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A Slower Market, With Wall Street Fizz

For four years, people feasted on Manhattan’s robust real estate market with a kind of bacchanalian revelry, so when prophesies of a bubble began circulating last year, many braced for the worst.Today the state of the market is certainly more sober and measured. The pace has slowed, there is more inventory and buyers are taking time to shop around. And while some brokers report a significant bump in sales thanks to record Wall Street bonuses estimated at $21.5 billion, others say they have not noticed so much as a blip. Still, two months into 2006, a death knell has yet to chime.

In many ways the new year ushered in a better environment for buyers. There is more inventory to peruse (up 35.6 percent over January 2005 according to Jonathan J. Miller, president of the Miller Samuel appraisal firm). Properties are staying on the market longer (137 days in the fourth quarter of 2005, up from 96 days in the final quarter of 2004, according to Miller Samuel).At most price levels, buyers are likely to enjoy more attention from their broker and more elbow room at open houses. And many sellers have accepted that the market is no longer red hot — and have priced their apartments accordingly. Brokers can schedule appointments in advance and show a half dozen properties instead of asking clients to make split-second decisions.”Buyers find it much more comfortable,” said Patricia Cliff, a senior vice president and the director of European sales for the Corcoran Group. “They can comparison shop.”

Gone, too, are the sellers who put their apartments on the market solely to cash out. Those whose apartments are on the market today tend to want to do business and are often willing to negotiate.

“The problem was you really could not differentiate between serious sellers and those that were testing the market,” said Jacky Teplitzky, an executive vice president at Prudential Douglas Elliman, referring to 2005.

Buyers seem to be more cautious now, a feeling that manifests itself in a desire to view as much inventory as possible.

“Even if they see the apartment and are in love, they want to see what is out there before they put in an offer,” Ms. Teplitzky said.

Indeed, many brokers think a new class of educated buyers has emerged, one that refuses to overpay and has a good grasp on property values. “People are taking notes, pictures with their cellphones, coming back the next week and asking for building financials,” said Richard J. Ingenito, an associate broker at Bellmarc Realty. “These buyers seem to really know their stuff.”

That buyers do their homework, are able to see more inventory and have time to deliberate also means that fewer deals fall through because there are fewer last-minute cases of cold feet, Ms. Teplitzky said. She pointed out, however, that this is not the time to buy something with the intention of selling it next year. “This is a market you’re in for the long haul,” she said, meaning five to seven years.

Marc Marin, 39, a management consultant who signed a contract on his first apartment — a two-bedroom co-op on the Upper West Side — last week, did not know if it was the best time to buy, but he figured he would be living there for a while and would not be distraught if the market dips.

Brian Lewis, a senior vice president at Halstead Property, said Mr. Marin searched for apartments for about two months and bought his place on Riverside Drive, which is in the $900,000 range, for below the asking price.

“It never gets easier, it seems,” Mr. Marin said. “You just need to take the plunge.”

Taking the plunge felt a lot better now than it did six months ago, he said, adding that buying in 2005 was somewhat intimidating. “I was feeling a little bit more power in this market,” he said. “You had some negotiating room.”

While that may be good news for buyers, it can mean more work for brokers. “I feel like I’m showing like mad and it takes forever to get an offer,” said Sarah Smith, a sales associate at Warburg Realty.

Ms. Smith, like other brokers, said the calmer market makes for a more pleasant work environment, though the offers she is getting are lower than they had been in recent years. Her open houses have been busy, yet she has not noticed an influx of Wall Street bonus money.

In January, State Comptroller Alan G. Hevesi estimated that Wall Street bonuses would be a record $21.5 billion in 2005 (the previous record, in 2000, was $19.5 billion). The average bonus was also estimated to be a record $125,500, up from $114,300 in 2004.

“We are so dependent on the money from Wall Street,” said Mr. Lewis. “If Wall Street is a shark, the real estate industry is the thing that cleans its teeth.”

Bonuses tend to trickle down and jump-start activity across the board. But not everyone is feeling the ripples of the lush payouts. Mr. Ingenito of Bellmarc said that while he has had about 30 to 40 people at recent open houses, he has not noticed a major impact from Wall Street money.

“There are a lot of people waiting to see what will happen,” he said. “If it looks like interest rates will go up rapidly, that should change.”

Many buyers are content to play wait-and-see, hoping prices will fall. Not surprisingly, no broker predicted that prices would continue to decline. Still, brokers have certain historical markers on their side.

Ms. Cliff noted that the New York market is so insulated that even after Sept. 11, 2001, it came roaring back. “To wait on the sidelines and try to second-guess the market, I think, is always a very dangerous game,” she said.

Ray Kiswani, a senior vice president at Bellmarc, explained that in the previous three years, buyers thought that deliberating about an apartment for a few months would cost them 5 to 10 percent in price increases. Therefore, they were willing to borrow from their parents or from their retirement fund to seal a deal. Now, they do not feel they have to act quickly to avoid a price penalty.

“Today, the market is stabilized, and it’s very unlikely a major change will occur in the next few months,” Mr. Kiswani wrote in an e-mail message. “Therefore, buyers — understandably — feel a couple of more months simply won’t make a significant difference.”

That attitude could potentially backfire, though, if you want to buy in some of the new luxury buildings where Wall Street bonus money has been spent in the last few weeks.

“The bonus season came around and it was a great year for a lot of people,” said Tim Wright, a 26-year-old stockbroker who is living in a rental. He said he “fell in love” with a one-bedroom, one-and-a-half bath apartment that he bought at the Link, a 210-unit, 44-story condominium tower being built in Hell’s Kitchen. It is expected to be completed by late 2006. Opening prices for one-bedrooms (about 600 to 1,000 square feet) are $650,000 to $1 million.

Mr. Wright did not fret about the state of the market because, as he said, “If I held off to time the market and the place sold out, I’d probably regret it.”

He described the Link sales office as “mobbed” and the competition as “fierce.”

“There is almost no negotiation,” Mr. Wright said. “Say it’s a million and you want to pay $850,000, they can say ‘go for a walk’ because they’re going to sell to someone the next day for $1.2 million.”

Dolly Lenz, vice chairwoman of new development marketing and investment sales for Prudential Douglas Elliman, said she has seen a “big bump” from bonuses in the last three weeks at the Cipriani Club Residences at 55 Wall Street. “A flurry just came as they got paid,” she said. More than half of the units in contract at Cipriani are from Wall Street bonus money, she said, adding that at a recent open house, nearly 50 people showed up for tours.

At the Hudson, a 20-story condominium on the Upper West Side that is scheduled for occupancy this spring, about half of the 40 contracts that have been signed are with Wall Street bonus spenders, said Ramona Mahtani, the director of sales and marketing for the Developers Group, which, along with Halstead, handles the sales and marketing.

Richard Cantor, a principal at Cantor & Pecorella, a sales and marketing firm that is handling sales in 10 new buildings around Manhattan, said some buyers are surprised there is activity in the market. He said that those who viewed apartments and then waited weeks to make an offer have sometimes wondered, how could it be sold?

Thomas Elliott, vice president of marketing and design at El Ad Properties, the developer of several condo projects, including the Link; the O’Neill Building, at 655 Sixth Avenue, between 20th and 21st Streets; and the Grand Madison, at 225 Fifth Avenue, between 26th and 27th Streets, said the feeling at some sales offices is that “the party’s not over yet.”

Still, property is not being snapped up as it was a year ago. Ms. Smith of Warburg said sellers should be realistic. “Don’t have supercrazy expectations,” she said. “The consumer is just not putting up with it.”

Mr. Lewis of Halstead, who said a property will sell if it is marketed and priced well, recently helped the owners of a two-bedroom, one-and-a-half bath co-op on the Upper West Side get the price they wanted (around $810,000) by putting their apartment on the market for $789,000. Some 47 people arrived at an open house and now a contract is signed for more than $800,000.

Mr. Lewis told the couple what he said he tells all of his clients: “You can choose to play pool where the ball used to be, or you can play pool where the ball is now.”