New York Times January 17, 2002
Buyers Are at the Door Again
By TRACIE ROZHON
THE winter apartment-hunting season in Manhattan, which began around Thanksgiving — normally the deadest of times for co- op and condo sales — is bursting with activity.
Brokers say this traditionally moribund period has come alive with wheeling and dealing. Open houses, which allow apartment shoppers to browse without tying themselves down to one company or agent, have become a weekend pastime. Hundreds of New Yorkers, starved for a real estate fix after the bleak weeks in September and October, are swarming through studios and multiroom maisonettes alike.
And a significant number are buying. Jonathan J. Miller, president of Miller Samuel, a large Manhattan appraisal company, said that 174 clients signed contracts for cooperative apartments or condominiums between Dec. 15 and Jan. 15, an increase of 7.4 percent over the same period a year ago. Diane N. Ramirez, president of Halstead Property, said her company had 21 offers accepted by sellers the first two weeks in November, and 37 the first two weeks of this month.
"There is definitely a pickup in the number of sales in the last two months," Mr. Miller said. "But the most noticeable thing is how busy the agents are. People are buying, but it takes many more showings. A year ago, it might take 35 or 40 showings before someone would purchase. Now it's 75 or 80."
Prices, on average, are down about 10 percent from the heights they reached in March 2000, but deals are being made at a pace that agents call surprising: they were braced for a real estate recession, with plummeting prices and nobody showing up, even to look.
A smattering of serious buyers who were scared away after Sept. 11 — some of whom dropped out of deals that they and the sellers had agreed upon — have resumed bidding. One woman backed out of a deal for a $1.1 million co-op on East 75th Street, but when she tried to get back in, for $970,000 this time, she was too late. Another bidder got there first, paying the lower figure.
Her experience characterizes the current market, said Frederick W. Peters, president of Ashforth Warburg Associates. He said that, for New Yorkers, not shopping for co- ops has become unbearable. "People's gratification can only be delayed so long," he said.
Mr. Peters and other agents find a combination of reasons for the return of the real estate shopper: a willingness by sellers to set more realistic prices, the fall in interest rates and the belief that, barring another catastrophe, "the sky hasn't fallen in," said Barbara S. Fox, president of the Fox Residential Group.
Brokers had predicted that after the attacks, apartment owners would panic and rush to put their places on the market, creating a glut and causing prices to plummet. While almost 2,000 new listings did appear, brokers say that the market has not been flooded. Ms. Fox said steady buying is absorbing the post-Sept. 11 surplus. "The buyers now are certainly more wary, and afraid of overspending, but people are really stepping up to the plate to buy," she said.
Barbara Corcoran, chairwoman of the Corcoran Group, said many of her buyers had liquidated their stock portfolios and put the money into real estate. She said that since Sept. 11, an increasing number of customers had used cash, rather than mortgages, to cover 60 percent or more of the prices for co-ops and condos. (Co- ops in Manhattan require 25 percent cash, on average.)
"The floodgates have opened," she said. She also said that in the last six or seven weeks, she had seen more buyers from overseas. "We had a big billion-dollar international media campaign talking about how warm and cozy New York is, and what heroes we've got — and it worked."
Although current activity won't be reflected in citywide statistics until quarterly reports are compiled by the real estate industry at the end of March, brokers say that more people are out there kicking baseboards and slamming doors. Mr. Peters said he had 27 accepted offers between Thanksgiving and Christmas, as against about 15 in the same period a year earlier. Not every company has had an increase, but brokers say the market has gathered momentum in the last month.
Lawrence Sicular, chief real estate analyst for Brown Harris Stevens, said prices remain surprisingly stable and may even be slightly higher than at summer's end, except at the highest levels. In the multimillion- dollar market, he said prices were "softening." (As has been reported, Manhattan rents are also softening: they have dropped by 10 to 30 percent since the attacks, agents say, partly because more people are turning away from renting and are buying instead.)
Agents are not so sanguine about sales downtown, the area that suffered most after the attacks. Deborah B. Beck, executive vice president of the Real Estate Board of New York, a trade group, said that although the market appears healthy, she is awaiting statistics on that area. "We won't see those for another two months," she said.
But elsewhere in Manhattan, agents who were urging both buyers and sellers not to panic a month ago are now warning sellers against irrational exuberance.
"It would be irresponsible to paint a totally happy picture, as if 9/11 had never happened," said Paul Purcell, president of Insignia Douglas Elliman, the largest real estate company in the city. "Could real estate really be the only business that is going up? I don't think so." The number of accepted offers at his company is still down 10 to 15 percent from a year ago, he said.
Nevertheless, he is encouraged by the number of people out shopping. A year ago, in the midst of a hot market, a good turnout at an open house would have been 8 to 25, depending on the property.
Toni D. Haber, an agent at Douglas Elliman, reported that the weekend before last, 65 people showed up at 250 West 89th Street for an open house at a two-bedroom, two-bathroom "condop" (which has shares, like a co-op, but less restrictive rules, like a condominium). Two bidders are now competing for the apartment, which was listed at $680,000, Ms. Haber said. Another open house that weekend drew 100 sightseers, though no offers have been made yet.
Last weekend, a studio at 67 East 11th Street, listed at $214,000, had 43 visitors and two offers. (That number of visitors is rare for a studio, especially at such a high price.)
An advertisement for an open house at a one-bedroom co-op at 311 West 82nd Street drew two offers, Mr. Purcell said, even though it gave an incorrect telephone number for the broker and misstated the price. (It did get the address right.)
"It feels like we have a horse race again," he said.
Ms. Ramirez, of Halstead, agreed. "The open houses are a phenomenon," she said. "My brokers are telling me 50 people came to this one, 60 to that."
The bounce-back in Manhattan's sales market is turning brokers into psychiatrists, Ms. Ramirez said. "We're all trying to figure out why it's happening." She said she thinks people are pouring into open houses because they are "still not ready to commit to a broker." For some, open houses provide a certain distance: they can look and shop without being interrogated by a broker about their income or intentions. Working with a broker is like going steady, while cruising open houses is more like dating around.
"Now they've got a taste of freedom after being squeezed by the ridiculously high prices" of 1999 and 2000, Ms. Ramirez said. "They do want to buy, but they don't want to feel they're being put in a corner."
When the price is right, buyers are not averse to engaging in bidding wars. "The sellers were pushing for the escalation of prices," Ms. Ramirez said. "They just didn't get that the market was leveling off, even before Sept. 11. But they're starting to get it, and they're either reducing their prices or putting their places on the market for reasonable amounts.
"We thought during December, things would be dead in the water, but our brokers were out there pounding the pavement Christmas week."