress, Mr. Miller
noted. In the region, unemployment has dropped. Mortgage rates didn’t
soar. “Two years ago, we were predicting they’d be up to
8 percent now,” he said. (Rates for a 30-year fixed loan on a
New York City co-op hover around 6.25 percent, according to the Manhattan
After months of trying to push shoppers over the edge of indecision,
brokers now say they spend time warning house hunters not to rush in
heedlessly — advice the would-be buyers don’t always listen
“When my wife and I got into the market in mid-December, people
told me there was a glut of one-bedroom apartments and I could take
my time,” said Shelly Cohen, 51, an empty-nester. “When
we actually got into the market, I found it was just the opposite.”
He just found a newly created condominium in a beige brick high-rise
at 1438 Third Avenue at 81st Street and quickly signed the contract.
He said he felt he had to.
Mrs. Hamill, the mother of the young artist in Chinatown, offers her
own advice to friends.
“Now I tell everybody: Be ready to write the check the minute
you see something you love,” she said. “If it’s any
good, it’ll be gone by the next day.” She paused. “Or,
even by that same day.”