IT'S another Saturday morning and Dan MacGowan, coffee cup at hand, is once again hunched at his desk, poring over the real estate listings. Kathy MacGowan, no longer an ardent adherent to this ritual, sits nearby, reading something -- anything! -- that does not have to do with apartment hunting.
So it has been for too many weekends in the MacGowans' protracted search for the right Manhattan home for sale, the one where they can start and nurture a family.
''He's all pumped up for Saturday morning and runs out to get the paper so that we'll be the first ones to make the call,'' said Ms. MacGowan. ''And then he's screaming out apartments at me, asking what I think, telling me to get to the phone and call. And I don't want to deal with it.''
The MacGowans -- she a financial consultant with Merrill Lynch, he a neurologist just hired by Beth Israel Medical Center -- are, by definition, not the only New Yorkers feeling the crunch of demand over supply.
''If I were to describe the market, it would be frustrated buyers and cocky sellers,'' Barbara Corcoran, chairwoman of the brokerage firm that bears her name, said of a Manhattan market where sealed bids and crowded open-house showings are increasingly the modus operandi for those on the supply side.
Continue reading the main storySales of Manhattan apartments in 1996 -- continuing a trend that became apparent at the end of 1994 and gathered momentum in '95 -- soared. And, as real estate economists predicted last year, the ripple effect was felt in varying degrees throughout the city.
The number of homes sold in Queens was up by 2.6 percent, while on Staten Island the increase was almost 12 percent, according to realtors' associations. Comprehensive figures for the Bronx and Brooklyn were not available, but individual brokerage concerns in both boroughs reported stronger sales for the year.
The city's price picture, however, was more complicated. Studies of the Manhattan co-op market found modest changes in prices, with their direction depending on such factors as size and location. One study, by the Real Estate Board of New York, found that the average co-op price in Manhattan had declined by 6.8 percent, a drop caused in part by a higher volume of sales of studio and one-bedroom apartments. A comprehensive study of house prices found that of the 130 ZIP-code areas in the boroughs outside of Manhattan, 101 experienced price rises, with Brooklyn and Staten Island leading the way. In Brooklyn, 35 of the 36 ZIP codes showed price increases, as did all 12 ZIP codes on Staten Island.
The MacGowans have been stymied for six months in their search for what those in the trade call a ''classic six'' -- a three-bedroom or a two-bedroom with a maid's room that Ms. Corcoran says ''tops the most-wanted list'' because it serves the needs of ''affluent couples who want extra space, families with two grown children or young couples starting a family.''
During the week, the MacGowans make the rounds with brokers; on weekends they go to open houses. ''There'd just be a swarm of people lined up at the door,'' Ms. MacGowan said. ''There's so little even to see. We feel hopeless and frustrated, like this is never going to happen.''
But the reason it is not happening for the MacGowans, and for hundreds of other potential buyers, is that it has happened for so very many others.
New York City's robust market, real estate executives and academics say, has been fueled by the record bonuses of a booming Wall Street, level and low mortgage rates, fears that rent regulation might be modified or even expire, an improving job picture, a growing population and the seemingly inexorable influx of immigrants.
''The city's housing phenomenon, and it is a phenomenon, is not simply due to the Wall Street expansion,'' said Susan Wachter, a professor of real estate economics at the Wharton School of Business, specifically citing immigration and mortgage rates as key accelerants for the hot market.
At one Manhattan concern, ''Sales volume has been enormous, a 32 percent increase in '96 over '95,'' said Joyce West, vice president of the Charles H. Greenthal Group.
''All the leftovers have been gobbled up,'' said Ms. Corcoran, pointing to the 6,891 sales in her company's survey of last year's co-op and condo market, a 23.1 percent jump over the 5,596 sales in 1995.
And matching the Corcoran Group's calculations almost to the decimal point were the sales reported by the Real Estate Board of New York. The board tracked 2,377 sales in Manhattan last year, a 23.6 percent increase over the 1,923 reported in 1995. The survey was based on data from the 20 companies in the board's residential division.
IN the other boroughs, increased sales volume ranged from about 30 percent in so-called ''brownstone Brooklyn'' to 2.4 percent for all of Queens. But while there is no doubt about increased volume, identifying price patterns is more difficult.
Divining real estate trends by the numbers is, at best, a murky exercise. To begin with, co-op sales are not officially recorded because, technically, they are securities transactions involving the selling of shares, and not transfers of title. Condominium sales, however, are officially recorded. And, as a result, studies of co-op data compiled by the Real Estate Board and by appraisal concerns and brokerage houses do not claim to include all transactions in the market.
Single-family home sales are reported in most areas by local realty boards. But not all real estate agents are members of the boards, and not all sales in a given area are recorded. And one board may use median prices -- meaning that half the sales are above that figure and half below -- while others calculate an average. Still, the numbers, along with anecdotal impressions, provide indications of market patterns.
Last year, according to the Real Estate Board's report, the average price for Manhattan co-ops was $472,019, a 6.8 percent drop from the $506,378 in 1995. ''The explanation for this,'' said Deborah Beck, vice president of the board, ''is that there was a substantial increase in sales of studios and one-bedrooms, which are smaller and typically have lower sale prices'' -- skewing the average or median price downward.
The Corcoran Group, according to its report, sold 2,515 one-bedroom apartments in 1996, up 31 percent from the 1,920 sold the year before -- and representing 40 percent of the company's total sales. ''That one number drags down the average sale prices,'' Ms. Corcoran said. ''If you just look at the charts, it shows slight increases. For instance, the median price co-op and condo only went from $594,000 to $598,000, according to our study. But if you're out looking for that classic six anywhere in Manhattan you're going to pay at least 10 percent more this year. The people who really know what's going on out there are the ones doing the shopping.''
The trend was apparent in the report prepared by the Brown Harris Stevens company, which specializes in upper-end sales. For 1996, Brown Harris recorded 711 transactions at an average price of $888,368, a slight dip from the 735 sales in 1995 at an $885,120. ''When you look at different size categories you get different pictures,'' said Lawrence Sicular, director of appraisal and consulting for Brown Harris.
In the seven- to eight-room market, average prices dropped from $1,326,797 in 1995 to $1,140,392 last year, Mr. Sicular said, while in for the classic six ''it was $716,723, and in 1996 it was $811,371'' -- a 13.2 percent jump.
Samuel E. Solie, executive vice president of Miller Samuel Inc., a real estate appraisal company, sees a crunch at the high end as contributing to the divergence between volume and price. Mr. Solie is author of the Douglas Elliman company's Manhattan Market Report, which is based on a combination of data from both companies.
''I don't think it's necessarily just the smaller ones'' that are skewing prices downward, he said. ''What's also happening today is that the highly desirable apartments are often selling in a matter of days, and you hear the brokers talk about a shortage in that tier. What happens then is that they are substituting less desirable apartments, which are cheaper.''
Mr. Solie cited as evidence the number of co-op sales tracked for the Elliman report -- a 33 percent increase last year, from 2,981 to 3,970, while average prices only increased from $436,825 to $459,569, a 5.2 percent jump.
The sales-price gap notwithstanding, there is no doubt that the seemingly relentless rise of the stock market, with its commensurate increase in bonuses, has been a driving force for housing demand.
The historic high for year-end bonuses for the city's 150,000 financial workers had been a total of $6.1 billion in 1995, according to a recent report by the New York State Comptroller, H. Carl McCall -- that is, until 1996.
This year, Mr. McCall calculated, the bonuses will infuse $8.1 billion into the economy -- an average of $54,000 a worker, with payments from $10 million for the biggest winners to a few thousand for clerks.
Culling its application forms, the Corcoran Group isolated Wall Street customers from all its other buyers and found that the average price paid by financial workers was $889,000 in 1995, but jumped to $1,170,000 in 1996.
Among those Manhattan areas most in demand, said Ms. West of the Greenthal concern, were Lincoln Center and the Flatiron District. ''There are three and four buyers for each property,'' she said.
But the most dramatic increases were in the downtown loft district. The Corcoran Group tracked 505 downtown loft sales last year, a 40 percent increase over the 361 recorded in 1995. ''Any vacant building downtown,'' Ms. Corcoran said, ''has five suitors, developers wanting it, and when it's ready, five buyers wanting each loft.''
After 26 years in a Park Avenue co-op, Stephen and Patti Munzer recently paid $750,000 for a loft in a converted factory at Laight and Greenwich Streets, where the archetypal Dietz lantern was once made.
''Patti travels to New Jersey where she works as a communications executive for a chemical manufacturer,'' Mr. Munzer, a lawyer, said. ''The worst part of her commute was in Manhattan because of traffic through the Lincoln Tunnel. Now she goes through the Holland Tunnel right by our house, saving 40 minutes each way.''
The sponsor, TriBeCa North Associates, started selling the building's 28 units early last year and, although the conversion work is still under way, has already sold them all. ''The miracle is that the guy sold out so quickly, from plans,'' Mr. Munzer said.
MORTGAGE rates, of course, played a significant role in the housing market. As James W. Hughes, dean of the School of Planning and Public Policy at Rutgers University, said: ''Mortgage rates stayed in the 7.5 percent range last year, and though that is somewhat higher than the low point of this cycle, which was just below 7 percent, compared to the history of the past 25 years, they are still extraordinarily low.''
Other factors in the bullish housing market were an inflation rate that stayed just below 3 percent and improved job growth. John L. Weiting, regional commissioner for the Federal Bureau of Labor Statistics, said the number of private-sector jobs in the city rose by 52,000, from 2,845,000 in 1995 to 2,897,000 in 1996. ''It was the largest increase since 1987,'' Mr. Weiting said.
Another major factor in housing demand was increasing population, particularly spurred by immigration. There were sharp declines in the city's population between 1960 and 1980. But between 1980 and 1990, according to the Census Bureau, the city's population grew 3.5 percent, from 7,071,639 to 7,322,564, and the influx continued during the 90's.
At the same time, the city has experienced an immigration explosion. According to City Planning Commission statistics, based on Immigration and Naturalization Service data, 1,250,000 immigrants have settled in the city since 1982 -- 14.5 percent of all immigrants to the United States. And the rate of immigration has jumped in recent years. During the 1980's, about 86,000 immigrants settled in the city each year; that jumped to 112,598 in the first half of the 90's.
''New York's housing market is directly driven by today's immigrants and the children of immigrants of as much as 30 years ago, who are in their household-formation years,'' said Wharton's Dr. Wachter.
Michael Schill, director of the Center for Real Estate and Urban Policy at New York University's School of Law, and Emily Rosenbaum, a sociology professor at Fordham, are preparing a comprehensive study of immigration and its effects on the housing market. ''One reason why immigrants to New York have such a major impact on the housing market is that they have a greater tendency to live in extended families and pool resources for the purchase of housing,'' Professor Schill said. ''Therefore, they can pay higher prices for housing.''
The immigration influx was most keenly felt in three of the boroughs outside of Manhattan. According to I.N.S. data, three-quarters of all immigrants who settled in New York from 1990 to 1994 gave as their first destination an address in Brooklyn, the Bronx or Queens, with the largest proportion moving to Brooklyn. And the city's immigrant communities significantly correlate with price appreciation, according to a comparison of two independent surveys.
One was Professor Schill's ZIP code by ZIP code analysis of where the new immigrants settled. The other was a repeat-sale index, devised by Case Schiller Weiss, a company that tracks price fluctuations.
The Case Shiller survey is based on a table showing the average price of all single-family homes sold in ZIP code areas, year by year. To determine fluctuations from 1995 to 1996, for example, the survey took the purchase price of each home sold in each ZIP code during the year just ended, compared it to the price that the house brought the last time it was sold, and then, using the annual index, adjusted the earlier purchase price to what it likely would have been had it sold in 1995. The survey does not cover Manhattan, where there are few single-family homes.
''When we combined the Case Shiller data with data from the 1990 census and recent immigration numbers from the I.N.S., we found that higher rates of immigration to a neighborhood significantly increased house prices in that community,'' Professor Schill said. ''Indeed, two of the five ZIP code areas in the Bronx, Brooklyn and Queens with the highest rates of price increases -- Bensonhurst and Sunset Park -- were also among the city's top eight neighborhoods in immigration.''
Overall last year, Brooklyn experienced a price surge that represented a 180-degree turn from 1995. Of the borough's 36 ZIP codes, according to Case Shiller, only one showed price depreciation in 1996, while 5 increased between 2 and 4 percent; 19 between 4 and 6 percent, and 5 rose by 6 percent or more. In 1995, by comparison, all 36 ZIP codes experienced price depreciation. There is no realty board covering all of Brooklyn, and so no multiple listings to indicate sales volume. But Christopher Thomas, vice president of the William B. May Company, said that in ''brownstone Brooklyn, in terms of our sales, '95 was a good year, around 100 sales, while '96 went over 150.'' Brownstone Brooklyn includes Brooklyn Heights, Cobble Hill, Park Slope, Carroll Gardens, Boerum Hill, Fort Greene and Clinton Hill.
''Prices for low-end property rose 15 percent,'' Mr. Thomas said. ''Let's say we had two-bedroom apartments selling for $225,000 to $250,000 in '95; they now sell from $250,000 up to $325,000.''
John Reinhardt, president of Fillmore Real Estate, which has offices throughout the single-family home sections of Brooklyn, said his firm closed deals on about 2,000 homes in 1995 and 2,200 last year, a 10 percent rise. ''For instance, Sunset Park, where there is a lot of Asian immigration, it's now Brooklyn's Chinatown and there is steady demand there,'' Mr. Reinhardt said.
''Our impression is that sales price has gone up about 2.5 percent in all of Brooklyn,'' Mr. Reinhardt said.
IMMIGRATION was also a factor in the Bronx. Nunzio Del Greco, executive vice president of the Bronx Board of Realtors, said comparisons between last year and 1995 were difficult because of incomplete reports from board members in '95. ''We're getting better information now,'' he said. ''But the 502 sales last year are probably 15 to 20 percent higher than in 1995.''
Harry Baksh, president of ERA Besmatch Real Estate, with sales throughout most sections of the Bronx, has performed his own survey based on deeds recorded at the Bronx County Courthouse. Mr. Baksh said that about 1,600 homes were sold last year, up 10.3 percent from the 1,450 in 1995.
''The bulk of the properties are within $140,000 to $175,000, at least 60 percent of the market,'' Mr. Baksh said. ''And the strongest areas, representing about 30 percent of all closed deals in the borough, were the contiguous communities of Williamsbridge and Baychester. ''They are very strong immigrant communities,'' Mr. Baksh said. ''The children have grown; you have people living in the same house, two incomes of working people.''
But while sales volume is up, the Bronx experienced a slippage in prices. According to Case Shiller, of the 25 ZIP codes in the borough, 21 experienced price drops up to 2 percent and three others decreased 2 percent or more. The borough had held its own in 1995 with only one of the 25 ZIP codes showing a decline of more than 2 percent.
On Staten Island, the indicators were somewhat contradictory.
The Staten Island Board of Realtors reported an 11.8 percent increase in volume, from 1,972 transactions in 1995 to 2,205 last year, while the average price for a one-family home rose only 2.2 percent, from $179,112 in 1995 to $183,137 last year.
The Case Shiller Weiss survey, however, indicated an even stronger price appreciation throughout Staten Island. Of the 12 ZIP codes, 11 showed price increases averaging 6 percent or more. A year ago, Case Shiller reported widespread depreciation, with 11 of 12 ZIP codes showing decreases of more than 2 percent.
Lydia Ragucci, president of the local board of realtors, said, ''Anything that comes on the market that's priced right and in a nice area sells right away -- sometimes days -- because there's not enough product on the market.''
In Queens, according to the New York State Association of Realtors, 4,080 single-family homes were purchased in 1996, a 2.4 percent increase over the 3,976 homes sold in 1995. Median prices rose 2.2 percent, from $157,500 in 1995 to $161,000 last year.
Those price increases paralleled the findings of the Case Shiller ZIP-code study. Of the 57 ZIP-code areas in Queens, only 5 experienced depreciation; 28 showed appreciation of up to 2 percent; 21 showed increases between 2 and 4 percent, and 3 appreciated by 6 percent or more.
And there was renewed strength in the Queens co-op category. About 120,000 co-ops have been converted in Queens since 1982, with a relatively high percentage of them running into financial difficulties, sharply affecting their ability to sell. But last year, 513 co-op apartments were sold in the borough at a median price of $46,600, according to the state realtor's association, compared to 383 transactions in 1995 at a median price of $45,000.
The patterns of the year just past, several market analysts agree, bode well for this year's prospects. ''It's going to continue because there have not been any real imbalances in the economy,'' said Rutgers University's Dr. Hughes. ''Inflation is not a problem, hovering below 3 percent. And, unlike the late 80's, there has not been any excessive speculation or overbuilding for condos and co-ops, or in the office market, which helps power the residential sector.''
''There's a lot more discipline now in the market among lenders and builders,'' Dr. Hughes said. ''They are not building unless there are commitments for firms to take the office space.''
Arthur Zabarkes, dean of N.Y.U.'s Real Estate Institute, agreed that conditions are ripe for another good year. ''I expect the immigrant market to still be very strong,'' he said. ''The ripple effect from Manhattan continues.
''There is nothing on the horizon to indicate a collapse in any sector of the economy,'' Dean Zabarkes said. ''And, at the same time, there has been no notable increase in real estate supply. The net effect is that we're going to see increased demand for existing stock.''
Continue reading the main story