On a rainy Saturday afternoon a couple of weeks ago, I met an acquaintance of mine, whom I’ll call Deirdre, at One Hunters Point, a condominium project in Long Island City. Deirdre is an attorney at a midtown firm where business is still brisk. Over the course of the last year, she’s saved up enough money for a down payment, and she is looking at studios and one-bedrooms in the half-million-dollar range.
The asking prices of the units Deirdre saw averaged around $600,000, but the agent assured her they were very negotiable. Still, Deirdre didn’t sense the urgency that she’d felt while looking around Chelsea and the West Village. “There,” she said, “you can really smell the desperation on the brokers.” We tried the sales office at the Piano Factory, another big new development—locked up, bizarrely, on a weekend afternoon—and then walked into Astoria, down streets lined with forlorn, half-finished buildings. Over lunch at a Greek restaurant, Deirdre recounted some other stops in her search, including a one-bedroom co-op on Bethune Street that had been drastically reduced to $550,000. She showed me a listing for a one-bedroom in Chelsea. “This place is where the guy said, ‘Make an offer that’s where you think the market could be a year from now,’ ” Deirdre said. She’s still trying to puzzle out that instruction.
Even the experts, at least those smart enough to avoid embarrassment, are making no predictions about where prices will settle. Maybe they’ll stabilize at 2005 levels, a drop of 25 to 30 percent, but even then, some buyers will argue that they belong back in 2003, or 1999—a process of regression that reels backward to Peter Minuit and his beads. The perception of opportunity is a relative thing. That’s why the experts always say that you shouldn’t try to time the market, because the perfect moment is usually gone by the time you recognize it.
Here’s a story about picking real opportunities. In 2002, Eric Stuart, a musician, bought a three-story townhouse in Carroll Gardens for $650,000. He’d grown up in the neighborhood, and watched with amazement as Carroll Gardens proceeded to be transformed by an invasion of big-spending yuppies. “It was kind of comical to me,” says Stuart. “Those were made-up numbers.” When he decided to move to Nashville, he made up a sizable number of his own, listing the house at $1.65 million.
Cara Sadownick, a broker at the Corcoran Group, brought the property on the market in September—just in time for the meltdown. Over the course of several months, she talked Stuart into two substantial price reductions. Finally, in February, David and Naama Bloom came to see the place. They are having a baby, and had an all-cash buyer for their apartment on the Upper West Side. They made an offer, and after some negotiation, the two sides agreed to a deal at $1.45 million. Stuart figured his timing had cost him $200,000, but was consoled by his overall profit. The Blooms thought they overpaid by $75,000, but realized they got a house they couldn’t have afforded a few months before. Everyone felt a mixture of defeat and satisfaction—the free market had worked.