Property Tales
With the market what it is today, it's hard to know what to advise people who are looking to buy studios. Prices for one- and two- bedroom apartments seem to have stabilized somewhat, but because so few studios are available, there are serious bidding wars driving prices way up. The bubble is bound to burst sometime, but who knows when? I guess I'd say if you don't need a place immediately, you'd best wait to buy. But if you do need a place-as I did when I bought-you should bid as much as you can the first time around-because you may not get another shot at it.
In spring of 2004, Bill Muraskin and his wife were divorced. She bought him out of the two-bedroom Upper West Side apartment they'd shared for 17 years, and Muraskin went apartment hunting for a studio in which to begin his new life.
In two months, Muraskin looked at every studio he heard about-some 50 in all. He liked several enough to bid on them, but he wasn't able to actually land a place until July 2004.
"Finally, I got lucky. I found my studio through a realtor friend who told me about it the same day-or, should I say, the same minute?-it was listed. I was the first person who saw it. It has a wall of windows overlooking a park. I loved it and immediately bid as much as I possible could to make sure I'd get it," says Muraskin.
That was about $50,000 over the asking price for the 550-square-foot, fourth-floor Lincoln Towers studio.
Why bid so much higher than the asking price?
"That's a lesson I learned from experience. I'd bid considerably more than the asking prices on several other places, and lost out. For example, I wanted to buy a similar apartment of the same size in the Schwab House. They were asking approximately the same price as for my studio, and I bid the same amount as I did for my studio-but I didn't get it. I didn't even get a chance to bid for it again, because I wasn't even in the top-bidding group. So, I wasn't totally crazy to bid way above what I thought my studio might go for-because I knew there was a good chance I'd miss it," says Muraskin.
"At the time, the market for studios was insane. Prices were going up 15 percent every few weeks. There were so few studios available, people were bidding aggressively against each other for places they wouldn't ordinarily consider worthwhile-or, quite frankly, weren't very nice."
Muraskin found himself consistently outbid by wealthy people buying studios for use as New York pied-à-terres or as first apartments for their grown children. Instead of paying several thousand dollars a month for rent, they might as well pay the same amount to buy a place as an investment.
"As long as interest rates were so low, it made good financial sense for them," says Muraskin. "But I found it somewhat humiliating. Here I was, willing to pay all I could afford for a primary residence where I would spend the rest of my life, and I was bidding against people who were just buying a little something extra-and I was losing out to them."
Muraskin thinks he overpaid for his studio.
"I had to. And, for the time being, it hasn't proven to be a bad investment. In the six months since I bought the place, the asking price has risen to what I paid for it, which means that if I were buying it now, I'd have to bid another $50,000 more-and who knows if I'd get it for that?
"Of course, if interest rates go up-as they're bound to-fewer people will be buying places, and prices could plummet. I went through those kinds of ups and downs with the value of my former apartment. But, in this case, it doesn't really matter that much to me, because I intend to live in my studio for a long time."