September 2009

REAL ESTATE

INSIDE STORIES BEHIND AREA
REAL ESTATE DEALS (Continued)

Nirvana in Westchester (click image for larger view)

WESTCHESTER

In Westchester County, the fall selling (we hope, fingers crossed) season includes a spectacular listing in Bedford Corners called Nirvana, an 18-acre estate that is something of a pleasure palace, starting with its 1,700-bottle wine cellar. (More unusual still is its tree house with electricity and running water.) The beautifully landscaped property also features a pool and fully outfitted pool house. And the 10,700-square-foot main house has five bedrooms and seven bathrooms, plus a gym, sauna and home theater. It's listed with Amy Smith Sroka of Sotheby's International Realty.

In nearby Chappaqua, an 86-acre estate called Rosewood features a private lake, an Infinity pool, and tennis and sports courts. The 20,000-square-foot Georgian-style manse was designed by architect Boris Baranovich and built in 2004 with 20 rooms, including a two-story mahogany library, a billiard room, a banquet-sized dining room and six beds full baths. Stacy Levey of Sotheby's International Realty in Chappaqua has the listing. —L.O.

MANHATTAN

Ask higher-end Manhattan brokers about the current market and you'll hear something like, "Apartments are selling—if they're priced right." That was Warburg partner Ronnie Lane's take, at least. Lane expects the market to continue to flatline for the next few months. "In my experience, every time the nation faces a crisis, the Manhattan real estate market takes a breather. If the economy continues to enjoy an upturn, I would look for rising Manhattan condo and co-op sales activity early in 2010." The veteran broker doesn't expect sellers to reduce offering prices much further. "Most have already accepted market conditions. There are plenty of good values available to prospective purchasers," she explains. "It's simply that buyers don't seem to be facing any urgent need to do anything immediately. This will change."

The stock market rebound has caused some brokers to express a modest level of newfound optimism. Foreign buyers, who seem to have been hibernating for the past year, are beginning to re-enter the market. That's the report coming from the developers of 40 E. 66th Street. The Upper East Side condo development is a conversion of a 1929 classic designed by noted architect Rosario Candela. According to the sponsors, prospects from Europe, South America and Canada are attracted both by the neighborhood, which offers nearby access to Central Park, and the many luxury shops up and down Madison Avenue. Rushmore, which towers above the Hudson, offers similar pleasures—including turnkey amenities reminiscent of an all-inclusive resort (see above).

To say that Manhattan has no shortage of available apartments in a variety of new condo buildings in virtually every neighborhood would be a gross understatement. Reportedly, sales in Tribeca dropped 90 percent so far this year over last. Sales of newly built apartments remain sporadic. As ever, location is key. Promoters of the conversion of the classic Apthorp building on the Upper West Side, home to artists, writers and celebrities for decades, expected brisk sales for a much anticipated conversion. But, like many of Manhattan's newer offerings, even those featuring all the latest bells and whistles, the building has been confronted with demands for price flexibility. Heavyweight Dolly Lenz of Prudential Elliman has been called in to bring her marketing skills here. —Staff

Luxury On the Hudson (click image for larger view)

PLENTY OF INVENTORY
Some 93,000 new condo units are expected to be completed nationally this year, including more than 12,000 units in New York and northern New Jersey, according to Reis, Inc., a New York-based real-estate research firm. In downtown Miami, nearly 23,000 new units have been added since 2003, but only 13,000 are occupied, says Condo Vultures Realty, LLC.

A study released last month by Maundrell says 2,818 new apartments will have hit the Brooklyn market by the end of 2009, with another 2,766 projected by the end of 2010. StreetEasy.com, a real estate site, lists 6,914 condos for sale in Manhattan and 2,452 in Brooklyn. While inventory levels remain high, they have reportedly dropped by 15 percent year to date, with decent sales activity at the lower end of the market. One problem, say brokers, is that large numbers of apartments that were taken off the market for the summer will be coming back on this month. Savvy buyers now use sites like StreetEasy.com to gauge the temperature of the market. This adds to the pressure on sellers. Many developers have been switching to rental programs until market conditions for condo sales improve.

On the plus side: the recent housing boom is bringing important new architecture to New York City. The art district in Chelsea and the Highline Park are excellent examples of urban gentrification. The Brooklyn skyline is now dotted with new buildings in Williamsburg and elsewhere (albeit some are more imaginative than others). Brooklyn developers of new buildings have lowered asking prices to $600 per square foot to satisfy bank debt. That's fueling interest.

A stunning and architecturally significant 38-story building called the Toren, designed by renowned architects SOM, just opened a sales office on site at 150 Myrtle Ave. near the Brooklyn Academy of Music. The building is "green" and claims to be sustainable. But will prospects pay up for sustainability—or will they add that to the list of perks they have come to expect from hard-pressed developers? The consensus of brokers is that this is a great time to buy a New York City apartment. "Too many prospects are waiting to buy at the bottom," says broker Harold Kobner. "Most will never know when the bottom was hit—until it has passed." —Staff

PALM BEACH

ON THE UPSWING
Corcoran's Paulette Koch reports that 22 of the 31 residential sales between January and August this year in Palm Beach closed after May 1, making a very busy summer for brokers here. Negotiations are lean and mean, lasting weeks, not days, but properties are moving. "There's an increased interest from serious buyers," says Koch. "People are gaining confidence day by day. Consequently, they're willing to make commitments."

Those 22 summer sales break down to nine sales in the under-two-million-dollar bracket; seven between $2 and $4 million and six between $4 and $9 million. "Before, we didn't have any inventory below $2 million. This is historic," she says. "It doesn't mean that prices will go up, but it does mean that there is more stabilization here for sure, and it's an opportunity to purchase."

Regal Intracoastal Estate (click image for larger view)

Fellow Corcoran broker Rosalind Clarke says most buyers are looking for turnkey properties, new or renovated, at good prices. "We still have buyers who want homes with renovation potential, but instead of purchasing for $2.5 million to $3 million, they are buying well-located properties on 10,000-square-foot to 11,500-square-foot lots for just under $2 million," she says. "There has been a surge of sales in this price range and once this supply is depleted, the prices will start to increase again."

In the meantime, don't come to Palm Beach expecting a fire sale. Bernie Madoff's Ponzi scheme didn't decimate every islander, and Cristina Condon of Sotheby's Palm Beach says there are plenty of sellers who are content to wait for the right price. "There have been eyebrow-raising sales at prices lower than most would have ever expected, although they have been very limited," she says. "However, as market values have indeed declined, by and large Palm Beach sellers have not succumbed to desperation despite bottom-hunting buyers' expectations. Palm Beach property owners' memories are quite long. They know Palm Beach properties always command a premium, and if they are not able to get what they believe their own property to be fairly worth today, they will wait patiently until tomorrow."

They may not have to wait long. "Our market is so small compared to other areas, it can change very quickly," adds Clarke. "Ten sales can alter the market overnight."

WHAT TO BUY NOW
Everyone's question is, "Where is the bottom?" And, sadly, no one ever knows until it's too late, says Jeffrey A. Cloninger, managing broker at Jeffrey A. Cloninger & Associates, Inc. "The bottom will be obvious when prices begin climbing and are sustained. Then, buyers will complain that they waited too long. I'm not sure we're at the absolute bottom now, but I believe those who continue to take a wait-and-see attitude will be sorely disappointed."

Cloninger says there are deals to be had on condos and houses in all price ranges. "This is truly a buyer's smorgasbord. Anyone desiring to be a real estate investor who doesn't take advantage of today's opportunities is making a big mistake. You can't have it both ways. It's never a buyer's market and a seller's market. It's got to be one or the other."

Homes purchased now are expected to quickly recover from their depreciated values as the market fully rebounds over the next 12 to 24 months, says Condon of Sotheby's. Properties listed above $20 million have been lingering the longest, she says, and may well offer the best values over the long term. Properties in the $3 million to $5 million range have already seen 25- to 30-percent reductions, offering value for young families or those just arriving to the island. An increased demand for rental properties is also a promising sign, as families from the Northeast head south to test the waters before signing a deal.

EXPECTING A BETTER SEASON 
New listings have reflected prices more similar to the highs of 2007, than on the lows of late 2008 and 2009, says Condon. "There is a sense of optimism on the part of Palm Beach sellers who feel they will realize close to list prices for their properties over the next 12 months," she says. "I believe the winter season will provide excellent opportunities for buyers to cherry-pick from a wide selection of prime properties on the island at reduced prices."

Ava Van de Water, executive vice president and broker at Brown Harris Stevens Palm Beach, also hopes to gain momentum for the coming season following an increase in sales and enthusiasm this summer. "Although 2008 was the year of the mega-sales—last summer we brought the buyer for Donald Trump's $95 million oceanfront property, which was Palm Beach's most expensive single-family-home sale ever—this summer, Brown Harris Stevens represented both buyer and seller of Palm Beach's most expensive property sale so far this year, an $18-million oceanfront house that is in the middle of a major renovation. We feel very optimistic for the coming season. Buyers have returned to the market. They have a good selection of properties to choose from, and prices are competitive." —A.D.