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REAL E$TATE 2000:
Bubble Jeopardy

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What happens to the people who used to live in those liminal areas is another matter. "In the last three years," says housing-policy researcher Victor Bach of the Community Service Society, "100,000 units went beyond $500 a month in rent." As the middle class continues its Lebensraum, "the people that are there get pressed out -- in some cases harassed out -- by the landlords," says Bach.

Clearly, somebody can afford all this. As one disappointed buyer puts it, "If, for a million-five, I can't even get a decent apartment, what's happening in this city? Who's getting them?"

"I'm convinced: The higher the price, the younger the buyer," says William B. May broker Joanne Greene, fresh from selling a $4.5 million apartment at the Westbury. "You have 30-year-olds who two years ago were living in bunk beds with roomies and wearing those p.j.'s with feet sewn on. They now have $10 million in cash and don't know what to do with it," says one downtown broker. "They're dot-commers who just went public. That's exclusively who they are. That's the spore that ate TriBeCa." Brown Harris Stevens broker Elizabeth Sample attributes the run-up, in part, to these guys. "In San Francisco and Silicon Valley, real estate is going for 30 percent over ask." With droves of them now washing up in Manhattan, it's increasing valuations. "It's people like Michael Dell," she says, referring to the 35-year-old Dell Computer Corporation founder who recently spent $22 million -- $4 million over asking -- for a twelve-room apartment at 950 Fifth Avenue. "They negotiate differently from New Yorkers. They hit the price and go above it and sign immediately. New Yorkers, they negotiate and try to delay a week."

Just think how hard this has been on those who are rich in an old-fashioned, low-bandwidth, East Coast way. "I thought we had the money," says a young, frustrated Upper East Sider who works for a family business (her fiancé works on Wall Street). "I thought it would be easy. And we do have money, but not for this market. To decide over this weekend to be willing to go up to $1.2 million and renovate at the age we are -- I mean, that's double the price of our parents' houses." How old are they? "In our mid-twenties. It's very scary. Say we're in our late twenties. It sounds better."

Psychoanalyst Dr. Gail Reed has noted the way housing hysteria has affected settled New Yorkers, especially with the steady approach of the luxury-decontrol thresher (which goes into effect once your income breaks $175,000 for two years running or your apartment's rent eases over the $2,000 barrier). "You think, boy, they live in this big apartment, and they probably own it. And that turns out not to be the case," she says. "You think that they're quite settled, but they're actually secretly very worried, alarmed, anxious that they're going to lose their apartment. The prices are especially a problem for people considering a divorce, when they discover that they can't afford to move just down the block." Forced exile to Wantagh is a sentence few West End Avenue types can bear to consider.

So, how to find shelter in this typhoon of hype and escalating prices? A surprising number of brokers are sitting it out in their rent-regulated apartments. Even Barbara Corcoran had a hard time finding a Park Avenue co-op where she could stash her $3 million (and she's still waiting to hear from the board). Another broker declares from his rental, "If I had to spend right now, I wouldn't."

But if you have to, you'd better move quickly and be decisive, say brokers. And don't worry about being in love.

Also, prepare for a quick and decisive tussle. Brokers say you should be prequalified for a mortgage and try to line up some backup method of qualifying for the place that doesn't require a mortgage. Have that deposit money handy. It helps to remember that "this is a nonsmart environment," says Sotheby's International broker Dolly Lenz. "It has nothing to do with intelligence. It has to do with luck, almost."

"I've said to clients, you don't even want to know how much it costs," says broker Linda Stein of Edward Lee Cave. "In situations where there are big buyers and no inventory, the only way you can explain these numbers to them is to tell them how much they can get for their own apartments. Because those numbers are also ridiculous. If I take you shopping and you're hypothetically John McEnroe, you want this, this, and this. And it's $18 million. He says, 'Are you fucking crazy?' You have to say, 'But John, you can get $22 million for yours.' "

"Nobody knows how high it will go or when it will stop," says broker Greene. "We all know something's going to happen eventually. I mean, how greedy can everybody get? I guess pretty greedy."


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