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A New Studio Rush
By LISA KEYS
Just days before Christmas, Halstead Property broker Ivana Tagliamonte held an open house for a studio apartment in the Foundry in Gramercy.
"I thought it would be a waste of time," she says. (The 500-square-foot apartment had been on the market a year ago at $275,000 and generated no interest.)
But to Tagliamonte's surprise, nearly 30 people showed up. In hours, she had three bids.
After one day on the market, the buyer accepted a cash offer for the new price of $299,000.
Ever hear that studio apartments don't sell well in New York City? Well, put that right up there with the Pop Rocks that killed Little Mikey - an urban legend that ain't true.
A combination of low interest rates, low housing stock and a glut of first-time home buyers currently make studios the hottest properties in New York City.
Ashley Russ, a 20-year-old Broadway hopeful, began shopping for a studio in the summer. She found one that she liked - but declined to bid after she learned the owners were already considering multiple offers.
"It's a hot thing now to have a studio in New York," says the Chicago native.
After months of looking, she landed one on the Upper East Side with the help of Halstead’s Tagliamonte, for which her parents paid $210,000 - just below asking price - in cash.
As Studio Wars '04 heat up, for the first time in recent real estate history, studios are commanding premium prices per square foot.
"As recently as two or three years ago, two- and three-bedroom units were at least 10 percent more per square foot," notes Andrew Heiberger, CEO of CitiHabitats. "Now it's evened out."
Some of the demand comes from small-time investors - those with $50,000 to $150,000 to spare - who have turned to studios (and one-bedrooms) as a safe haven.
"It's the triangle theory," says Rob Gross, senior vice president at Douglas Elliman.
"There's certainly more people at the base of the triangle - those who can spend less than $500,000 - than there are at the top of the triangle, those who can spend more than $2 million."
The trend has become more pronounced in recent months, according to Jonathan Miller of Miller Samuels, a Manhattan real estate appraisal company.
Miller Samuels' numbers show that six months ago, the average sales price for Manhattan studio co-ops and condos was $255,927. Partial results for the fourth quarter of 2003 indicate that the average has climbed to $292,313. That's a 14 percent increase in just six months.
Part of the frenzy is fueled by the notion that the economy's good times are here to stay, giving uncertain investors the confidence to purchase real estate.
Shrinking housing stock is the other part of the equation. In Chelsea alone, according to Halstead broker Rich Hamilton, if you look at properties on the market for under $400,000, there are 100 fewer places on the market today compared to six months ago.
"It's not rocket science," he says. "This is what's going to drive prices up like crazy in the first quarter. Unemployment is down, interest rates are low, bonuses are coming in and there's no inventory."
Hamilton recently had an open house for a studio on West 16th Street. "The apartment was rough," he says. "It looked like it had been rent-stabilized for the past 30 years."
He didn't need to worry, since 50 people came to the open house. With six bids, Hamilton sold the property for $233,000 - $4,000 above the asking price.
Some might see "just" a studio, but some savvy New Yorkers see a springboard.
"A lot of people who want that loft or that large two-bedroom with outdoor space realize they'll never get to that point without buying a studio now," says Halstead's Tagliamonte.
"It's very difficult to get into the market at that price point without anything to sell."
Just ask designer Sheila O'Rourke, who, with five bidders, just sold her studio in the Foundry for $274,000 with the help of Tagliamonte - not a bad price, considering that last year, a studio two floors higher in her building sold for closer to $200,000.
With the money from the sale, she closed on a new apartment - a two-bedroom, plus deck, in Park Slope.
Saturday, January 03, 2004