Photo: David Goldman for the New York Times
By CHRISTINE HAUGHNEY
OWNERS of one-bedroom apartments in Manhattan may be surprised if they put their homes up for sale anytime soon.
Price appreciation for one-bedrooms — long a bastion for singles and newly married couples who want to stay in Manhattan and live close to work — is sluggish compared with other types of apartments.
Buyers, many of whom are having difficulties getting mortgages, are unwilling or unable to pay the prices sellers still expect. And by one estimate one-bedrooms have been taking nearly three weeks longer to sell than bigger, or smaller, apartments.
Although the average sale price for a one-bedroom apartment grew by 7 percent in the last year, overall apartment prices in Manhattan jumped by 21 percent — not including condo sales at the ultra-expensive 15 Central Park West and the Plaza Hotel — according to Halstead Property.
“If you want to look at what area is experiencing the least amount of growth, it’s one-bedrooms,” said Gregory J. Heym, the chief economist who works for Halstead and for Brown Harris Stevens. “It is the lowest increase of any size category.”
That is a notable change from the situation a year earlier. From the second quarter of 2006 to the second quarter of 2007, prices for one-bedrooms rose by 10 percent, while overall apartment prices rose by only 7 percent.
Now that has changed. One-bedrooms are sitting on the market largely because the buyers most likely to purchase them can’t get mortgages. “Getting financing is very challenging,” said Diane M. Ramirez, the president of Halstead Property. “It can be difficult if the buyer of the one-bedroom is a first-time buyer. Some of the buyers who were able to get financing when the banks were throwing things at them are gone, and the requirements are stiffer.”
The number of studios available for purchase is not piling up in the same way because there are fewer of them, Ms. Ramirez said.
Brokers say that many people who bought their apartments at or near the top of the market and now must sell are often simply trying to avoid losing money on the deal.
In May 2007, John and Wendy Penn bought a one-bedroom on West 72nd Street for $650,000. The couple, whose main residence is on Long Island, wanted an office and a pied-à-terre in Manhattan to expand their insurance business.
They bought the apartment as a long-term investment and quickly completed about $30,000 in renovations, including the restoration of the apartment’s prewar details. But when Mr. Penn became an independent insurance agent, he no longer needed space in Manhattan.
So in February, the couple put the apartment up for sale, pricing it at $769,000. Three price cuts later, the apartment is listed at $725,000 and still has not sold.
Their broker, Danica Cordell-Reeh of Halstead, said that the Penns have the burden of finding a buyer who will pass the co-op board when most buyers’ assets have shrunk in value because of Wall Street declines. She has shown the apartment to about three dozen prospects and received three offers.
Looking back, the Penns wish they had negotiated more with the first prospect, because the second and third bidders’ finances were not solid. Ms. Cordell-Reeh advised them not to accept offers from buyers who might ultimately face rejection from the co-op board.
The Penns never thought they would have such a hard time. While their apartment is on a less-desirable low floor (the first), it is newly renovated and has a flexible floor plan, giving new owners the ability to change the location of the kitchen and the bathroom if they choose. “Hopefully, we’ll get close to breaking even,” Mr. Penn said.
But sellers of one-bedrooms might be even worse off, if not for changes in recent years in the Manhattan apartment mix. In the 1980s, developers built one-bedrooms for a market dominated by professionals and young couples, and investors who planned to rent out their units.
But by the time the latest construction boom started, the mix of buyers had changed. Developers found that building large apartments for wealthy families was more profitable in many neighborhoods, because more families were willing to pay a premium to stay in the city.
On the Upper East Side, the Worldwide Group built only five one-bedrooms in its 77-unit building at 255 East 74th Street, choosing to focus mainly on three- and four-bedrooms.
Even around Madison Square Park, a neighborhood that attracts many singles, the Clarett Group included a relatively low number of one-bedrooms in its new building at 11 East 29th Street. Veronica Hackett, the firm’s managing partner, said there were only 23 one-bedrooms in the 139-unit building. “I tend to believe that when people buy, they stretch to buy a two-bedroom instead of a one-bedroom,” she said.
But even though developers have not concentrated on building smaller apartments, there are more one-bedrooms on the market now than there have been in at least 20 years, according to Jonathan Miller, chief executive of Miller Samuel Inc., a real estate research company.
There are also more one-bedrooms available than apartments of other sizes. As of July 30, there were 3,390 one-bedrooms or sale in Manhattan compared with 3,229 two-bedrooms and 1,063 studios, according to data tracked by StreetEasy.com.
Mr. Miller has found that one-bedrooms sit on the market longer than any other size of apartment. He sees “a drag in demand on one-bedroom units, which is allowing inventory for one-bedrooms to be disproportionate to others.”
This is a tough time for sellers who are moving for job-related reasons. Rabbi Tom Gardner, who recently accepted a job at a synagogue in Baton Rouge, La., needs to sell his one-bedroom on Riverside Drive at 101st Street. Because he has sublet the apartment before, he cannot do so again under his co-op’s rules.
He bought the apartment for less than $400,000 in 1998, and last year, he was told he could sell it for $750,000. But by the time he put it on the market at the end of April, he set the asking price at $695,000, based on advice from his broker, Susan Faber of Barak Realty. Since then, the number of similar one-bedrooms for sale in his neighborhood has grown sixfold, Ms. Faber’s colleague Antonio del Rosario said.
After getting few offers, Rabbi Gardner cut the price to $650,000. When a buyer offered him less than $600,000, the rabbi made a counteroffer of $630,000. The buyer said no.
Despite the time pressures he faces, Rabbi Gardner is reluctant to yield on what he believes is the inherent strength of the unit he owns. “I think there’s still a certain value to an apartment in a full-service building on the Upper West Side,” he said.
Other sellers are even more determined to wait for the price they want.
Three years ago, Kenneth Kuo, a concert cellist who owns music schools in Manhattan and in Greenwich and Westport, Conn., and his cousin bought a one-bedroom at 120 Riverside Boulevard at Trump Place, the building where Mr. Kuo lives in a one-bedroom penthouse. They paid about $675,000.
They have been trying to sell the investment apartment for the last six months, but they are determined not to accept less than $1 million.
Mr. Kuo has a list of other sales in his building through the middle of 2007 that indicate the asking price for his apartment is in line with the building’s sales history. He also says that last year, he sold another one-bedroom he owned in the building for $790,000 after buying it in 2005 for about $550,000. He thinks he was justified in waiting for a high price.
But he was willing to consider a slightly lower bid. “Even if I could get $999,999, I would be happy,” he said. “There are just so many one-bedrooms out there on the Upper West Side.”
Late last month, he cut the price to $1.015 million. He also listed it for rent at the same time, on the advice of his friend Andy Kim, a broker at Nest Seekers. He had a tenant in a week willing to pay $3,400 a month, and plans to try to sell the apartment again in a few years.
For buyers, the growing inventory of one-bedrooms is enabling them to negotiate good deals.
When April Hartstein shopped for a new one-bedroom condo in Williamsburg, Brooklyn, in April, she asked brokers whether developers would negotiate. By the time Ms. Hartstein found her ideal condo at the Jacksonia at 131-145 Jackson Street, she had learned that many costs were negotiable. She persuaded the developer to pay her $7,000 transfer tax, build a second larger closet in her bedroom and cut the price by about 3 percent. (Apartments like hers are priced at $495,000 to $499,000.)
Ms. Hartstein stresses that she had to push, but that she found many developers would work with buyers. “No one just offered,” she said. “No one was like, ‘This is a slashed price.’ ”
Christine Blackburn, the Prudential Douglas Elliman broker overseeing sales at the Jacksonia, acknowledges that there are many one-bedrooms for sale right now in Williamsburg and relatively few larger apartments available. In Brooklyn, developers built more smaller units than in Manhattan to cater to younger first-time buyers.
She said that developers realized they had a lot of competition. “They built a lot of one-bedrooms, and there’s heavier competition in that market,” she said. “It’s a supply-and-demand thing.”
In this market, some buyers are finding that they can get apartments that would have been out of reach before.
Adam and Zena Rudzki had been searching for a one-bedroom near their daughter‘s home in Washington Heights for the past year. They found a one-bedroom at Cabrini Terrace, 900 West 190th Street, for $350,000. The apartment, listed by Simone Song Properties, has river views. They negotiated a $5,000 reduction in the price and closed on the apartment last week. “We had the luxury of looking and waiting for something that is reasonable in price” and attractive, Mr. Rudzki said. “We are very pleased.”
Bargain-hunting one-bedroom buyers are finding that the longer they wait, the more opportunities they are offered.
In March, Bruce and Eva Forrest started looking for a one-bedroom near Madison Square Park. The couple, who live in Rockland County, weren’t in a rush to buy. They intended to use the apartment as a pied-à-terre, and they wanted to make sure they found an apartment big enough for their 4-year-old son, Alexander, to run around in.
By June, they had a contract for a one-bedroom at the Stanford, 45 East 25th Street. The Forrests negotiated the price down to $867,500 from $875,000 with the help of Jenet Levy of Coldwell Banker Previews International.
But when the sale was delayed, Mr. Forrest looked at the market again. He noticed that prices for one-bedrooms had dropped 5 to 8 percent and that more sellers of one-bedroom co-ops were advertising that they would accept buyers interested in pieds-à-terre.
Although he is happy with the deal he had negotiated on his apartment and plans to close on Aug. 11, he notes that there are even more one-bedrooms to choose from today than when he found his apartment.
“It was amazing how much property was on the market, and it was amazing that it was sitting there,” he said.
Sunday, August 03, 2008