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Bubble Jeopardy


There's Christmas-list stealing, fax-nabbing, "brokers sending letters to the entire roster at the San Remo bragging about their record sale there -- which wasn't their sale," complains another broker. "People will shoot their mother for a listing."

"When I was sick, someone wanted to give me an exclusive, and another broker called them and said, 'Oh, she's close to death -- why would you give her your exclusive? Better give it to me,' " a broker says.

Maybe this town isn't big enough for all of them. According to the heads of other brokerages, the two most expansionist giants in town, Douglas Elliman and Corcoran, seem to have declared war on each other.

"Barbara Corcoran steals so many brokers, many of them Elliman's," causing some of the tension, says a rival brokerage head. But she's also a Fast Company-style marketing machine in a previously quiet business. The result, says another brokerage head, is a lot of "I won't show you my apartment 'cause you didn't show me yours" going on between the two.

Competition between the megabrokerages has been squeezing the lesser players, too. "In the middle, you get killed," said Neil Binder, principal of Bellmarc. Smaller companies can be stripped of their star brokers or simply swallowed up. Some just fade away.

Now that demand has surpassed supply, a new-economy goofiness has overtaken apartment valuations. "There are no more parameters for what people should expect to pay," says Frosty Montgomery of Corcoran. "Somebody who bought an apartment for $3 million two years ago can put it back on the market for $5 or $6 million. People come in with half a million dollars and think, 'That's a hefty sum of money. I should be able to buy a two-bedroom.' And you know what? That's like finding a needle in a haystack."

Suddenly, owners of even the most banal real estate are sweating greed as they contemplate what someone might pay. "The worse case is when the seller keeps raising the price," says Frederick Peters of Ashforth Warburg. "He wants $2.2 million and you bring him that. Only now he wants 2.5, and you have to blow off the 2.2. And then he wants 2.8. By the time you get him what he wants, he figures it's worth more now."

As the sellers play their game of price-tease, many buyers are left clutching their paper sacks of cash, not quite understanding how they can make this much money and still be unable to find a place.

"I have a nice, completely board-passable client," says Alexa Lambert of Stribling, Wells & Gay. "I just call them up to chat and ask after the kids because I have nothing to show them. Otherwise, they think you've forgotten about them." What used to pass for the Carnegie Hill middle class -- professionals scraping by without Wall Street bonus bucks, "the normal people," Lambert calls them, already stretching the definition, "the people making a half a million dollars a year -- they won't be able to afford to live here and put two kids in private school."

Brokers are constitutionally a-go-go, but even they are starting to get a little overwhelmed by the deal-after-deal delirium of the marketplace.

Ashforth Warburg's Richard Steinberg puts it this way: "You can't relate real-estate prices in New York to size or square footage. You have to think of it as art." Lusting after that three-bedroom Van Gogh on Central Park West is only natural.

The good things that have resulted from the boom -- the renovation of mediocre buildings, the cleaning up of semi-abandoned areas -- are changing this into a different kind of city. "A very important thing to focus on is how much more money certain people, like securities-and-commodities brokers, have," says Larry Sicular, head of residential appraisals at Brown Harris Stevens. "They're shocked that prices have doubled in ten years but forget how much their income has gone up."

The counterargument to that counterargument, of course, is that nobody else can afford to live in Manhattan. "They're not building one-bedrooms anymore," observes Bellmarc's Lisa Strobing. Instead, everyone's building prewars all over again, with many of the new buildings -- 515 Park, the Empire, the Chatham, 610 Park, the Westbury -- consisting almost exclusively of large apartments, two bedrooms-plus. Even as new buildings are built and opened, there are other forces nipping at the housing stock, like the trend of combining apartments and making multifamily brownstones and townhouses whole again. The new rich are hollowing out more and more of Manhattan just for themselves. "As a standard strategy, if we see a studio or one-bedroom, we knock on the neighbor's door," says Bellmarc's Binder. "A studio's worth $150,000. Combine it with a neighbor, and together, they're worth $400,000."

Gil Neary, president of DG Neary Realty, says that, in rentals, "we have a lot more people who are not sharing a bed but are sharing a one-bedroom apartment or a studio." Volume at the Gay Roommate Information Network, which he also runs, has more than doubled from two years ago.

Barbara Corcoran and other real-estate bulls have said that there's still room for prices to go up: Just compare Manhattan real-estate prices with the swank districts of Paris or London, which are pricier still.

That pretty much leaves Brooklyn. Middle-class ex-Manhattanites have reconstituted the Upper West Side along the F-train line, filling in the gaps from dumbo through Carroll Gardens and the stinky industrial wasteland of Gowanus, on to the southern half of Park Slope and down toward Kensington. Settlement is cheek-by-jowl with public housing in Fort Greene and Clinton Hill. For grittier youngsters who work in new media, it's following the L-train four stops in, practically to Bushwick. And, of course, there's Harlem, too, which has become a buy-a-mansion empowerment zone for professional whites and blacks.

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