Demand Returns for 2-Bedroom Apartments

TWO-BEDROOM apartments have long been the workhorse of the New York City real estate market, accounting year after year for the largest percentage of apartments sold.

 

When the recession hit, buyers fled the market and prices fell across the board. After things stabilized in late 2009, the market share for two-bedrooms had dropped from a typical 40 percent to as low as 25 percent, because more people had found that they could afford three-bedrooms, which took sales away from two-bedrooms.

 

Now, after a lull that has lasted for more than a year, two-bedrooms are back.

 

The market share for two-bedrooms first dipped under 30 percent in early 2009, with smaller and larger apartments gobbling up more of the sales, according to data compiled by Jonathan J. Miller, the president of the appraisal firm Miller Samuel and a market analyst for Prudential Douglas Elliman. But in recent months, that percentage has climbed back up to 39 percent.

 

“We’re finally in a period where we’re not dealing with abnormalities with an unusually excessive amount of entry-level or large apartments selling,” Mr. Miller said. “We’re moving toward a more balanced and more normal market.”

 

The median price for two-bedrooms seems to have stabilized. The median in Manhattan dropped 20 percent, from a high of $1.6 million, in 2008, to $1.272 million in 2009, according to Prudential Douglas Elliman data. It has since inched back to $1.3 million.

 

Interest in two-bedrooms definitely took a dive last year, said Diana Chung, an agent with Mark David & Company. After the recession hit, “the first people to get back in the market were people who were priced out earlier,” she said, “and a lot of them were first-time buyers.” These buyers often start with studios or one-bedrooms. “Then you saw people trading up from cramped spaces, because three-bedrooms that might have been unattainable when the market was hot were suddenly affordable.”

 

As a result, Ms. Chung said, “two-bedrooms were almost a no man’s land.”

 

Last year, “even the lookers we had weren’t serious,” she said. They tended to come to open houses on their own, never to be heard from again. But in recent months, she noted, most people are coming with brokers, usually a sign that they want to do more than just look.

 

Listings at nytimes.com also suggest that activity is up, with total inventory for two-bedrooms dropping from close to 3,000 in September 2009 to about 2,400 last month. The median listing price for two-bedrooms in Manhattan last month was $1.299 million, where it has hovered for most of the year.

 

Median prices vary significantly from neighborhood to neighborhood, though, ranging from as low as $399,000, in the Sugar Hill section of Harlem, to $3 million in SoHo. Median prices for apartments of all sizes and in all neighborhoods can be found at nytimes.com.

 

Ms. Chung has a two-bedroom three-bath listing at 20 West 72nd Street for $1.295 million, priced right at the median for the Upper West Side. The apartment was created by combining a two-bedroom with a studio, and Ms. Chung originally marketed it for $1.45 million as a potential three-bedroom because a third bedroom could easily be carved out of the oversize living room.

 

But many of the people who have come to see the apartment have liked the expansive city views from the living room’s four south-facing windows, and Ms. Chung acknowledged that creating a third bedroom would make the living room a much less interesting space. So her client, who uses the place as a pied-à-terre, agreed to lower the price and to market the apartment as a two-bedroom.

 

Ms. Chung said most potential buyers for the apartment had been young couples who either have one child or are planning on starting a family. She has also fielded inquiries from couples whose children are grown and who are downsizing.

 

The profile of people hunting for two-bedrooms appears to vary slightly by neighborhood.

 

Buyers looking below 96th Street in Manhattan often branch out to areas like Harlem and Brooklyn Heights, both neighborhoods that attract young couples planning to expand their families.

 

Vicki Negron, a senior vice president of the Corcoran Group, has a two-bedroom listed for $815,000 at 76 Remsen Street in Brooklyn Heights, where the median listing price is $820,000. The apartment has a dining room and a balcony that overlooks brownstone gardens.

 

Open-house traffic for two-bedrooms started to pick up about eight months ago, Ms. Negron said, and many of the interested buyers are young couples from Manhattan with no children.

 

Couples who already have one or two children seem to be asking for three-bedroom apartments, “because the larger apartments are no longer out of reach for many young couples,” she said.

 

Tony Von Meyers, a senior vice president of Halstead Property, has a $399,000 two-bedroom listing at 330 West 145th Street, which borders on Sugar Hill and Hamilton Heights. At the height of the market, many of the potential buyers might have trained their sights on a one-bedroom, Mr. Von Meyers said. “But at these prices now, we’re getting people who are looking in anticipation of life changes and eventually needing more space.”

 

The apartment, which has floor-to-ceiling windows and views of Jackie Robinson Park, went on the market in late July at $435,000, but was reduced last month to $399,000, the median price for Sugar Hill. It is in a building that went up in 2003 with city subsidies, and consequently has a household income limit of $192,000. Mr. Von Meyers and his partner, Neil Tilbury, said the price reflected the limits set by the income restriction.

 

Many of the people looking in Harlem are from the Upper West Side. “The No. 1 question we get is: Am I getting the best value for my money?” Mr. Von Meyers said.

 

Brokers say that buyers in the current market are often reluctant to act quickly. “People are very slow to make decisions,” Mr. Tilbury said. “They’re bringing a lot more people back with them to have a second, third or fourth look.” That means involving “parents, friends, lovers, even Aunt Sally,” Mr. Von Meyers said.

 

Elizabeth Howng and Jim Connors, clients of Mr. Von Meyers, are first-time buyers who had been living on the Upper West Side. They started their search at the beginning of the year and finally bought and moved into a new two-bedroom condo in Harlem last month.

 

“With prices and mortgage rates where they are,” Mr. Connors said, “we felt it was time to do something.” They focused on two-bedrooms, Ms. Howng said, “because we lived in a small one-bedroom rental, and if we were going to go to the trouble of moving and putting down our life savings, why bother buying a one-bedroom?”

 

Had the market been stronger, though, they might easily have been priced out, they said. With a budget of $800,000 and a requirement that their home also have outdoor space, they found their choices limited.

 

Mr. Connors said that while the open houses they visited had seemed busy enough throughout the year, a heightened urgency seemed to take hold over the summer. They made an offer on an apartment in early July and were in negotiations with the sponsor when another buyer swooped in with a full-price offer.

 

“That might have been a one-off experience,” Mr. Connors said. “But that’s when we realized we couldn’t sit back, make a low offer, and wait for the market to come to us.”

 

Despite the one that got away, they’re both very happy in their new home. “I think we made the right decision,” Ms. Howng said.

 

In the East Village, where the median listing price for two-bedrooms is $895,000, Tamara Marotta, a senior vice president of Prudential Douglas Elliman, said she had seen a jump in buyer interest in the last two months.

 

Ms. Marotta has a $895,000 listing at 265 East Seventh Street that has been on the market since April, and she said that recent activity “is almost at the level when we first put it on in the spring, and people seem to be serious and on a mission.” The apartment is a floor-through in a walk-up building, and it has two bedrooms, a large dining room, an interior office and an eat-in kitchen with windows. The woodwork in several of the rooms has been refinished, revealing lovely original details, but the kitchen, bathroom and master bedroom need a fair amount of work. In the spring, people seemed reluctant to take on any kind of project, but Ms. Marotta thinks the climate may be different now.

 

Many of the house-hunters who have come through already live in the East Village, “and they’re making the next jump for them because they have a baby, but they want to stay in the East Village and maintain the lifestyle.”

 

At the high end, Nic Bottero, a vice president of Brown Harris Stevens, said buyer interest in two-bedrooms priced well over $1 million also seemed to have spiked recently. He has helped sell three two-bedrooms at 17 Cornelia Street, a condominium in Greenwich Village, in the last three months, all of them close to asking prices. Mr. Bottero has a $2.875 million listing for a two-bedroom at 505 Greenwich Street in SoHo with Erin Boisson Aries, a senior vice president of Brown Harris. A penthouse, it has two bathrooms and a large terrace with open city views to the north, south and east.

 

Potential buyers have included people looking for a pied-à-terre with space for entertaining indoors and out, and young couples who plan on starting a family, but only after enjoying their downtown address for a while. The current sellers fit that profile perfectly when they became the first owners of the condo five years ago. At the time, they had no children and used the second bedroom as a study and guest room. They have since had two children, and the second bedroom functions as both a study and a bedroom for the older one.

 

“Last year was very different, because buyers were so scared,” Mr. Bottero said. “But now there’s not a lot of inventory, and if something is priced well and you’re not being disrespectful by asking an outlandish price, it’s going to sell.”

 

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