The Real Deal New York

Ceiling gets lower for top sales

Top residential deals fail to wow

April 01, 2009
By Sarah Ryley

Go to chart: Top 25 resales in New York City, January to February 2009

So far, this year’s record residential real estate deals aren’t as
dazzling as those seen in recent quarters — in fact, 2009′s top deals
would have merely elicited a yawn last year — and the number of overall
transactions has plummeted.

This month, The Real Deal looked at the most
expensive residential sales in the city during January and February
2009 (data courtesy of PropertyShark) to get a sense of the top deals
being made despite today’s dire economic circumstances.

The accompanying list of the top 25 resales in the city
takes a closer look at who the buyers and sellers are, whether the
property was discounted and if the property appreciated between the
seller’s purchase and their resale.

Last year, Manhattan dominated the entire list. This year,
Brooklyn is on the list as well. None of the other boroughs had sales
expensive enough to make the list.

New construction was not counted on the top 25 list because
the contract period is generally much longer, meaning the deals that
closed earlier this year would have been made before the economic
meltdown first hit last September.

A close look at the data shows that compared to the top sales
during the same two months of last year, even the ceiling of the market
has significantly dropped.

During January and February, only seven of the top 100 sales
of pre-existing or newly constructed homes closed above $10 million
citywide — and most deals were below $2,000 per square foot. During the
same two months last year, 47 deals closed above $10 million, roughly
half at superbuilding 15 Central Park West. Only a handful were below
$2,000 per square foot, according to PropertyShark.

In a comparison of the same time periods, the overall number
of transactions fell 64 percent in Manhattan and 52 percent in
Brooklyn, for 1,859 deals between the two, according to StreetEasy.

There are a few bright spots. While this year’s deals are
clearly more modest, with sellers often forced to accept steep
discounts on their original asking price, in most cases sellers still
made a profit.

Five of the city’s 25 most expensive resales were in
Brooklyn, and last year the borough didn’t even make the combined list
of the top 100 resales and new construction sales. The fact that
Brooklyn claims some of the top spots — in Park Slope, Cobble Hill,
Manhattan Beach and two in Gravesend — signals that the city’s most
enduring neighborhoods are spread beyond just Manhattan.

Successful brokers said a shift in strategy involving a bit
more elbow grease and modesty has been necessary to seal deals since
the economy collapsed. Examples include everything from smaller changes
like using printed figures rather than vague sales pitches to convince
buyers that real estate is still a good investment; to cleaning and
renovating property; to most important, convincing sellers to reduce
prices and consider all offers.

Tamir Shemesh, managing director of Prudential Douglas
Elliman and a broker involved in two of the top 25 resales, said he’s
declined dozens of listings since January. “I will not take overpriced
listings, I just will not. Not in this market,” he said.

Shemesh said he had a bidding war on a Wooster Street
apartment listed at $2.2 million, which resulted in a slightly higher
sale, according to PropertyShark. A similar apartment next door was
listed for around $2.8 million and, after a series of price cuts,
StreetEasy shows it has since been taken off the market.

Consistent with overall market trends, the top five resales
had purchase prices of 27 to 58 percent below their original asking
price, but still showed an appreciation in value.

Richard Steinberg of Warburg Realty, the seller’s broker on
a $24.9 million Upper East Side mansion which finished first on the
list, said his seller would absolutely not have accepted an offer 29
percent below ask had it been made last year.

“It’s absolutely because my buyer came along when there was
so much confusion. The downturn happened so quickly that it just
panicked some sellers, and they didn’t know what to think,” he said,
adding that two months were wasted negotiating with artist Jeff Koons,
who took a fixer-upper next door.

Carol E. Levy of Carol E. Levy Real Estate had the
second-highest sale, a $12.5 million penthouse at the Park Belvedere
Condominium. A confidentiality agreement barred her from commenting on
the property, but public records reveal fashion tycoon Kenneth Cole was
the seller.

Levy said she hasn’t noticed the downturn as much as some
brokers, in part because she’s not above wiping off a dirty countertop
or, as is her specialty, ordering big renovations. “It’s amazing how
many brokers don’t even take the time to draw back curtains when there
is an amazing view,” she said, mentioning a storage room she keeps full
of vases for fresh flowers for her listings.

For $18,000, Levy said she transformed a shabby studio with
a dorm-style kitchen into a junior one-bedroom with a full kitchen now
in contract for $450,000 (it’s listed at $519,000).

“Having a pristine property that doesn’t need as much work
is particularly important in a market where people don’t have a lot of
money,” she said.

Levy also reasons to her clients that over the past 10
years, while investments in the stock market are often now flat or
negative, real estate in New York has still appreciated, despite its
recent downturn, and is tangible.

Robson Zanetti, vice president of Sotheby’s International
Realty, makes the same argument, often presenting his clients with
articles. “The last two deals I did were with Brazilians,” he said.
“The market has opened up for a whole new group of investors and
[individual buyers], people who waited because maybe they felt the
market was too aggressive.”

So far this year, according to StreetEasy, the median sale
price for homes closed during January and February is $838,879, which
is 2.7 percent lower than over the same period last year in Manhattan.
In Brooklyn, the median is down 16.4 percent to $452,029.

Generally, experts predict that before the bottom is
reached, New York City prices will fall to levels last seen during the
first half of this decade.

Location and quality can make a big difference of course.
For example, a Park Slope townhouse on the list more than doubled its
value in 10 years. In 1999, it sold for $1.1 million; this year, it
sold for $2.4 million.

Gravesend, a Sephardic Jewish community that one broker
called “the Beverly Hills of Brooklyn,” is somewhat of an anomaly
because, in the most exclusive section, properties rarely come to
market.

Families often pass homes down through generations. When
something is for sale, it is commonly through word of mouth, not a
public listing, which helps keep prices very high, explained David
Sitt, head of the commercial division of Sitt Asset Management.

Sitt’s own rather unremarkable 1930s brick home, which he
called “an investment property,” went into contract for $4.2 million in
September, right before the economy crashed. On a 3,000-square-foot
lot, he said the buyer could tear down the house for a bigger one,
typical of the area.

Sitt chalked up his good luck to timing. “It wouldn’t have
gone through had I put it on the market later,” he said. “People in our
neighborhood have been affected by the recession, as well.”

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