“Price is what you pay. Value is what you get.” Warren Buffet’s wise words handily sum up a dominant theme in New York’s residential market these days — which is to say, despite all the talk of glitzy new condos and penthouses with astronomical prices, developers, buyers and brokers are increasingly chasing value.
The phenomenon is playing out across all price points, and it applies to first-time homebuyers on the lowest end of the price spectrum to foreign investors seeking a “safe haven” for their money at the high end.
This month, The Real Deal dissected the market under $10 million, zeroing in on three key price brackets: $1 million to $3 million, $3 million to $5 million and $5 million to $10 million. What we found was that each of those markets is behaving very differently in this transitioning market.
Not surprisingly, properties between $1 million and $3 million are flying off the shelves. As prices rise across the board, this category is absorbing a growing number of buyers who are finding themselves priced out of more expensive apartments. And the majority of buyers in this range know that they need to act fast because there is a line of competing buyers who will grab the property if they don’t.
However, higher up on the ladder — in both the $3-million-to-$5-million range and the $5-million-to-$10-million market — sales have slowed as buyers wade through more choices than they’ve had in years and sellers overreach with asking prices.
“It’s just a tale of two markets,” said Noah Rosenblatt, founder of real estate analytics firm Urban Digs.
Compass agent James Cox put it this way: “We have more listings and more buyers than we did this time last year, but they’re looking for bargains and sellers are holding out for something better.”
No one is immune from price sensitivity, either.
“Even at $10 million, people are very aware of value and they will not overpay,” said Jeffrey Stockwell of Stribling & Associates. “Look, we live in uncertain times and people want to make smart decisions.”
Renters Flocking to Student Housing
Excerpt By Jessica Fiur, News Editor, MHN Online
New York—In downtown Brooklyn, a former seven-story multifamily building is being converted to a 44-unit student housing community. The property, 902-908 Bedford Avenue, houses undergraduates and graduate students and their families, most of whom attend the Pratt Institute and Long Island University.
DelShah Capital LLC, a real estate management and CRE debt acquisition company, in charge of 902-908 Bedford Avenue’s rebranding, along with Distinct New York, a real estate marketing company, renovated the building in eight months. Currently, DelShah, having completed its value-enhancing program, is listing the building with Massey Knakal for sale at $17 million.
The units range from two-bedroom apartments with outdoor balconies to six-bedroom suites.
The apartments also have been given “student-friendly” upgrades, including a student lounge, a rear deck and monitored security cameras. According to Victor Jung, executive vice president of operations of Distinct New York, the apartments have green elements such as nozzles on the showerheads that promote water conservation, “green” paint, and energy efficient appliances.
Rents for 902-908 Bedford Avenue range from $900 per room to $4,500 for a four-bedroom apartment.
“The students seek larger units to share with classmates, are less price sensitive and desire a rental building that caters to their needs in close proximity to specific campus locations,” Michael Shah, principal and CEO of DelShah, said in a statement.
Though one would think that potential residents would be more price sensitive in this slowed economy, this is proving not to be the case for students.
Victor Jung believes this is because the general package of 902-908 Bedford Avenue is so appealing. “We offer stability to students and parents because it’s all inclusive,” he tells MHN.
According to Victor Jung, the appeal also lies in the fact that these off-campus apartments are cheaper than the on-campus ones, and the fact that students have “parent guarantors.”
“Bottom line, they need a place to live,” Victor Jung says.
This appears to be the case—the property is already 98 percent occupied.