Property Grunt

Monday, December 11, 2006

Women: Saviors of the market?

Women Unafraid of Condo Commitment is another expose on how real estate is just like rock rock and roll since it consists of 4 things. Chicks, chicks, chicks and dough!

Seriously, NYT tries to make sense of why the rest of America is getting clobbered while New York holds its own. The NYT thinks the answer lies with the fairer sex. Below are some points I find interesting.

In the last five months, single women spent more than $30 million out of the $100 million or so in sales in the 299-unit condominium. In fact, single women bought 72 of the first 165 apartments sold. Spending by these women far surpassed that of single men, who accounted for $19 million. Married couples accounted for about $45 million in sales, and investors $5 million.

Mr. Walentas has done so well that he has been able to raise his prices twice. He also sees more married women writing the $60,000-to-$100,000 deposit checks. “It’s the women’s checks,” he said. “It’s not like a dual account — Joe and Suzy. It’s Suzy. I’m amazed.”

All I have to say is this. Happy wife, happy life. However the part where wives are putting their money where their mouths are is quite telling. It could be indicative of husbands who are more than willing to take a risk as long as their signifgant others are the ones footing the bill.

Brokers say that women are betting that even if they buy in a declining market, the values won’t drop as much as they would have spent on rent. They’re more comfortable buying in the same neighborhoods and buildings as their friends do. By purchasing condominiums that they could eventually rent out if they needed to move, they’re also hoping that they can hold on to these properties until the market improves.

So, in other words there seems to be a herd mentality that is displayed by women who are invading Brooklyn. So if one woman screasm "Brooklyn!" They all rush in like the running of the bulls. As long as it is in a enviornment that is attracts their own social circle, they will be more than happy to take the plunge.

"A woman will say, ‘I’m still saving money in the long term.’ ” said JoAnn Schwimmer, an associate real estate broker at DJK Residential. “They’re able to see the bigger picture, while a guy says, ‘I have to get the best deal.’ ” She said that her female clients who bought four years ago have male friends still waiting for prices to drop.

Perhaps. But how long is the long run? How long do they want to stay for to recoup their ivnestment? If the market takes a severe enough beating it may take awhile for you get a return on your investment.

As for women being able to "see the bigger picture" while men just want "to get the best deal,". I have to disagree with that. Getting the best deal is part of the bigger picture. How much you pay plays a critical role in the long term benefits of your home.

Erica Besikof is one of the women who decided that now was the time to buy at 110 Livingston. Ms. Besikof and her husband, Dan Besikof, who currently live in Manhattan in the financial district, put down a 10 percent deposit on a $600,000 apartment. As self-professed Food Network addicts and aspiring chefs, they were sold on the unit’s Viking range and Sub-Zero refrigerator.

Ms. Besikof was so enthusiastic about the purchase that she tried to persuade a half-dozen female friends and their husbands or partners to buy in the same building. Her candidates included a college friend, a high school friend, her husband’s former co-worker, a current co-worker and the co-worker’s former roommate.

So far, only Melissa Sussberg and her husband, Matthew Sussberg, have followed her advice and bought an apartment, a $765,000 two-bedroom. But there’s still time for the Besikofs to turn more acquaintances into neighbors: they don’t move until spring.

The impact of female buyers may be most pronounced in the Brooklyn condominium market, because properties are less expensive than they would be in Manhattan and the deposits are as low as 10 percent of the purchase price. That means that more women who are first-time home buyers can break into the market more easily and that women who own apartments in Manhattan can sell and buy larger apartments in Brooklyn.

Women’s interest is good news for Brooklyn developers, who are beginning to see the same troubling market conditions that are hitting Manhattan and the rest of the country. Brooklyn has 5,888 condominiums under construction and another 11,634 units planned, according to data gathered by Halstead Property.

I am sure anthropolgists would have a field day with this trend since there is so much you can discern from this. At one point some of these women will get married and have children. Brooklyn presents itself as a unique area where they can acclimate themselves and move to other areas of Brooklyn that have better school systems. And the worst case scenario is that they send their kids ot private school which Brooklyn has plenty of excellent ones.

For those, for a lack of a better word, that are part of the spinster set. Brooklyn is a great place where they can lay their burdens down while not having to deal with the refugees from Sex and the City.

New York City real estate brokers say that many of these sales originate from friends talking to friends. “Word of mouth kind of seals the deal for them,” said Sarah Burke, the vice president for sales and marketing at the Developers Group, a Brooklyn real estate company.

Ms. Besikof said that her husband would have been happy to postpone buying an apartment. But she convinced him that they could stop paying a lot in rent and live closer to their favorite beer bar, the Downtown Bar and Grill, and their favorite Thai restaurant, Joya.

“He’s more nervous about the market and if we’re going to make a profit,” she said. If the couple hadn’t found an apartment at 110 Livingston, “he would have been fine renting,” she added.

Of course he's nervous. At a certain point he's going to have kids. And kids cost alot of money. He wants to save up as much money as possible because the reality is that he might become the only breadwinner in the household. Of course one can argue that all he is doing is throwing money down the drain by not buying a place. However there is a certain amount of flexibility in renting. And when things really cool off, he would be allowed to pick and choose what he wants.

While Ms. Besikof encouraged her friends to check out the building, she said she never pressed them to buy. “Everyone, I guess, has to make up their mind to take their own risk,” she said.

Ms. Besikof and Ms. Sussberg were in the same sorority at the University of Wisconsin but graduated in different years. It was a mutual friend who encouraged them both to move closer to her in Brooklyn. Ms. Sussberg, a 28-year-old Chanel sales executive, said that she and her husband, Matthew, a 30-year-old advertising sales executive for the Huffington Post, a political Web site, wanted more space than they currently have in their Upper East Side apartment.

Now that the Besikofs will live on the third floor and the Sussbergs on the fourth, both couples look forward to hanging out together. “It will be fun to have a social life in the building,” Ms. Sussberg said.

This the perfect blend of social networks and a touch of irrational exuberance. It seems in this segment of the market women are leading the charge to stake out their own territory where they can be comfortable and populate it with their brethren. This is no different with the migration patterns of senior citizens to Florida and Chinese people showing up in certain areas of Boston.

Some women said that they felt their friends were better market indicators than any statistics that point to a downturn.

Roberta Brenner, 62, a former recruiter for consumer marketing executives, had accompanied her friend Jill Montaigne, 48, a media and entertainment consultant, to give her advice on buying an apartment at 70 Washington Street in Dumbo, a two-bedroom that cost more than $1 million.

The women had been friends since Ms. Brenner tried to recruit Ms. Montaigne for a job many years before. After 19 years on the Upper West Side, Ms. Montaigne wanted more anonymity and more space for her 8-year-old son, Schuyler.

While Ms. Brenner encouraged Ms. Montaigne to buy, Ms. Brenner had some reservations about the neighborhood. In the spring, Ms. Montaigne went to dinner at Ms. Brenner’s and encouraged the Brenners to move to Dumbo. The next weekend, the couple checked out the building for themselves.

While women have purchased a smaller percentage of apartments in this building, they still have made an impact. Single women bought about 40 of 200 of the units, including the two penthouses, accounting for about $35 million in sales, according to the executive sales director, Toby Klein. The project is a conversion by Mr. Walentas’s company, Two Trees Management.

“There’s a certain amount of evangelism that goes on,” Ms. Montaigne said. “There are so many people who moved in because they knew someone else who bought in the building.”

This is one of the reasons why real estate is not an exact science. Sometimes it is not the numbers that tell the story. Sometimes it is people on the ground who are in the trenches that will give you a better perspective of what is going on. Reporters call this "Shoe Leather."

People can argue all day on why men are so committment phobic. Perhaps it is due to our genetic code of being hunter gatherers who have a constant need to wander. Or perhaps men are not prone to impluse buying? Are women able to percive another angle in real estate? Do they have the intuition to understand more than the numbers? I have no idea.

I am curious to see how these women fare in the next couple of years.