I have anecdotal evidence (from an RE agent aunt and in-laws who have looked at apartments in Manhattan both a couple of years ago and recently) that the market is not as hot as it was and that prices in some areas and some ranges have come down a little.

The last downturn went from roughly 1988 to 1996 and there were a number of Jersey City residential projects famously underwater.

To state the obvious, real estate investors and developers are more stupid and corrupt than the average business person. Brokers are even worse. This may heighten cyclicality.

The underlying economic fundamentals in the downtown JC market haven't changed much at all in recent years, and they're only likely to slowly deteriorate along with those of downtown Manhattan.

Another obvious point: Jersey City is mostly a rat-hole.

From Marketwatch:

New-home sales plunged 16.6% to 937,000 in January

Sales of new homes plunged 16.6% in January to a seasonally adjusted annual rate of 937,000, the Commerce Department reported Wednesday. It was the lowest sales pace in four years, and was the biggest percentage decline in 13 years. Sales are down 20.1% compared with January 2006. The decline in sales was much sharper than expected. The inventory of unsold homes dipped to 536,000 from 537,000, representing a 6.8-month supply at the January sales pace, the most since a 7.2-month supply in October. The median price of a new home was down 2.1% year-over-year at $239,800.

I'm pretty confident that I can compare the stock market and the real estate market over a much longer time frame than either of us has been alive. The leverage that you mention and base your argument on is a double edged sword - one can end up under water in leveraged real estate in a way that would never happen with stock investments. To wit, a 20% loss in market price results in a 100% loss of one's investment (assuming a 20% down payment). Your argument presumes a rising real estate market and is a bit of a tautology.

Over limited time periods (which is what you are talking about with respect to real estate) many have made 50% + gains in the stock market (e.g. the internet bubble). Over a reasonable time period (>=20 years) this is not sustainable in the stock market or real estate. My point is that over such time periods, which could reasonably be taken as predictive, real estate has matched the rate of inflation while the stock market has exceeded it by about 7%.

The privileged tax nature of home ownership profits is a benefit. Nevertheless, capital gains tax is now just 15% and by judiciously tax managing one's buying and selling one can get a tax deduction every year in the stock market. One can also give appreciated securities to 501c3 charities, pay no capital gains, and get a tax deduction for the full market value.

Finally, in terms of rent vs. buy, my rent is less than 50% of what all-in ownership costs would be. My rent has not "skyrocketed" or even increased because I am an excellent tenant and live in a small owner occupied building. As others have pointed out, this is by no means unusual in JC nor irrational on the part of my landlord. To assume that the ownership premium will not only continue but expand seems extremely dubious to me but I bear no ill will to you if it does and you benefit.

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Link from New York's Sixth:

http://www.associatedcontent.com/arti ... ey_city_an_interview.html


The Development of Jersey City: An Interview with James H. Hughes, Ph. D, Dean of Edward J. Bloustein School of Planning and Public Policy

By Justin Woods

(Woods) Considering the history of Jersey City development, overall what are the major trends and or changes it has seen in recent years?

(Hughes) "Going back 100 years ago Jersey City was known for manufacturing, rail yards, and it's distribution centers."

"During the 50's and 60's they disappeared."

Jersey City has gone through a post economy in the past 25 years

- very high paying jobs
- there is more office space in Jersey City then there is in downtown Pittsburgh Penn.

{ Basic trend for J.C}
New office buildings
Will continue residential developments
The planning of residential developments will continue

Note: Jersey City has an overbuilt office market

(Woods) Historically why did New York City grow but Jersey City did not?

(Hughes) - It grew in different ways, it's an accident in history.
- The Dutch settled in Manhattan.
- During the earlier settlement, Manhattan was just easier to get to when traveling by water.

(Woods) Is the development in Jersey City speeding up? Do you think it's going too fast?

(Hughes) "Office development is slowing by itself, I don't think any of it's going too fast."

- new high rise
- new sites
- seeing in field development, vacant lots
- not only the waterfront

(Woods) Can Jersey City ever be the next New York? And why?

(Hughes) "Nothing can compare to New York."
- New York has so much wealth,
- Large office space

Jersey City is always going to dwarfed by New York City."

(Woods) What do you think attracts developers like Donald Trump to Jersey City?

(Hughes) "Housing prices have gotten so high in New York City."

The things that attract developers....

- Are the lower cost
- Jersey City has great views of Manhattan

"Jersey City has geography going for it."


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2007 ? Associated Content, All rights reserved.
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Essentially I think its good to see dense development near transportation centers. In other threads Ive mentioned the 1/4 mile and 1/2 mile radius zone around the PATH, and the need to expand transportation options (transit, not highways) elsewhere. To this end, while I think the goals of the PAD as an artists community are admirable, its also an excellent location for upzoning becuase of its proximity to transportation, namely Grove Street PATH. Density can be added there without significantly adding to auto traffic. At the same time, the areas between 12th and 18th street, also a warehouse district, would be a great place for an artist community-- its distance from rail transit means its better suited to lower density, yet its also close enough to transit that visitors, i.e., art finantics and collectors and hipsters, could still visit the area. Its also in greater need of an anchor to attract people, where as the PAD is anchored by Grove street and the soon to be revived Newark avenue. However, if the population increase is pushed further away-- west of the turnpike, the heights, or the greater suburban region-- a greater percentage of that population will be traveling by car. They'll still pass through the downtown and use resources like roads and seats on the PATH and light rail, but without contributing anything to the local economy. Thats not to say that the heights or montgomery street corridor or JSQ won't see development, or deserve new development, only that at the moment, only JSQ has the infrastructure to support more residents without over burdening roads.

Yes, I think that prices will continue to rise with more development. But two things to that. First, if development is capped at 4 or 5 stories, then you will get the same sort of problems the village has, or historic districts on the upper east side-- high prices and unquentiable demand without amenities that make life easier or cheaper. As an example, arguably, a Washer and dryer in a residential unit is cheaper than using a laundromat, and easier certainly. But with high demand, an apartment without a washer and dryer will rent for a high rent, unless there is an alternative, like a newer apartment. Secondly, as more housing is built, older housing becomes less valuable. Consider Newport's Thomas Jefferson, one of the oldest newport towers, compared with the not yet built ellipse or Aqua. The newer towers will get a higher rent simply because they are new and shiney. The older towers will rent for less because they are older, and not quite as shiney-- thus, ultimately, you create a community of mixed incomes (or at least, mixed rents).

So, Wolf says increase supply will increase prices - probably right because it increases JC's credibility as a place to live. Ian says if supply slows prices increase because demand exceeds supply. I agree with both of them, but not sure what the variable that keeps prices up and/or rising. My guess is "desirability" and someting approaching infinite demand - used to be if I said I lived in JC the response was - where's that? (we were usually facing it from a window in lower Manhattan) now, the response is, hey I hear that is a cool place, a friend of mine just moved there.

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I agree that the people are coming. I think the people are coming whether we build towers or low-rise buildings; obviously towers provide more density and thus more total available units than a series of low rise buildings. I also think we'll face a transportation shortage soon if light rail and subway service is not expanded. But in either case, I dont think its possible to reduce the number of people coming, only reduce availability of housing and services.

New York City is one of the few places in the world that anyone in the world with enough money might want to have an apartment - that means Manhattan and MAYBE now a couple of places in Brooklyn. Much of the Manhattan market is driven not only by wall street employees with giant bonuses but by the superrich of the entire world. A recent NYTimes article detailed how many newer Manhattan luxury condo buildings are virtually empty most of the year in spite of being sold. They're essentially vacation homes.

Everything else remains merely a more affordable "alternative" and doesn't have the same cache. JC has considerably less cache than the trendier parts of Brooklyn and even Queens. We're certainly helped by the NYC market, but it's a bit absurd to suggest that JC will go as Manhattan goes.

By the way, no my rent hasn't gone up. In fact I'm probably paying something like half what I'd pay in mortgage and taxes on a similar apartment.

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Of course, there's money to be made here, but maybe a crash affects returns, even in a hot area. Maybe the value of properties is going up 20 percent a year, but maybe the value would be increasing 40 percent a year if the interest rate picture were better and the mortgage market were healthier.

Also: Jersey City, specifically, suffers from a crippling handicap: a drastic shortage of seats in decent public schools or affordable private schools.

That could put a floor under the real estate market here. Because, if the market really started to tank, all developers and building owners would have to do is get together and find a way to give Learning Community Charter School enough space to add 100 to 200 seats per grade. Just adding those seats might trigger 100 or more residential sales per year and help Jersey City lure residential business away from Bloomfield/Montclair and Battery Park City.

JC rents have undergone considerable price inflation in the last five to ten years. As its profile continues to expand, it will only become a more and more desirable place to live. I actually think that the thousands of units coming on line in the next few years will only serve to further enhance its standing and push rents further north. Thinking otherwise suggests that the amount people who will want to live here will remain static or at least not increase as quickly as the new units come online. Long term, I don't think this is likely, as we will see more and more people move into the city, eschewing living in NYC for the hot new "borough". This market is unlike any in the country and JC is simply filling the land void. As nuts as current prices seem (in town), they aren't close to what you'll pay in Brooklyn/Manhattan.

I just don't see how Jersey City will avoid becoming another Brooklyn from a price standpoint (rent or buy) in another five to ten years.

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Bringing Laboratory Space Back to New York

ALISON GREGOR - New York Times - Feb 21

When Eric Kandel, a Nobel laureate at Columbia University, formed a life sciences company, Memory Pharmaceuticals, in 1998, a lack of lab space options in New York City eventually forced the business to Montvale, N.J.

In March, the same real estate developer that built those Montvale laboratories, Alexandria Real Estate Equities, will break ground on New York City?s first substantial campus for the life sciences, called the East River Science Park. The first tenants are expected in 2009.

Upon completion, the $400 million complex will have three buildings encompassing 1.1 million square feet of specialized laboratories and office space. It will occupy 3.5 acres in Manhattan between East 28th and 29th Streets and First Avenue and Franklin D. Roosevelt Drive.

Proponents of the East River Science Park said they hoped it would induce start-up life sciences companies like Memory Pharmaceuticals, which now has 65 employees, to set up operations in the city.

?There is huge investment in basic research in the life sciences through our medical research institutions, but we have failed to commercialize our science in New York City,? said Kathryn Wylde, president and chief executive of the Partnership for New York City, a nonprofit group composed of 200 chief executives from companies in the city.

?There are about 30 bioscience companies a year coming out of New York institutions, and essentially, they?re all going elsewhere.?

To change that, the partnership?s economic arm contributed $10 million toward creating East River Science Park. The group also worked to enlist the cooperation of an array of top scientific institutions, including Columbia University, Memorial Sloan-Kettering Cancer Center, Mount Sinai Hospital, Rockefeller University, New York University School of Medicine, the Hospital for Special Surgery and Weill Medical College of Cornell University.

Some of the institutions are within a 50-block corridor on the East Side of Manhattan, creating a natural cluster around the planned East River Science Park campus.

?The reason we think New York City is going to be particularly competitive is most other clusters have one or two institutions,? Ms. Wylde said. ?Here, we have seven or eight major institutions, so the critical mass of science and of talent is greater here.?

In the life sciences, private businesses often collaborate with research institutes, medical centers and government agencies. The efforts tend to be clustered in a handful of cities, including Boston and Cambridge, Mass., and San Diego.

Laboratories used by life sciences businesses tend to have special features, like higher ceilings, heavier floor-load capacities and advanced mechanical, electrical, ventilation and plumbing systems.

Alexandria Real Estate Equities, a real estate investment trust based in Pasadena, Calif., specializes in this type of development. The company, which is publicly traded, owns 159 properties, encompassing about 11.2 million square feet; six million more square feet are planned.

It is building the East River Science Park as a speculative development, said Joel S. Marcus, the chief executive of Alexandria. The company?s tenants are mainly biotechnology and pharmaceutical businesses, but also include biodefense companies that might, for example, produce a vaccine for anthrax; concerns that develop medical devices; nonprofit organizations; and branches of government agencies and universities.

?We?ve got quite a few clients that we?re going to recruit there, and we?re in discussions with a number of people,? he said. ?We?ve got a pretty good handle on the market.? Mr. Marcus said the new center would have dozens of tenants.

Property development in New York City is notoriously expensive, and life sciences space can cost two to four times that of conventional office space to develop.

Alexandria did not have to purchase the land, however. It negotiated a land lease with the city for 49 years with two 25-year options. The parcel holds a parking lot and an old laundry building that is part of the Bellevue Medical Center campus.

Once construction is complete, Alexandria will pay the city $2 million a year, a figure that will escalate over time, said the New York City Economic Development Corporation.

Alexandria will also receive subsidies. Infrastructure work, like relocating a sewer and other utilities and cleaning up the site, will be paid for with $13.9 million from the city, $27 million from the state and possibly $2 million in federal money. There will also be property tax abatement over 25 years worth $251 million, and breaks on city and state sales tax and recording taxes worth about $22.7 million.

That should enable the developer to keep rents at a reasonable level, helping attract start-up companies, said Bill Fair, the managing director of health care and bioscience at the city?s Economic Development Corporation. ?What we strongly encouraged Alexandria to do, since it?s on city-owned land, is to make sure the rents are appropriate to allow some percentage of early-stage companies to come into the East River Science Park,? he said.

Lab space that has been fully built out at the Audubon Business and Technology Center, affiliated with Columbia University, is running at $55 a foot; the 100,000-square-foot center is full, with about 16 life sciences companies, said Carol Shuchman, director of commercial leasing and development at Columbia.

The only other complex offering life sciences space in the city is in Brooklyn at the Advanced Biotechnology Park of the State University of New York?s Downstate Medical Center. It currently has about 24,000 square feet of ?incubator? space for start-up companies.

Mr. Marcus, Alexandria?s chief, said his company was designing the buildings to attract both start-up and midstage companies, as well as biotech venture capital companies. Besides trying to keep new bioscience companies in the city, Alexandria will also try to recruit companies from the region, as well as pharmaceutical and biotech companies based worldwide.

But even if Alexandria is able to hold down rents to recruit early-stage companies, there is no guarantee that the life sciences will flourish in New York City, said Sheridan Snyder, entrepreneur in residence at Rockefeller University.

Those institutions turn only a tiny percentage of that research into applied science, products and clinical solutions each year, said Mr. Snyder, who founded the biotech company Genzyme in 1981 and has since founded other bioscience businesses.

The East River Science Park ?is akin to when the football coach says, ?I need a new stadium to recruit players,? ? Mr. Snyder said. ?It?s a great step, but there?s so much more than just putting up that building.?

CCITIZEN

Okay, you can put it back in yr pants now and for some hard to swallow reality, like all inflatted balloons, theres an eventuality that it will burst, so in essence you made yr $400g's upfront, only to give ot back on the tail end when that day arrives .

The only realestate is that which comes with some land and quality of life, i.e. more bang for yr buck and a greater return down the line .

CK

With respect to not raising rents when leases are up: a good tenant is not worth pissing off - a small increase is petty behavior on the landlords part and a large one could result in the tenant not renewing. Over the years, I have concluded that a vacant apartment represents at least 3 months lost rent: lost rent, cost of repairs and possible realtor fees. Just not worth it. Consider an apartment renting for $1500. Loss = $4500. Even if you got $200 more from new tenant it takes almost 2 years to recoup expenses.

Much of the enthusiasm for RE in the area is based on the prediction that the metro population will increase by 1,000,000 people in the next 20 (I think) years. This assumption was recently ripped apart in an essay in the WSJ. Essentially, it is too expensive to live here. Employees won't come and employers are moving jobs to more affordable parts of the country. This is a win/win situation since lower cost of living allows for lower salaries and lower operating costs. The idea that young yups "must" live in NYC, Boston, LA, SF, Seattle etc, apparently doesn't stand up to scrutiny.

In today's NYTimes there was an article that they are building a biotech RESEARCH CAMPUS in Manhattan for biotech startups.

That is great news (and hard to believe).

This should help diversify the job pool in Manhattan and bring additional demand for housing within commuting distance to Manhattan.

Manhattan is so hot it is not even funny, and JC is benefiting.

Also, on Trump's second tower:

"Geibel said the sales "threshold" has not been reached in terms of dictating the construction of the companion 50-story tower.

But Geibel said the $1.6 million tax abatement payment for the second tower has already paid in anticipation of building the next tower. "

Which pretty much means the second tower is going to be built.

A number of people on JCList have pointed to a possible "glut" of apartments, that developers are building "too many" units, in part as a way of arguing against urban density and to reassure themselves that preservation is more important than providing adequate housing for the surging demand. I think what CCitizen was pointing out is that despite naysayers, the housing market in the region is still going strong and any possible "glut" is going to be overcome by demand. People still want to live in New York, Brooklyn, & Jersey City, even if the housing bubble in Middleofnowhere, America has popped.

Trump will build the second tower, it is just a matter of when. There is a certain % sold they need to hit in the first tower. Right now I think they are at about 50% (not sure what the green light % is for the second tower but they have already paid the 1+ million for the tax abatement on it). The Shore Club followed a similar model.
Overall I think construction will keep pace with the buyers and we will see an overall increase in property value each year, but obviously not as robust as we have seen in years past. A few percentage points plus tax breaks still makes it worthwhile to buy.

Condos/apartments in NYC are much more limited and thus prices will be driven up. Here in downtown JC there will be thousands of new apartments/condos opening in the next couple years...Grove Pointe, Trump, Shore Club just to name a few. With more options to choose from people are not going to be willing to buy on a whim. Didn't Trump back off on building a second tower due to lack of potential buyers?

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Me too. Same rent for almost 3 years now.

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HAHAHAHAAHAHHA!!!

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If anyone looks at my posts - 200 in 2 years vs. over 1000 in 6+ months for some people - I have been in the game over here since '04 (for much longer and thru more cycles in nyc)and i've consistently been told by some of the jclist that the party was over and to date they've been wrong.

Jeebus,

I get your points but you can't compare the stock market to RE and its ability to create wealth. 20% down on a property that appreciates 10% is really a 50% tax-sheltered gain with far less risk than buying on margin in the market because there are no margin calls and I have the power to drive and create value and returns. Warren Buffett couldn't do 50% and he's a genius. All you need in RE is average leverage (10-20%) and average historic returns (5-6%) and you blow away the stock market. I won't even factor in tax benefits.

There are other ways to make the deals more sexy (and risky but you need to know where you are in the RE cycle)For instance, when you pull most of your cash out at closing the returns can be astronomical.

There are deals where we've basically bought buildings for the cost of the first year's insurance, i.e.,pulled down payment out at closing , did minor cosmetic work to drive up rents, and 18 months later pulled out cash and bought a small apartment for almost all cash and used the income from that to pay the refi additional balance.

Two deals ago, we turned 10k into approx 310k cash out refi (how's that versus the s&P)in 18 months with about $500 per month neg cash flow using the above method. People like brewster know this is possible (certainly more risky but with those kinds of returns you can take that risk). Sure we had some neg cash flow - very low mortgage rates :> - but we had the "down payment" in our pocket so big deal.


Not all markets are the same. Places like miami, vegas, san diego and detroit WILL have trouble. But if you understand the dynamics of your local market you can do soooo well with RE. That is how real money is made.

P.S., can't believe your rent has stayed the same. I've been able to increase rents by as much as 20-30% after vacancies in downtown over the last few years.If you get a new landlord don't be surprised.

The original article mentioned the role of Wall Street bonuses a number of times. In an all-time record year it's not so surprising that a chunk of that mountain of cash found its way into the NYC real estate market. Whether this will continue to be the case is anyone's guess but a few deca-million purchases sure do move the average price up.

I'm happy that you have made money, although I also suspect it would have been more if you had sold a year ago. In general, I find the unrelenting touting by real estate people a bit reminiscent of tech stock analysts in 2000.

My rent has remained the same while the money that I could have put into a risky, illiquid and undiversified real estate investment has grown quite well in the stock market. Historically, housing has matched inflation yet the stock market has beat it by a comfortable margin. I question the wisdom of assuming that real estate returns won't revert to their normal mean.

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Is that so? congratulations! My rent hasn't risen in 4 years so I could care less what is going on "with the market" but thanks for the update.

what does "I made" mean - you sold and have cash in hand or on paper your equity has increased by 400K.

Just curious, where would people park 400K after selling out?

CCitizen, congratulations on your good year. You took a chance and won.

January 2007 was the warmest on record, which obviously had an effect on the housing market. Wall Street bonuses were also at a record level, which had an obvious effect on the housing market.

All of the real estate folks are talking about the end of the real estate slowdown.

However, it's possible think that we may not have even seen the beginning. Remember, foreclosures are at an alltime high, and are set to increase even more this year.

Let's see what happens.

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Yeah, how conveniently you omit the fact that had you acted a year earlier, you'd have made $450K or possibly $500K instead of $400K.

Well then, congratulations. Now, are you done gloating?

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Keep waiting. Since the last flurry of posts with you last year I've made over $400k (my partners collectively made over 1.2mm) and you folks on the sidelines are just watching your rents skyrocket. Keep waiting for the sky to fall in JC. Thanks

Whatever happens in NYC is a harbinger for Downtown JC





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February 19, 2007
Housing Market Heats Up Again in New York City
By TRACIE ROZHON
Since the new year began, a burst of activity has broken out in Manhattan and several Brooklyn neighborhoods as New Yorkers frenetically hunt for co-ops, condominiums and town houses, sending prices higher despite sluggish sales in many other cities.

Preliminary indications from real estate firms showed that this increased activity, with open houses jammed and bidding wars taking place, has occurred in all price ranges ? from tiny studios in the East Village to red-brick mansions on the Upper East Side ? in counterpoint to the heavily weighted record sales of luxury properties that led the market in the late summer and fall.

Real estate brokers and statisticians are quick to point out that not every single apartment is flying into contract. During the last quarter of 2006, the major real estate agencies differed on which way prices were headed.

But now, the three largest real estate companies in the city agree: for January, at least, both prices and the number of signed contracts rose in double-digit percentages compared with the same month in 2006.

With higher Wall Street bonuses, a strong regional economy and pent-up demand from New Yorkers who were once worried that the city?s real estate market would crash, buyers? attitudes have done an about-face. ?Their psychology has changed,? said Frederick W. Peters, the president of the Warburg Realty Partnership. ?For almost two years, they?ve been scared that the market would plummet and they?d end up like fools who paid too much.?

Real estate experts say they see no reason for the trend to not continue, with economists predicting stable mortgage rates and a continuing city budget surplus. However, other factors may alter New Yorkers? renewed interest in buying real estate, including an expansion of the Iraq war, a changing employment picture or another terrorist attack.

Yet, there is ?cautious exuberance,? according to Steven L. James, director of Manhattan sales for Prudential Douglas Elliman.

A week ago, one open house attracted 100 people to an Upper West Side one-bedroom; a $2.475 million house in the Park Slope neighborhood of Brooklyn sold in a day.

Across the board, the prices of Manhattan apartments are rising. Jonathan Miller, the president of Miller Samuel, an appraisal firm, said the number of contracts signed this January was 19.4 percent higher than in January 2006. Prices were up 14.4 percent in the same time period. Inventory, which was mounting last summer, is shrinking fast.

Now, according to Mr. Miller, statistics showed that sales of studio and one-bedroom units, stagnant over the past year, were up 13.7 percent in January. ?It?s not like a lot of huge sales at the high end skewed the average up.?

According to a report released last week by the National Association of Realtors, prices are falling in many other metropolitan areas around the country. The report covered only the last quarter of 2006, and showed a modest increase of 3.1 percent for the New York area, which includes parts of northern New Jersey.

Anecdotally, there isn?t much talk of falling prices in Manhattan and in the most sought-after neighborhoods in Brooklyn, where young people looking for a break, empty nesters looking for a guest room and foreigners looking for a pied-?-terre say they want to live.

Katalin Shavely, a 30-year-old bedding designer in Manhattan, devotes her weekends to scanning the classifieds and attending open houses, searching for just the right one-bedroom apartment for less than $750,000. She can?t find it. ?I made a mistake,? she said last week. ?I should have started looking before Thanksgiving.?

Mr. Miller said New Yorkers had been reluctant to buy because of the feeling of an impending crash. ?Last summer, a lot of information was being dumped on the consumer: stories about the glut of condos in Miami, Washington, D.C., and Las Vegas, exacerbated by the constant debate on the blogosphere about housing bubbles, mixed together with a barrage of negative predictions,? he said in a telephone interview.

Although no one can pinpoint the moment when New Yorkers started feverishly buying again, Kirk Henckels, the director of the private brokerage division of Stribling & Associates, said he thought the luxury market picked up after Labor Day.

He and others said the resurgence was partly fueled by the fall?s record-setting (and well-publicized) sales of a few multimillion-dollar apartments and town houses, like the Stanford White limestone palazzo at 25 East 78th Street bought by Mayor Michael R. Bloomberg for $45 million and the Harkness mansion at 4 East 75th Street sold in October for $53 million.

Then came this year?s stratospheric Wall Street bonuses, and the market exploded, real estate executives said.

?The plunger that freed up all the hesitation at all price levels was those bonuses,? said Diane Ramirez, the president of Halstead Property. ?It cleaned the pipes and gave confidence to even small apartment buyers.?

Within the last month, the Corcoran Group, Halstead and Prudential Douglas Elliman, three of New York City?s largest real estate sales firms, say they have recorded double-digit increases in contract prices and in the number of transactions.

In a real estate market where 18 and 22 percent price increases were recorded in 2004 and 2005, last year?s 6 percent increase was depressing, Mr. Miller said.

Pamela Liebman, the president of the Corcoran Group, reported that the company?s contracts for this January totaled $1.3 billion, an increase of 53 percent from January 2006.

Prices in many areas of Brooklyn are going up, too. According to Marc Garstein, the president of Warren Lewis Realty in Park Slope, prices in what he called the downtown neighborhoods ? including Brooklyn Heights, Park Slope, Carroll Gardens, Cobble Hill, Prospect Heights and Windsor Terrace ? are now approaching 2004 highs, after being off about 10 percent in the last two years.

A town house at 171 Garfield Place in Park Slope, priced at $2,475,000, sold for the asking price one day after it was put on the market. Fifty people had shown up at the open house, Mr. Garstein said.

Customers said they had expected a buyer?s market in which they could call the shots, but found a race track, instead.

Jane LaFarge Hamill, a 25-year-old painter who lives in a ?small, kind of stinky? studio in Chinatown, said she had looked at 60 apartments over three months, trying to take advantage of the lull she had noticed. ?We decided to look while sellers were still worried that the market was crashing,? she said.

When she started looking last fall, there was still ?wiggle room,? she said. But now, there is frenzy, said her mother, Leita Hamill, who, with her husband, Bill, is helping her daughter search for and buy a new home. The Hamills had gotten into a bidding war, one of many reported by brokers these days, for a two-bedroom co-op in Gramercy Park. They had started bidding above the asking price, but it wasn?t enough.

?There were people bidding on the apartment sight-unseen,? Mrs. Hamill said. The victors got the co-op through a sealed bid, she said. ?It was like a pair of shoes that you absolutely had to have,? she said.

Real estate executives say they do not know how long the market?s heat will be turned up, although they say the regional economy looks strong.

They also say that the first two quarters of the year ? the spring market ? are traditionally stronger than the last two. Thus, the average for the whole of 2007 may or may not show the double-digit growth that the first part of the year is showing. ?It?s all about price now,? Ms. Ramirez said. ?The market is not in a spike mode, when anything, for any price, will sell.?

Ms. Ramirez, who has sold real estate for more than 30 years, said she expected that the current rocketing growth would be followed by a period of slower yet steady increases. ?I don?t want to hear, ?Oh my gosh, the market is slowing up again,? ? she said. ?With the number of deals we had last week, it has to calm down. But I feel much more confident than at any time in the last five years when the market had fits and starts and there was always a certain underlying nervousness.?

Toward the end of 2004, the real estate market in the city was booming. But then, brokers started seeing ?great concern among clients that mortgage rates were about to jump and that house prices would suffer a sharp correction,? Mr. Miller said.

Since then, there has been change of leadership in Congress, Mr. Miller noted. In the region, unemployment has dropped. Mortgage rates didn?t soar. ?Two years ago, we were predicting they?d be up to 8 percent now,? he said. (Rates for a 30-year fixed loan on a New York City co-op hover around 6.25 percent, according to the Manhattan Mortgage Company.)

After months of trying to push shoppers over the edge of indecision, brokers now say they spend time warning house hunters not to rush in heedlessly ? advice the would-be buyers don?t always listen to.

?When my wife and I got into the market in mid-December, people told me there was a glut of one-bedroom apartments and I could take my time,? said Shelly Cohen, 51, an empty-nester. ?When we actually got into the market, I found it was just the opposite.? He just found a newly created condominium in a beige brick high-rise at 1438 Third Avenue at 81st Street and quickly signed the contract. He said he felt he had to.

Mrs. Hamill, the mother of the young artist in Chinatown, offers her own advice to friends.

?Now I tell everybody: Be ready to write the check the minute you see something you love,? she said. ?If it?s any good, it?ll be gone by the next day.? She paused. ?Or, even by that same day.?



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