Studios sell as rentals rise.
The sales market in residential studios is revving up as tenants are discovering it's cheaper to own than to rent. With studios in many Manhattan buildings The Manhattan Building is a 16-story building at 431 South Dearborn Street in Chicago, Illinois. It was designed by architect William Le Baron Jenney and constructed from 1889 to 1891. renting for upwards of $1,500 a month, brokers are showing their clients how to save money by owning.
"The rentals are so astronomical as·tro·nom·i·cal also as·tro·nom·ic
1. Of or relating to astronomy.
2. Of enormous magnitude; immense: an astronomical increase in the deficit. they are rethinking the purchase," said Carmen Carmen
throws over lover for another. [Fr. Lit.: Carmen; Fr. Opera: Bizet, Carmen, Westerman, 189–190]
See : Faithlessness
the cards repeatedly spell her death. [Fr. Lee Shue, president of Lee Shue Realty realty n. a short form of "real estate." (See: real estate)
REALTY. An abstract of real, as distinguished from personalty. Realty relates to lands and tenements, rents or other hereditaments. Vide Real Property. , Inc., who has begun canvassing for studio sales she would have never bothered with previously. Plus, she is getting a quick turnover and bidding wars. "Years ago, I couldn't give them away," she added.
Many buyers got caught up in the 1980's real estate market as thousands of rentals turned co-op. Some people moved from building to building, getting insider pricing and then flipping Flipping
Buying shares in an initial public offering (IPO), and then selling the shares immediately after the start of public trading to turn an immediate profit.
flipping the units. Other buyers just wanted a place to live and bought tiny apartments for large sums of money.
When the market crashed and banks tightened lending requirements on both the partially sold buildings and end loans, many people ended up with units they could not sell, even as their own lifestyle changed.
"Five or six years ago, we all questioned whether there would be a studio market ever again," said Diane Ramirez, president of Halstead Property.
But now, with sales prices up across the board, rentals priced higher than many coop/condo maintenance bills, and Fannie Mae Fannie Mae: see Federal National Mortgage Association. waivers available for financially stable buildings with high pro ratas [Latin, Proportionately.] A phrase that describes a division made according to a certain rate, percentage, or share.
In a Bankruptcy case, when the debtor is insolvent, creditors generally agree to accept a pro rata share of what is owed to them. or unsold shares, sellers are discovering they can move on with their lives.
"It's a good time to flip," agreed Tina Eichenholz, a broker with the Corcoran Group who handles Manhattan sales.
Downtown Manhattan prices are driving the average studio sale price up, as are West Side co-op sales.
For year-end 1998, the latest figures available, the average price of a studio market-wide was $134,000, up 7 percent from 1997. Upper East Side co-ops were up 3 percent to $112,000, while condominiums were down 2 percent to $161,000.
The Upper West Side, however, had coop COOP
See Banks for Cooperatives (COOP). studios selling for an average of $129,000, up 11 percent, while West Side condo prices averaged $175,000, the same as a year ago.
Downtown, year-end numbers were averaging $115,000, up 13 percent for co-ops, while condominiums were up 20 percent to $167,000.
Studios historically lag behind the rest of the market, and now the numbers are catching up.
The Corcoran Group had up-to-date numbers run on June 11th for this article. These show average studio sale prices up in all categories. For both co-op and condos, the average sale price is $146,000, up 14 percent over the first six months of last year.
East Side co-ops are averaging $125,000, with condo studios at $177,000. The average on the West Side is $135,000 for coops, while condo studios are averaging $214,000. The newer buildings are also driving up prices.
Downtown, co-op studios are averaging $127,000, with a $183,000 average for condos. No lofts are included in this pricing.
The condos demand higher sales prices because they can be rented out, and the market is not as sensitive to pre-war features as it is in the larger apartments, said Ramirez.
Eichenholz recently sold an alcove studio on the Upper East Side for $135,000 that has a maintenance of $600. Altogether, the buyer will now spend $1,350 a month, less than her previous rent of $1,600.
Robert Sussman, an executive managing director with S. Goodstein Realty, says he's suddenly getting queries about studios, too. And he hasn't even looked at them in years.
The prices are not that much different from the end of the Eighties, said Reba Miller, president RP Miller & Associates. "They are going from $80,000 to $125,000 to $140,000 on an alcove, which is pretty comparable to the Eighties. People are getting out of anything they want to get out of now." Even so, she agreed, "If it's too highly priced, it won't move."
Because the city is safer, Miller says people want to have some place to stay overnight. "If the husband works in the city and will use it four days out of the week, that's a good candidate to buy a studio," she said.
Those needing a pied pied
a coat color in dogs that consists of uneven patches or spots of color on a white or cream background. a terre or first apartment because they've been accepted at an area college or are starting a new job, will find some studios priced more than competitively with the high market rentals.
Etienne Lafayem, a broker with Stribling & Associates, just sold a studio on 49th Street near the Waldorf Astoria between Lexington and Third avenues to a Westerner west·ern·er also West·ern·er
A native or inhabitant of the west, especially the western United States.
a person from the west of a country or region
Noun 1. who had tired of staying in hotels, and decided to buy a pied a terre.
"It's right underneath the penthouse penthouse
Enclosed area on top of a building. A penthouse can be an apartment on the roof or top floor of a building or a structure on the roof housing the top of an elevator shaft, air-conditioning equipment, or stairs leading to the roof. , faces West, gets lots of light, and he paid $62,000," relayed Lafayem. "It's the lowest sale at Stribling for the year and the maintenance is under $600."
Lee Shue just completed a sale on a studio apartment in Tudor City Tudor City is an apartment complex located on the East Side of Manhattan in New York City. It is bordered by E 40th Street to the South, First Avenue to the East, Second Avenue to the West and E 43rd Street to the North. . The unit measured about 300 square feet and had maintenance charges under $350. Her seller had purchased at the top of the Eighties' market for about $70,000, and had it listed for two months. Now, with sudden interest from several buyers, it sold for just over $80,000 to someone who had already been outbid out·bid
tr.v. out·bid, out·bid·den or out·bid, out·bid·ding, out·bids
To bid higher than: We outbid our rivals at the auction. on two other units.
"I could have even played two buyers against each other," said Lee Shue, who observed a sudden surge towards studios in the last few months as the new grads started looking.
This buyer, too, just graduated from college and is starting his job in July. "He said the rentals are too outrageous," recalled Lee Shue. "He found it's better to buy than rent."
Halstead "sells them as quick as they come in," said Ramirez. An alcove studio in the 700 square-foot range came on the market last week, and while it is priced in the higher $170,000 range, its size generated immediate interest.
Speaking at the Young Men's/Women's Real Estate Association meeting last week, owner/developer Bernard Mendik worried that there is overbuilding of $2,000 a month apartments, and no government program in place to subsidize sub·si·dize
tr.v. sub·si·dized, sub·si·diz·ing, sub·si·diz·es
1. To assist or support with a subsidy.
2. To secure the assistance of by granting a subsidy. enough affordable housing.
Renters stymied by the high rents are finding more affordable apartments by ferreting out the forgotten studios.
In Queens, the co-op apartment complexes that have low owner occupancy and few sold units often now have good cash-flows because of the increase in the rental market, new holders of unsold shares or new cheaper underlying financing.
Individual buildings can work with lenders to obtain a so-called "Fannie Mae waiver The voluntary surrender of a known right; conduct supporting an inference that a particular right has been relinquished.
The term waiver is used in many legal contexts. " of the mortgage repurchaser's usual requirements, thus providing financing for end loans. Some of those buildings are now generating sales in all units for the first time in nearly a decade, at prices that range upwards from about $20,000 for studios.
Although rents in the boroughs seem to top out in the $800 to $1,200 range in the most luxurious buildings, in Manhattan, the ability to decontrol de·con·trol
tr.v. de·con·trolled, de·con·trol·ling, de·con·trols
To stop control of, especially by the government: decontrolled oil and natural-gas prices. the rents on apartments that are renting for $2,000 by those with $175,000 in income for two years running, has left many renters wanting to regain control over their housing costs.
"Since we've had the decontrol laws in place, owning is the safer bet," said Miller. "If all of a sudden the market jumps more, the owner of the building can raise the rent. If you own that studio, you are in control."
Because the studios are the smallest and usually the lowest priced units in buildings, brokers say they provide an entree to both apartment ownership and tax deductions Tax deduction
An expense that a taxpayer is allowed to deduct from taxable income.
See deduction. for young professionals.
Eichenholz says building boards are very exacting in their income requirements, and many young people also won't qualify for larger apartments that are much more expensive.
"The studios are so hot because the boards are very difficult, and if the buyer is making under $50,000, such as someone recently out of college, it's very difficult to purchase anything larger than a studio," she noted.
For singles that make between $65,000 and $130,000 a year and are tired of paying high rent, apartment ownership provides a tax deduction.
"They buy condominiums because they are also encouraged by the fact that if they are sent out of state or out of the country, they know they can rent," said Lafayem, who observed that co-op buyers are mostly couples.
He isn't worried that people will be "stuck" at the top of the market. "There is a market for studios and first buyers, and I don't see the market changing for three years," he predicted. "New York New York, state, United States
New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of is an attractive place for international buyers and a world financial center."
With crime way down and tourism up thanks to Mayor Rudy Giuliani Rudolph William Louis "Rudy" Giuliani (born May 28, 1944) is an American lawyer, businessman, and politician from the state of New York. Formerly Mayor of New York City, Giuliani is currently seeking the Republican nomination in the 2008 United States presidential election. touting touting
the making of personal representations by a veterinarian to persons who are not clients in an attempt to solicit their business. New York City New York City: see New York, city.
New York City
City (pop., 2000: 8,008,278), southeastern New York, at the mouth of the Hudson River. The largest city in the U.S. as the Capital of the World, Lafayem may be right. After all, in the last market downturn Downturn
The transition point between a rising, expanding economy to a falling, contracting one.
A decline in security prices or economic activity following a period of rising or stable prices or activity. , it was foreign buyers that kept coming in to park their money in New York real estate.
One Halstead broker is once again working with a customer who was in the market five years ago, and grappled over buying a studio or a fancy car.
"They bought the Jaguar and now they said they made a mistake, and the car is not worth anywhere near what the apartment would be worth today," Ramirez relayed. "Now they're buying an apartment."