The Million-Dollar Manhattan Apartment By MICHELLE HIGGINS APRIL 18, 2014
With a budget of about $1 million, Patricia Marx began looking for a two-bedroom, two-bath apartment in Manhattan last fall. She soon realized just how limited her options were.
“For a while, we were determined to acquire the large two-bedroom in the back of a building on Fifth Avenue,” said Ms. Marx, a staff writer at The New Yorker who is looking for a larger space with her boyfriend, Paul Roossin, a scientist and tech entrepreneur. “The apartment’s asking price was within my range, $995, but the board required you to have amassed three times as much money in your bank account as the purchase price.
“In other words,” she said, “you had to demonstrate that you were someone who would never want the apartment you claimed to want.”
The couple found a charming five-story walk-up in Gramercy, but the second bedroom “required scaling what was more ladder than staircase,” she said. “It is the perfect apartment for Heidi or for someone who plans never to leave.”
Then there was the chic one-bedroom, two-bathroom in the Flatiron district. “I went to check it out but it was taken before I got off the subway,” she said.
As Ms. Marx quickly learned, rising prices and an ongoing scarcity of listings mean that buyers in the million-dollar price range are increasingly out of luck or forced to make major compromises.
Low inventory, high demand and a shift toward larger units in new luxury developments pushed the median sale price for a Manhattan apartment to $972,428 in the first quarter of the year, up 18.5 percent over the same period last year, according to a report by the Douglas Elliman brokerage firm.
That’s just 5 percent below the peak of $1,025,000 in the second quarter of 2008 — the only time the median has crossed the $1 million threshold.
Eventually, Ms. Marx went into contract on a two-bedroom, two-bath with a lovely view in the Sutton Place area that was listed for $995,000. “The apartment is a wreck,” she said, noting a crumbling bathroom, gaping holes covered with blue tarp and a vintage oven. With an impending renovation, she expects to pay at least $1.2 million in all. “I convinced myself I was dealing with play money,” said Ms. Marx, who recently listed her current home, a gracious one-bedroom corner unit on East 88th Street in Carnegie Hill for $975,000. “A million dollars to me still seems like an unfathomable amount of money.”
Part of the problem for buyers is that new supply isn’t growing fast enough to meet the demand for apartments priced at $1 million or less.
“Below a million is like a dying breed,” said Jonathan J. Miller, the author of Elliman’s report and the president of the appraisal firm Miller Samuel.
Apartments for $1 million or less still make up the bulk of the Manhattan market, but that piece of the pie has shrunk significantly. About 52 percent of sales in Manhattan in the first quarter were below $1 million, compared with 60 percent for the same period a year ago, according to Mr. Miller. A decade ago, 71 percent of all Manhattan sales were below $1 million.
In the first three months of the year, 4,692 apartments were for sale for $1 million or less, down about 20 percent from the same period last year, according to Streeteasy, which tracks the listings of most Manhattan brokerage firms. Three years ago, 8,014 units were on the market for $1 million or less in the first quarter.
This turn of events is disappointing buyers with a nest egg that would buy a mansion in many parts of the country. The national median sale price, which tends to be a more stable measure of market prices than the average price, is $194,400, according to data from Zillow.
Just how tough is it to find something for $1 million or less in Manhattan right now? Consider a snapshot of apartments in that price range taken earlier this month by Streeteasy.
The neighborhoods with the most apartments for $1 million or less were the Upper West Side, which had 167 listings; Yorkville, 140; Lenox Hill, 126; the Upper East Side, 115; and Murray Hill, 112. Of those, the majority were studios and one-bedrooms. The studios ranged from a compact but nicely staged studio in an elevator building with a doorman, 205 East 78th Street, No. 4E, listed by Corcoran for $395,000; to a pristine studio listed by Stribling at 3 Gramercy Park West for $995,000. (The price includes a coveted key to the park, directly across the street.)
Moving up in size, an “estate condition” one-bedroom, 565 West End Avenue, No. 7E, was listed for $899,000 by Halstead Property.
Practically nothing was available for $1 million or less in hot neighborhoods like NoLIta (2), TriBeCa (4), Central Park South (5), Flatiron (16), SoHo (17) or the West Village (23).
Sure, those who search hard enough may find gems, but they tend to be snapped up quickly, attract bidding wars or come with major financial constraints. A one-bedroom with a fireplace, a washer/dryer and a lovely bi-level garden listed by Halstead Property is available for $995,000 at 353 East 50th Street. “We had offers but it ended up that an all-cash purchase is preferred,” said Wigder Frota, the listing broker.
Central Harlem had the most two-bedrooms of any neighborhood, 45 earlier this month, according to Streeteasy. Two-bedrooms below 96th were often in need of major renovation or involved compromises.
For instance, a move-in condition two-bedroom in Turtle Bay is listed for $995,000 with Halstead Property. Pros include central air-conditioning, capacious closets and a view of the Chrysler Building from one of the bedrooms. The con: The living room and kitchen look out on a brick wall.
With few exceptions, said Alan Lightfeldt, a data analyst with Streeteasy, “you won’t find anything bigger than a two-bedroom below 96th Street.” Buyers in search of three-bedrooms, he said, found the most in Central Harlem (14) and Washington Heights (13).
But be prepared for competition. Kim Martin-Shah, an agent with Douglas Elliman, recently listed a three-bedroom, two-and-half bath at 2292 Frederick Douglass Boulevard for $975,000. Eighty-seven prospective buyers came to the first open house earlier this month, not counting people who chose not to sign in.
“It was madness,” Ms. Martin-Shah said. Brokers huddled in corners, strategizing with clients while a woman with an iPhone showed the apartment to her spouse via video chat and a family traded off a crying child in order to tour the space. “We had multiple offers by the next day,” she said.
“It’s deflating,” said Audra Tuskes, a design executive for a hotel company with a young daughter who began searching for a two-bedroom, two-bath with a $1 million budget about six months ago.
After considering an estate sale and a place with pink granite floors, she decided she didn’t want to take on a two-bedroom in need of a full-tilt renovation. Ms. Tuskes, who is working with Corlie Ohl of Citi Habitats, dialed back her expectations.
“Frankly,” Ms. Tuskes said, “I’m looking at a decent space without legal bedrooms — something with decent sleeping space but not what one could technically market as a bedroom.”
She recently placed a bid on a financial district condo but lost to a buyer who waived all financing contingencies, a risk Ms. Tuskes was not willing to take. Days later she placed an offer on a West Village one-bedroom. “The list price was in the low $900,000 range,” Ms. Tuskes said. “I bid significantly above ask. The accepted offer was apparently over $1 million, cash.”
Indeed, buyers in Ms. Tuskes’s price range often have competition from investors looking to park their money in Manhattan real estate who can pay cash. Sellers, wielding the upper hand, often insist that buyers waive mortgage contingencies, risking the return of their deposit if financing falls through. This puts buyers without a lot of money to burn in a tricky position.
If you waive the contingency on a $1 million apartment and you can’t secure a mortgage, said Loretta Bricchi Lee, a broker at Citi Habitats, “the only way you back out from that contract is you lose $100,000. That’s a lot of money.” Many people, she said, “don’t want to risk it.”
It doesn’t help that land prices remain high, encouraging developers to continue to build for the upper-upper-echelon to justify the cost of building. Just 85 units in new Manhattan developments were listed for $1 million or less at the end of the first quarter, according to the Corcoran Sunshine Marketing Group. That’s down more than 50 percent from the same period last year, when 203 units were available for $1 million or less.
After one disappointment after another, some buyers are turning to off-market deals drummed up by ambitious brokers. Charles Keane, a sales engineering manager in the data security industry who is relocating from Boston, has been bested six times by higher offers or all-cash deals — including a one-bedroom with a den that he visited after driving eight hours in a snowstorm so as to be the first in the door at the open house.
“That was heartbreaking,” Mr. Keane said. “You’re basically in competition with the world elite in terms of finances.”
Now, Mr. Keane has his fingers crossed. His broker, Neil Laurine of the Corcoran Group, came up with a potential whisper deal by writing letters to owners in financial district buildings asking if they would be interested in selling. “I’m very hopeful going into this,” Mr. Keane said. “I try to stay as positive as I can.”
Yikes! I know rent is high in NYC, but is it so high that buying is actually a reasonable option?
Um... I'll just say that we're beginning to think about buying because our friend who lives in our building (in a studio while we have a 1BR, but her rent is the same as ours) just got her renewal notice and they want to raise her rent by $675 for next year. So I'm expecting the same increase for us.
On the other hand, we're not exactly in the position to buy a $1 million 1 bedroom with cash so I don't think we really could afford to buy something we would actually want to live in even if we were inclined to buy. So we're kind of screwed either way.
Yikes! I know rent is high in NYC, but is it so high that buying is actually a reasonable option?
In general I think no. I honestly don't know anyone that owns in NYC in my age bracket. You still have to have money for a down payment.
My cousin rents in Harlem and for some reason he thought he'd be able to buy a small apartment in the area. My dad even offered to help him with the down payment. My cousin then finally decided to do some research and realized that apartments in Harlem were still $700,000 plus, so that idea quickly got scratched. His rent for a studio is far less than a mortgage on a $700,000 apartment.
Yikes! I know rent is high in NYC, but is it so high that buying is actually a reasonable option?
In general I think no. I honestly don't know anyone that owns in NYC in my age bracket. You still have to have money for a down payment.
My cousin rents in Harlem and for some reason he thought he'd be able to buy a small apartment in the area. My dad even offered to help him with the down payment. My cousin then finally decided to do some research and realized that apartments in Harlem were still $700,000 plus, so that idea quickly got scratched. His rent for a studio is far less than a mortgage on a $700,000 apartment.
... Particularly if you also consider maintenance fees, which are often $1000+.
Yikes! I know rent is high in NYC, but is it so high that buying is actually a reasonable option?
Um... I'll just say that we're beginning to think about buying because our friend who lives in our building (in a studio while we have a 1BR, but her rent is the same as ours) just got her renewal notice and they want to raise her rent by $675 for next year. So I'm expecting the same increase for us.
On the other hand, we're not exactly in the position to buy a $1 million 1 bedroom with cash so I don't think we really could afford to buy something we would actually want to live in even if we were inclined to buy. So we're kind of screwed either way.
Yeah my cousins friend just posted that their rent got raised by $1275 this year, so now he's looking for a new place. He's lived there for I think 7 years, so I think he was getting a pretty decent price, but damn to get hit like that all at once with a rent increase really sucks.
I have a friend looking in the $1.2-$1.4 range in the west village and having zero luck because of the competition. It's amazing how many cash buyers there are out there.
With our last apartment we had 50+ people show up for open houses. We received multiple all cash offers and ended up in a bidding war. It was insane. The combo of low taxes (we had an abatement) and low maintenance ($850/month) gave us a ton of traffic. It sold in a New York minute.
The process of buying our current place was a JOKE and we were completely unprepared. We lost 6 bidding wars (mostly to all cash buyers) and looked for over a year. I lost track, but I saw well over 170 apartments before we nabbed one.
We have a few friends starting the process now and I hate watching the constant disappointment. It sucks.
Am I reading this right? The board requires 3x asking price. (I.e. $3m)? That seems extra crazy!
You're reading it right. Many co-ops require substantial liquid assets-- the most famous example being a building in my neighborhood (there is a book written about it.) I think the magic number is 100M in assets to buy in.
Condos have different requirements usually regarding down payment (ours required 25% down), are priced higher per sq ft, and there are fewer of them out there, but if you put up the money, you get the apartment.
Am I reading this right? The board requires 3x asking price. (I.e. $3m)? That seems extra crazy!
Not on a street like Fifth Avenue. But as 212 said, that's only for coops not condos. A developer (or whoever the developer sells to) owns the condo so if you buy a unit you're buying real property. On the other hand if you buy in a coop bldg you're literally buying shares of a corporation not real property.
Thus if someone in a coop defaults it is the responsibility of everyone who also owns in that building whereas if you default in a condo you're the building owner's problem. Consequently coops want to make sure you're extra financially stable. Also, who are we kidding, it's a way for these coop boards to pick and choose their neighbors given that new buyers into a building often serve as a networking source. A lot of people (relatively speaking) have a million cash liquid leftover. Fewer have three million liquid leftover. The more selective you are, the more it increases demand which in turn increases property values of everyone who lives there. That's partly why a coop board can reject a sale price of a unit if it thinks it is too low. It will harm everyone in the coop down the line.
Because of all this condos are on average slightly more expensive per sq ft because you have fewer board rules usually than in coops. Also coops typically have larger DP requirements. Many condos allow 10-20%. In a coop 20% DP is the minimum but most are between 30-55%. However most condos are postwar not prewar.
Am I reading this right? The board requires 3x asking price. (I.e. $3m)? That seems extra crazy!
You're reading it right. Many co-ops require substantial liquid assets-- the most famous example being a building in my neighborhood (there is a book written about it.) I think the magic number is 100M in assets to buy in.
Condos have different requirements usually regarding down payment (ours required 25% down), are priced higher per sq ft, and there are fewer of them out there, but if you put up the money, you get the apartment.
There's also a documentary
That building looks so nondescript from the outside, too.
You're reading it right. Many co-ops require substantial liquid assets-- the most famous example being a building in my neighborhood (there is a book written about it.) I think the magic number is 100M in assets to buy in.
Condos have different requirements usually regarding down payment (ours required 25% down), are priced higher per sq ft, and there are fewer of them out there, but if you put up the money, you get the apartment.
There's also a documentary
That building looks so nondescript from the outside, too.
The documentary has been in my Netflix queue forever. Worth watching?
And it's so nondescript. I walk by it almost every day and from the outside it's just another nice building. But behind those walls... I don't know. Maybe a chocolate river a la the Wonka factory? Lol.
Post by wanderlustfoodie on Apr 19, 2014 10:42:29 GMT -5
I will say, anecdotally, I think the market between the $1-2 mm starter market and the ultra-luxury $20+mm market is starting to cool a bit from last year. . At the beginning of the year we had an accepted offer on an apt but we chose to back out right before signing the contract. That place is still available, as is the other one we were deciding between which has already lowered its price by more than $100K and still no bites. This would've been unheard of last year.
I will say, anecdotally, I think the market between the $1-2 mm starter market and the ultra-luxury $20+mm market is starting to cool a bit from last year. . At the beginning of the year we had an accepted offer on an apt but we chose to back out right before signing the contract. That place is still available, as is the other one we were deciding between which has already lowered its price by more than $100K and still no bites. This would've been unheard of last year.
My broker just told me the same thing. But she said the market between 2-5M is a white hot mess. In the next breath she half-joked that if we were interested in selling...
I did not let her complete her thought. No way in hell am I ready to dive back into the shark tank.
The documentary has been in my Netflix queue forever. Worth watching?
And it's so nondescript. I walk by it almost every day and from the outside it's just another nice building. But behind those walls... I don't know. Maybe a chocolate river a la the Wonka factory? Lol.
What's the movie?
It's called Park Avenue: Money, Power, and the American Dream
The documentary has been in my Netflix queue forever. Worth watching?
And it's so nondescript. I walk by it almost every day and from the outside it's just another nice building. But behind those walls... I don't know. Maybe a chocolate river a la the Wonka factory? Lol.
Um... I'll just say that we're beginning to think about buying because our friend who lives in our building (in a studio while we have a 1BR, but her rent is the same as ours) just got her renewal notice and they want to raise her rent by $675 for next year. So I'm expecting the same increase for us.
On the other hand, we're not exactly in the position to buy a $1 million 1 bedroom with cash so I don't think we really could afford to buy something we would actually want to live in even if we were inclined to buy. So we're kind of screwed either way.
So V, what does one do in your situation? I'm from vlcol nowhere, so this is all so foreign to me. Pay the huge increase until you find something to buy? Find a less expensive apartment?
We really do love where we live (the apartment itself, the building, and the location), so we'll probably suck it up and stay. Maybe I'll start looking at rental listings to get an idea of the rental market, but moving is expensive and annoying, and I don't know that we'd find anything we really liked that would cost all that much less.
To be fair, though, we happen to love living in a particularly pricey area of Manhattan, and we would flat out refuse to move to, say, the Upper East Side or Harlem or Hell's Kitchen or whatever (let alone to another borough or out of the city) to save money. Our unwillingness to compromise on location is certainly part of the problem.
My sister just moved with her husband from a $7K/mo 2BD in Tribeca (really nice but not spectacular) to a 2BR condo in Chicago at the same monthly cost out of pocket. The difference? The Chicago place is in what I think is Chicago's nicest building. 360 lake and city views, spa, hotel services ... NYC is just INSANE.
I find it really hard to muster any sympathy for people with a million dollar budget who can't find a decent apartment in Manhattan. Cry me a river.
Okay, if you have no sympathy for the millionaires (fair, I suppose), extrapolate a bit -- what about all the people with sub-$1 million budgets who can't afford a not-even-close-to-decent apartment? Median household income in Manhattan is around $65,000. If a "decent" apartment can't be found for $1 million and the median sale price last quarter was $972,000, those who can't ever dream of a $1 million home are kind of screwed, no?
v keep us posted with what the rental increase is for you in regards to percentage.
Apparently Boston's rental market is pretty hot right now, too.
It is. We thought about renting out our place because we could charge double our mortgage payment in rent. We have had multiple agents ask to bring clients by because they wanted to make an offer on our place. Its not just ours. Its our building and area. We aren't selling.
I find it really hard to muster any sympathy for people with a million dollar budget who can't find a decent apartment in Manhattan. Cry me a river.
The article is highlighting how ridiculous it is that a million gets you a shithole barely legal one bed that needs renovations. So no families, or anyone that wants 2 closets. I bet most of the people who have the million dollar budget saved for decades and are still planning on paying 35-50% of take home pay to their mortgage.
Yes, they have a choice in where they live, blah blah blah. But Manhattan is going to become the land of uber wealthy and single people. More than it is now