Bring on the bargains
Six months ago, "luxury" was the all-encompassing buzzword of Manhattan real estate. Buyers happily paid astronomical sums, often sight (and even site) unseen, to live in buildings designed by world-famous architects, with private wine cellars and terrazzo marble as far as the eye could see. In an environment where financing was easy, bonuses were huge and real estate values rose at breathtaking speeds, home prices seemed almost beside the point.
Now, Manhattan buyers are just as demanding, but their criteria have changed drastically. The new buzzword — and subject of buyers' singlemindedness — is "bargain." With real estate prices falling for the first time in a decade, home seekers are just as intent on price cuts as they once were on floor-to-ceiling windows and Sub-Zero refrigerators.
"I tell all my sellers, 'You must give them a deal,'" said real estate doyenne Sharon Baum, a senior vice president at the Corcoran Group. "If you're not willing to do that, you shouldn't be in this market."
The hard part is defining exactly what "a deal" is, at a time when the Standard & Poor's 500 Index has careened to its lowest close since 1997, the number of recipients of unemployment benefits has hit an all-time high of nearly 5 million and the economy seems to be in a general freefall.
Still, Manhattan real estate agents aren't taking the slump lying down. A number of savvy high-profile brokers have begun fighting back with eyebrow-raising price cuts — in both the stratosphere of the market and the below-$1 million price range. Their new "bargain" listing prices are 20 or 30 percent lower than they would have been just months ago.
"It's almost at the point where we're calling it Wal-Mart pricing," said Amelia Gewirtz, an executive vice president at Halstead Property. "Right now, closed comps don't even matter."
In the face of such difficult market conditions, auctions of new condo units — a phenomenon virtually unheard of in New York City for nearly two decades — are likely to gain a toehold in the New York market in the coming months, experts say.
Co-ops, long overshadowed by higher-priced condos, are also being viewed with increasing desirability. However, by responding to market instability with tougher restrictions, many well-intentioned co-op boards may ironically be harming the value of their own homes.
The price cutting, meanwhile, has made its way to the rental market as well, and competition between Manhattan landlords is now so intense that for perhaps the first time, better bargains can be found in Manhattan than in many sought-after, outer-borough neighborhoods like Long Island City and Brooklyn Heights.
Finally, bargain-hunting buyers may have more luck at the lower end of the market, as smaller one-bedrooms and studios outperform the luxury market.
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