AS the real estate market in New York City shuffles toward recovery, two-bedroom apartments have been the last to rejoin the party.
Sales of studios and one-bedrooms rebounded first after the market crashed in late 2008, followed by three-bedrooms, but it wasn’t until mid-2010 that the two-bedroom market started its comeback. Now, brokers say that the demand for smaller apartments has ebbed and that two-bedroom apartments are all the rage, especially those priced at the lower end of the market.
Alan Nickman, an executive vice president of Bellmarc Realty, says that more buyers have recently come to him looking for apartments between $750,000 and $1.2 million. “That’s basically your starter two-bedrooms,” Mr. Nickman said, adding that the pool of potential buyers included “first-time buyers who are going straight into a two-bedroom,” bypassing smaller units.
Jonathan J. Miller, the president of the appraisal firm Miller Samuel, said that the volume of sales for two-bedrooms was on pace to match last year’s figures, but that the inventory of two-bedrooms for sale was increasing more slowly. While overall inventory has grown by 13.4 percent since March 1, two-bedroom inventory grew the slowest, at 11.4 percent. “If inventory gets tighter,” he said, “that portends a more robust two-bedroom market for the year.”
The median sales price for two-bedrooms topped out at $1.65 million in 2008 and now hovers at $1.21 million, according to Miller Samuel data. Two-bedrooms in New York, of course, vary greatly, ranging from a modest apartment with one bath and less than 800 square feet, for $700,000, to a sprawling 2,000-square-foot space with two or more baths, a dining room or office, and maybe even a terrace, for $5 million.
Focusing on the lower end of the spectrum, a recent search for two-bedrooms between $750,000 and $1 million found more than 650 listings. (There were about 1,100 two-bedrooms between $1 million and $2 million.) Many of the under-$1 million properties were in Upper Manhattan, Brooklyn and Queens, but a significant number were in coveted locations south of 96th Street.
At the lower prices, the apartments tended to have only one bathroom and to be in nondoorman buildings, but many had been recently renovated. Brokers say that when priced competitively these listings sell quickly.
Tracie Hamersley, a senior vice president of Citi Habitats, said she had a two-bedroom listing in Murray Hill that received multiple bids and went into contract close to the asking price after one week on the market. “The buyer had bid on and missed out on two other similar apartments in the same building,” Ms. Hamersley said. “So certain types of two-bedrooms are definitely moving very quickly.”
She is listing a recently renovated two-bedroom two-bath condop at 312 East 23rd Street in a prewar nondoorman building. The owners initially listed it at $1.085 million in March, but buyer traffic picked up significantly after they reduced the price to $999,999 in late April.
“The price drop made a big difference, because a lot of people want to avoid the mansion tax,” Ms. Hamersley said. The New York State mansion tax is a 1 percent levy on homes sold for $1 million or more, which means an extra $10,000 on a $1 million apartment.
Many of the potential buyers are owners of one-bedroom apartments who were reluctant to make the leap to a two-bedroom when the market was weaker, according to Ms. Hamersley.
Like Mr. Nickman, she is encountering renters who are hoping to make their first purchase a two-bedroom. “A lot of these people feel they can stretch for the two-bedroom in the current market,” she said. “They want to get more bang for their buck.”
Arabella Greene Buckworth, a senior vice president of Brown Harris Stevens, has a listing for a two-bedroom one-bath co-op at 50 West 67th Street, on the same desirable block as the Hotel des Artistes. It was originally listed at $1.15 million, but buyer interest spiked when the price was dropped to $995,000. “A lot of people find the mansion tax to be a real psychological barrier,” Ms. Buckworth said. This listing seems particularly attractive to pied-à-terre seekers who are “looking for convenience of location and who are looking for something architecturally distinctive about the space,” she said.
Scott Harris, a vice president of Brown Harris Stevens who has several two-bedroom listings ranging from $499,000 to $1.56 million, said two-bedroom buyers on a budget were motivated by low mortgage rates and also by concern that when the limit for conforming loans drops to $625,500 from $729,750 on Oct. 1, mortgages will become more expensive. “The lower limit affects this buyer more than any other,” Mr. Harris said, noting that buyers of higher-priced properties tended to have higher incomes, which protected them somewhat from fluctuating mortgage rates.
Mr. Harris recently sold a two-bedroom one-bath apartment at 71st Street near Central Park, listed at $925,000, to Joe and Danielle Carney. The couple have a home on Long Island, but were looking for a pied-à-terre for the days when work keeps them in Manhattan late into the night.
“We wanted to be able to spend more time with our 1-year-old daughter and have less stress on the commute,” said Mr. Carney, the director of media sales for NFL.com. “We also decided this was the best and safest place to invest our money — plus we get the utility of the apartment.” To be able to get an apartment that fit their criteria “and get it south of $1 million” was a bonus, he said.
Softer prices for two-bedrooms have also attracted Aaron Schindler, another client of Mr. Harris’s and a first-time buyer. Mr. Schindler, a financial planner, said that in 2008, with prices some 20 percent higher, he had thought it made more sense to rent than to buy. “Now, when you compare rent and carrying costs,” he said, “it’s pretty close, but I think there’s value in making the long-term investment, especially in a two-bedroom.”
To rent the kind of two-bedroom apartment he seeks — in a prewar doorman building on the Upper West Side with decent views — would cost him $5,000 to $5,500 a month, and at that rate, he said it would be wiser to buy a two-bedroom for $775,000 to $925,000.
“I very much know what I want,” he said, “and I probably won’t get it at the lower end of my price range. Scott says, ‘We’ll find it, but be patient,’ and I’m happy to be patient.”
Closer to $750,000, two-bedroom apartments in Manhattan tend to have a few strikes against them. Rooms may be dark and face brick walls, and the spaces may need renovation, but the price is not far from the average for one-bedrooms, which was about $650,000 in the first quarter of 2011.
“There are some very well-priced two-bedrooms available for people who may have only been able to afford a one-bedroom not that long ago,” said Karin Posvar Picket, a senior vice president of the Corcoran Group. She represents a renovated two-bedroom one-bath co-op at 166 East 92nd Street reduced to $630,000 from $729,000. It has eight windows, but none of them provide interesting views.
“There are not many two-bedrooms in Manhattan priced this low,” Ms. Posvar Picket said. “This is an alternative to a one-bedroom that buyers can stay in well into the next stage of life.” The current owners, for example, moved in as a young couple, had three children, and are now headed to the suburbs.
North of 96th Street, Peter Burval and Frances Katzen, agents with Prudential Douglas Elliman, have a $750,000 listing for a two-bedroom co-op with one bath at 407 Central Park West, between 100th and 101st Streets. The living room and kitchen look out on the park, but the bedrooms face a courtyard. Mr. Burval said many buyers would prefer to live farther south, “but this is perfect for someone who wants to take advantage of the park,” and desires some extra space, as the bedroom has an anteroom that could be used as an office or nursery.
Mr. Burval, who is working with several buyers looking for two-bedrooms below 96th Street, said, “It’s been very hard to find quality inventory, and when we do find something that has good views and is in good condition, there are multiple bids within the first few weeks of it coming on the market.”
That’s what Ray Sapirstein experienced in his search for a two-bedroom in Brooklyn, near the apartment he is renting in Carroll Gardens. With the help of Shari Sperling, an agent at Halstead Property, he just paid under $700,000 for a two-bedroom loft in the Columbia Street waterfront district.
The search was “a real dogfight, though,” he said. “I bid on two other places where there were other bidders, and the price went up higher than I wanted to go.” He said that his new apartment had been the subject of multiple bids as well, but that other buyers had been intimidated by its need for renovation. “It had been converted into a large one-bedroom, so I’ll have to do some work to turn it back into a real two-bedroom,” he said. But having once worked as a carpenter, Mr. Sapirstein said, he likes the idea of the project.
Buyers averse to fixer-uppers but not to staying under $1 million can head to Harlem, Williamsburg or Long Island City, where two-bedrooms can be found for six figures in new developments.
Norman Horowitz, an executive vice president of Halstead, represents the Gateway Tower, an 88-unit condominium at 2098 Frederick Douglass Boulevard in Harlem. There, two-bedroom two-bath apartments range in price from $750,000 to $1.15 million. The apartments have as much as 1,300 square feet of space and come with impressive vistas, including bright views of Morningside Park.
Many of the potential buyers who come to see the building have been priced out of the Upper West Side, Mr. Horowitz said. “We get a lot of renters who find that rent doesn’t pay for them anymore,” he said. “And we see young families who are trading up for more space and who see that there’s added value here in Harlem — you can get more space, two full bathrooms, a washer and dryer, and views or a terrace.”