The estate encompasses 47 prime acres 20 minutes south of San Francisco, halfway between the city and Silicon Valley. “This is the first time since this land was acquired 150 years ago by the de Guigne family that such a large amount of land in such a desirable location is coming to market,” says Gregg Lynn, a Sotheby’s International Realty agent co-listing the property with colleague Bernadette Lamothe. “In the town of Hillsborough all of its large estates have been subdivided over the last 50 years and this estate remains one of the only two [of this size] left.”

The sizeable acreage is the main driver behind the listing’s lofty price tag: $100 million. That princely sum makes the de Guigne estate one of the most expensive homes for sale in the U.S.

To compile our annual list of America’s most expensive homes for sale, we sorted through listings on Realtor.com, Trulia TRLA -0.13%.com, Sotheby’s International Realty, Christie’s International Real Estate (and its affiliates), Coldwell Banker Previews International (and its affiliates), The Agency, and others. And, since some ultra-expensive homes never officially hit the market, with their owners choosing to shop quietly for wealthy buyers through well-connected brokers, we included pocket listings that could be confirmed. The resulting list encompasses more than 30 homes, all priced $60 million and up.

While real estate across the U.S. slowly recovers from the collapse of the housing bubble, the super luxury market is currently rivaling, and in some cases even trumping, bubble-era prices. Thanks to a handful of recent record purchases – including a November $117.5 million Silicon Valley sale – an increasing number of high-end home owners are attaching ambitious nine-figure price tags to their digs.

Like the de Guigne estate. There are other properties on the market in the $100 million range, but this home comes with an unusual condition attached: the owner, Christian de Guigne IV, 75, is requiring that the buyer allow him to inhabit the premises until his death. Nonetheless, there’s plenty of interest, according to Lynn, particularly from wealthy foreigners looking for a hard asset in which to park their cash. The Era Of The $100 Million House Morgan Brennan Morgan Brennan Forbes Staff Inside America’s Billionaire Housing Boom Morgan Brennan Morgan Brennan Forbes Staff Brokedown Palaces: Mega Mansions That Have Faced Foreclosure And Bankruptcy Morgan Brennan Morgan Brennan Forbes Staff Manhattan’s Now Home To America’s Most Expensive Zip Code Morgan Brennan Morgan Brennan Forbes Staff

On the East Coast another similarly enviable slice of land is listed for an even larger sum. Copper Beech Farm encompasses 50 exclusive waterfront acres in Greenwich, Conn., a tony Wall Street-centric suburb of New York City. At $190 million, it is far and away the most expensive home for sale in America.

“There’s nothing like this and the second-to-last one that existed, on about the same acreage, sold in 1952,” listing agent David Ogilvy of David Ogilvy & Associates, a luxury Greenwich realty firm affiliated with Christie’s International Real Estate, told FORBES in May.

For that staggering sum, the buyer gets an 1890s French renaissance-style mansion encompassing 13,519 square feet that includes 12 bedrooms, seven full baths and two half baths, a wood-paneled library, an ornate dining room with a tracery ceiling and oak columns, a solarium, a wine cellar, a third-floor staff wing, and a three-story, wood-paneled entry foyer. The grounds, which include two islands in Long Island Sound, boast a clock tower-bedecked carriage house, a guardhouse, formal gardens, multiple greenhouses, an apple orchard, a grass tennis court and a 14-sided swimming pool with an accompanying octagonal pool house.

Ogilvy says he calculated the $190 million asking price off of numerous comparables (of which none are even remotely as large), having crunched the average sales prices per acre for close to a dozen nearby properties.

New York City has about two dozen available homes priced $30 million or higher, according to Jonathan Miller, chief executive of New York-based real estate appraiser Miller Samuel. Nine make our list, including the penthouse atop the Hotel Pierre. Located on the south side of Manhattan’s Central Park, it’s listed for $125 million, tying it for fourth most expensive home in the country (alongside Los Angeles’ $125 million Fleur de Lys).

The Pierre penthouse spans 12,000 square feet across three floors that tout five bedrooms, six full baths, staff quarters, a marble staircase, a private interior elevator, a 3,500-square-foot ballroom-turned-grand salon and sweeping 360-degree views of Central Park and the surrounding city. The unit boasts access to hotel amenities like room service as well – for a hefty monthly maintenance fee of $42,720, or an annual expense of $512,640.

The co-op apartment first graced the sale block in 2004 with a $70 million price tag. After a wealthy buyer capable of passing the building’s infamously exclusive co-op board failed to materialize, the home, owned by finance maven Martin Zweig, was quietly delisted. After Zweig passed away in February, it came back on the market – at nearly 80% more.

The Big Apple AAPL -0.12%’s super luxury market has diverged from city’s general real estate trends, notes Miller. Several unprecedented sales including a $88 million penthouse in 15 Central Park West and two penthouses in up-and-coming One57 in contract for $90 million-plus apiece have propelled some owners to optimistically list their abodes with lofty price tags in the hopes of securing similarly deep-pocketed buyers.

Among the most expensive: hedge fund billionaire Steve Cohen’s $115 million Bloomberg Tower duplex, a 9,000-square-foot condo designed by architect Charles Gwathmey; real estate developer Steven Klar’s $100 million CitySpire penthouse, an octagonal-shaped 8,000-square-foot condo now offered as a For Sale By Owner listing after it failed to find a buyer while listed more traditionally via luxury brokers; and a $95 million Sherry Netherland full-floor co-op, a 15-room flat touting a solarium, separate staff quarters on separate floors and a $54,000-per-month maintenance fee that includes daily housekeeping, turn-down service and room service from posh restaurant Cipriani’s.

Six Los Angeles County abodes grace our list, the majority located within the coveted Platinum Triangle of Holmby Hills, Bel Air and Beverly Hills. Fleur de Lys, socialite Suzanne Saperstein’s Holmby Hills mega mansion, is perhaps the best known thanks to a steadfast asking price of $125 million — despite bouncing on and off the market for six years.

Compared to that, the Carolwood Estate, located directly across the street, seems like a relative bargain at $90 million. Known best as Walt Disney DIS +1.24%’s former family home, the compound occupies four gated acres that include a 35,000-square foot mansion built in 2001, a pool with accompanying pool house, a tennis court, a putting green, a wine cellar and best of all, remnants of Walt Disney’s Carolwood Pacific Railroad, the one-eighth-scale backyard train said to have inspired Disneyland.

Other opulent abodes include the nearby Beverly House, the former Beverly Hills estate of William Randolph Hearst , which can be purchased for $115 million (or rented for a stunning $600,000 per month) after the owner hiked its original $95 million price tag, and Dallas, Texas’ Crespi-Hicks Estate, a 25-acre Mayflower Estates compound also listed sans MLS, with an asking price of $135 million.

Several homes that have graced our list in years past remain on the market, albeit with price chops. The most notable perhaps is Casa Casuarina in Miami. The South Beach home-turned-boutique hotel, better known as the Versace Mansion due to its tragic history as the former residence of the late fashion designer, first came to market in 2012 for $125 million. Several pending foreclosure-related lawsuits later, the manse has undergone two reductions and currently is on the block for $75 million.

Here’s how experts predict the market will play out this summer–and how you can prepare as a buyer or seller.

The summer 2013 market outlook

Inventory was near a 12-year low in the first quarter of 2013, says Jonathan Miller, president of appraisal firm Miller Samuel. And it’s likely to stay that way.

Miller expects an active summer market with strong activity.

“I don’t think we’re going to get a lot of relief from any of the new development hitting the market,” says Miller. New developments are targeted towards the “upper echelon” –which often means high net worth or foreign buyers who pay in all cash.

“It seems like it’s pre-2008 all over again, where you’ve got 100 people coming to open houses and sometimes 10 or more offers coming in over the asking price,” says real estate attorney Adam Stone of Regosin, Edwards, Stone & Feder. “From what I hear, it’s very frustrating for buyers.”

What if you’re looking to sell?

Because demand is outpacing supply, asking prices are often increasing. In particular, “All of downtown is busy,” says real estate agent Dan Bamberger of Citi Habitats.

Most sellers can expect strong demand, and usually don’t need to be concerned about whether their home will sell if priced appropriately.

“The answer is going to be almost always yes, unless there’s something strange about your property,” says Stone.

Bamberger encourages sellers to be “flexible” when it comes to holding open houses and to have as many as possible to accommodate summer and weekend vacation schedules. That said, though traditionally weekend open houses can be slower than weekday open houses during the summer, he expects solid traffic both on weekends and weekdays this year because of high demand.

Perhaps the biggest question for sellers is whether they can get a good deal for their next apartment and ultimately come out ahead after selling for a profit.

Some of Stone’s clients have decided to take temporary rentals.

“They’ve sold, and they’re done, they’ve got their money. And they’ll figure out what they can buy afterwards,” he says. Being able to offer full cash bids in the future also gives them a big advantage over buyers who need financing.

An important turning point–which may come within the next few months–will be if prices begin leveling off, which could encourage more sellers decide to list their units and help increase supply.

“I expect at some point in time that there will be some new psychology change: We better sell now or prices will go down,” says Bamberger.

Generally speaking, sellers should look for an all-cash buyer or a buyer willing to waive mortgage the mortgage contingency in order to avoid any potential financing wrinkles.

If you accept an offer from a buyer who needs financing, bear in mind that in a rising market like this one–and especially in a bidding war situation–there’s a bigger possibility that your apartment will appraise too low. So if you do agree to a mortgage contingency, consider a reduced contingency clause.

“You and your buyer agree that if the appraisal comes in too low for the amount of the loan, the buyer will make up the difference in cash and accept a lower loan amount from the lender,” says Stone, the attorney. “For instance, instead of the bank lending 80% of the sales price, it will lend 80% of the appraised value. If you have this limited appraisal contingency and the appraisal comes in $50,000 lower than the sales price, the buyer has to put in $10,000 more cash instead of having the right to cancel the contract.”

How to prepare as a buyer

Besides a willingness to go above list price in many cases, buyers who are on the hunt this summer need to have strong financial credentials, says Miller: “It’s all about your ability to close.”

While cash offers are still expected to hold sway this summer, if you need financing, get yourself prequalified first–a quick process that can usually be completed online. You’ll submit a standard uniform residential loan qualification form and details like income, assets and a credit report, says Robbie Gendels, a senior loan officer of National Cooperative Bank in Manhattan.

Buyers who can put up a 20 percent downpayment and have a credit score of at least 680 will have the best chance of getting a mortgage, says Gendels, noting that employees with regular salaries tend to have an advantage over those who are self-employed.

To compete against all-cash offers, you may need to waive your mortgage contigency (or agree to a reduced contingency as described above), as well as abandon hope of negotiating a funding contingency, which would protect you if the bank decides not to lend for reasons having nothing to do with you personally. The risk of the latter can be mitgated by asking your lender to pre-approve the building too, says Gendels of National Cooperative Bank.

Also important during the summer months: Get a lawyer who is “here, available and can move quickly,” says Stone.

And if you are a buyer battling it out in a bidding war…

Thanks to the strong sellers’ market, more and more buyers may find themselves embroiled in bidding wars. Here are some tips for coming out on top:

Make an all cash offer if you can. If you can’t, and you feel comfortable that you’ll be approved for a mortgage, waive any financing contingencies. (As noted above, to get comfortable that the building itself will be approved by your lender, ask your lender to pre-approve the building before you sign the contract.)

Don’t be afraid to show interest. Sellers will often think favorably about someone who’s passionate about thier apartment. Playing it too cool may be underwhelming for a seller.

Stay in touch with the listings broker to find out things like how long it’ll take the seller to accept an offer, how many rounds of bidding there will be and whether anyone’s offered all cash.

Try to accommodate the seller. If they want to close quickly, let them. Or do they want to stay in the apartment longer? Sure.

Put a clear deadline on your offer.The seller may be more compelled to take your offer, and at least you’ll know the status sooner rather than later.

Apply a personal touch. Some sellers are swayed by a personal letter explaining their situation. Obviously this is something that’ll affect long-time owners and not developers.

Finally, even if a seller accepts your offer, prepare for the possibility that you are not the only “winner”–and, whether you know it or not, whoever gets a signed contract first will win.

Move through the due diligence and contract negotiation phase as quickly as you can, and don’t get hung up on any issues that are trivial in the grand scheme of things, says Stone.

If you suspect you’re in a race against other buyers, make sure your attorney knows that time is of the essence, and come up with ways to improve your offer.

These may include raising your bid, raising your downpayment (to show you’re serious), waiving a mortgage contingency, accepting the seller’s demand for a specific closing date, or even allowing the seller to rent back for a short period of time if they need to, says Stone.

Confused about the direction of the housing market? It’s no wonder. You hear stories about sellers slashing listing prices to attract buyers, but home prices nationally have risen more than 10% over the past year. Inventories of unsold homes are on the rise, yet homebuilder Lennar Corp. just reported a 34% jump in earnings. And the much feared rise in 30-year mortgage rates seems to have stalled.

In this muddled situation, what should you do, whether you’re on the buyer’s end of the seesaw or the seller’s? Cut your price now or hold out for more? Rent or buy? Go for a bigger house or a smaller one? In the New York City suburb of Larchmont, N.Y., where prices are off their peaks, confusion reigns. Says Realtor Carol Higgins: “Buyers are complaining that prices are astronomical, but sellers are still thinking they’ll get what they saw their neighbors get last year.”

Let’s be honest: No one can predict with certainty which way home prices will go in the next year or so. Over the past several years almost everyone who has tried to forecast the direction of the housing market has been wrong (though BusinessWeek Chief Economist Michael Mandel takes a shot).

We can, however, tell you how to avoid some critical psychological and financial mistakes in today’s anxious markets. No matter how smart you are, it’s easy to fall into certain mental traps that can cost big bucks. Instead of concentrating on the fundamentals, people tend to be ruled by their feelings and the compulsion to compare themselves with their neighbors. If your brother-in-law made a killing in real estate, you’re determined to do the same. “So much of what drives the housing market is human interpersonal dynamics,” says Yale University economist Robert J. Shiller.

What follows is a set of practical guidelines for navigating today’s choppy and uncertain real estate markets. The suggestions come from behavioral economists, who study the kinds of erroneous decisions people tend to make repeatedly, as well as from hands-on real estate experts. In addition we’ll tell you which cities are more vulnerable to a drop in prices and which are less at risk.

CONTRARIAN COOL

A first rule of thumb is to avoid herd behavior, which is what lured a lot of people into overpriced houses in the first place. The expectation of rising prices became a self-fulfilling prophecy as office mates and in-laws tried to leapfrog each other. The prevailing mindset: “You see people who aren’t particularly talented, who aren’t hard-working, who buy a house with nothing down, and they’ve been getting rich doing it. If they’re getting richer, then you’re falling behind,” says Robert H. Frank, a Cornell University economist and author of Luxury Fever. Another attraction of herd behavior is safety in numbers. Millions of buyers can’t all be wrong, can they?

Also, behavioral economists have discovered in laboratory experiments another attraction of herd behavior. Misery really does love company: People seem to worry less about losing a lot of money if they think everyone around them will suffer the same fate.

Still, the rewards of thinking independently can be high. Richard X. Bove, a financial services analyst at boutique investment bank Punk, Ziegel & Co., put on his green eyeshade and concluded that Florida real estate was overpriced. So earlier this year he bailed out. Bove sold his 5,600-square-foot St. Petersburg (Fla.) home for $1.2 million, twice what he paid for it a decade ago. The plan was to rent while he waited out a housing decline. But Bove couldn’t find a suitable rental, so he lowballed a four-bedroom house in Tampa and got it for $740,000 — 30% below the asking price.

In a softening real estate market, one of the most dangerous mental mistakes is what behavioral economists call “loss aversion,” which is the tendency to do dumb things to avoid, at all costs, recording a loss. Some sellers are so averse, they gamble the market will bounce back rather than cut their prices.

Indeed, real estate agents often have a much clearer idea than sellers that demand has softened. “The hardest thing is to convince the sellers of the change in the market,” says Alfonsina Rechichi, an agent at Coldwell Banker Residential Brokerage in Katonah, N.Y. “There’s a sense of fear among brokers that you sense at open houses,” says Saul Greenstein, a renter in Washington, D.C., who suspended his house search because prices were too high. “The self-confidence you saw a year ago has been replaced by fear and pandering.”

Even owners who stand to make a big profit on a sale often set the price too high. In this case the mental error isn’t loss aversion but outdated thinking. New research shows that sellers set their listing price, in part, based on information six months to nine months old. That means if you don’t pay close attention, you will tend to underprice in a rising market and overprice in a falling one.

STUNG ON BOTH ENDS

Two smart people who just might be guilty of that in the New York City suburbs are Joe Watson, a neurosurgeon, and his wife, JoAnn, who has a PhD in genetics. In relocating from New Rochelle, N.Y., to McLean, Va., they planned to come out even by selling and buying at roughly the same price: $1.2 million. Now they’re getting stung on both ends of the transaction. The Virginia house is costing them “significantly more” than $1.2 million, and they can’t get what they want for their 1937 Tudor in New Rochelle. Says JoAnn: “We were advised by two brokers to price it initially at $999,999, but my husband and I wanted to start at $1.19 million because we thought we could get it.” Even after nudging the price down to $1.09 million, though, there haven’t been any offers. JoAnn has taken to blaming the shoppers. “It’s a great house,” she complains. “Why doesn’t anyone realize it?”

The gravest danger of dragging your heels on price cuts in a sinking market is that you can “follow the market down,” never managing to sell because your price is always just a little too high, says Christopher J. Mayer, a Columbia Business School economist. He and David Genesove of Hebrew University in Jerusalem found that when prices were falling in Boston in the early 1990s, two-thirds of the houses that came on the market were eventually withdrawn without a sale.

In parts of the country where the market is still strong, a common sin continues to be overconfidence. Owners typically don’t seriously consider a wide enough range of potential housing market outcomes, including the possibility of a steep decline. That leads people to take more risks than they should.

Nordstrom Inc. managers Robert J. Gelb, 50, and his wife Cindy, 47, of Mercer Island, Wash., own the house they live in as well as two they bought for their children. Gelb says last year’s appreciation on the house his son occupies was greater than his son’s salary at Nordstrom’s. For the house they bought for their college-student daughter, they put down 3% and got a negative-amortization loan, which Gelb says makes it a better deal than renting her a dorm room. “Worst case is that I sell it for what I paid for it,” he says. His take on housing is nonchalant: “Even if it is a bubble…it would be a slow leak. Maybe some people would say I’m naive, but I don’t see a downside.”

Optimist Gelb is well-off enough to take a slump in stride. Still, he might want to have a conversation with Linda R. Fink, 57, who manages a city park with a bicycle-racing track in Indianapolis. She knows all about slow leaks. Fink bought a house in November, 2000, for $120,000. At the time, Fink says, she viewed the purchase as an investment and reassured herself that “if something happens five or six years down the road, I’ll be O.K. I can sell it and get out.”

Instead, Fink watched home prices in her neighborhood fall and fall. She bailed out in 2004 for $92,000 in a “short sale,” meaning the lender got the proceeds of the sale but not all it was owed. Says Fink: “It all just blew up on me.”

Rent-vs.-buy decisions are a perfect example of what the housing market can learn from behavioral economics. If financial efficiency were all that mattered, more people would be renting nice houses instead of buying them, even taking into account the home mortgage-interest deduction. But there’s something comforting about owning the place where you lay your head on the pillow each night. “It’s worked out so phenomenal,” exults first-time buyer Obrey M. Minor, a 27-year-old special education teacher who bought his first house last year with his wife in the Houston suburb of Katy.

You can hear how much homeownership matters by talking to people like Annapolis (Md.) renter April McKinley, a health-care consultant who recently moved with her police officer husband from Pittsburgh to the Washington (D.C.) area and ran smack into a wall of high prices. “Here I am, a productive citizen, and I can’t afford to own a piece of it,” says McKinley.

Especially in upscale communities, social pressure to buy is intense. Jonathan Miller, CEO of real estate appraiser Miller Samuel Inc., recalls that when he and his family moved to upper-crust Darien, Conn., 15 years ago and rented for a year, “we were absolutely second-class citizens. It was very unpleasant.”

Call it “castle thinking” — the notion that a home is a fortress against a cruel world (table). And it’s perfectly defensible. But in many markets the total monthly costs of renting are far below the total monthly costs of owning the same property — 62% cheaper in San Diego, for example, according to Boston-based Torto Wheaton Research, a unit of property manager CB Richard Ellis Group Inc. So you owe it to yourself to be aware that your castle thinking can be a costly predilection.

Neuroscientists have even discovered the place in your brain that makes you spend too much on a house. Far from behaving perfectly rationally, real people are pushed and pulled by signals emanating from below the neocortex — the primitive “lizard brain.” That may be why there are so many homes with empty marble foyers, faux Roman columns, dust-collecting Jacuzzis, and exotic drooping conifers on the lawn.

MANAGE YOUR CRAVINGS

What people can do is be aware of their human tendency toward status-seeking. Cornell’s Frank suggests channeling the drive more productively. If getting your kids into a good school district is a priority, for example, try to satisfy your lust for status by buying a smallish house in a prime school district instead of a showplace in a worse one. “You have some choice,” says Frank. “There’s room to do better.”

A foible that helps account for America’s obsession with real estate is what you might call the tangibility fallacy. It’s the all-too-human tendency to regard tangible things like houses as more stable and trustworthy than intangible ones like stocks and bonds. It’s true that a house provides more comfort than a book entry in a stockbroking account. But that doesn’t mean it’s a better investment.

In fact, except for the past few years, house prices have risen only 1% or so faster than the rate of inflation. But just try telling that to Ron DeLucia of Jacksonville, Fla., who at the age of 68 is selling his current home and buying a bigger one across town, in part because he and his wife think a house is a more trustworthy asset than shares of stock. Says DeLucia: “We all went through the crash of the market. I lost $150,000. You never get that money back. I think the stock market is going to go down. I’d rather put the money we have in hard assets like property.”

And finally, it’s easy to lose your head over housing if your thinking isn’t disciplined. To find your moorings, try to focus on the fundamental factors that determine value. On that score it’s somewhat reassuring to realize that prices in the U.S., though high, are not out of line with other major countries. Finding properties that are exactly comparable is difficult. But in an unscientific survey, BusinessWeek correspondents rounded up listings for a few homes for sale around the world. There’s a four-bedroom in Kleinmachnow, a pricey suburb of Berlin, going for $525,000. In the upscale Golders Green neighborhood of London, 20 minutes from the city center, a four-bedroom house is on the market for $1.56 million. And in Tokyo’s Suginami Ward, three bedrooms squeezed into a cozy 987 square feet go for $566,000. These kinds of prices have a familiar ring.

READING THE TEA LEAVES

Within the U.S., however, prices in some housing markets do raise red flags. A good starting point is to look at the affordability of homes for ordinary families. By that measure greater Los Angeles was the worst in the nation in the fourth quarter of 2005. Only 2% of homes sold there were affordable by families earning the area’s median income, according to the National Association of Home Builders. New York wasn’t much better at 6%. Other expensive big cities included San Francisco at 7%, Miami at 14%, Boston at 24%, and Washington, D.C., at 27%. Tops in affordability among big cities were places like Dallas, with 60% of homes sold affordable by median-income families, San Antonio and Houston at 57%, and Chicago at 48%.

Of course, unaffordability is a chronic condition in cities like New York, so it’s not necessarily evidence that a sharp correction is in the offing. Economists at Global Insight Inc. and National City Corp. deal with that by looking at whether metro areas have departed from their own historical trends in affordability. They conclude that in the fourth quarter, 42% of the top 299 metro markets were “extremely overvalued and at risk for a price correction.” Florida and California dominate this historically adjusted list. Boston and New York look more reasonable by this measure, and San Francisco appears a bit less bubbly. Texas still comes out looking cheap.

Yet another way to identify a problem area is to compare rents to sales prices. The idea here is that if people’s monthly payments to own a house are much higher than what they would spend to rent the same place, tax considerations included, then they must be banking on prices going up so they can sell for a profit someday. That leaves them exposed if prices don’t rise. By this measure, San Diego is one of the frothiest areas of the country. But Tampa, Orlando, and New York, which come out as expensive by some other measures, aren’t so costly by this one.

This year millions of American households will buy a home. The process will always be lengthy and a big deal. But whether you are a buyer or seller, you don’t have to feel quite so lost.

This comes on the heels of a 1 percent drop in April, and Miller Samuel president Jonathan Miller said, “The market seems to be taking a bit of a breath. I’m not sure if this is a continuing trend.” There’s also been an overall increase in the actual number of rentals on the market.

Which is still probably a temporary blip, but notable at a time when Manhattan rents continue to climb steadily (the median jumped from $3,093 in May 2012 to $3,200 in May 2013), and maybe a harbinger of future outer-borough trend pieces to come: “I think the beneficiary of this rental growth and sales growth is going to be Queens, especially markets like Long Island City,” Miller told Brownstoner. “In many ways, the commute is simpler if you work in Manhattan.”

They bought the two-bedroom condominium in an oceanfront golf resort for $429,000 in April. Values this year in the Hilton Head area jumped 11.1 percent from the first five months of last year and sales rose 9.3 percent, according to the South Carolina Association of Realtors. Prices are still down by about a third from 2007, near the real estate market’s peak.

“We knew several other people were looking at it and it wouldn’t last long,” said Leslie Tyree, 44, a lawyer who first saw the home two weeks before the closing. “We realized if we are going to do this at some point we might as well do it now.”

The surging buyer confidence underpinning the year-old rebound in U.S. property prices — driven by mortgage rates near record lows — is spilling into seasonal communities from Lake Tahoe in California to the Berkshires in western Massachusetts.

Vacation-home demand relies on discretionary spending and typically lags behind the broader housing market by about one or two years, indicating secondary properties are on the cusp of a recovery, according to Jeff Meyers, a housing-research consultant with Beverly Hills, California-based real estate firm Kennedy-Wilson Holdings Inc. (KW)

Markets Strengthen

“We’re starting to see a lot of resort markets really strengthen,” Meyers said. “Prices going up in the core markets has a big influence on what people do with their vacation homes and their ability to purchase them.”

U.S. home prices rose 12.1 percent in April, the biggest jump since February 2006 and the 14th consecutive year-over-year increase, according to CoreLogic Inc. That’s helping more Americans feel optimistic about their futures, with the Conference Board’s consumer-confidence index climbing to a five-year high last month.

Asking prices in vacation areas have advanced more slowly. On a per-square-foot basis, May median prices in primary markets jumped 7 percent from a year earlier, compared with a 1 percent increase in areas where at least a quarter of properties were seasonally occupied, according to Trulia Inc. (TRLA)

List prices were up 1.6 percent in the Hamptons on New York’s Long Island, 1.4 percent in Dewey Beach in Delaware, and 8.9 percent in the Big Bear Lake and Lake Arrowhead areas near Los Angeles, the housing-data company said.

Increases Accelerate

“A vacation home is not most people’s first purchase as we emerge from a recession,” said Jed Kolko, chief economist of San Francisco-based Trulia. “But if the recovery continues we could see the price increases accelerate.”

Second-home sales climbed 11 percent last year to 553,000, according to a survey by the National Association of Realtors. That compares with the peak of 1.07 million in 2006. There will be a “meaningful upward movement” in vacation-home transactions this year and into 2013, Lawrence Yun, chief economist for the Realtors group, said June 7 at the National Association of Real Estate Editors conference in Atlanta.

Sales of getaway homes may increase to 650,000 by 2015 and then plateau for several years at about 600,000, according to Chris Fair, president of Vancouver-based Resonance Consultancy Ltd. The firm produces biannual reports of spending on travel and leisure by affluent Americans, defined as families with incomes above $150,000.

Emerging Destinations

Beach and mountain retreats near growing cities or those with long histories are likely to see the fastest rebound, Fair said, such as Lake Tahoe, south Florida, Hawaii and Martha’s Vineyard, off the Massachusetts coast.

“It’s the ‘A’ destinations that are going to recover faster than emerging destinations,” Fair said. “There were many projects that were launched in areas that were not the traditional vacation destinations in hard-to-get-to places, and those are the ones that are going to take the longest and may not ever recover to the peak prices.”

Places such as Central Oregon and the Florida Panhandle where there was a lot of overbuilding and limited populations within driving distance are likely to struggle to revive holiday-home sales and prices, he said.

Nationally, second-home sales will be limited because the U.S. population aged 45 to 54, the prime buying market, will decline by about 8 percent from 2010 to 2020, he said.

Demographics Driven

“We certainly don’t see a return to highs that we saw in 2005 or 2006, when it was over 1 million,” Fair said. “We’re unlikely to see that level of sales for the next 10 to 20 years, largely just driven by the demographics.”

Changes in mortgage rules may also curb demand. The Senate Finance Committee and the House Committee on Ways and Means are considering altering the tax code, including possible limits on mortgage interest deductions for non-primary residences.

In some vacation areas, prices have already begun to follow or even exceed surges in primary markets. With Los Angeles-area home prices up 30 percent in the 12 months through May, the California desert getaways where Liberace, Frank Sinatra and Bob Hope owned weekend estates are following with a jump in values and a revival of construction, said Michael Hilgenberg, an owner of broker Keller Williams International franchises in resort towns including Palm Springs, Rancho Mirage, Big Bear Lake and Lake Arrowhead.

Prices rose 24 percent in Palm Springs and 25 percent in Rancho Mirage in the 12 months through May, according to DataQuick, a San Diego-based research firm.

Buy Two

Attractive prices and historically low mortgage rates spurred Alon Antebi, an orthopedic surgeon who lives in the Los Angeles suburb of Santa Clarita, to buy two vacation homes this year. In April, he paid $775,000 for a 3,400-square-foot (316-square-meter) mountain log cabin in Big Bear. In May, he bought a 4,800-square-foot dockside retreat in the coastal city of Oxnard for $2 million.

Antebi, 42, negotiated a 10-year mortgage at 3 percent from Wells Fargo & Co. for the Big Bear house, on which he made a 50 percent down payment. He got a 3.25 percent rate on a 30-year loan from Bank of America Corp. for the Oxnard house.

Antebi, a father of two children ages 8 and 10, is also considering buying a third getaway home within driving distance.

“I wanted a place in the mountains and the beach,” he said in a telephone interview. “I did it because I want to enjoy life, but it just happened to be the right time, where interest rates are really good.”

Lake Tahoe

Lake Tahoe, about 190 miles (306 kilometers) northeast of San Francisco, was among the first resort areas to bounce back from the recession as the Bay Area’s technology industry fueled fortunes among young families.

At Martis Camp, a ski and golf resort northwest of Lake Tahoe, 73 properties sold this year through the first week of June, compared with 117 in all of last year, said Brian Hull, director of sales at the golf and ski resort. Typical buyers are technology or finance executives in their mid-40s who pay $900,000 per lot and spend $2.4 million to build, he said.

“We sold OK through the whole thing,” Mark Kehke, president of Martis Camp’s developer, DMB Pacific Ventures, said in a telephone interview. “Things were definitely better in ’11 and ’12 and we’re doing even better this year.”

In Hawaii, vacation-home demand has recovered as investors from the U.S. mainland and Asia return after a five-year slump, according to Kevin Miyama, president of the Honolulu Board of Realtors. Home prices in the state soared 17 percent in April from a year earlier, according to CoreLogic.

Luxury Market

“What’s really kind of picking up is the luxury market,” Miyama said.

Luxury property sales surged at the end of 2012 in Martha’s Vineyard, a summer retreat for President Obama and actors Larry David and Ted Danson, and the Hamptons, where radio talk show host Howard Stern and comedian Jerry Seinfeld have homes. The rush, prompted by an expected jump in capital-gains taxes at the start of 2013, may have pulled forward transactions that would have happened this year.

In the first quarter, the median sales price in the Hamptons fell 5.1 percent to $740,000, reflecting a drop in higher-priced sales, according to appraiser Miller Samuel Inc. and brokerage Douglas Elliman Real Estate. In the year through April, Martha’s Vineyard prices rose 8 percent and sales fell 24 percent, reflecting a drop in inventory, according to Warren Group, a real estate tracker.

Berkshire Mountains

“The fourth quarter was one of the best in several years in terms of local activity, which ultimately cleaned up a lot of the inventory,” said John O’Connell, broker and owner of Vineyard Realty Group in Edgartown, Massachusetts. “Options are limited.”

Prices are picking up in the resort towns of the Berkshires in Massachusetts, where inventories are shrinking, said Chapin Fish, broker at wm. Brockman Real Estate in Great Barrington. Sales in Berkshire County fell 9 percent for the first four months of the year and prices climbed 13 percent, according to Warren Group.

There were enough properties on the market in the southern part of the county in April to last 21 months, down from 29 months a year earlier and 42 months two years earlier, according to the Berkshire County Board of Realtors.

“More started moving for us but we still have a lot to go,” Fish said. “The real premium homes above $1 million are slow. For the lower-priced homes, it has been crazy busy.”

The Tyrees jumped into the Hilton Head market because they wanted to own a piece of oceanfront property before bargains dry up. When their family isn’t using the condo, Scott Tyree plans to offer weekends at the house as a bonus for the best employees at his law and real estate firms, Leslie Tyree said.

Foreclosures Spiked

Demand for properties on the island, known for its golf courses and white-sand beaches, surged during the housing boom as Americans borrowed to buy second homes. After the crash, foreclosures spiked as homeowners who stayed current on primary properties allowed vacation homes to go delinquent, Hilton Head real estate attorney Tom Brooks said.

Foreclosures in the first quarter dropped 39 percent to 542 compared with the same period in 2010, according to RealtyTrac, an Irvine, California-based data provider.

The Tyrees’ agent, Lea Allen, has been selling in the market for more than two-and-a-half decades and said it’s the busiest she’s been in years. Her annual income plunged from about $100,000 in the worst year of the housing boom to about $30,000 in the leanest years of the crash, spurring her to start teaching yoga for additional income.

She earned $60,000 in May alone.

“It’s exciting — it feels like you have your job back,” Allen said. “I don’t have to teach yoga any more. I get to go and enjoy yoga.”

Park land as a % of city area: 15.1% Spending on parks per resident: $210

“You can’t have a great city without a great park system,” said Adrian Benepe, senior vice president at the non-profit Trust for Public Land, which recently released its ratings of city park systems.

Minneapolis’ parks ranked number one thanks to the services it offers, like its management of community sports leagues, and ease of access for residents.

No matter where a person lives in the city, they are no more than six blocks away from one of the city’s 197 parks, said John Erwin, the president of the city’s parks and recreation board.

The city’s parks are built around the area’s abundant water resources, which includes seven lakes and numerous rivers and streams, said Erwin. The latest planned park involves re-purposing an old industrial area along the Mississippi River.

New York

Park land as a % of city area: 19.7% Spending on parks per resident: $160

New York’s green spaces receive well over 100 million visitors a year, according to Parks Department spokesman, Arthur Pincus. Central Park is the showstopper, hosting 40 million park goers annually.

New York devotes nearly 20% — more than 38,000 acres — of its land to green use. And most of that land is quite valuable: Central Park’s acreage alone is estimated to be worth more than half a trillion dollars, according to Jonathan Miller of Miller Samuel, a New York real estate appraiser.

The park system extends far beyond Manhattan to include ocean beaches in Staten Island, upland forests in the Bronx and re-purposed industrial sites, like the old Domino Sugar plant property in Brooklyn.

In recent years, the city has reclaimed much of its waterfront and established new parks along the Hudson River in Manhattan and along the East River in Brooklyn and Queens.

San Francisco

Park land as a % of city area: 17.9% Spending on parks per resident: $281

San Francisco’s moderate climate and seaside location help make it an exceptional place for recreational activities. And the city offers plenty of space for them, too: Nearly 18% of all land in town is park land.

There are parks on some of the city’s highest elevations, like Telegraph Hill, and green space along the waterfront from the Embarcadero on San Francisco Bay to the Pacific Ocean shore all the way to the city line.

Golden Gate Park, which stretches for three miles from Haight-Ashbury all the way to the beach, is an amalgam of gardens, woods, pavilions and lawns.

And because the summers are cool and the winters warm, San Francisco’s parks can be enjoyed year-round.

“The parks are heavily utilized,” said Phil Ginsburg, general manager of San Francisco’s parks and recreation department. “People think of them as their backyards.”

Sacramento, Calif.

Park land as a % of city area: 8.1% Spending on parks per resident: $157

Sacramento’s parks made this year’s “best city parks” list thanks to the area’s strong culture of volunteerism, according to the Director of Parks and Recreation, Jim Combs.

“People in Sacramento really care about their parks,” said Combs. “After the financial downturn in 2007 and 2008, I lost half my budget and staff and we had to maintain the same amount of park land.”

Community members formed more than 60 “Adopt-a-Park” groups, many of them pitching in to help keep the greenery looking good. Currently, 2,000 volunteers are helping to restore McKinley Playground, which was badly damaged in a fire.

Of the top 5 park systems, Sacramento devotes the smallest percentage of its area to park land, lowering its overall rating from the Trust for Public Land. Yet, the city’s parks have one of the highest utilization rates in the country.

Boston

Park land as a % of city area: 15.9% Spending on parks per resident: $110

Established in 1634, historic Boston Common is the oldest park in the U.S. But it’s just one bead in an “Emerald Necklace” of parks, that hopscotches south through the city neighborhoods to Franklin Park.

Boston’s parks tend to be more formal, with landscaped gardens, gazebos, fountains, statues, and monuments.

Like many cities, Boston has expanded its park system recently to include the Rose Kennedy Greenway, which was built above the “Big Dig,” the project that tunneled through the city to form the route for I-93.

Cities with great park systems are often healthy cities and Boston is no exception. It was ranked the sixth fittest major city in the nation by the American College of Sports Medicine.

The warmer weather kept the heat on the borough’s rental market in May, according to two reports.

The median rent for a Manhattan apartment rose 3.5% to $3,200, according to Prudential Douglas Elliman.

Forget about getting any kind of goodies from landlords. Just 4.4% of transactions offered a concession, which amounted to an average of 1.2 months’ worth of free rent or its equivalent.

The borough’s vacancy rate was down sharply to 1.6% from 2.5% a year ago.

A separate report from Citi Habitats showed the average rent in May was $3,448, up $81 from April and up $10 from a year ago.

The borough is now just $13 away from the rental market’s all-time high of $3,461 reached in August of last year.

Tenants can blame the improving economy and a lack of inventory for rising rents.

“Although there are several large rental projects in the pipeline, there is little new product in the near term,” Citi Habitats President Gary Malin told the Daily News. “Our research shows just around 1,500 new rental units to market in 2013, compared to over 3,200 in 2014.”

The picture was different in Brooklyn, where the median rental price fell 3% to $2,579. It was the second month in a row that borough’s median price dropped.

The Brooklyn market tends to be more volatile than Manhattan, noted Jonathan Miller, CEO of appraisal firm Miller Samuel, which compiled the report for Douglas Elliman.

Brooklyn rents came down somewhat as would-be renters of smaller apartments chose to become first-time homebuyers instead, he added. The share of the rental market for studios and one-bedroom units fell 2.2%.

“The Brooklyn sales market is very robust,” Miller told The News. “Low mortgage rates pulled tenants into the sales market.”

Even with the decline, Brooklyn rents remain historically high and demand is strong, especially in neighborhoods like Park Slope, Boerum Hill, Cobble Hill and Williamsburg, said Douglas Elliman director of rentals, Mark Menendez.

“Renters are still looking at Brooklyn as a destination,” he said. “Manhattanites are giving up amenities such as rooftop terraces and a 24-hour doorman for high ceilings, fireplaces and outdoor space that they are finding in Brooklyn.”

In Brooklyn, though the tight credit/higher employment factors are the same, the rental market is more volatile than in Manhattan. The median rent fell to $2,579/month in May, a drop of 3 percent. The number of new rentals rose 23.5 percent, a statistic hinting that Brooklyn renters aren’t so willing to go along with their landlords’ pricing as Manhattan residents are. Since rents started rising in Brooklyn about six months before they started in Manhattan, JMillz explains, Brooklyn landlords probably aren’t quite as in sync with the market as their Manhattan counterparts.

The median rental price of a Manhattan apartment in May clocked in at $3,200 a month, a 3.5 percent year-over-year increase from $3,093, a report from Douglas Elliman shows. Across the river in Brooklyn, the median price of an apartment was $2,579, a 3 percent year-over-year decrease from $2,658.

“Brooklyn rents have been rising since late 2010, even before Manhattan rents began” rising, said Jonathan Miller, president of Miller Samuel, who compiled the report. “Brooklyn [rents] showed a slowing pace, [but] I wouldn’t characterize Brooklyn rents as falling — they’re not.”

Rental trends in Brooklyn tend to be more “volatile” than Manhattan ones, Miller explained, partly because of the way the housing stock is in the borough.

In another contrast, the number of new rental transactions in Manhattan fell 21.8 percent year-over-year to 4,139 units in May from 5,290 units at this time last year, Elliman’s report shows. The report attributed that to less “tenant churn” as more tenants renewed their existing leases with landlords. However, in Brooklyn, the number of new rental transactions jumped 23.5 percent year-over-year to 479 units from 388 units.

In Brooklyn, “you had an uptick in rentals, which infers that there’s a resistance to rising rents, so there’s more tension between landlords and tenants,” Miller said.

Meanwhile, the vacancy rate of Manhattan rentals is down 15 percent month-over-month to just 1.09 percent from April’s 1.28 percent level, Citi Habitats’ monthly rental report shows. But compared to May 2012, the vacancy rate is up 8 percent from 0.89 percent.

And, the number of rental transactions with a concession was just 5 percent this month, Citi Habitats’ report said.

Gary Malin, the president of Citi Habitats, said because the rental market is so hot right now, there is no need to incentivize buyers to rent apartments.

“It’s what we expect to see right now,” Malin said. “There’s a lot of demand and a lot of inventory and those two things favor the landlord. There’s no real need to incentivize people to transact.”

As rental vacancies remain low, prices are set to rise in the coming months, experts said. High rental activity may even continue into the fall and winter months as tenants who don’t want or can’t afford to move put off their move until then, similar to last year, Malin said.

“People get priced out of the marketplace during the summer months, and if they can move their move date to sometime in the fall or early winter they try to do it to save some expense, or there’s a better choice of inventory for them, so it’ll be interesting to see how that plays itself this year as well,” Malin said.

Manhattan apartments rented for a median $3,200 in May, up 0.2% from the previous month and 3.5% from a year earlier, according to a report from Douglas Elliman Real Estate. The increase came as the vacancy rate dropped to 1.6%, down nearly a full percentage point from 2.5% a year earlier.

“This is the highest median rent since November 2008, with one month’s exception,” said Jonathan Miller, CEO of Miller Samuel Inc., who prepared the report.

He attributed much of the rise in rents to a combination of falling unemployment rates and strict credit conditions.

“We have seen employment growth in the city, which has caused the rental market to continue to be robust,” he said. “But the pump was initially primed with tight credit conditions tipping would-be buyers into the rental market.”

Meanwhile, a report from Citi Habitats pegged the average Manhattan apartment rent at $3,438 in May, just $13 below its all-time peak. The report showed that SoHo/TriBeCa was Manhattan’s most expensive neighborhood by far, with a median monthly rent of $5,373. It also boasted the lowest vacancy rate, at 0.72%. In contrast, the most affordable area in Manhattan was Washington Heights. There, median apartment rent was $1,625 in May.

Over in Brooklyn, the picture was decidedly different. Rents in that borough fell for the second straight month after peaking in March. The median rent for north and northwest Brooklyn was $2,579 in May, down 4.5% from April, and down 3% from a year earlier, according to the Miller Samuel report.

“Brooklyn rents tend to be more volatile relative to Manhattan, which has to do with the housing stock,” Mr. Miller said.

As much as price increases are a sign of the busy summer season, year-over-year rental averages also point to a strong landlords market overall.

“The busy summer season is in full gear,” said Gary Malin, president of Citi Habitats. “Rents are up across the board, the vacancy rate is down and landlord-paid concessions became increasingly rare.”

Median rents Downtown are up 3.5 percent over the same period last year. Average rents are up 8.8 percent, while prices per square foot have risen 7 percent since April of 2012 according to the latest market report by Douglas Elliman.

Meanwhile, vacancy rates remain low in Downtown Manhattan neighborhoods, currently standing at 0.92 percent in SoHo and Tribeca, 1.11 percent in Chelsea and percent 1.87 in the Financial District according data released by Citi Habitats.

“Although frustrating for tenants and apartment seekers, a strong rental market is a symbol of a strong New York,” said Malin. “Market conditions like these will spur new rental development around the city.”

With newer tech companies and start-ups concentrated from Chelsea/Flatiron area south through Union Square to SoHo, rents are following the trend of demand steaming from workers looking to walk to their jobs.

“I think Silicon Alley is a significant force,” said Jonathan Miller, president of Miller Samuel Inc. “I suspect there is plenty more to come. The tech sector continues to expand and New York City will be a beneficiary.”

New leases by Facebook and Hi-Five Games for 157,000 square feet collectively at 770 Broadway in the central Village are sure to drive up more rental demand. The Huffington Post and AOL already have space at that address, FourSquare is located six blocks to the south. Shared spaces like Public Assembly and Fuzed are nearby as well.

But areas within walking distance in every direction have the highest rents in the city.

SoHo and Tribeca lead in median rents at $5,245 a month. Wall Street and Battery Park City come in second at $3,600 per month, with the West Village and the Gramercy Park/Flatiron District being third and fourth most expensive ‘hoods respectively.

“For tenants on a limited budget, it pays to have a pioneering attitude,” said Malin. “More and more areas of the city have become desirable – and relatively affordable – alternatives to prime Manhattan.”

That alternative more and more has become Brooklyn.

With median price growth slowing now to 1 percent over last year and the number of new rentals increasing by 10.9 percent, according to Douglas Elliman, Brooklyn, which is almost 3 and one half times larger in area than Manhattan, has those pioneering neighborhoods that have an upside for both tenants and landlords.

One of these neighborhoods is Prospect-Lefferts Gardens.

Located on the east side of Prospect Park, the neighborhood, a mere three stops from Canal Street in Manhattan, is walking distance from the Prospect Park Zoo, the Brooklyn Botanical Gardens and costs significantly less cost than nearby Park Slope.

Hudson Companies plans to build a 254-unit, 23-story rental building on Flatbush Avenue next to the Prospect Park train station. Experts say new in fill development over the last five years along neighborhood thoroughfares like Ocean Avenue are attracting new residents to the neighborhood who are priced out of both Downtown Manhattan and Downtown Brooklyn.

“A lot of these [properties] were condo developments that got caught in the downturn,” said Michael Weiser, executive vice president of GFI Realty Services Inc. “[The properties] got foreclosed on or re-modified. The new owners of those projects found themselves at a lower cost basis where they can make rentals work.”

All deals at the 88-unit condominium at 47th Street and First Avenue will likely fall within the top 10 percent for Manhattan, Jonathan Miller of Miller Samuel told Bloomberg. It’s the neighborhood’s first new residential project since Trump World Tower arrived in 2001.

Prices will start at $2.8 million for a one-bedroom unit, and from $3.6 million to $9.4 million for two-bedrooms, according to documents filed with the New York Attorney General’s Office cited by Bloomberg News. Sales are slated to begin in the third quarter of this year.

The aforementioned 9,700-square-foot penthouse on the 43rd and 44th floors has five bedrooms, two of which are for staff and are adjacent to the kitchen. The unit also features a pool and terrace on the top floor.

William and Arthur Zeckendorf broke ground in November on the condominium, a project that was stalled for four years during the recession. The Zeckendorfs paid $160 million for the site in 2007.

The developers told Bloomberg a “top restaurant operator” is in talks to occupy a 2,000-square-foot venue at the base of the tower.

The limestone mansion at 105 Eighth Avenue, was easily poised to set a record for the highest price paid for a single-family home in Brooklyn when it first hit the market, as The Real Deal reported. A mansion in Brooklyn Heights, at 70 Willow Street, once owned by Truman Capote set the $12.5 million record last year, and still holds the title, according to appraiser Jonathan Miller of data firm Miller Samuel.

The property first saw a $7 million price drop just one month after it hit the market, as previously reported; yesterday the ask slipped an additional $3 million.

The owners, Anil and Hannah Sinha, are selling the home as part of a “gradual retirement,” following a sex scandal involving their daughter, Lina, who worked at one of three New York City Montessori schools the couple owned, according to a report last year from the Wall Street Journal. The Sinhas bought the home for $95,000 in 1969, the Journal said.

Even now, at $15 million, the sale would still be a record total for the borough, Miller told The Real Deal. However, the sale would be lower on a per-square-foot basis than the $12.5 million sale.

The mansion measures 9,788 square feet, according to PropertyShark. The Truman Capote home, in Brooklyn Heights, is 5,702 square feet.

Halstead Property’s Marc Wisotsky and Jackie Lew have the listing. Neither were immediately available for comment.

Confused about the direction of the housing market? It’s no wonder. You hear stories about sellers slashing listing prices to attract buyers, but home prices nationally have risen more than 10% over the past year. Inventories of unsold homes are on the rise, yet homebuilder Lennar Corp. just reported a 34% jump in earnings. And the much feared rise in 30-year mortgage rates seems to have stalled.

In this muddled situation, what should you do, whether you’re on the buyer’s end of the seesaw or the seller’s? Cut your price now or hold out for more? Rent or buy? Go for a bigger house or a smaller one? In the New York City suburb of Larchmont, N.Y., where prices are off their peaks, confusion reigns. Says Realtor Carol Higgins: “Buyers are complaining that prices are astronomical, but sellers are still thinking they’ll get what they saw their neighbors get last year.”

Let’s be honest: No one can predict with certainty which way home prices will go in the next year or so. Over the past several years almost everyone who has tried to forecast the direction of the housing market has been wrong (though BusinessWeek Chief Economist Michael Mandel takes a shot).

We can, however, tell you how to avoid some critical psychological and financial mistakes in today’s anxious markets. No matter how smart you are, it’s easy to fall into certain mental traps that can cost big bucks. Instead of concentrating on the fundamentals, people tend to be ruled by their feelings and the compulsion to compare themselves with their neighbors. If your brother-in-law made a killing in real estate, you’re determined to do the same. “So much of what drives the housing market is human interpersonal dynamics,” says Yale University economist Robert J. Shiller.

What follows is a set of practical guidelines for navigating today’s choppy and uncertain real estate markets. The suggestions come from behavioral economists, who study the kinds of erroneous decisions people tend to make repeatedly, as well as from hands-on real estate experts. In addition we’ll tell you which cities are more vulnerable to a drop in prices and which are less at risk.

CONTRARIAN COOL

A first rule of thumb is to avoid herd behavior, which is what lured a lot of people into overpriced houses in the first place. The expectation of rising prices became a self-fulfilling prophecy as office mates and in-laws tried to leapfrog each other. The prevailing mindset: “You see people who aren’t particularly talented, who aren’t hard-working, who buy a house with nothing down, and they’ve been getting rich doing it. If they’re getting richer, then you’re falling behind,” says Robert H. Frank, a Cornell University economist and author of Luxury Fever. Another attraction of herd behavior is safety in numbers. Millions of buyers can’t all be wrong, can they?

Also, behavioral economists have discovered in laboratory experiments another attraction of herd behavior. Misery really does love company: People seem to worry less about losing a lot of money if they think everyone around them will suffer the same fate.

Still, the rewards of thinking independently can be high. Richard X. Bove, a financial services analyst at boutique investment bank Punk, Ziegel & Co., put on his green eyeshade and concluded that Florida real estate was overpriced. So earlier this year he bailed out. Bove sold his 5,600-square-foot St. Petersburg (Fla.) home for $1.2 million, twice what he paid for it a decade ago. The plan was to rent while he waited out a housing decline. But Bove couldn’t find a suitable rental, so he lowballed a four-bedroom house in Tampa and got it for $740,000 — 30% below the asking price.

In a softening real estate market, one of the most dangerous mental mistakes is what behavioral economists call “loss aversion,” which is the tendency to do dumb things to avoid, at all costs, recording a loss. Some sellers are so averse, they gamble the market will bounce back rather than cut their prices.

Indeed, real estate agents often have a much clearer idea than sellers that demand has softened. “The hardest thing is to convince the sellers of the change in the market,” says Alfonsina Rechichi, an agent at Coldwell Banker Residential Brokerage in Katonah, N.Y. “There’s a sense of fear among brokers that you sense at open houses,” says Saul Greenstein, a renter in Washington, D.C., who suspended his house search because prices were too high. “The self-confidence you saw a year ago has been replaced by fear and pandering.”

Even owners who stand to make a big profit on a sale often set the price too high. In this case the mental error isn’t loss aversion but outdated thinking. New research shows that sellers set their listing price, in part, based on information six months to nine months old. That means if you don’t pay close attention, you will tend to underprice in a rising market and overprice in a falling one.

STUNG ON BOTH ENDS

Two smart people who just might be guilty of that in the New York City suburbs are Joe Watson, a neurosurgeon, and his wife, JoAnn, who has a PhD in genetics. In relocating from New Rochelle, N.Y., to McLean, Va., they planned to come out even by selling and buying at roughly the same price: $1.2 million. Now they’re getting stung on both ends of the transaction. The Virginia house is costing them “significantly more” than $1.2 million, and they can’t get what they want for their 1937 Tudor in New Rochelle. Says JoAnn: “We were advised by two brokers to price it initially at $999,999, but my husband and I wanted to start at $1.19 million because we thought we could get it.” Even after nudging the price down to $1.09 million, though, there haven’t been any offers. JoAnn has taken to blaming the shoppers. “It’s a great house,” she complains. “Why doesn’t anyone realize it?”

The gravest danger of dragging your heels on price cuts in a sinking market is that you can “follow the market down,” never managing to sell because your price is always just a little too high, says Christopher J. Mayer, a Columbia Business School economist. He and David Genesove of Hebrew University in Jerusalem found that when prices were falling in Boston in the early 1990s, two-thirds of the houses that came on the market were eventually withdrawn without a sale.

In parts of the country where the market is still strong, a common sin continues to be overconfidence. Owners typically don’t seriously consider a wide enough range of potential housing market outcomes, including the possibility of a steep decline. That leads people to take more risks than they should.

Nordstrom Inc. managers Robert J. Gelb, 50, and his wife Cindy, 47, of Mercer Island, Wash., own the house they live in as well as two they bought for their children. Gelb says last year’s appreciation on the house his son occupies was greater than his son’s salary at Nordstrom’s. For the house they bought for their college-student daughter, they put down 3% and got a negative-amortization loan, which Gelb says makes it a better deal than renting her a dorm room. “Worst case is that I sell it for what I paid for it,” he says. His take on housing is nonchalant: “Even if it is a bubble…it would be a slow leak. Maybe some people would say I’m naive, but I don’t see a downside.”

Optimist Gelb is well-off enough to take a slump in stride. Still, he might want to have a conversation with Linda R. Fink, 57, who manages a city park with a bicycle-racing track in Indianapolis. She knows all about slow leaks. Fink bought a house in November, 2000, for $120,000. At the time, Fink says, she viewed the purchase as an investment and reassured herself that “if something happens five or six years down the road, I’ll be O.K. I can sell it and get out.”

Instead, Fink watched home prices in her neighborhood fall and fall. She bailed out in 2004 for $92,000 in a “short sale,” meaning the lender got the proceeds of the sale but not all it was owed. Says Fink: “It all just blew up on me.”

Rent-vs.-buy decisions are a perfect example of what the housing market can learn from behavioral economics. If financial efficiency were all that mattered, more people would be renting nice houses instead of buying them, even taking into account the home mortgage-interest deduction. But there’s something comforting about owning the place where you lay your head on the pillow each night. “It’s worked out so phenomenal,” exults first-time buyer Obrey M. Minor, a 27-year-old special education teacher who bought his first house last year with his wife in the Houston suburb of Katy.

You can hear how much homeownership matters by talking to people like Annapolis (Md.) renter April McKinley, a health-care consultant who recently moved with her police officer husband from Pittsburgh to the Washington (D.C.) area and ran smack into a wall of high prices. “Here I am, a productive citizen, and I can’t afford to own a piece of it,” says McKinley.

Especially in upscale communities, social pressure to buy is intense. Jonathan Miller, CEO of real estate appraiser Miller Samuel Inc., recalls that when he and his family moved to upper-crust Darien, Conn., 15 years ago and rented for a year, “we were absolutely second-class citizens. It was very unpleasant.”

Call it “castle thinking” — the notion that a home is a fortress against a cruel world (table). And it’s perfectly defensible. But in many markets the total monthly costs of renting are far below the total monthly costs of owning the same property — 62% cheaper in San Diego, for example, according to Boston-based Torto Wheaton Research, a unit of property manager CB Richard Ellis Group Inc. So you owe it to yourself to be aware that your castle thinking can be a costly predilection.

Neuroscientists have even discovered the place in your brain that makes you spend too much on a house. Far from behaving perfectly rationally, real people are pushed and pulled by signals emanating from below the neocortex — the primitive “lizard brain.” That may be why there are so many homes with empty marble foyers, faux Roman columns, dust-collecting Jacuzzis, and exotic drooping conifers on the lawn.

MANAGE YOUR CRAVINGS

What people can do is be aware of their human tendency toward status-seeking. Cornell’s Frank suggests channeling the drive more productively. If getting your kids into a good school district is a priority, for example, try to satisfy your lust for status by buying a smallish house in a prime school district instead of a showplace in a worse one. “You have some choice,” says Frank. “There’s room to do better.”

A foible that helps account for America’s obsession with real estate is what you might call the tangibility fallacy. It’s the all-too-human tendency to regard tangible things like houses as more stable and trustworthy than intangible ones like stocks and bonds. It’s true that a house provides more comfort than a book entry in a stockbroking account. But that doesn’t mean it’s a better investment.

In fact, except for the past few years, house prices have risen only 1% or so faster than the rate of inflation. But just try telling that to Ron DeLucia of Jacksonville, Fla., who at the age of 68 is selling his current home and buying a bigger one across town, in part because he and his wife think a house is a more trustworthy asset than shares of stock. Says DeLucia: “We all went through the crash of the market. I lost $150,000. You never get that money back. I think the stock market is going to go down. I’d rather put the money we have in hard assets like property.”

And finally, it’s easy to lose your head over housing if your thinking isn’t disciplined. To find your moorings, try to focus on the fundamental factors that determine value. On that score it’s somewhat reassuring to realize that prices in the U.S., though high, are not out of line with other major countries. Finding properties that are exactly comparable is difficult. But in an unscientific survey, BusinessWeek correspondents rounded up listings for a few homes for sale around the world. There’s a four-bedroom in Kleinmachnow, a pricey suburb of Berlin, going for $525,000. In the upscale Golders Green neighborhood of London, 20 minutes from the city center, a four-bedroom house is on the market for $1.56 million. And in Tokyo’s Suginami Ward, three bedrooms squeezed into a cozy 987 square feet go for $566,000. These kinds of prices have a familiar ring.

READING THE TEA LEAVES

Within the U.S., however, prices in some housing markets do raise red flags. A good starting point is to look at the affordability of homes for ordinary families. By that measure greater Los Angeles was the worst in the nation in the fourth quarter of 2005. Only 2% of homes sold there were affordable by families earning the area’s median income, according to the National Association of Home Builders. New York wasn’t much better at 6%. Other expensive big cities included San Francisco at 7%, Miami at 14%, Boston at 24%, and Washington, D.C., at 27%. Tops in affordability among big cities were places like Dallas, with 60% of homes sold affordable by median-income families, San Antonio and Houston at 57%, and Chicago at 48%.

Of course, unaffordability is a chronic condition in cities like New York, so it’s not necessarily evidence that a sharp correction is in the offing. Economists at Global Insight Inc. and National City Corp. deal with that by looking at whether metro areas have departed from their own historical trends in affordability. They conclude that in the fourth quarter, 42% of the top 299 metro markets were “extremely overvalued and at risk for a price correction.” Florida and California dominate this historically adjusted list. Boston and New York look more reasonable by this measure, and San Francisco appears a bit less bubbly. Texas still comes out looking cheap.

Yet another way to identify a problem area is to compare rents to sales prices. The idea here is that if people’s monthly payments to own a house are much higher than what they would spend to rent the same place, tax considerations included, then they must be banking on prices going up so they can sell for a profit someday. That leaves them exposed if prices don’t rise. By this measure, San Diego is one of the frothiest areas of the country. But Tampa, Orlando, and New York, which come out as expensive by some other measures, aren’t so costly by this one.

This year millions of American households will buy a home. The process will always be lengthy and a big deal. But whether you are a buyer or seller, you don’t have to feel quite so lost.

Many agents indicated strong activity at the high-end of the market with several record breaking sales recorded so far this year while still others noted a dead zone in the $800,000 to $1 million price range where inventory is high. Agents in Montauk reported a strong market in condo sales where units are ranging in price from $199,000 to $500,000 and above. Others pointed to the financial devastation experienced by homeowners in Hampton Bays where 200 foreclosures were reported in 2007. Many agents indicated the next anticipated trouble spot would be in the Springs section of East Hampton.

“We are seeing the effects of sub-prime lending in these areas now,” Enzo Morabito, a broker at Prudential Douglas Elliman, said. “These are people who bought houses they couldn’t really afford to buy because of the relaxed lending practices in place at the time.”

Paul Brennan, a top broker and manager in Prudential Douglas Elliman’s Bridgehampton office, noted his crew closed 40 deals during the first quarter of 2008, a marked decline from the 68 deals closed during the first quarter of 2007.

At Prudential Douglas Elliman, the average transaction for the Hamptons and North Fork last year was an estimated $1.479 million as opposed to this quarter’s average of $1.728 million, representing a 16.2 percent increase in sales price, though numbers of sales have decreased. This year the number of sales for the first quarter topped out at 400 while last year’s first quarter number was 683.

“We are seeing a lot of activity in the condo market,” Carie Salvadore, principal broker at Pospisil Real Estate in Montauk reported. “No one is really losing money when you look at what they paid, but many sellers are still on the market at prices that are too high and they won’t come down.”

Pricing Is Key Morabito agrees – “Correct pricing is the key to selling in this market,” Morabito noted, adding the large inventory in the $899,000 range north of the Highway, which is real estate speak for houses located north rather than south of Montauk Highway. This strategic location and important distinction translates into a property’s proximity to the ocean – a factor that is dramatically reflected in value.

“Now is the time to buy north of the highway,” Morabito said. “That is where the deals are. The ocean front is still going strong and it always will,” Morabito added, noting strong sales in the high-end of the market where selling prices are still breaking records practically every time a property changes hands.

In Southampton Village all eyes are on a new subdivision located on the corner of Old Towne Road and Wickapogue Road where developer Bob Gianos is preparing to market seven four-acre building lots that have been carved out of a 53-acre farm he purchased in 2005. The former Fiore Farm was a site selected by the first settlers who came to the Village in the 1600s where village pioneers camped out in make-shift housing, surviving the winter under the harshest of conditions.

The last major farm parcel in the Village proper prior to its purchase by Gianos, building lots will sell for $18 million to $21 million when they hit the market at the end of May. Gianos’s venture, dubbed Olde Towne, is being viewed as a tremendous show of confidence in the high-end of the market by the local real estate community. “They will sell,” Gianos said, “there are only seven lots like this in the entire Village.”

Further to the east, in the Village of Sagaponack, residents are trying to stave off development and protect their few remaining farm fields by protecting farmers’ rights to farm in the face of three high-end luxury residential subdivisions now in the preliminary planning stages. The projects signify a strong show of investor confidence in this most exclusive of markets. The Village of Sagaponack has been dubbed one of the most expensive zip codes in the United States by Forbes Magazine.

“That is all prime land,” Morabito commented. Beginning his real estate career selling land in Sagaponack more than a quarter-of-a-century ago, he added, “Back then you could buy a lot for $250,000.”

“Now is the time to buy,” Brennan said. “Property out here will never lose its value. If you buy now, you are going to look like a genius in two years.”

Among the first quarter reports released this week, was a market analysis prepared by Miller Samuel, Inc. for Prudential Douglas Elliman Real Estate, a company with offices on both the North and South Forks of the eastern end of Long Island. This market study indicates that Prudential’s listing inventory on the East End increased by 25.5 percent going from 1,472 listings recorded in the first quarter of 2007 to 1,848 reported in the first quarter of 2008. The number of sales made during the first quarter of 2008 by Prudential agents has decreased by 41.4 percent with 400 sales recorded in comparison to sales figures for the first quarter of 2007 when 683 sales closed in their offices on the East End.

In a press release issued this week by Rubenstein Associates, Inc. on behalf of their clients, Prudential Douglas Elliman Real Estate notes “the lower level of sales activity is largely attributable to the declining national economic climate, tighter credit and a weaker employment picture for the New York City financial services sector.”

Back on Main Street in Bridgehampton, Brennan had the last word on the market for the moment in a business where its practitioners are strong believers in the saying “tomorrow is another day.”

“People are taking a breather,” Brennan said, “they don’t know what’s going on.”

The measure would allow lenders to include projected energy savings from efficiency upgrades when measuring the borrower’s income against expenses and the value of the home against the debt. In addition to giving borrowers larger loans in new purchases and refinancings, it could also lower their interest rates.

Senator Johnny Isakson, a Republican from Georgia who worked in the real estate industry for 33 years and introduced the bill with Senator Michael Bennet, a Democrat from Colorado, said that consumers should get credit for energy-saving construction materials, which are often “out of sight and out of mind and are not valued.” Decreasing the amount of energy a home uses, he said in an interview, increases “the amount of dollars in the pockets of the homeowners.”

The government already promotes so-called energy-efficient mortgages under a Department of Housing and Urban Development program. But the proposed legislation would require lenders to take the projected energy savings into account when presented with a qualified energy report. The senators originally introduced the bill in 2011, and although it attracted support from groups across a broad political spectrum — including the United States Chamber of Commerce and the Center for American Progress — it failed to gain approval. The sponsors have broadened its appeal within the real estate industry, chiefly by eliminating provisions that could have penalized older, less efficient homes or those lacking a report based on estimated energy consumption.

How the bill will fare this time around is unclear. Its proponents in the Senate say they are hopeful it could pass, possibly as part of a comprehensive energy bill introduced by Senator Jeanne Shaheen, a Democrat from New Hampshire, and Senator Rob Portman, a Republican from Ohio. The proponents say the changes could curtail energy use, reduce greenhouse gas emissions and increase the market for conservation upgrades.

The legislation would apply to loans guaranteed by the federal agencies that collectively back roughly 90 percent of new mortgages.

In the absence of a home energy report, which would come from an approved third-party inspector, the home’s energy use would not become a factor. But lenders would provide applicants with information about the benefits of investing in energy-saving upgrades and counsel them on how they could go about doing so.

“Really we’re just talking about disclosure here,” Sean Babington, legislative counsel on energy and natural resources for Senator Bennet, said in an interview. “For years you’ve had to disclose if there are termites in your house or if you have radon gas in your basement. You bring an inspector out to make sure the foundation’s not cracked. Here we have something that probably over the life of the home costs the homeowner orders of magnitude more than all those problems, and we totally ignore it.”

According to Senator Bennet’s office, a household’s average energy costs can run to more than $70,000 over the life of a 30-year loan, more than the real estate taxes and insurance payments that are already taken into account during the underwriting process. Investments in insulated hollow-core doors, double-pane windows and insulated floor-joist systems above crawl spaces can reduce the average home’s bill by at least 30 percent, a value that does not always translate into a higher purchase price.

Jonathan J. Miller, the president of Miller Samuel, an appraisal firm, said the consensus in the real estate market was that “people want green, but to date they haven’t been willing to pay for it to the extent of what it costs.”

If passed, proponents say, the proposal could help close that gap, in addition to promoting energy conservation and construction jobs, generating $1.1 billion a year in savings for consumers by 2021.

Loan applicants could expect to gain about 5 percent more borrowing power on average, said Cliff Majersik, executive director of the Institute for Market Transformation, a nonprofit group that promotes energy efficiency in buildings and helped shape the proposal.

“Many people buy what they can qualify for and no more and no less,” he said. “There are $2 trillion in mortgage loans that happen every year, and the fact that you have this big blind spot is an enormous impediment to energy efficiency.”

The development, a 44-story tower under construction on First Avenue near 46th street, will be the Turtle Bay neighborhood’s first new residential project in a dozen years and is poised to set price records for the area. It’s located across the street from the UN, which is built on land assembled by the Zeckendorfs’ grandfather more than half a century ago.

“If you’re a UN ambassador posted here, you can’t get a better location than this,” said Arthur Zeckendorf, standing in a hard hat on what will be the 19th floor of the condo building.

The project is a departure for the Zeckendorf brothers, whose dual limestone towers at 15 Central Park West set the standard for trophy apartments favored by Wall Street bankers and the rest of Manhattan’s local elite. At 50 UN Plaza, they are seeking to lure some of the wealthy buyers from around the world who are fueling demand and price increases at towers such as One57 and 432 Park Ave.

The latest project’s look also will be different, trading the signature style of Robert A.M. Stern — the New York architect who designed 15 Central Park West and the Zeckendorfs’ 18 Gramercy Park — for stainless steel and glass. For 50 UN Plaza, the developers turned to Foster + Partners, the London-based firm run by Norman Foster, whose credits include the UK capital’s city hall, Singapore’s Supreme Court and a terminal at Beijing Airport that’s among the world’s biggest buildings. The firm is also designing Bloomberg LP’s European headquarters in London.

International Style

“It was definitely a decision to do a very modern, international-style building, whereas 15 Central Park West and 18 Gramercy are Stern-designed, traditional Park Avenue, Fifth Avenue-type buildings,” said Arthur Zeckendorf, 53. “That was a major decision point: How to design the outside to appeal to your buyer.”

On the exterior, bay windows are stacked on top of one other, threaded together by a horizontal grid of stainless steel and forming three columns that run the length of the building. “Highly reflective” fritted, or textured, glass panels run vertically between the bays, giving the tower a jewel-like appearance, William Zeckendorf, 54, said during a tour of the site in April.

The windows offer residents the “perfect architectural angle” for viewing the UN Secretariat, his brother said as he stood at the edge of one of the bay protrusions, shielded at the time only by orange netting.

Five Bedrooms

The tower is Foster + Partners’ first residential project in the U.S., William said.

Zeckendorf Development Co.’s plans call for 88 apartments, with prices starting at $2.8 million for a one-bedroom unit, according to documents filed with New York State Attorney General Eric Schneiderman’s office, which reviews the details of condominium projects. Two-bedroom units range from $3.6 million to $9.4 million.

A 9,700-square-foot (900-square-meter) duplex penthouse spanning the 43rd and 44th floors will be listed for $55 million. The property includes five bedrooms, two of which abut the kitchen and are designed for staff, as well as a pool and terrace on the top floor, according to preliminary plans.

Sales will begin in the third quarter, the developers said.

Price Records

As the Turtle Bay neighborhood’s first new residential project since Trump World Tower was completed in 2001, 50 UN Plaza would set price records in the area, with all deals probably falling within the top 10 percent for Manhattan, said Jonathan Miller, president of New York-based appraiser Miller Samuel Inc.

The Zeckendorfs’ marketing is unique because “the other buildings all seem to be downplaying international buyers,” Miller said. “For them to say it, and embrace it, makes it somewhat different.”

The project is a return to family roots for the Zeckendorfs. Their paternal grandfather, William Sr., assembled the land on which the UN complex was constructed with intentions to build a Rockefeller Center-style “city within a city” including an opera house, hotel, apartments and a convention hall on an elevated platform, according to “Capital of the World: The Race to Host the United Nations,” by Charlene Mires. Their maternal grandfather, Trygve Lie, was the first UN secretary general, from 1946 to 1952.

“They’d be very proud, very excited that we’re creating a great building to go with what they created,” Arthur said.

City ‘Oasis’

The entrance to 50 UN Plaza’s 6,000-square-foot-lobby, currently a tangle of cinderblocks, will feature a waterfall that will cost as much as $1 million to design and construct, William said.

“Fire and water are the elements of life,” Arthur said. “You come in from the city and it’s an oasis.”

The developers are in talks with a “top restaurant operator” to occupy a 2,000-square-foot venue at the base of the tower, with an open-air terrace facing the UN. The restaurant would provide room service and a private dining area for residents, William said.

The Zeckendorfs are seeking to build “a perfect project” as buyers have been paying unprecedented prices for New York trophy condos. The current record for the most expensive residence in Manhattan was set at 15 Central Park West in February 2012, when former Citigroup Inc. Chairman Sanford Weill sold his full-floor penthouse for $88 million. The apartment was purchased for the daughter of Russian billionaire Dmitry Rybolovlev.

One57 Penthouses

That benchmark is set to be topped next year when deals for two penthouses at One57 are completed. Both units are under contract for more than $90 million, according to Extell Development Co., which is constructing the 90-story tower. Bill Ackman, the New York hedge-fund manager who founded Pershing Square Capital Management LP, is part of an investment group that purchased one of the apartments.

At 432 Park Ave., which Harry Macklowe and CIM Group are building, buyers have come from around the world, including South America, the Middle East, China and Russia, the developers said. The tower is slated for completion in 2015.

New York is No. 1 on a list of “cities that matter” to high-net-worth individuals, according to the 2013 “Wealth Report” by Knight Frank LLP, a London-based real estate consulting firm. The city’s real estate has come “to epitomize the so-called safe-haven market, with overseas buyers looking to escape currency, economic, political and security crises by putting equity into tangible assets,” according to the report.

Reviving Projects

New York’s appeal to global investors has been helped by the “growing availability of high-quality new-build developments,” according to Knight Frank. “This contrasts with the dearth of stock in the years after the financial crisis.”

Proposals for new Manhattan condos plunged 79 percent in 2009 from the prior year as developers waited for a glut of new and unsold units to clear the market following the recession. Builders revived projects in 2011, filing plans to to sell 2,267 new condos in the borough, more than the previous two years combined, according to the attorney general’s office. They added plans for 1,695 units in 2012.

The Zeckendorfs acquired the 50 UN Plaza site in 2007 for $152 million and delayed plans for development as credit markets began to freeze later that year. They revived the project in December, obtaining a $280 million loan from HSBC Holdings Plc. Israeli financier Eyal Ofer is also backing the project.

Gramercy Park

Builders throughout Manhattan have been raising prices on their unbuilt condos as demand intensifies. At the Zeckendorfs’ almost-completed 18 Gramercy Park, for example, the combined value of all units for sale climbed 5 percent since they went on the market in May 2012, documents filed with the attorney general show. A 4,500-square-foot second-floor apartment originally listed for $15.5 million was increased to $16.2 million a few months later.

Closings began last month at the building, where the residential units have at least four bedrooms. Owners will get a key to the private, gated Gramercy Park and must pay $6,000 a year to the trust that holds title to it. Other amenities include a pet grooming area and artwork in the lobby by Damien Hirst, according to the offering plan.

As of June 3, half of the 16 condos were under contract to be sold, including the penthouse for $42 million, developers said. None of the buyers so far are from outside the U.S.

Uptown, at the UN site, the Zeckendorfs see interest coming not just from overseas but from across the street. Standing in their not-yet-finished project, Arthur looked north to Trump World Tower at 845 UN Plaza, and the twin cooperative buildings that his grandfather conceived at 860 and 870 UN Plaza.

“There will be some buyers from all of them,” he said. “We want to be the trade-up building in any given submarket.”

In recent years, Venezuelans in particular have been coming to the city in droves.

Since the Miami Association of Realtors started to track sales to foreign buyers in 2006, Venezuelans have bought more Miami real estate than Brazilians, Argentinians or citizens of any other nation in the world.

The buying began in earnest when Hugo Chavez started running the country in 1998. While the Socialist president was considered a hero among the working-class, many wealthy Venezuelans considered him a tyrant.

The fears of unrest surrounding his October 2012 reelection triggered another infusion of Venezuelan cash into the Miami real estate market. Local real estate agents joked at the time that Chavez should have been named Miami’s “Salesman of the Year,” according to Matthew Martinez, a local real estate investor and principal of Beacon Hill Property Group.

After Chavez died in March of this year, the ensuing election that put his successor, Nicolas Maduro, in office also stirred up fears — and more home buying in Miami.

Left-of-center politicians elected in Bolivia and other Latin American countries have encouraged wealthy citizens of those nations to look for a safe haven in Florida as well. And, investors from Brazil and Argentina, where the economies are booming, are also putting their excess cash in safe Florida real estate.

As a result, Miami has become known as a “global gateway,” much like New York and San Francisco, that attracts deep-pocketed investors from all over the world, said Neisen Kasdin, a real estate development attorney and former mayor of the city of Miami Beach.

The influx of buyers, combined with the economic recovery in the U.S., has created a dramatic turnaround in Miami’s housing market. Sales of single-family homes in Miami climbed 10.3% during the first three months of 2013 compared with 12 months earlier and prices jumped 23%, according to the Florida Association of Realtors.

About 45% of single-family home sales and 77% of condo sales were made in all cash, reflecting the heavy foreign presence. More than 90% of sales to foreigners in Miami are made in cash.

“Two years ago, Miami was the poster child for distressed real estate in the United States,” said Jonathan Miller, of Miller Samuel, a real estate appraiser and consultant. “It has now morphed into a luxury brand.”

All but 600 of the 23,000 bubble-era condos that once languished on the Miami market have been sold, according to the Miami Association of Realtors.

“That old inventory is basically gone,” said Kasdin.

During the first week of May, five new condo projects in downtown Miami launched their pre-construction sales campaigns. Among them was the boutique condo building Le Parc at Brickell, where units range from 622-square-foot studios starting at $280,000 to 1,566-square-foot, three bedrooms for $699,000. The units have access to a rooftop pool and jacuzzi and outdoor kitchen and feature high ceilings and imported tile floors.

“People who want to retire and play golf, that’s not Miami,” said Alan Ojeda, a local developer and founder of Rilea Group who’s building a 44-story condo in downtown Miami. “The city is filled with youth, with life, with music. The main difference now, is that the South Americans are not just parking their assets here, they’re parking their families as well.”

In recent years, Venezuelans in particular have been coming to the city in droves.

Since the Miami Association of Realtors started to track sales to foreign buyers in 2006, Venezuelans have bought more Miami real estate than Brazilians, Argentinians or citizens of any other nation in the world.

The buying began in earnest when Hugo Chavez started running the country in 1998. While the Socialist president was considered a hero among the working-class, many wealthy Venezuelans considered him a tyrant.

The fears of unrest surrounding his October 2012 reelection triggered another infusion of Venezuelan cash into the Miami real estate market. Local real estate agents joked at the time that Chavez should have been named Miami’s “Salesman of the Year,” according to Matthew Martinez, a local real estate investor and principal of Beacon Hill Property Group.

After Chavez died in March of this year, the ensuing election that put his successor, Nicolas Maduro, in office also stirred up fears — and more home buying in Miami.

Left-of-center politicians elected in Bolivia and other Latin American countries have encouraged wealthy citizens of those nations to look for a safe haven in Florida as well. And, investors from Brazil and Argentina, where the economies are booming, are also putting their excess cash in safe Florida real estate.

As a result, Miami has become known as a “global gateway,” much like New York and San Francisco, that attracts deep-pocketed investors from all over the world, said Neisen Kasdin, a real estate development attorney and former mayor of the city of Miami Beach.

The influx of buyers, combined with the economic recovery in the U.S., has created a dramatic turnaround in Miami’s housing market. Sales of single-family homes in Miami climbed 10.3% during the first three months of 2013 compared with 12 months earlier and prices jumped 23%, according to the Florida Association of Realtors.

About 45% of single-family home sales and 77% of condo sales were made in all cash, reflecting the heavy foreign presence. More than 90% of sales to foreigners in Miami are made in cash.

“Two years ago, Miami was the poster child for distressed real estate in the United States,” said Jonathan Miller, of Miller Samuel, a real estate appraiser and consultant. “It has now morphed into a luxury brand.”

All but 600 of the 23,000 bubble-era condos that once languished on the Miami market have been sold, according to the Miami Association of Realtors.

“That old inventory is basically gone,” said Kasdin.

During the first week of May, five new condo projects in downtown Miami launched their pre-construction sales campaigns. Among them was the boutique condo building Le Parc at Brickell, where units range from 622-square-foot studios starting at $280,000 to 1,566-square-foot, three bedrooms for $699,000. The units have access to a rooftop pool and jacuzzi and outdoor kitchen and feature high ceilings and imported tile floors.

“People who want to retire and play golf, that’s not Miami,” said Alan Ojeda, a local developer and founder of Rilea Group who’s building a 44-story condo in downtown Miami. “The city is filled with youth, with life, with music. The main difference now, is that the South Americans are not just parking their assets here, they’re parking their families as well.” To top of page

The first of the three to open will be One57. Armies of workers are putting the finishing touches on its 90 floors. One57 had an unfortunate moment in the spotlight during Hurricane Sandy. High winds wrecked its crane, leaving it dangling by the penthouse, one of two duplex condos in the building that have sold for at least $90 million.

That mishap is all cleaned up now, but the developers are still skittish about letting visitors all the way up. So prospective buyers get a taste of the building through its opulent sales office down the street. Every inch is designed to look and feel very, very expensive, from the stylishly dressed woman who greets buyers to the St. Laurent marble floor to the video presentation that begins each pitch.

A staffer taps a tablet and the wall projection comes to life. Soaring orchestral music builds as an elaborate animation shows the building forming out of water rising from the street. A model in a black evening gown saunters around an apartment, savoring a breathtaking view of Central Park, two blocks north.

After the video, prospective buyers are taken through scale models of the building and shown the elaborate custom kitchens and bathroom fixtures they can choose to have installed. The tour ends in a room with a giant projection of a time-lapse image of Central Park, a simulation of the helicopter view that costs dearly.

The pitch is working for a global cast of buyers, the types of hedge fund titans, metals magnates and oil barons who can write eight-figure checks. One57 is 70 percent sold, which represents about $1.5 billion in revenue. The lowest-priced apartment still on the market runs $17 million.

“Certainly in this area where you can have this view corridor, Manhattan is a very developed place,” says Extell Development Company Vice President Jeff Dvorett, One57’s project manager. “These kind of sites don’t come around very frequently.”

That’s certainly true — it took Extell more than a decade to piece together the land and rights to build One57 — but other lofty choices for the ultra-rich are emerging on 57th Street. Just a few doors down, developers recently purchased Steinway Hall, showroom of the famed piano maker. They’ll combine that with an adjacent vacant site to mount another high-rise luxury residential building.

Further east, another construction site buzzes, where workers are building 432 Park Avenue. When finished, it will be the tallest residential building in the Western Hemisphere. Growing global wealth is driving demand for these kinds of super-tall, ultra-expensive apartments.

“Assets like real estate and art are big draws for parking a lot of money,” says Lynne Sagalyn, director of Columbia Business School’s Milstein Center for Real Estate. “And there’s a lot of money floating around the globe that’s looking for a home in real solid assets.”

Manhattan real estate can fluctuate, but investors believe buildings like these, in prime locations with panoramic views, will hold their value. Billionaires put their money into trophy apartments around the world for some of the same reasons that they snap up pricey works from hot artists.

One might imagine lush living happening in these buildings, with swank cocktail parties buzzing on floor after floor every night. But in reality, these astonishingly expensive apartments could sit dark and empty most of the year. Few owners will use them as primary residences.

Jonathan Miller, CEO of the real estate appraisal and consulting firm Miller Samuel, likens these properties to “the world’s most expensive safety deposit boxes.”

“People buy them and put their possessions in them and maybe visit them a couple times a year,” Miller says, gazing up at the construction under way at 432 Park Avenue.

These popular multimillion-dollar condos aren’t a proxy for the larger American housing market, but the boom in luxury buildings is a boon for New York. It’s creating well-paying jobs and will generate blockbuster property tax revenues that will fund the city’s education and public safety.

With glorious views, central location and unprecedented height, 57th Street is now the prime spot for billionaires in the market for a place in the sky.

Schloss, 58, points to Ontario’s C$130 billion ($126 billion) teachers’ pension fund, which has returned an average 9.6 percent annually on its investments since 2003 — 1.6 percentage points better than New York’s funds. The Canadian system reaped those gains mostly without paying outside asset managers. Schloss says the same in-house approach could work in New York.

“I’m not looking for John Paulson,” said Schloss, who earns $224,000 a year, referring to the billionaire hedge-fund manager. “I’m just looking for a VP at MetLife who makes 500,000 bucks.”

Saving Money

The 38 staff members in the city comptroller’s Bureau of Asset Management oversee five funds for police, firefighters, teachers, school administrators and civil-service workers. They get paid an average of $100,000 a year, less than the median base salary of a first-year Harvard MBA graduate. They farm out asset management to more than 300 firms.

Investing directly means the Toronto-based Ontario Teachers’ Pension Plan doesn’t have to pay outside managers 2 percent of assets they oversee, plus 20 percent of profits, the typical fees for hedge funds and private-equity and real-estate firms. It also gives Ontario Teachers’ more control over investments, Chief Executive Officer Jim Leech said in a telephone interview.

Among New York’s outside arrangements is a $60 million investment by four pensions in a real-estate fund sponsored by Colony Realty Partners, a Boston-based private-equity firm that oversees $3.2 billion. The fund has lost 15.5 percent since 2006, while Colony has reaped $7.7 million in fees, according to the comptroller’s office.

Paying Fees

Last year, three city pension funds paid more than $1.2 million in fees on a $160 million investment in a real-estate fund co-sponsored by Fisher Brothers, a New York-based property investor and Morgan Stanley, the New York bank. The fund has returned 0.3 percent since 2004. Another 2004 real-estate investment with Tishman Speyer Properties LP returned 58.8 percent.

The city could hire a 5 person real-estate team, pay them around $2 million and start doing some joint ventures, Schloss said. On a $1 billion investment that returns 12%, New York City could save $20 million in fees over five years, he said.

Emily Margolis, a spokeswoman for Colony, didn’t respond to e-mailed and telephoned requests for comment. Suzanne Halpin, a spokeswoman for Fisher Brothers and Matt Burkhard, a Morgan Stanley spokesman, declined to comment.

California’s Woes

Managing money internally and paying staff higher salaries and bonuses isn’t always a formula for success. The California Public Employees’ Retirement System, the largest U.S. pension, manages almost two-thirds of its assets, including 83 percent of stocks and 91 percent of bonds. Chief Investment Officer Joseph Dear received $522,540 in compensation in 2011.

Yet its 6.1 percent average annual return for the 10 years ending June 30, 2012 is 1.1 percentage point less than that of the Pennsylvania Public School Employees’ Retirement System. The Pennsylvania fund manages only 26 percent of assets internally and paid Chief Investment Officer Alan Van Noord $269,302 in 2011.

New Jersey’s $75.3 billion pension manages 73 percent of its assets in-house, the most among the 11 biggest U.S. public funds. The system returned 6.4 percent for the 10-year period ending June 30, 2012.

‘Way Ahead’

New York City will pay $8 billion this year toward retirement benefits, a cost that has risen more than fivefold since 2002. That’s why Ontario Teachers’ presents a model, Schloss says.

“They’re way ahead,” Schloss said in an interview in his seventh-floor office in the Municipal Building, which houses more than 2,000 employees across from City Hall. The former global head of private equity at Credit Suisse First Boston, Schloss was hired by Comptroller John Liu in 2010 to increase returns and reduce costs.

The Ontario fund employs a staff of investment managers earning an average of C$720,000 a year to increase assets worldwide. Their investments include ownership of Toronto Eaton Centre and other shopping malls, a stake in Seoul-based Kyobo Life Insurance Company, and a 30 percent interest in Copenhagen’s international airport.

Managing Managers

In New York, there’s plenty of talent and it’s “ridiculous” that the city won’t pay enough to hire it, Schloss said. A plan to manage a portion of assets internally, with compensation levels benchmarked to New York City insurance companies, endowments and pensions, hasn’t gained traction with fund trustees, he said.

“We’re not really in the asset-management business,” Schloss said. “We manage managers.”

Bringing Ontario’s approach to New York may be a challenge. While the city’s retirement system has about 60 cents of assets for every $1 in obligations, union officials say they’re wary of tinkering with it.

Management ‘Yearning’

“Why would you try to dismantle a system that’s performing well?” said Greg Floyd, president of Teamsters Local 237, which represents 24,000 city employees. Floyd sits on the board of the city’s $46 billion civil-employees’ pension. Pension-fund trustees have to approve raising investment staff salaries and authorize internal asset management.

There’s “a yearning” among union trustees to manage assets in-house, though “we are never going to be able to pay private-industry salaries to work in government,” said Manhattan Borough President Scott Stringer, a labor-backed Democrat running for comptroller who’s favored to win. Liu, also a Democrat, is running for mayor. His term expires Dec. 31.

Replacing Staff

“When you get a new comptroller, you get a new chief investment officer,” Schloss said. “It’s not good for performance to have a system where your senior staff turns over every four years.”

The Ontario fund, which also has offices in London and New York, manages more than 80 percent of its assets in-house and is 97 percent funded. By contrast, the total market value of the assets of 109 U.S. state pension plans last year was 69 percent of projected liabilities, according to Wilshire Associates, a Santa Monica, California-based consulting firm.

What sets Ontario Teachers apart is governance and compensation, Leech said.

The fund paid its 250-person investment staff C$180 million last year. The workers aren’t government employees, meaning their salaries aren’t subject to civil-service rules. High salaries and bonuses attract Wall Street-caliber talent, Leech said. About 35 percent of assets are in so-called alternatives such as private equity, real estate, and hedge funds.

‘Second-Stringer’

“We compete with KKR,” said Leech, referring to the private-equity firm founded in 1976 by Jerome Kohlberg, Henry Kravis and George Roberts. “You don’t want to go into that game with a second-stringer.”

The Ontario fund has a nine-member independent board that sets policy and delegates day-to-day management to the professional staff. New York’s five funds have 58 trustees spread across several unions and political jurisdictions.

Two years ago, Mayor Michael Bloomberg and Liu unsuccessfully proposed overhauling management of the five pensions to create a system more like Ontario Teachers’. The mayor is the founder and majority owner of Bloomberg News parent Bloomberg LP.

Accounting Background

The five boards were to be pared down to a single 12-member body that would set investment policy. Asset management would have been separated from the comptroller’s office to insulate it from politics.

Instead of union officials and political appointees, Ontario Teachers’ board members are chosen for their backgrounds in business, finance, economics and accounting. Only one board member is a former teacher.

“What does a kindergarten teacher know about investing?” said Leech.

When Schloss was chosen to oversee the city’s pensions in 2010, Liu described the funds’ structure in a press release as a “cluster$&*$.” Schloss persuaded trustees to increase the investment staff to 38 from 22. The pensions added hedge funds, opportunistic fixed income and leveraged loans to the mix of investment possibilities.

Pay Obstacle

To an inexperienced staff he added Barry Miller, a former managing partner at Nottingham Capital Management, to oversee private equity. He hired Seema Hingorani, former research director at Pyramis Global Advisors to oversee hedge funds. Both earned $175,000 annually. Miller resigned to join Connecticut- based private-equity firm Landmark Partners on May 20, said Matt Sweeney, a spokesman for the comptroller’s office.

“We wanted to hire a number of people but couldn’t because of compensation,” Schloss said.

Asset management staff are required to live in New York City unless they get a waiver. Obtaining one involves multiple agencies and City Hall approval, Sweeney said.

The median sales price of a two-bedroom condominium in Manhattan was $1.6 million in the first quarter of 2013, according to appraiser Miller Samuel Inc. and brokerage Douglas Elliman Real Estate.

“It’s just really hard to say, ‘Hey, come work here for $100,000 and you have to live in the five boroughs,” Schloss said.

“It’s the kind of insanity you live for in this business,” said Mickey Conlon, a broker with CORE, recalling a two-bedroom two-bath condominium at 49 East 21st Street in the Flatiron neighborhood that he listed with his business partner, Tom Postilio, for $1.89 million in early January.

“At the moment, that was considered aggressive pricing,” Mr. Conlon said. Yet within 24 hours, the brokers had received a flurry of requests to see the place, which prompted them to be bold. The next day they raised the price by $100,000, to $1.99 million. Though some potential buyers grumbled about the change, about 100 people came to the first open house. Soon, there were multiple offers above the asking price. By the end of January, there was a signed contract for $2.16 million — all cash. The sale closed in April.

The rules of engagement for buying an apartment in the city have changed. Negotiation, brokers say, is no longer part of the equation. Forget about taking time to mull over your decision. Serious buyers need to be prepared to pounce. And while lots of cash has always helped, it’s now more important than ever, as sellers select the best offers with the least amount of hassle involved.

Not that sellers can name just any price. Brokers caution that even in this market of extremely tight inventory, listings priced too high tend to linger, and low prices intended to bring the biggest crowds through the door could result in lowball offers. There is an art to choosing the right price.

While housing prices across the country recently posted their biggest gains in seven years, New York City’s market has been experiencing a slow and steady recovery ever since the market hit bottom in 2009.

More recently, scarce apartment listings and low mortgage rates have stoked competition among buyers and driven up prices. The number of Manhattan apartments for sale dropped 27.6 percent last month, to 5,077, versus 7,011 for the same period a year ago, according to the appraisal firm Miller Samuel. At the same time, prices have inched up. The median sale price rose 12 percent to $930,000, from $829,000 a year ago, according to the most recent available data for the second quarter, which began on April 1. That follows a 5.9 percent year-over-year increase in the median sale price, to $820,555, in the first three months of the year.

Apartments are going into contract at a faster pace, with listings lasting 105 days on the market, down from 156 a year ago, according to Miller Samuel. In popular neighborhoods like the West Village, it’s not uncommon for sought-after properties to go into contract well above the asking price in the head-spinning span of 10 days or less. Brokers are fueling the frenzy, turning open houses into pressure cookers, with tactics like one-day-only showings and short deadlines set for best and final offers.

Yet for the tenacious buyer, it is still possible to land an apartment without offering a pound of flesh.

After losing one place in a bidding war and another because he waited a week to make up his mind, Shamoun Afram, a program manager at an investment bank in Manhattan, kicked his search for a one-bedroom condo into high gear and homed in on the Orion, a modern high-rise condominium in Midtown. In January he toured about 10 units there with the help of his real estate agent, Patrick Mills of CORE, and he was about to sign a contract on an apartment slightly above his $1 million sweet spot when he noticed a new listing on Streeteasy.com late on a Tuesday.

The next morning he was on the phone with his broker to see if he could get in to see the apartment that day, but it wasn’t being shown until Thursday. “I knew I had to make a decision fast,” Mr. Afram said. He put in an offer that day, sight unseen, at the full asking price of $999,000. “We decided, let’s just be cavalier about it,” Mr. Mills added. The offer was accepted on Wednesday; on Thursday they toured the apartment; and on Friday they signed the contract.

But that didn’t stem a wave of interest in the apartment. “After we had the contract out, people started to call,” said Sarah Son, a broker at Keller Williams Realty who represented the seller. “Even after we told them we had a signed contract,” she said, “they kept trying to make us an offer. It was really crazy.”

In a highly competitive market, where cash is king, here is what you need to do to buy an apartment in the city.

REFRESH, REFRESH, REFRESH. With prime listings being snapped up, the faster you get to an apartment the better. Web sites including nytimes.com/realestate, Streeteasy.com and Zillow.com eliminate some of the work by automating your search. Apartment hunters can save search criteria, and the sites will e-mail new listings that meet their requirements.

DON’T WAIT FOR THE OPEN HOUSE. “If you can’t see an apartment the first week it is on the market,” said Doug Perlson, the chief executive of the online brokerage RealDirect, “there is a good chance you will not even get a chance to make an offer. Schedule a showing during the week before the first open house and use the open house for your second visit. Then you should be ready to make your offer.”

FORGET ABOUT GETTING A DEAL. The conventional wisdom over the last few years has been to come in at 5 percent below the asking price when making an initial offer. That won’t fly for attractive listings that are particularly scarce, especially if they are priced fairly. “Give the full price with no contingencies and leave that offer on the table for 24 hours,” said Shaun Osher, the chief executive of CORE. “You want to let the seller know that you’re really serious, that you really want the property, but you’re not going to let them use you as bait to get a higher offer.”

DON’T DELAY. Being the first to make a solid offer can give you an edge. When a one-bedroom two-bath unit at the Memphis Downtown Condominium in the West Village drew more than 100 people to its first open house, Adolfo Brenes and Lena Datwani of Bellmarc Realty knew they had to act quickly on behalf of the buyer they were representing. They submitted an all-cash offer at the full asking price of $1.65 million. The next day they received a call from the seller’s broker informing them that two other full-price all-cash offers had been made. “Because we were first,” Mr. Brenes said, “the seller was giving us the chance to come up to $1.8 million to take it off the market.” Having been outbid for other West Village apartments at the full asking price, the buyer decided to meet the seller’s increased price. They closed the deal in April. A few weeks later, a similar apartment four floors above was listed at $2.1 million.

BE THOROUGH. A well-prepared offering package can be a leg up for buyers. When submitting an offer on behalf of her clients for a two-bedroom in Carnegie Hill recently, Lisa Larson, a Warburg Realty associate broker, “prepared the buyers’ financial statement, as well as a short bio, as this was a co-op and we also needed to show that they would pass the board’s approval process. We also presented the offer as all-cash and agreed to sign the contract in five days.” Her clients, she said, were recently approved by the board.

RAISE YOUR DOWN PAYMENT. Thirty or 35 percent down is the new 20 percent, brokers say. In a rising market, appraisals tend to lag behind asking prices because they are based on past sales of comparable apartments. Banks will not lend more than the appraised amount, so buyers need to come up with more cash to make up the difference. “The stronger offers are the ones putting down more money,” said Josh Scheier, a public defender with the Legal Aid Society in Brooklyn who was recently in the enviable position of choosing among 30 offers for the two-bedroom two-bath co-op in Prospect Heights, Brooklyn, that he and his wife, Anat Soudry, listed in April for $699,000. After winnowing the possibilities down to two of the highest offers — both of which were more than 20 percent above the asking price — Mr. Scheier said the decision came down to who was “less of a risk” if the apartment were to appraise for less. The winner offered to put 50 percent down and had more money left over after the purchase.

BEWARE MORTGAGE CONTINGENCIES. With demand high, fewer sellers are willing to accept contingencies, and desperate buyers may feel pressed to waive the mortgage contingency and risk losing the typical 10 percent deposit, in order to have a shot at an apartment. But unless you have the cash to cover your losses, it’s not a good idea. Without a contingency, you will lose your deposit if the appraisal comes in low and you are unable to make up the difference, or if the bank finds something wrong with the building and will not lend the money.

NEGOTIATE THE CONTINGENCY. Christopher Kromer of Halstead Property and his business partner, Nora Ariffin, recently found something of a middle ground. The buyer they represented wasn’t comfortable making his offer of $1.7 million for a two-bedroom in TriBeCa without a mortgage contingency, and the seller was concerned that a low appraisal could ruin the deal. “What I suggested is that we present our offer with a 70 percent contingency, while reserving the right to finance 80 percent,” Mr. Kromer said. “This is essentially telling the seller that the buyer will put down 30 percent if the bank requires it, but he is also reserving the right to put down 20 percent if allowed.” This addressed the seller’s concerns while creating a 10 percent cushion for the buyer.

SET YOUR ULTIMATE PRICE. If a bidding war ensues, buyers will need to have a “walkaway number,” Mr. Kromer said. Mr. Conlon of CORE put it this way: “Think of it like anything else you are going to buy or like something on eBay. What is the number you are willing to go up to and be able to sleep at night?”

SIGN YOUR CONTRACT QUICKLY. A year ago, buyers could take as much as two to three weeks for due diligence and negotiation before signing a contract. “Today’s sellers are less patient and may pull a deal from a buyer that is taking too long,” said Mr. Perlson of RealDirect. “Also, since there is nothing binding until a contract is signed, we have seen very aggressive buyers try to steal a deal by offering an amount significantly above ask to try to get the seller to switch buyers.” Ethical brokers, he added, will not abandon an accepted offer, but if it takes too long, they will go to their backup faster than in the past.

Schloss, 58, points to Ontario’s C$130 billion ($126 billion) teachers’ pension fund, which has returned an average 9.6 percent annually on its investments since 2003 — 1.6 percentage points better than New York’s funds. The Canadian system reaped those gains mostly without paying outside asset managers. Schloss says the same in-house approach could work in New York.

“I’m not looking for John Paulson,” said Schloss, who earns $224,000 a year, referring to the billionaire hedge-fund manager. “I’m just looking for a VP at MetLife (MET) who makes 500,000 bucks.”

The 38 staff members in the city comptroller’s Bureau of Asset Management oversee five funds for police, firefighters, teachers, school administrators and civil-service workers. They get paid an average of $100,000 a year, less than the median base salary of a first-year Harvard MBA graduate. They farm out asset management to more than 300 firms.

Investing directly means the Toronto-based Ontario Teachers’ Pension Plan doesn’t have to pay outside managers 2 percent of assets they oversee, plus 20 percent of profits, the typical fees for hedge funds and private-equity and real-estate firms. It also gives Ontario Teachers’ more control over investments, Chief Executive Officer Jim Leech said in a telephone interview.

Losing Money

Among New York’s outside arrangements is a $60 million investment by four pensions in a real-estate fund sponsored by Colony Realty Partners, a Boston-based private-equity firm that oversees $3.2 billion. The fund has lost 15.5 percent since 2006, while Colony has reaped $7.7 million in fees, according to the comptroller’s office.

Last year, three city pension funds paid more than $1.2 million in fees on a $160 million investment in a real-estate fund co-sponsored by Fisher Brothers, a New York-based property investor and Morgan Stanley (MS), the New York bank. The fund has returned 0.3 percent since 2004. Another 2004 real-estate investment with Tishman Speyer Properties LP returned 58.8 percent.

California Compensation

Emily Margolis, a spokeswoman for Colony, did not respond to e-mailed and telephoned requests for comment. Suzanne Halpin, a spokeswoman for Fisher Brothers and Matt Burkhard, a Morgan Stanley (MS) spokesman, declined to comment.

Managing money internally and paying staff higher salaries and bonuses isn’t always a formula for success. The California Public Employees’ Retirement System, the largest U.S. pension, manages almost two-thirds of its assets, including 83 percent of stocks and 91 percent of bonds. Chief Investment Officer Joseph Dear received $522,540 in compensation in 2011.

Yet its 6.1 percent average annual return for the 10 years ending June 30, 2012 is 1.1 percentage point less than that of the Pennsylvania Public School Employees’ Retirement System. The Pennsylvania fund manages only 26 percent of assets internally and paid Chief Investment Officer Alan Van Noord $269,302 in 2011.

New Jersey’s $75.3 billion pension manages 73 percent of its assets in-house, the most among the 11 biggest U.S. public funds. The system returned 6.4 percent for the 10-year period ending June 30, 2012.

‘Way Ahead’

New York City will pay $8 billion this year toward retirement benefits, a cost that has risen more than fivefold since 2002. That’s why Ontario Teachers’ presents a model, Schloss says.

“They’re way ahead,” Schloss said in an interview in his seventh-floor office in the Municipal Building, which houses more than 2,000 employees across from City Hall. The former global head of private equity at Credit Suisse First Boston (CSGN), Schloss was hired by Comptroller John Liu in 2010 to increase returns and reduce costs.

The Ontario fund employs a staff of investment managers earning an average of C$720,000 a year to increase assets worldwide. Their investments include ownership of Toronto Eaton Centre and other shopping malls, a stake in Seoul-based Kyobo Life Insurance Company (KYLINZ), and a 30 percent interest in Copenhagen’s international airport.

Managing Managers

In New York, there’s plenty of talent and it’s “ridiculous” that the city won’t pay enough to hire it, Schloss said. A plan to manage a portion of assets internally, with compensation levels benchmarked to New York City insurance companies, endowments and pensions, hasn’t gained traction with fund trustees, he said.

“We’re not really in the asset-management business,” Schloss said. “We manage managers.”

Bringing Ontario’s approach to New York may be a challenge. While the city’s retirement system has about 60 cents of assets for every $1 in obligations, union officials say they’re wary of tinkering with it.

“Why would you try to dismantle a system that’s performing well?” said Greg Floyd, president of Teamsters Local 237, which represents 24,000 city employees. Floyd sits on the board of the city’s $46 billion civil-employees’ pension. Pension-fund trustees have to approve raising investment staff salaries and authorize internal asset management.

Reduced Fees

There’s “a yearning” among union trustees to manage assets in-house, though “we are never going to be able to pay private-industry salaries to work in government,” said Manhattan Borough President Scott Stringer, a labor-backed Democrat running for comptroller who’s favored to win. Liu, also a Democrat, is running for mayor. His term expires Dec. 31.

“When you get a new comptroller, you get a new chief investment officer,” Schloss said. “It’s not good for performance to have a system where your senior staff turns over every four years.”

The Ontario fund, which also has offices in London and New York, manages more than 80 percent of its assets in-house and is 97 percent funded. By contrast, the total market value of the assets of 109 U.S. state pension plans last year was 69 percent of projected liabilities, according to Wilshire Associates, a Santa Monica, California-based consulting firm.

What sets Ontario Teachers apart is governance and compensation, Leech said.

Wall-Street Caliber

The fund paid its 250-person investment staff C$180 million last year. The workers aren’t government employees, meaning their salaries aren’t subject to civil-service rules. High salaries and bonuses attract Wall Street-caliber talent, Leech said. About 35 percent of assets are in so-called alternatives such as private equity, real estate, and hedge funds.

“We compete with KKR,” said Leech, referring to the private-equity firm founded in 1976 by Jerome Kohlberg, Henry Kravis and George Roberts. “You don’t want to go into that game with a second-stringer.”

The Ontario fund has a nine-member independent board that sets policy and delegates day-to-day management to the professional staff. New York’s five funds have 58 trustees spread across several unions and political jurisdictions.

Two years ago, Mayor Michael Bloomberg and Liu unsuccessfully proposed overhauling management of the five pensions to create a system more like Ontario Teachers’. The mayor is the founder and majority owner of Bloomberg News parent Bloomberg LP.

Accounting Background

The five boards were to be pared down to a single 12-member body that would set investment policy. Asset management would have been separated from the comptroller’s office to insulate it from politics.

Instead of union officials and political appointees, Ontario Teachers’ board members are chosen for their backgrounds in business, finance, economics and accounting. Only one board member is a former teacher.

“What does a kindergarten teacher know about investing?” said Leech.

When Schloss was chosen to oversee the city’s pensions in 2010, Liu described the funds’ structure in a press release as a “cluster$&*$.” Schloss persuaded trustees to increase the investment staff to 38 from 22. The pensions added hedge funds, opportunistic fixed income and leveraged loans to the mix of investment possibilities.

Pay Obstacle

To an inexperienced staff he added Barry Miller, a former managing partner at Nottingham Capital Management, to oversee private equity. He hired Seema Hingorani, former research director at Pyramis Global Advisors to oversee hedge funds. Both earned $175,000 annually. Miller resigned to join Connecticut-based private-equity firm Landmark Partners, the Wall Street Journal reported on May 21.

“We wanted to hire a number of people but couldn’t because of compensation,” Schloss said.

Asset management staff are required to live in New York City unless they get a waiver. Obtaining one involves multiple agencies and City Hall approval, said Matt Sweeney, a spokesman for the comptroller’s office.

The median sales price of a two-bedroom condominium in Manhattan was $1.6 million in the first quarter of 2013, according to appraiser Miller Samuel Inc. and brokerage Douglas Elliman Real Estate.

“It’s just really hard to say, ‘Hey, come work here for $100,000 and you have to live in the five boroughs,” he said.

“Twenty-five years, and we’ve never seen this kind of market,” said Warren Lewis Sotheby’s International Realty president Aroza Sanjana, referring to the high demand and intense bidding wars seen in the Brooklyn market. Similar signs were seen in several markets across the country, including Atlanta, San Francisco and Phoenix.

Miller Samuel’s Jonathan Miller told BBC that he was “less concerned about the term ‘bubble,’” but acknowledged that the market was in an “extreme situation that would abate somewhat” in the next few quarters. [BBC News] — Hiten Samtani

With the average apartment price in Manhattan hitting $1,185 psf in the first quarter of this year, according to Halstead, that’s a lot of cash to overlook if you are in the market for sale.

That unaccounted for space is the balcony — on average 6 ft. by 11 ft. in Manhattan, according to Miller Samuel Inc. — that most folk use for extra storage or as a graveyard for dead house plants.

But a little bit of TLC and some serious thought can be the difference between hanging a “sold” sign or languishing on the market, according to some of the city’s top staging experts.

“It definitely helps close the deal,” said Barbara Brock, principal of Sold with Style, who just worked her magic on two city apartments that had been for sale for months with no takers.

Brock and her team transformed a 10 ft. by 4 ft. glass-enclosed balcony overlooking the Hudson from a dingy den with an old television, Melamine bookcase and withered plants where no-one wanted to go, into a cozy, extra room everyone wants to use.

“We used furniture the client had and put in a lounge chair, a club chair, some plants and some artwork and it became another, usable room,” said Brock.

“The broker said it definitely helped close the deal.”

The second, smaller balcony was used by the owners to store all the things they wanted kept out of reach of their toddler.

After clearing everything from the space and giving it a good clean down, Brock said a simple table and chair with a pillow “totally changed the space.” She explained, “Space in New York is of such a premium, you always want to give potential buyers the perception that they can go out there and utilize that terrace or balcony, regardless of the size.”

Celebrity interior designer and home stager, Cathy Hobbs, owner of Cathy Hobbs Design Recipes and a finalist on Season 6 of HGTV Design Star, agreed. “In a city like New York, space is a premium both inside and out,” she said.

Hobbs recalled moving to New York City in the spring of 1997, in the midst of an extremely tight rental market, and the real estate agent telling her that, in the winter, everyone wants a fireplace. The rest of the year, everyone is looking for outdoor space.

“Whether you have a balcony or wrap around terrace, I believe what everyone is looking for is relaxation, spaciousness and views,“ said Hobbs. “The key in creating the ideal outdoor retreat is to make sure that you select pieces that will essentially expand or extend your outdoor living space.”

Cheryl Eisen, president of IMG Interior Marketing Group, said there is no doubt the extra effort will earn a return on investment.

“Any space in Manhattan is sold at a premium, and if you can show you can use the space, people will pay for as much real functionality as you can show.

“It is one of my favorite things to do, because most people don’t know how to stage a little terrace. But even if all you have time for is a round table with a bowl of lemons, it still shows functionaility, no matter how small, and that will always sell.

“By putting something on the balcony, you expand the depth of the room, give the perception that the balcony is part of the home and by doing that, its going to draw the eye.ˮ

According to Brock, most house hunters have no “spacial relation,ˮ which basically means that, when faced with an empty space, they have no perception of where to put things or how to use it.

She explained, “When a buyer looks at a vacant space, one of three things happen; they go out and then immediately walk back in; they go out and say they have too much furniture to fit; or they go out and say they don’t know what they would put there.

“With terraces, if you don’t have anything to grab them, they won’t linger long — and as a broker said to me, if a buyer sits down, an apartment is virtually sold.ˮ

Making a buyer want to sit down and stay a while needn’t cost the earth.

Laurie Gorelick, of Laurie Gorelick Interiors, said, “There are inexpensive, bistro-type sets of tables and chairs that can easily found on websites like OverStock.com or Wayfair, that can create a little niche for dining or reading.

“And it can be spruced up with indoor / outdoor fabric, and pillows to add color and softness. You want to make it look like a desirable location to hang out in. Adding different types of greenery will make it look alive, sunny and habitable.

“Most importantly, it extends the living area of the dwelling so, in the first instance where the balcony is empty, it doesn’t increase the footprint of the apartment. In the second instance, seeing additional living space shows you are getting more for your money.ˮ

Kim Depole, a designer who has been featured on a trio of Oprah apartment staging segments, has seen some new trends in balcony design develop.

“Right now, everyone is making outdoor dining spaces, making their patio work like an outdoor dining room. And they employ themes — like a Japanese-inspired garden, or Polynesian. Another thing that’s popular right now are fire elements, although New York City fire regulations prohibit charcoal, electric or gas grills or fires on most apartment building balconies.ˮ

Depole’s company, Kim Depole Design has crafted both residential and commercial spaces across the country, from “tween roomsˮ to model apartments. The firm is currently working on amenity spaces at The Gateway new development in the Financial District, SJP Properties’ newest rental, the 800-unit Modern in Fort Lee and is also developing a “creativity labˮ with Simon and Schuster publishing.

But when she’s not turning her hand to expanding other people’s spaces, Depole has turned her own 200 s/f patio into an extra room.

“I have a huge, oversized Buddhist statue, a big red umbrella, bamboo screens and a table and chairs, and what was a barren space in now a dining room,ˮ said Depole.

“But even if all you have is a window box, plant it. If you want privacy, buy a large bamboo plant which will grow quickly and is very low maintenance. It’s also nice to do a little herb garden, and hanging strawberries can be beautiful, too.ˮ

In a city where all to often the view is the building next door, Sold With Style’s Brock believes anyone can create their own little urban oasis

“When you step outside, you want to think about putting some type of barrier that makes the space cozy and makes you think you are secluded and it’s just yours. A bar-height stool and table gives the idea that you can sit their with your cocktail and relax — it’s all about perception.

“When people look out at a balcony, they want to think of calm and relaxing, and what says that better than a lounge chair, side table and a Margarita cocktail.

The sale of the vast duplex apartment in Harperley Hall—a 1911 Arts and Crafts-style building on the corner of West 64th Street with large banks of windows facing Central Park—closed last week, after lingering on the market for six months, listing records show.

It was listed in November for $23.5 million, with a rush of celebrity publicity. But the price was cut by 15% in February to $19.995 million, and brokers said Mr. Narula, who built a fortune as an investor in mortgage-backed securities, paid considerably less.

Mr. Narula, a former mortgage-bond trader at Lehman Brothers Holdings, is the principal and managing partner of Metacapital Management, which oversees more than $10 billion in assets under management, according to a company filing. Last year, one of Mr. Narula’s funds was ranked fifth on a Barron’s list of top 100 hedge funds, and Bloomberg Market Magazine said the fund’s performance ranked it first among hedge funds managing $1 billion or more.

Madonna assembled her vast apartment by combining sponsor-owned units into a single sprawling unit on the fifth and sixth floors of 41 Central Park West many years ago. It has 15 rooms, including six bedrooms, and two large living rooms with Juliet balconies and French doors opening onto the park, according to a listing by Adam Modlin of the Modlin Group, and Arabella Greene Buckworth of Brown Harris Stevens.

Judging on the evidence of listing photographs, the apartment is quite orthodox for a performer known for her glittering costumes and extravagant spectacles. It has dark-wood floors, a stainless-steel and marble kitchen, and a large marble bathroom with old-fashioned pedestal sinks and a claw-foot tub. (It has a total of eight bathrooms.)

In 2009, Madonna paid $32.5 million for what were once three adjacent townhouses on East 81st Street near Third Avenue that had been listed for as much as $45 million. She then spent years renovating those spaces, which she still owns.

For many years, Harperley Hall wasn’t considered to be one of the more desirable buildings on Central Park West, but partly as a result of the spotlight brought to the building by Madonna herself, the building’s prices and reputation have been going up, brokers say.

Mr. Narula didn’t respond to a request for comment, nor did a spokeswoman for Madonna.

Madonna put her just-sold apartment on the market once before, for about $6.8 million in late 1996, according to Jonathan Miller, an appraiser and president of Miller Samuel Inc.

At the time, her brokers said a celebrity listing can add an extra kick early in a marketing campaign. But it was then taken off the market without a buyer, Mr. Miller said.

One reason for sluggish local growth was that prices here didn’t fall as much as more speculative markets did during the crash. Experts also cited the impact of a shrinking Wall Street, New York’s long foreclosure process, and superstorm Sandy.

Nationally, prices rose in March by 10.2 percent compared to a year earlier. That gain was the highest annual return since 2006, when the housing market was peaking. The biggest growth was in Phoenix, San Francisco and Las Vegas, where year-over-year increases topped 20 percent.

In the New York area — defined as a 29-county region that includes Long Island — prices rose by 2.6 percent, the smallest gain among 20 metropolitan areas covered by the index.

Prices on Long Island actually slipped in the first quarter from a year earlier, according to data published last month from a different source. The median Island home price, excluding sales in the Hamptons and on the North Fork, fell 2.6 percent, to $341,000 from $350,000, according to real estate appraisal firm Miller Samuel Inc.

The uneven recovery speaks to the disparity of the housing crash, experts said. While Phoenix is up 30 percent since the trough and New York is up 3 percent, prices in that Sunbelt city plunged 56 percent in the crash, while those in the local market fell 27 percent, said Craig Lazzara, an analyst at S&P Dow Jones Indices, which publishes the index.

“New York had relatively low decline in the deflation of the bubble,” Lazzara said, “and so it had less to bounce back from.”

Lazzara said the shedding of Wall Street jobs was also a factor. “New York, to a large degree, is influenced by the financial industry, and we all know that that industry is contracting,” he said. “When one of the major industries affecting the area is downsizing or is shrinking more than it’s rising, that inevitably is going to affect the demand for real estate.”

Other factors that create a drag on area prices are a backlog of foreclosures due to the state’s relatively slow legal process, and the fact that the housing market in suburban areas like Long Island is underperforming compared to urban areas, said Jonathan Miller, president and chief executive of Miller Samuel.

Other parts of the country also didn’t have to deal with last fall’s superstorm, said Kevin Leatherman, president of the Multiple Listing Service of Long Island. “Hurricane Sandy also skews the numbers,” Leatherman said, “because you have houses that are physically distressed.”

Some of that is due to an investment push by financial firms, as we noted last month in an article on February’s 9.3% year-over-year gain. The spending certainly seems to be widespread, with a dozen U.S. cities registering double-digit year-over-year gains. Hot markets basically got hotter, as Detroit, formerly up 15.2%, jumped 18.5%; Atlanta, formerly up 16.5%, jumped 19.1%, and Las Vegas, formerly up 17.6%, soared 20.6%. The price increase laurel still goes to Phoenix, where prices, are up 22.5%.

That’s if you can find anything to buy. Inventory is tight all over the country, and real estate listing aggregator Zillow has noted that in February, the number of listings on the site was down 17% from the previous year. Last week, the site published a report arguing that that’s due to homeowners who are “underwater” (remember them?) owing more on their mortgages than they have in equity, and thus unwilling or unable to list their homes.

However, the good news is that the number of Americans in foreclosure or late on their mortgages continues to decrease. A report from LPS Applied Analytics notes that the number of distressed homeowners dropped to 4.7 million in April, which is the first time in five years that that figure has come down below 5 million.

If we think of distressed homeowners as a tide-water mark, the flood of foreclosure is clearly receding.

So the question on the table for this month is: When can those homeowners recover enough to list their homes, pushing up inventory, and providing some balance to prices? According to Zillow, it may be the first quarter of 2014, at which point the firm predicts that 1.4 million homeowners who currently have negative equity (another way of saying they are underwater) will be positive again.

If you’re looking to buy, though, the national statistics aren’t necessarily a good guide to your local market. If anything, certain areas are seeing inventory even more constrained at high price points (where presumably owners may have two incomes, and/or some non-real-estate resources) than at low ones. That’s certainly the case in New York, where new condo inventory fell 41.7% in the first quarter, compared to the year before, versus a decline in overall inventory of 34.4%, according to a report from appraiser Miller Samuel.

That’s also the case in red-hot Phoenix, as real estate broker Bob Hertzog noted in a blog post dissecting the Zillow report, stating that “the greatest annual decreases in inventory were among the most expensive homes with inventory declines of 20.5% year-over-year. By contrast, mid-tier homes saw 17.2% reduction in inventory levels, and bottom-tier homes fell 9.1%.”

But you needn’t care about mansions if you’re buying a mid-tier home, and vice-versa. So if you’re in the market, and the news of “double-digit price increases” is making you nervous, don’t forget to check how homes at your specific price point are doing, and seek local market insight on inventory in that segment might unclog.

The market’s recovery is being closely watched, and is seen as a key factor in overall global economic health. Although the signs are improving, there is also evidence of a potential bubble.

The BBC’s Samira Hussain reports from Brooklyn, New York, one area where home prices are soaring.

Economists and business executives say the job market here has, on the surface, recovered from the deepest economic downturn since the Great Depression. The local economy has more than regained all the jobs it lost, and the current 6 percent unemployment rate is the lowest since 2008. The 7.5 percent national unemployment rate calculated in the same way as the local rate — without seasonal adjustment — would be 7.1 percent.

Such a turnaround would normally produce a sigh of relief, especially among local economists. But some of these experts say the Island’s job market remains fraught with problems that could have far-reaching effects, even on other areas of the economy.

Gone are the days when economists talked about strong, high-wage employment growth and its multiplier effect of generating other jobs.

Instead, during the current recovery, Long Island is more likely to grow jobs that pay $11 an hour than $30. The robust hiring that characterized past economic bouncebacks has been clipped this time by employers’ determination to run leaner operations and by worries about the costs of federally mandated employee health care, local business executives and economists said.

Lower standard of living

All told, the post-recession job market suggests that the new normal for Long Island’s workforce could be a lower standard of living.

“The salaries are not going to be what they used to,” said Ken Goldstein, an economist at The Conference Board, a Manhattan business-research group. “That is continuing to change the economic climate on the Island.”

Long Island had 1.28 million jobs in April, up from 1.27 million reached in April 2008, before the recession began shrinking employment, the latest state Labor Department data show.

One of the fastest-growing employment sectors is food services and drinking places, where the number of jobs has expanded by 15,200 since 2008.

By contrast, construction jobs, despite a recent increase in employment stemming from superstorm Sandy rebuilding, are still 9,200 shy of their 2008 peak.

The wages of those two sectors are a study in contrasts. The food service workers earn an average $11.39 an hour, compared with $29.62 an hour for construction workers, data from the U.S. Bureau of Labor Statistics show.

The lower-wage jobs could remain the growth engine of the Long Island employment market for a while.

“There’s a feeling out there that things haven’t returned to normal or what people expect at this point in a recovery,” said Irwin Kellner, the Port Washington-based chief economist for MarketWatch, a financial news website. That’s in part “because of the nature of the jobs being created.”

Some significant layoffs announced recently will cost the Island skilled jobs in industries noted for higher wages.

Biotech company closing

OSI Pharmaceuticals, which was one of the most important biotech companies here before its acquisition in 2010 by Astellas Pharma Inc. of Japan, earlier this month said it is closing its remaining facility on Long Island and will lay off all of its 115 local employees. And in March, Northrop Grumman, once the Island’s largest private-sector employer, announced plans to shift 850 of its 1,400 remaining Long Island jobs from Bethpage to Florida and California.

Hiring for some higher-paying jobs may not pick up until the bulk of federal health care legislation takes effect next year and employers can determine their cost to provide employee benefits.

“Health care is holding back hiring because in some cases the real cost of health insurance is still being ferreted out,” said Lou Basso, president of Alcott HR, a Farmingdale human-resource services company whose 300 clients employ white-collar professional and skilled blue-collar workers.

Worries about expensive health care are having less effect on some lower-wage employers, who are pushing ahead despite concerns. Rob Basso — no relation to Lou — who owns Advantage Payroll Services in Freeport, said that his 280 restaurant and hotel clients, about a tenth of his customers, have increased hiring in the past six months.

General economic uncertainty is also weighing on the job market.

Howard C. Bluver, president and chief executive of Riverhead-based Suffolk Bancorp, said that despite business expansions and increased demand for loans, strong hiring hasn’t followed.

“We’re seeing robust expansions,” he said. “What we’re not seeing is very robust hiring by these businesses. They’re still being cautious.”

Modest housing price gains

Housing, which normally is one of first sectors to recover after a downturn, has had only modest price gains in recent months. The median home price last year, excluding the pricey East End and the North Fork, was $350,000, 20 percent below its 2006 peak of $440,000, according to the appraisal company Miller Samuel Inc.

The growing dominance of low-wage jobs could weigh on housing, Goldstein said: “The good news is that a lot of people who were out are back to work. But because they aren’t making the money they used to, that is holding them back from buying a house or buying a bigger house.”

At Teachers Federal Credit Union, based in Hauppauge, president and chief executive Robert Allen sees a pickup in demand for mortgages but worries that a lower standard of living could force more Long Islanders to leave for less expensive areas.

“People are only going to be able to afford so much,” he said.

James Brown, principal economist in the state Labor Department’s New York City office, notes that local labor markets have come back when other parts of the country are still struggling to get back to their pre-recession peaks. “I am thrilled that New York City and Long Island are beyond where they were,” he said.

Goldstein, of The Conference Board, says the next few years will be crucial in determining if the Island’s job market will settle into its new normal or move beyond it.

“It’s going to take at least three to five years minimum,” he said, “and easily could take longer, with no guarantees that it will come back, period.”

This situation is the consequence of several factors: the slowdown in construction following the financial crisis and the fact that banks are still more likely to finance rental projects versus condos and demographics. The City is adding about 50,000 residents a year but the number of homes being added was 10,599 in 2012, compared with a recent high of 33,911 in 2008. Low crime rates, improved subways and more family-friendly amenities are among the factors fueling the city’s popularity.

Other factors restricting residential inventory today could include unemployment and still tight credit. Homeowners who are struggling financially or fear they can’t get a mortgage can’t upgrade to larger apartments; that means they are unlikely to put their own homes on the market. Between 2009 and 2013, Midtown West is the neighborhood that has seen the biggest drop in available apartments for sale today: 51% (from 521 units to 257). The second biggest drop, 48%, happened in Tribeca (from 447 units to 232). Chelsea, Central Harlem and Greenwich Village all saw the inventory decrease by about 40% since 2009.

The upswing includes places that haven’t seen such surges before. New sectors are expanding into emerging markets—like the automobile industry in Shanghai, and accounting and law in Hong Kong—and sparking demand for high-end rentals, as weak European economies force companies to look elsewhere for business.

Four cities that have seen some of the biggest jumps in rental prices over the past year are Dubai, where an apartment in a prime location surged 14.3% from 2012 to $3,628 a month for a two-bedroom; Beijing, up 8.5% to $3,125 a month; Shanghai, up 6.1% to $3,387; and Hong Kong, up 3.7% to $6,223, according to Knight Frank, a global property consultancy based in London.

Expat living, on the whole, seems to be on the rise, with global rents jumping 5.1% over the past year in 11 global cities surveyed. New York City grew a relatively modest 4.5% but has the highest monthly rent—roughly $8,200 a month—of the cities surveyed.

Knight Frank’s latest Global Corporate Lettings Review looked at prime rental demand in the 11 cities, largely based on expatriate demand. Knight Frank surveyed its teams world-wide to see what properties and amenities are most often requested by corporate executives working abroad, and what price is “typical” for the area. The report is scheduled to be released Friday.

Corporate accommodations account for up to 85% of prime apartments in some cities, said Kate Everett-Allen, international residential analyst at Knight Frank, who worked on the report.

“We saw a big drop-off in [human resources] budgets post-2008. Now that’s starting to come back, but it’s coming back stronger in these emerging markets as opposed to traditional markets,” she said.

For expats, ease of living is key. Roughly 90% of corporate staffers in Shanghai and 100% in Beijing request furnished units, according to the report. In New York, only 10% ask for furnished units. Ultraluxurious amenities sometimes outrank other factors, such as location or size, says Josh Doyle, senior vice president and associate broker at Corcoran.

Mr. Doyle recently worked with a Vancouver, British Columbia, couple who had to relocate to New York City for work. At first, they looked in neighborhoods downtown to be close to their office. Eventually they settled in a $13,000-a-month, two-bedroom apartment in midtown—drawn to more than 44,000 square feet of amenities offered by One MiMA Tower, the luxury rental residences on West 42nd Street.

Last year, the first year Knight Frank released this report, Shanghai saw the biggest year-to-year increase in rental prices, at 8.2%.

This year, Dubai showed the most growth.

“Downtown Dubai has matured quite a lot over the past 18 months,” Ms. Everett-Allen said. “Location is pretty much key.”

Billionaires found the green-carpet views of Central Park — meticulously captured by a remote-control helicopter — to be irresistible. Gary Barnett, the president of the Extell Development Company, announced sales of full-floor apartments for more than $50 million apiece in the unfinished building, later confirming that the duplex penthouse and an even larger duplex 14 floors below had each gone into contract for more than $90 million.

Success begat boldness. And boldness begat listings like the penthouse at CitySpire, which at $100 million is now perceived as the highest F.S.B.O. listing in New York history, although the owner, Steven Klar, has listed the property with his own brokerage. The sales contract that Mr. Klar, who is also a developer, signed with Douglas Elliman and its brokers Raphael De Niro and Victoria Logvinsky, has expired, and now Mr. Klar is trying to sell the 8,000-square-foot octagonal residence himself. (An Elliman spokeswoman had no comment this week on whether any serious offers had ever been received.)

New York was not alone. In Miami, owners and their agents took their cues from the frenzy seizing Manhattan. The developer Bruce Eichner listed his penthouse at the Continuum for $39 million. The telecom mogul Peter T. Loftin listed Casa Casuarina, the former Gianni Versace mansion, for $125 million, dropping the price five months later to $100 million. The buyers of Mr. Loftin’s 23,000-square-foot spread on Ocean Drive will have to tangle with a pile of litigation; the latest suit, from Barton G. Weiss, the restaurateur who has been operating the property as a hotel, revealed that the 54-foot mosaic-tiled swimming pool lined in 24-carat gold was never approved for use by hotel guests.

None of those properties have sold yet. And others with eye-popping price tags in Manhattan, including co-ops at the Sherry-Netherland and the Pierre, as well as Leroy Schecter’s combo unit at 15 Central Park West (recently reduced to $85 million from $95 million), continue to collect dust waiting for a trophy collector.

If there is a defining feature of the last year, it is that the mania over listing prices for trophy properties was built on a mirage of big sales creating new comps in the market. Consider that in Manhattan only one monster sale above $80 million — the $88 million sale of a penthouse at 15 Central Park West — has actually been recorded as a sale so far. The others are contracts that could be torn up if the prospective buyers somehow change their minds.

Which isn’t to say that extremely wealthy people aren’t paying extraordinary prices for amazing apartments in New York and Miami. It’s just that the mega-rich in both cities are gravitating not to resales, but to spectacular new penthouses designed with them in mind. Properties like the duplex penthouses at Ian Schrager’s Residences at the Miami Beach Edition, which sold as a package for $34 million (or $3,800 a square foot, a new Miami Beach record), or the penthouse at 432 Park Avenue, which the developer Harry Macklowe said is under contract for $95 million, continue to prove the point.

“The only properties that are getting these numbers are new development projects, and those can’t be confirmed until the year after when they close,” said Jonathan J. Miller, the president of Miller Samuel, a property appraiser. “So in many ways this is a phenomenon that is hard to document or prove. However, it has launched the next wave of development.”

And that new wave of development, in New York, at least, is focused almost entirely on the top 10 percent of the market, Mr. Miller said, as developers feel pressured to build luxury units to justify soaring land prices.

Still, it may well be that the trophy property craze spawned a wave of transactions for more modest — believe it or not — $20 million and $30 million apartments.

“When we look back,” Mr. Miller said, “the legacy of this period is going to be that it jump-started with a handful of trophy property sales that led the way for a lot of top-tiered transactions that we haven’t seen in the last two or three decades. The trophy sales broke the ice.”

The same can be said of Miami, where the going rate for trophy penthouses climbed above $3,000 a square-foot this past year, driven by the boldness of Mr. Schrager and other developers reacting to an influx of prospective buyers from Brazil, Russia and China.

“Everywhere there is a grand property, we have these great buyers, and there is no end to them,” said Mark Zilbert, the president of the Zilbert Realty Group in Miami Beach.

What is attracting wealthy buyers to Miami, Mr. Zilbert said, are quality buildings with grand spaces, like Edition, 1000 Museum and even Related’s recently announced Marea, a six-story building with only partial views of the ocean and bay where buyers have nevertheless already reserved about half of the 30 units.

“It is sort of build it, they will come,” Mr. Zilbert said. “We didn’t have this a few years ago. But now developers are building these exceptional properties.”

But not all properties are created equal. And some, like Casa Casuarina, are saddled with complications. It’s tough enough that it sits on a touristy stretch of Ocean Drive and has no parking — not exactly the kind of privacy and exclusivity the superwealthy demand these days.

Mr. Versace was killed outside the entrance gate in 1997. Mr. Loftin bought the property in 2000, initially living in it and running it as a members-only club. Then, faced with impending foreclosure and eviction, he invited Mr. Weiss in 2009 to open a Barton G. restaurant on the property and to run it as a high-end hotel and event site. Last summer Mr. Loftin decided to sell, inflaming Mr. Weiss, who had a lease to operate his business there until 2019.

Mr. Weiss’s business, 1116 Ocean Drive L.L.C., filed suit earlier this month, saying Mr. Loftin misled him and had not told him that the mansion’s swimming pool was not approved by the state of Florida for hotel use. (A few months after Mr. Weiss signed the lease, the state required that a “no swimming” sign be posted at the pool, meaning guests paying upward of $2,250 a night were not allowed to swim there.)

Adam J. Steinberg, Mr. Loftin’s attorney, called the suit “baseless” and said that Casa Casuarina had “provided a tremendous amount of slack to Barton G.’s company to comply with the lease.” He said Mr. Weiss never made an issue of guests not being able to use the pool.

Until this week, I viewed Casa Casuarina as a symbol of the irrational exuberance that permeated the highest end of residential real estate the past year, despite it being listed by the prominent Coldwell Banker agents Jill Eber and Jill Hertzberg, known as “The Jills.”

Earlier this month, Mr. Loftin said that he expected the property to sell “soon.” “We have had some very good offers and have some very good prospects,” he said.

Then on Tuesday night, Mr. Loftin sent out a press release announcing that the price of Casa Casuarina was being lowered again, to $75 million — a 40 percent price drop in 11 months in a supposedly red-hot Miami market. Mr. Weiss plans to leave the property by the end of the month, so “the timing is now perfect for a quick and easy sale,” Mr. Steinberg said in the statement.

So maybe the 10-bedroom, 11-bath home has turned into something else: the first sign that owners shooting for the moon are finally letting some of the air out of the balloon, and floating gently back to earth.

To be fair, there have been stumbles. Painful busts followed euphoric booms, like the one that flattened the housing market a few years ago. And not everybody’s idea of progress is a skyline of skyscrapers. Other brokers worry that the city is becoming divided into the “have-mosts” and everyone else. Yet one could also allow that Miami’s planners, brokers, and developers might want to take a collective curtain call for their efforts, as they’ve largely proved the old real estate adage: Build it, and build it right—with attention to detail, style, and comfort—and residents will come.

“Miami has become a magical place in the last 20 years,” says Russell Galbut, a longtime condo developer who also grew up here. Two decades ago, for instance, “you could roll a bowling ball through downtown and not hit anybody,” he points out, while these days the area pulses round-the-clock with clubs, hip eateries, and coffeehouses.

Galbut, who today is managing principal of the firm Crescent Heights, became among South Beach’s largest landlords, and he continues to develop there—his 87-room Gale South Beach hotel on Collins Avenue just opened in December. But he recognizes that the center of gravity has shifted somewhat to the mainland, especially along Biscayne Bay from 36th Street to Brickell. To wit: Zuma chose downtown as the location of its first US restaurant outpost.

Similarly, consider the rebirth of Wynwood, whose warehouse-lined blocks have been enlivened with art galleries, eateries, and shops. And in a place that once eschewed foot traffic, people actually walk around there, encouraged by the bright murals that jazz up Northwest Second Avenue.

It would likely be music to the ears of late developer Tony Goldman, whose company still owns about two dozen buildings. According to real estate brokers who worked with him, Goldman—credited with the reinvention of New York’s Soho neighborhood in the 1970s—always thought that the area’s low-slung, pedestrian-friendly vibe had great potential, even if the rest of the city still believed the future was about building upward.

“I don’t mind high-rises where they belong, but I don’t think a whole city should be made up of them,” says Metro 1’s Tony Cho, a Wynwood-based broker and developer who is turning a denim factory into a Ducati dealership. But sky-high homes became a way of life in the last decade, and they remain popular, Cho points out. At Wynwood’s edge, buildings like 2 Midtown and 4 Midtown, which were built as condos but rented out many of their unsold units over the years, are completely filled up, he says.

While in the 1980s South Americans drove much of the demand for real estate, recent years have seen the arrival of buyers from other continents. There are also more full-timers than snowbirds, brokers add. When Ugo Colombo, president and chief executive of condo developer CMC Group, came from Milan to attend college at the University of Miami in the ’80s, you could count the number of Europeans “on your fingertips,” he says. Now, Colombo’s buyers also include Italians, Asians, and Russians, the post-Soviet oligarchs who are snapping up trophy homes in New York City, too; about half the sales over $1 million are estimated to be by foreigners. But Latin Americans are also still here. Brazilians seemed to come en masse in 2009 and 2010. Venezuelans, nervous about President Hugo Chavez’s socialistic reach, turned up in the past few years. Mexicans worried about crime in their country are big buyers. Plus, Argentines looking for safe havens for their cash, in the face of inflation in their native land, began picking up multimillion-dollar condos in 2012, too.

As the city has become an international magnet, Colombo has made it a point to craft interiors those new arrivals would find appealing. Projects like his 147-unit Bristol Tower on Brickell Avenue, completed in 1993, are awash in Italian marble instead of the plain tile that used to be common. “It’s stuff that everybody does now,” he says, “but 20 years back, it wasn’t so normal.”

To fully understand Miami’s journey, developers say, look to the renaissance of Miami Beach. In the 1970s, its buildings were run-down and inhabited by seniors, who had to contend with low-level street crime. But the Miami Design Preservation League, which was founded in 1976 by Barbara Baer Capitman and her son John Capitman, began to turn things around by restoring the area’s mesmerizing Art Deco architecture, with projects like the restoration of the Cardozo Hotel on Ocean Drive and advocating for historic districts.

Star turns in Hollywood and the media—in the movie Scarface, on Miami Vice, and as a backdrop for a well-known photo shoot for Calvin Klein’s Obsession—didn’t hurt its rebound either. Another factor that raised the stature of South Beach was developer Thomas Kramer’s 17-acre South Pointe project in the 1990s, which helped gentrify the area. Still, back then, a one-bedroom residence in South Beach could be purchased starting from $59,000, according to an ad in Ocean Drive’s premiere issue; today it might cost $750,000.

As the decade heated up, a gold-rush mentality set in, which often forced developers away from South Beach proper to points further north on the peninsula. Another hurdle was that increasingly assertive preservation laws in the Art Deco section made many large-scale developments off-limits.

Developers who flourished in the post-revival era of South Beach include David Martin, whose father, Pedro, emigrated to the US from Cuba in 1961 and continues to work alongside his son. The family’s Terra Group, formed in 2001, built several high-rise condos along Indian Creek Drive, near the Intracoastal Waterway, then jumped over to the Omni area as downtown picked up. Martin is now busy with projects in Doral, which was incorporated in 2003 in a testament to how Miami continues to push outward.

The city “has definitely undergone a revolution,” Martin says, explaining that cultural institutions have helped shed its beach-and-body image. Art Basel Miami Beach has drawn art buyers since 2002. In the rush to find the next cool spot, developers have not neglected historic sections. In fact, Coconut Grove, Miami’s oldest real neighborhood and perhaps its most verdant, has seen its fortunes improve in recent years, too.

Martin, for one, is now building the Grove at Grand Bay in Coconut Grove, a two-towered, 96-room condo project designed by Danish wunderkind Bjarke Ingels. Nearby, Peter Gardner, of Pointe Group Advisors, is preparing to break ground on Grove Village on Grand, a six-block mixed-use project aimed in part to spruce up the neighborhood’s shopping district, which follows other projects in recent years there. And Gardner may have a good perspective on what works. His great-grandfather, Frank Gardner, came to Florida in 1903 and built homes in Lake Alfred.

The youngest Gardner believes Miami’s new-found visibility has a lot to do with professional sports: The Heat, which came in 1988, and the Marlins, in 1993, became effective marketing tools for the city, like the Dolphins, at home and abroad. “You can probably hear 10 different languages at a Heat game if you are listening for them,” he says.

As the Heat surged anew in the mid- 2000s, developers, freshly euphoric about the city’s future, seemed to almost trip over themselves to put up condos. Leading the charge was Jorge Pérez, the billionaire founder of the global development giant the Related Group and a former local urban planner. Like mushrooms after rain, his condo towers sprang up across the region, such as 50 Biscayne and One Miami.

But the addition of about 100 towers by Pérez and others over the decade, including about 64,000 units introduced in 2006 alone, created a glut of housing that quickly outstripped demand. At the same time, a city that once unflatteringly had the reputation for “land by the gallon” real estate scams saw droves of investors buying and flipping apartments before kitchen counters were even in place, which ran up prices to unsustainable levels, compounding problems. By the end of the decade, condos sat dark and unsold. Between 2006, when housing prices peaked, and 2010, after the credit crunch, two-thirds of all sales in the city were distressed ones, according to an analysis by Miller Samuel, an appraisal firm.

Developers were hardly unscathed themselves. Pérez, for one, told Ocean Drive he lost between $1 billion and $2 billion because of projects like Icon Brickell, his opulent two-towered condo, whose struggles were typical of many projects in the last boom. As the market cratered, Pérez slashed Icon’s prices to unload its units, but in the end, lenders took back the property anyway. “Did I take a financial beating? Yes,” says Pérez, who started in 1979 with a 40-unit rehab job in Little Havana but estimates he’s developed “tens of thousands” of condos in Miami and nearby cities. “It was very humbling,” he adds.

But like a phoenix, Pérez, and the condo market, appears to have taken flight again. For starters, a surge in renters in the last few years has helped to absorb some inventory, analysts say, leading to something of a market equilibrium. In fact, dozens of new condo projects are now planned, including one from Pérez himself: One Ocean, which is to break ground in a South Beach parking lot at the end of Collins Avenue next summer. And to discourage speculative buyers at the 50-unit project, which will contain a weekend penthouse for Pérez himself, buyers will be required to chip in 50 percent of the price up front before construction even starts. “We have learned our lessons from the past,” he says. Still, Pérez is optimistic. “We are very lucky that the world looks at us as a place to be.”

Indeed, setbacks are temporary, say those who have been around Miami for decades, who observe that boom-bust cycles come with the territory. “But the booms are getting louder and more expensive,” jokes Martin Margulies, who since the 1960s has built about 4,000 condos, explaining that the overall trajectory has been positive. Margulies was also an early proponent in Wynwood; the Margulies Collection at the Warehouse, his contemporary art pieces, opened in 1999.

Prices at his latest residential project, the Bellini on Williams Island—with 70 units across 24 stories, each with a private elevator—start at $1 million. But buyers will probably fork over cash. “Many don’t even try to go to the bank,” knowing that loans won’t be available for new condos, he says. Banks are still skittish about home loans, brokers add. But the wave of foreigners who are now buying homes in Miami usually don’t seek mortgages anyway, they say. Overall, Miller Samuel found that about 75 percent of all deals in the third quarter of 2012 were in cash.

For developer Nitin Motwani, a board member of the Downtown Development Authority, Miami’s biggest accomplishment in the last 20 years has been its urbanization, as it comes into its own as a city. More people are taking trains than they were before, for instance, and the All Aboard Florida rail project being considered for downtown, which would let people easily commute up and down the coast, could allow that trend to continue. Yet others say a train to Miami Beach needs to be built to make the city truly world-class.

But most importantly, developers explain, in looking across the huge swatch of neighborhoods that gleam along Florida’s southeastern tip, there’s finally a lot more there. “You have all these different pockets, with unique aspects,” Motwani says. “It’s got something for everyone.”

“We’ll do it, but this takes away from tuition,” said Delgado, 48, who has two sons in college. “I can’t turn on a dime.”

The bad news for Delgado, an education consultant, is the latest good news for bondholders of the property, whose owners walked away in 2010 from its $3 billion mortgage. Mid-lease rent increases by the landlord on 1,300 tenants in the complex will boost revenue, raising the value of the 80-acre asset enough for creditors to break even on their investment, according to Lea Overby, a debt strategist at Nomura Holdings Inc.

Three years after the second-biggest commercial mortgage-backed securities default in history, the company controlling the property may be able to sell at the full value of the debt as investor interest in Manhattan apartments surges. Rents are approaching all-time highs set in 2006, when Tishman Speyer Properties LP agreed to pay $5.4 billion for the 11,000-unit complex along the East River, near New York University and Union Square and a short commute to Wall Street.

‘Trophy Assets’

“I was very negative on the terms of the loan,” Overby said when the deal was first announced. “The thing I’ve learned is you really have to give a lot of credit to great assets in amazing locations. There’s something to be said about trophy assets in Manhattan.”

Median rents in the borough climbed 6.5 percent in April from a year earlier to $3,195, bringing them to within 2 percent of their peak, according to a report this month by Miller Samuel Inc. and brokerage Douglas Elliman Real Estate. Property investors are clamoring to capture the rising rates, more than doubling the volume of multifamily sales in the borough last year to $9.1 billion, Real Capital Analytics data show.

Tishman Speyer and BlackRock Inc. (BLK) bought Stuyvesant Town-Peter Cooper Village from Metlife Inc. (MET) at the height of the U.S. commercial property boom as cheap financing emboldened investors to ever larger deals. A $3 billion loan that helped back the deal was carved up and bundled into five commercial-mortgage bonds that also contained debt tied to offices, hotels and shopping centers.

Tishman Speyer’s plan to make interest payments relied on remodeling apartments at the complex — built in the 1940s to ease a housing shortage for returning World War II veterans — raising the cost of rent-regulated units to market rates, and evicting illegal occupants.

‘Patient Money’

Billionaire investor Sam Zell in October 2006 described it as a “patient money deal” since three-quarters of the tenants fell under laws that set rents below market value and limited increases.

Residents responded by suing Tishman Speyer and previous owner MetLife Inc. in 2007, claiming the companies improperly forced at least one-fourth of the complex’s residents to pay market rents while the owners received more than $25 million in tax breaks.

Unable to push through rent increases, thwarted by the litigation, and facing a deteriorating rental market after the global financial crisis, Tishman Speyer missed a $16.1 million payment on the mortgage in January 2010.

Special Servicer

CWCapital Asset Management LLC, a special servicer that represents lenders in soured loans, took control of the complex and appraised it that year at $2.8 billion, according to data compiled by Bloomberg. The firm is responsible for advancing interest payments on the loan to investors and managing the property until its sale, according to Bloomberg data. A spokesman for CWCapital declined to comment on the rent increases or its strategy for a sale.

Prospects for the property began to recover in 2012, when Manhattan rents increased by about 5.3 percent each month over the same month the previous year, according to Jonathan Miller, president of New York appraisal firm Miller Samuel. Rents this year are continuing to climb at the same pace, bolstered by improving employment and tenants who are lingering in the leasing market because they can’t find anything to buy, Miller said.

CWCapital also lowered labor costs and management fees, Fitch Ratings said in an April report. Still, the debt was considered the largest contributor to expected losses in bonds called WBCMT 2007-C30 that contained it, Fitch said in a report downgrading some of the securities.

Legal Case

CWCapital signaled it would seek to boost revenue at the site as early as last year, when it asked tenants to sign forms attached to their leases that acknowledged it might alter their rents mid-lease once a settlement in the long running legal case was reached, according to Alexander Schmidt, the lawyer who represented tenants at Stuyvesant Town in the class action lawsuit known as Roberts v. Tishman Speyer.

“Once we found out that they intended to enforce that lease term there was nothing we could do to stop them, absent derailing the entire settlement, so we built in protections,” Schmidt said.

The eventual settlement required CWCapital to give tenants at least 30 days’ notice and 60 days to vacate their properties if such rent increases were to occur. Tenants who chose to vacate also won’t be penalized for breaking their lease, Schmidt said. The settlement, which determines what CWCapital and future owners may charge tenants through 2020, went into effect May 14, the day after the deadline passed to appeal it, Schmidt said.

Clear Message

That same day, CWCapital told tenants of the increase.

“The message I’m getting is loud and clear: pay or leave,” said Kirstin Aadahl, 41, who received a notice increasing the rent on her one-bedroom apartment by $550, three months after she signed a two-year lease.

Aadahl, a teacher whose five-year old daughter attends kindergarten at the local public school, said she’d accept the rental increase for now.

“We’re going to do everything we can to stay here, this is our home,” she said. “ This is a big blow here. It’s a very stressful serious time.”

CWCapital estimates it will take 18 months to implement the legal agreement, and it doesn’t intend to consider a sale until then, the company said in an April 15 servicing note. CWCapital will spend that time focusing on “operational issues” related to the settlement as well as repairing damage done by Hurricane Sandy last year. Minimal Loss

The complex was valued at $3.2 billion in September, according to servicer data compiled by Bloomberg. A valuation of more than $3 billion, which doesn’t include the rent increases, would translate to “a zero to very minimal loss” for bondholders, said Roger Lehman, an analyst at Credit Suisse Group AG. The value of the property probably needs to be greater than $3.5 billion to cover the interest and other expenses advanced so far by CWCapital, he said.

The prospect of bondholders recouping their investment is of little comfort to Aadahl, Delgado and other residents facing rent increases.

“They’re churning these apartments,” said Delgado, who was among tenants picketing outside of the Stuyvesant Town-Peter Cooper Village leasing office over the weekend, warning would-be tenants of the landlord’s midterm lease increases. “Every time a vacancy occurs, they get an extra buck.”

A. Much of the answer depends on whether you plan to live in the apartment yourself or rent it out as an investment, as well as on what type of tenant is currently in place, say our experts.

“If you are buying the apartment for investment and wanted to rent it out anyway, then it could be a great bonus to have a tenant in place already,” explains real estate attorney Adam Stone of Regosin, Edwards, Stone & Feder. That’s because you’ll have an immediate revenue stream and won’t have to worry about negative cash flow while trying to find a tenant getting him or her approved by the board.

“The downside in this scenario is that you had no involvement in choosing the tenant or negotiating the terms of the lease,” says Stone. “Learn as much as possible about the tenant so you can decide if they are someone you want to start doing business with. Ask for all of the information provided to the seller or the condo/coop board in connection with tenant’s rental application.”

In addition, says Stone, “your attorney should also review the signed lease to learn all of its terms,” noting that important terms could be whether there are any options to renew, any automatic rent increases, etc.

It’s also critical to establish whether the apartment is subject to rent-regulation.

“Even apartments thought to be unregulated may in fact be regulated, as was painfully found out by many investors in the last five years,” says co-op and condo attorney Dean Roberts of Norris McLaughlin & Marcus. “It is incumbent on you to ensure that there are no hidden issues that would create additional tenancy rights, such as J 51, 421-A, etc.”

If tenants are regulated, notes Roberts, “investors engage in a life expectancy lotto, basing their investment on the expected life or tenancy of the tenant. That’s a risky bet. People can live for a long time, and in the worst case scenario, the young grandchild of the tenant moves in and wins succession rights to the apartment, which means the apartment stays regulated for another lifetime.”

If you are buying the apartment for your own use, you may want to think again about proceeding at all.

“It is almost always a detriment to purchase with an existing tenant in place,” says Stone. “Even if the lease expires shortly after the closing, there is no guarantee the tenant will cooperate and vacate in a timely fashion. A lot depends on whether the tenant has plans in place already to move to a new home.”

If the tenant has trouble finding some place new and stays in the apartment after the lease runs out, you may need to evict, which is costly and time consuming.

“It’s much cleaner to require seller to deliver the apartment vacant, so that it becomes the seller’s problem to make sure the tenant leaves,” advises Stone, noting, however, that “even if the seller is required to deliver the apartment vacant at closing, that doesn’t mean there won’t be delays because of a uncooperative tenant.”

Another drawback to buying an apartment with a renter in place is that “it’s harder to obtain financing for a unit that is occupied, requiring a greater down payment and typically a higher interest rate,” points out asset manager and real estate broker Roberta Axelrod of Time Equities.

As for how much of a discount you can expect?

“Apartments that are occupied by rent controlled and rent stabilized tenancies often sell at a significant discount to the market rate for the unit and subject the owner of the unit to a number of significant obligations and restrictions,” notes real estate attorney Jeffrey Reich of Wolf Haldenstein Adler Freeman & Herz. “On the other hand, apartments occupied by market rate tenants often do not sell at any significant discount and are sometimes specifically sought out by investor-purchasers.”

In the market-rate tenant scenario, the price you will pay “depends heavily on the cooperation of the tenant and the availability of competitive inventory,” says New York City real estate appraiser Jonathan Miller of Miller Samuel.

“Listing inventory has fallen to a 12-year low so a discount, if there was one, would be far less now than during a period with lots of supply like in 2009,” explains Miller. “The cooperation of the tenant can have an additional impact on the value and perhaps exaggerate the effect when they are uncooperative. If they severely limit the ability of real estate agents to show the space to prospective buyers, the marketing time can be unnecessarily expanded and may cause the seller to miss a particularly robust period of the market.”

One final detail: If you do go ahead and buy with a tenant in place, make sure you get the right type of co-op or condo insurance.

“An individual co-op or condo policy is typically voided if you are not residing in the covered apartment,” says apartment insurance broker Jeff Schneider of Gotham Brokerage. “It is possible to arrange proper insurance, but you must speak to your broker for the proper policy forms.”

On the surface, things looked healthy for the sales in the borough in the first quarter. Median prices were up 1.1% to $350,000 and sales volume rose a solid 9.2% to 2,377, according to Miller Samuel’s first quarter Queens report, prepared for Douglas Elliman (PDF)

But there are signs that the good times (for sellers) may not last: Listing inventory fell to 6,496, an 8-year low and down a big 26.6% compared to the prior year.

“We expect continued rise in sales through the spring,” Jonathan Miller, president of Miller Samuel, told Brownstoner. “At some point, though, the contraction of inventory is going to rein future sales growth.”

Low inventory is good news for developers who are able to break ground and bring new buildings to market. But it is, unsurprisingly, bad news for buyers, who have fewer options and more competition. This was reflected in the first quarter with a drop in price discounts to 5.8%, down from 6.9% in the prior year.

Although the Queens market is highly local, it mirrors some of national trends. Mortgage rates are low, with the 30-year fixed rate around 3.5 percent. But the problem, Miller explains, is the difficulty of actually getting mortgage approval. Most banks are looking for stellar credit ratings, and a small blemish like a few missed payments can damage your chances for getting financing.

This ends up hurting not just first-time buyers, but also resales. If a person isn’t able to get a new mortgage, he or she will likely stay put, weakening inventory further.

“Many sellers who want to sell can’t buy, so they don’t sell,” says Miller.

The popular solution for those with bad credit? Renting.

Chris Pollack hat gerade ein Reihenhaus in Manhattan renoviert, in dem eine knapp 100 Quadratmeter große Teenager-Suite integriert ist. Dort sind Pingpong- und Billardtische, ein Tonstudio, eine Küche und ein Kino für Filme und Videospiele zu finden. Die Renovierungen haben etwa 750.000 Dollar gekostet. „Immer mehr Kunden mit Kindern, die gerade ins Teenager-Alter kommen, denken über so etwas nach”, sagt Pollack, der bei der New Yorker Design- und Bauberatungsfirma Pollack + Partners arbeitet. Er habe auch bereits mehrere Hausaufgabenzimmer mit Sicherheitskameras gebaut, damit die Eltern ein Auge darauf haben können, ob ihre Kinder zu oft ihren Computer benutzen.

Mit dem typischen Jugendzimmer hat dieser Raum nicht mehr viel zu tun: Immer mehr wohlhabende Eltern engagieren Architekten und Designer für die Gestaltung der Räume für ihre Kinder.

Mit dem typischen Jugendzimmer mit einigen Postern an der Wand haben diese Räume wenig zu tun. Familien werden immer kleiner, Häuser jedoch größer. Die Wohnräume von Teenagern haben sich dadurch immer weiter entwickelt, auch weil die Eltern mehr Zeit mit ihren Kindern verbringen. „Die derzeitige Elterngeneration ist besonders liebevoll und gewissenhaft”, sagt Michael Thompson, ein Psychologe und Autor, der sich auf Kinder und Familien spezialisiert. „Doch sie ist auch besonders ängstlich.”

Jacquie Kim, eine Mutter von zwei Kindern in San Diego, verwandelte zum 16. Geburtstag ihres Sohnes Alex ein Poolhaus in eine Teen-Lounge. Ein Grund dafür war, dass er mehr Spaß daran haben sollte, zu Hause zu bleiben – denn er hatte gerade seinen Führerschein gemacht. Dafür hat Kim die Designerin Kristy Kropat engagiert, die das mediterrane Häuschen in einen modernen Raum mit LED-Lichtern, bunten Farbakzenten, metallisch grauen Wänden und Space-Invader-Bildern an der Wand verwandelte.

Heute ist Alex 18 Jahre alt und besucht im ersten Semester die University of California in Los Angeles. Wenn er nach Hause kommt, verbringt er immer noch Zeit in diesem Zimmer, ebenso wie seine 15-jährige Schwester. In einigen Jahren will Kim das Poolhaus womöglich wieder umwandeln, zum Beispiel in einen Sport- oder Hobbyraum. „Sein Geschmack passt gar nicht zu meinem”, sagt sie.

Eltern glauben auch, dass besonders attraktive Jugendzimmer im restlichen Haus für mehr Ruhe sorgen können. Lee Lovely, der bei einer Medizingerätefirma arbeitet, ließ sich bei der Lounge für seine 13 und 15 Jahre alten Kinder von seinen liebsten Videospielen und Comics inspirieren. Myriam Payne, seine Innenarchitektin, verwandelte ein Angestelltenzimmer und ein Wohnzimmer in einen Raum mit Pinballautomaten, Videospielen, einer Bettcouch und Korkböden. Die Möbel und Materialien sollten robust sein. „Sie brauchten einen Raum, wo sie Zeit verbringen und einfach Kinder sein können”, sagt Lovely. Im Kinderzimmer können Erwachsene ihre Kreativität ausleben

In Kinderzimmern können Eltern kreativer werden als im Rest des Hauses. Als Melissa Kearney das Haus ihrer Familie gestaltete, wünschten sich die Kinder Geheimgänge wie in der „Harry Potter”-Serie. Der Wandschrank im Zimmer der zwölfjährigen Tia hat eine altmodische Tür bekommen, die an die Narnia-Kinderbuchreihe erinnert, in der die Hauptfiguren durch einen Schrank in eine Fantasiewelt entwischen. Der zehnjährige Ethan wünschte sich ein eher futuristisches Zimmer.

„Ich wollte, dass ihre Freunde gerne bei uns zu Hause Zeit verbringen”, sagt Kearney, eine Innendesignerin. „Das ist doch das, was alle Eltern wollen.”

Designer und Immobilienexperten warnen jedoch, dass Teenager-Räume so entworfen werden sollten, dass sie sich leicht wieder in normale Räume verwandeln lassen, wenn die Kinder ausziehen oder das Haus verkauft wird. Der Gutachter Jonathan Miller sagt, dass zu eigenwillige Häuser schwer zu verkaufen seien. „Das sind Ergänzungen, die keinen Wert schaffen.” Einige Familien treiben es auf die Spitze

Jeff Hyland von der kalifornischen Maklerfirma Hilton & Hyland, sagt, er biete derzeit ein 50 Millionen Dollar teures Anwesen an. Die drei Kinder der Familie hatten jeweils eine 185 Quadratmeter große Suite mit Schlafzimmer, Studienzimmer und Spielzimmer und einer gemeinsamen Lounge.

Wenn er Häuser mit großen Teenager-Zimmern anbietet, erklärt Hyland den Interessenten immer, dass sich die Fläche zum Beispiel in eine Suite für die Schwiegereltern verwandeln ließe – „vorausgesetzt, dass es architektonisch so entworfen wurde, dass man es umbauen kann”, sagt er.

Einige Familien treiben das Konzept der Teenager-Räume auf die Spitze. Wayne Visbeen, ein Architekt aus Michigan, hat für Kunden ein knapp 750 Quadratmeter großes Haus entworfen, in dem auch eine große Fläche für Kinder integriert ist. Neben zwei großen Kinderschlafzimmern gibt es in dem Haus außerdem einen Karaokeraum, ein Kino, eine voll ausgestattete Küche, ein Basketballfeld, eine DJ-Station und einen Raum für Pyjama-Partys mit hängenden Hochbetten. „Die einzige Angst, die wir dabei hatten, war, dass die Kinder nicht mehr aus ihren Zimmern herauskommen würden”, sagt Visbeen, der die Kosten für das Erdgeschoss auf 2.700 Dollar pro Quadratmeter schätzt.

Auch größere Immobilienunternehmen springen auf den Zug auf. Jade Signature, ein Luxuswohnhaus, das gerade in Miami gebaut wird, bekommt auch eine gemeinsame Teenager-Lounge mit den neusten bewegungsgesteuerten Videospielen, einer elektronischen Wandtafel und Pingpong-Tischen. Laut Ana Cristina Defortuna, Vertriebschefin des Bauunternehmens, hatten auch frühere Wohnhäuser solche Gemeinschaftsflächen, jedoch waren diese nur ein Viertel so groß. Eigentumswohnungen in dem Wohnhaus kosten zwischen zwei und 20 Millionen Dollar.

How to create a truly healthy housing market is a question that matters to everyone. Economic research shows that gains in housing wealth are likely to spur more consumer spending than gains in stock wealth are–and getting people to spend more is crucial to a sustainable recovery in an economy that is 70% driven by consumer spending. Homeownership isn’t for everyone. We got into trouble handing out too many mortgages, including “liar loans,” to unqualified buyers. Today the problem is that a relatively small group of rich investors–not typical would-be homeowners–is driving the real estate market. That includes private-equity titans like Blackstone (which owns a portfolio of 20,000 rental properties) as well as high-wealth individuals who can pay cash up front for a property for themselves or to rent out. “Investors remain the dominant force behind the house-price bounce back,” says Capital Economics property economist Paul Diggle. That’s reflected not only in the lower rate of homeownership but also in the swelling ranks of renters. Not since 2002 have fewer rental properties been empty in the U.S., and rents are rising sharply in many cities.

Most ordinary home buyers, meanwhile, need mortgages to buy real estate. But they can’t get the loans; banks are keeping credit tight. “The perception of credit risk is still just like it was right after Lehman Brothers fell,” says Jonathan Miller, CEO of the New York City–based real estate appraisal company Miller Samuel. Even senior government officials admit that banks are reluctant to provide more standard 15- or 30-year fixed loans to individuals until they know more about the new rules of the road under the Dodd-Frank reforms. Among other things, banks want to know how much capital they’ll be required to hold and whether they’ll be allowed to mix lucrative trading with plain-vanilla lending. Sadly, regulators are still writing the rules nearly three years after Dodd-Frank was signed into law.

But while easing the mortgage drought would help stoke a broader housing recovery, a more important factor is the underlying economic condition of the U.S. To have a sustainable and healthy market, all that really matters is employment, says Miller. “There’s no quick fix. You need higher employment and wages [to support housing consumption] and looser credit,” he says. “If we see some real economic growth over the next two to three years, then we’ll know the housing recovery is real. Until then, we’re in what I call a precovery.”

It’s worth keeping in mind that this precovery has been underwritten by the government at historically unprecedented levels. Every month, the Federal Reserve is purchasing $40 billion worth of mortgage-backed securities. And Freddie Mac and Fannie Mae stand behind the bulk of new mortgages. Many would argue that former Treasury Secretary Timothy Geithner and other government officials should have done more for homeowners rather than banks, and sooner. If they had, we would likely be further along in the healing process than we are now. You could certainly argue that completing Dodd-Frank and removing that uncertainty about the structure of the mortgage market would also be a big help.

But perhaps the biggest takeaway from the current housing “boom” is that the conventional wisdom no longer holds. It has long been said that you can’t have a sustainable economic recovery in the U.S. until the housing market is back. In truth, it may be the other way around. Until you have more jobs, rising wages and a middle class that can afford to take out a mortgage from a bank that will actually lend to it, you can’t have a real housing recovery.

The closely watched Case-Shiller Home Price Index most recently reported a 9.3 percent nationwide increase, while a similar measure from market analytic firm CoreLogic, released May 14, found a 10.5 percent increase.

Meanwhile, a local report from Douglas Elliman, which excludes the East End, found median home prices down 2.6 percent annually and a report from the Multiple Listing Services of Long Island, which includes Queens, showed a 4.5 percent uptick. CoreLogic’s Nassau-Suffolk home price index measured a 3.2 percent increase in prices.

So no matter how you slice it, Long Island is underperforming relative to the rest of the country. And that’s especially surprising considering the historically low supply of homes on the local market. What’s to blame?

It’s mostly New York’s foreclosure process, industry experts explained. The state employs a judicial process that, on average, takes 1,089 days from the time a lender files a complaint to the time the property is officially foreclosed, according to a recent report from RealtyTrac. That’s tops in the United States, where the overall average is 414 days.

As a result, there’s a humongous inventory of distressed homes looming in the shadows awaiting clearance to be offered for sale. Nassau and Suffolk counties have more than 24 months supply worth of distressed homes that haven’t completed the foreclosure process and entered the sales market, according to the CoreLogic report.

Consider there’s only one other market among the nation’s 25 largest that even has more than 15 months worth of supply — the Edison-New Brunswick, N.J. region has a 16-month supply of distressed homes.

So while other localities have made significant progress clearing supplies of distressed homes — especially since the massive federal mortgage settlement in February 2012 — Long Island hasn’t. Nationally, between 20 and 30 percent of all homes sold in March 2013 were in some stage of distress in many of the largest markets compared to between 30 and 40 percent a year ago. The elevated, but decreasing share of distressed sales indicates that foreclosures are clearing through the market.

“That’s how you make a housing market recover,” Jonathan Miller, president of appraisal firm Miller Samuel, said in an interview. “You move the distressed properties from weak hands to strong hands. Until that happens you can’t truly recover.”

But on Long Island, just 7.1 percent of all sales are distressed properties, and that’s actually increased year over year, from 6.3 percent, according to CoreLogic. As a result the stock of foreclosed homes on Long Island has fallen just 9.6 percent from the peak, whereas in major markets outside New York and New Jersey, the foreclosure stock has decreased from 14.2 percent to 78.3 percent from peak levels.

“It’s just not clearing on Long Island,” Molly Boesel, a CoreLogic economist, said in an interview. Those distressed properties and their owners remain in limbo, negatively impacting neighborhoods’ property values. The homes also represent a cluster of typically cheaper homes that can be used as negotiating tools in home transactions. “The distress is clearly putting downward pressure on prices,” Boesel noted.

Considering the enormous supply of delinquent loans — currently about 46,000 exist on Long Island, according to Boesel, compared to 5,000 in the area’s typical housing market — Boesel expects Long Island to lag national home price increases for some time.

“The numbers imply that it could take a few years before that’s lifted,” she said.

The maintenance work for the update, which has shut down ACRIS, began yesterday afternoon and will continue until Monday morning.

The new version’s enhancement include, most notably, a document search exclusively for co-op units, a search that will distinguish if a mortgage is being recorded as a refinancing or not, and a document search by date range across all boroughs, according to the department’s website.

Starting in July, real estate professionals will be able to submit property documents electronically.

Jonathan Miller, president of appraisal firm Miller Samuel, echoed the sentiments of many ACRIS users by noting the database’s functionality and accuracy — but surmised there was still room for improvement.

“I certainly would love to have a friendlier user interface,” Miller said. “I don’t think anybody looking at it would argue with me.”

A bigger problem with ACRIS, he continued, is its “consistency of information” in terms of late postings for co-op data, for example.

Representatives for the DOF were not immediately available for comment.

An open house for a five-bedroom brownstone in Brooklyn, New York, priced at $949,000 drew 300 visitors and brought in 50 offers. Three thousand miles away in Menlo Park, California, a one-story home listed for $2 million got six offers last month, including four from builders planning to tear it down to construct a bigger house. In south Florida, ground zero for the last building boom and bust, 3,300 new condominium units are under way, the most since 2007.

The U.S. spring homebuying season has been marked by a frenzy of demand fueled by the Federal Reserve’s drive to push down borrowing costs, a scarcity of listings and Wall Street’s new appetite for foreclosed homes. While values remain well below their peak, economists including Stan Humphries of Zillow Inc. (Z) and Mark Vitner of Wells Fargo & Co. assert prices in some areas are rising at an unsustainable pace — a dramatic shift from early 2012, when billionaire Warren Buffett said housing “remains in a depression.”

“It’s a big change from a year ago,” said Paul Willen, a senior economist at the Federal Reserve Bank of Boston. “You’ve gone from hearing horror stories about people losing money to hearing stories of frenzy — lots of traffic and multiple offers.”

Price Surge

U.S. home prices jumped almost 11 percent in March from a year earlier, the biggest gain since the height of the real estate boom in 2006, CoreLogic Inc. reported last week. Values are rising faster than incomes, an indication that prices may fall in some cities once higher mortgage rates erode affordability, Humphries said. Investor purchases will inevitably cool, adding another potential hit to the market, according to Vitner.

The gains in some U.S. areas aren’t sustainable for a healthy market, said Dean Baker, co-director of the Center for Economic and Policy Research in Washington.

“If prices keep going up at this rate for another six months, we will have a bubble, and people will get hurt,” he said in a telephone interview.

U.S. buyers spent three times their annual incomes on homes at the end of last year, and those properties were 15 percent pricier relative to incomes than before the housing bubble of the mid-2000s, according to data from Seattle-based Zillow (Z). Markets such as Silicon Valley, Southern California, Boston and New York will look expensive relative to incomes when mortgage rates rise, Humphries said.

‘On Sale’

“The Fed has put every home on sale because of its actions,” Humphries said in a telephone interview. “We’re not saying you should ignore the sale sign and not pay a cheaper price. We want people to be aware of the fact that this is unusual and not bake these expectations of high appreciation into their long-term calculus.”

The average rate for a 30-year fixed mortgage was 3.51 percent this week, and reached a record low of 3.31 percent in November, according to Freddie Mac. That compares with an average rate of 6.24 percent from 2001 to 2006.

It’s too early to say another bubble is emerging. So far, the biggest gains are limited to hard-hit markets such as Phoenix and Las Vegas and thriving job centers such as San Francisco, while prices are falling in cities such as Chicago and Indianapolis, according to CoreLogic. Nationally, existing-home sales are about a third off a 2005 peak and home construction is down by 66 percent. Also, in contrast to the easy lending of the boom years, mortgage standards are strict.

Spotty Recovery

In areas such as Long Island, New York, and Omaha, Nebraska, price gains are within moderate growth levels of 3 percent to 5 percent, according to the National Association of Realtors. In other cities, demand remains stagnant and the market is far from overheated.

Homebuyers in Erie, Pennsylvania, a port on Lake Erie in the northwest part of the state, are still finding plenty to choose from, said Debra Fries, a local agent with Coldwell Banker Select. The median home price in the area fell 5 percent to $105,000 in the first quarter from a year earlier, according the Realtor group.

“We don’t have any bubbles,” Fries said. “We’re steady as a stream.”

U.S. home prices fell 35 percent from their July 2006 peak to the bottom in March 2012, and are still 29 percent off their high, according to the S&P/Case-Shiller index measuring 20 U.S. cities. Nationally, prices dropped so much during the crash that they remain about 7 percent undervalued, based on comparisons with historical prices, incomes and rents, Trulia Inc. said this week, introducing a feature on its website called “Bubble Watch.”

Eight Markets

Still, the recent price surge has made eight U.S. markets – - including Orange County, California; Houston; and Portland, Oregon — overvalued, the San Francisco-based real estate data company said.

The housing market has defied predictions of a tepid recovery by many economists. A year ago, Moody’s Analytics Inc. said prices in 2013 would climb 1.6 percent. The company revised its projections upward for each of the last six months and now expects an increase of 7.5 percent this year. Gains probably will moderate in 2014, said Celia Chen, a Moody’s housing economist who predicts a 4 percent rise as homebuilding ramps up and underwater homeowners regain enough equity to sell.

CoreLogic said today that it projects prices will rise at an annualized rate of 3.9 percent through 2017 after climbing 7.3 percent in 2012.

Phoenix, Atlanta

Of the 150 metropolitan areas tracked by the National Association of Realtors, 9 out of 10 showed price increases in the first quarter from a year earlier and areas such as Silicon Valley, California; Phoenix; Atlanta; and Reno, Nevada, saw gains of more than 30 percent, the group said. Prices declined in 17 markets, including Edison, New Jersey; Champaign-Urbana, Illinois; and Allentown, Pennsylvania.

“This is a good spring for sellers in a hurry,” Jed Kolko, chief economist for Trulia, said in a telephone interview. “Buyer demand is stronger than we’ve seen it in years and it’s been strong enough to lift sales despite tighter inventory.”

The buying frenzy was on display at a March open house in Brooklyn, a borough of New York City where the median price rose 14 percent to $515,000 in the first quarter from the prior year as the number of listings plunged 45 percent, according to Douglas Elliman Real Estate and appraiser Miller Samuel Inc. Over two hours, 300 visitors streamed into a three-story brownstone in Crown Heights and it went under contract for more than the asking price less than a week later, said Barbara Brown-Allen, a Douglas Elliman agent who represents the seller.

Brooklyn Boom

The fear of losing out on mortgage rates that are close to the lowest on record is spurring the rush, Brown-Allen said. The up-and-coming Brooklyn neighborhoods of Crown Heights, Bushwick and Bedford-Stuyvesant have surged in popularity during the past year because buyers have been priced out of Manhattan and more exclusive Brooklyn neighborhoods, such as Park Slope and Cobble Hill, she said.

“It was a zoo — sometimes there were over 100 people in the house at a time,” Brown-Allen said. “Once the inventory is this short, you have a lot of people vying for the same properties.”

Above Asking

Even in markets like Boston, where CoreLogic put home-price gains at a moderate 8 percent in March, demand is high. Often, homes spend only one day on the market, said Cliff London, a broker with the RE/MAX Home Team in the suburban town of Needham, Massachusetts.

“By the time the first open house is over the offers are coming in, sometimes above asking price,” London said. “There’s a lack of quality inventory — that’s fueling it.”

In much of the country, inventory has been drained by institutional investors such as Blackstone Group LP and Colony Capital LLC buying single-family homes, often foreclosures, to turn into rentals, said CoreLogic Chief Economist Sam Khater.

Blackstone, the largest buyer in the U.S., spent more than $4 billion on 24,000 rental properties last year. The company recently bought 1,400 residences in Atlanta, the biggest bulk deal for the fledgling homes-for-lease industry. Such purchases helped to drive prices up 12 percent in March from a year earlier in Georgia, where values only rose 1.2 percent six months earlier, Khater said.

Moderating Prices

Appreciation in Arizona (SPCSPHX) is moderating as investors look in other markets for better yields, Khater said. Prices in the state rose 17 percent in March from a year earlier compared with a 20 percent increase in September 2012, he said.

Vitner of Wells Fargo said investors are buying properties as quickly as they can and when they leave, housing will take a hit. Investors accounted for 19 percent of sales in the U.S. in March and even more in some former bubble markets, according to the National Association of Realtors.

“The problem is if they don’t earn a high enough return, they all walk away,” Vitner said. “Investors accounted for a larger proportion of the housing recovery than people realize.”

While the tightness in the existing-home market is driving up sales for new homes, homebuilders can’t increase production fast enough because of labor shortages and rising competition for lots in the best locations. There were 153,000 new homes available for purchase in March, just 10,000 more than a five-decade low in mid-2012.

Not Done

In Menlo Park, builders are selling houses long before they’re completed, said Keri Nicholas, a Realtor with Coldwell Banker in the affluent Silicon Valley town. Land is in such short supply that they’re buying million-dollar homes to knock down and put up mansions, she said.

A three-bedroom house Nicholas listed for $2 million last month received four offers from builders. It sold to an owner-occupant who paid all cash, she said.

In south Florida, 20 condominium towers with more than 3,300 units are under construction, according to Peter Zalewski, owner of Condo Vultures LLC, a brokerage and consulting firm based in Miami. Another 14,600 units are planned, about three-quarters of them for Miami-Dade County, where the crash left dozens of unfinished and failed condo projects, now mostly filled with renters, he said.

“I don’t think there’s any question that we’re in the early stages of the next great south Florida construction boom,” Zalewski said.

The conditions that have propelled prices up for the past year won’t last, said Joel Naroff, president of Naroff Economic Advisors Inc. in Holland, Pennsylvania.

“We’re eventually going to see mortgage rates increase, supply increase, and affordability decline, so you probably cut price gains at least by half,” Naroff said. “It will be a slowdown, not a crash.”

But wider homes don’t necessarily sell for higher prices per square foot–location and layout factor in. A 13-foot, four-bedroom townhouse at 35 West 12th in Greenwich Village sold for $5.2 million in 2011, while the same year, a 20-foot, two-family townhouse at 69 Bedford Street went for $2.6 million. Important, too, is how far the width deviates from the Manhattan average.

Wider townhouses are a high commodity, offering a buyer more flexibility to work with the original floor plan. However, even with ample space, if the design does not take advantage of that space, the value is decreased. Miller warns against “throwing amenities at a property and not considering a key attribute like width.”

There’s something to the skinny houses, too. “There is some cachet behind having the tiniest townhouse around. You can boast about that,” said Sofia Song of StreetEasy.

Read the rest of the story on The Real Deal.

An open house for a five-bedroom brownstone in Brooklyn, New York, priced at US$949,000 drew 300 visitors and brought in 50 offers. Three thousand miles away in Menlo Park, California, a one-story home listed for US$2-million got six offers last month, including four from builders planning to tear it down to construct a bigger house. In south Florida, ground zero for the last building boom and bust, 3,300 new condominium units are under way, the most since 2007.

The U.S. spring homebuying season has been marked by a frenzy of demand fuelled by the Federal Reserve’s drive to push down borrowing costs, a scarcity of listings and Wall Street’s new appetite for foreclosed homes. While values remain well below their peak, economists including Stan Humphries of Zillow Inc. and Mark Vitner of Wells Fargo & Co. assert prices in some areas are rising at an unsustainable pace — a dramatic shift from early 2012, when billionaire Warren Buffett said housing “remains in a depression.”

“It’s a big change from a year ago,” said Paul Willen, a senior economist at the Federal Reserve Bank of Boston. “You’ve gone from hearing horror stories about people losing money to hearing stories of frenzy — lots of traffic and multiple offers.”

Price Surge

U.S. home prices jumped almost 11% in March from a year earlier, the biggest gain since the height of the real estate boom in 2006, CoreLogic Inc. reported last week. Values are rising faster than incomes, an indication that prices may fall in some cities once higher mortgage rates erode affordability, Humphries said. Investor purchases will inevitably cool, adding another potential hit to the market, according to Vitner.

You’ve gone from hearing horror stories about people losing money to hearing stories of frenzy

The gains in some U.S. areas aren’t sustainable for a healthy market, said Dean Baker, co-director of the Center for Economic and Policy Research in Washington.

“If prices keep going up at this rate for another six months, we will have a bubble, and people will get hurt,” he said in a telephone interview.

U.S. buyers spent three times their annual incomes on homes at the end of last year, and those properties were 15% pricier relative to incomes than before the housing bubble of the mid-2000s, according to data from Seattle-based Zillow. Markets such as Silicon Valley, Southern California, Boston and New York will look expensive relative to incomes when mortgage rates rise, Humphries said.

‘On Sale’

“The Fed has put every home on sale because of its actions,” Humphries said in a telephone interview. “We’re not saying you should ignore the sale sign and not pay a cheaper price. We want people to be aware of the fact that this is unusual and not bake these expectations of high appreciation into their long-term calculus.”

The average rate for a 30-year fixed mortgage was 3.51% this week, and reached a record low of 3.31% in November, according to Freddie Mac. That compares with an average rate of 6.24% from 2001 to 2006.

It’s too early to say another bubble is emerging. So far, the biggest gains are limited to hard-hit markets such as Phoenix and Las Vegas and thriving job centres such as San Francisco, while prices are falling in cities such as Chicago and Indianapolis, according to CoreLogic. Nationally, existing-home sales are about a third off a 2005 peak and home construction is down by 66%. Also, in contrast to the easy lending of the boom years, mortgage standards are strict.

Spotty Recovery

In areas such as Long Island, New York, and Omaha, Nebraska, price gains are within moderate growth levels of 3% to 5%, according to the National Association of Realtors. In other cities, demand remains stagnant and the market is far from overheated.

Homebuyers in Erie, Pennsylvania, a port on Lake Erie in the northwest part of the state, are still finding plenty to choose from, said Debra Fries, a local agent with Coldwell Banker Select. The median home price in the area fell 5% to US$105,000 in the first quarter from a year earlier, according the Realtor group.

“We don’t have any bubbles,” Fries said. “We’re steady as a stream.”

U.S. home prices fell 35% from their July 2006 peak to the bottom in March 2012, and are still 29% off their high, according to the S&P/Case-Shiller index measuring 20 U.S. cities. Nationally, prices dropped so much during the crash that they remain about 7% undervalued, based on comparisons with historical prices, incomes and rents, Trulia Inc. said this week, introducing a feature on its website called “Bubble Watch.”

Eight Markets

Still, the recent price surge has made eight U.S. markets — including Orange County, California; Houston; and Portland, Oregon — overvalued, the San Francisco-based real estate data company said.

The housing market has defied predictions of a tepid recovery by many economists. A year ago, Moody’s Analytics Inc. said prices in 2013 would climb 1.6%. The company revised its projections upward for each of the last six months and now expects an increase of 7.5% this year. Gains probably will moderate in 2014, said Celia Chen, a Moody’s housing economist who predicts a 4% rise as homebuilding ramps up and underwater homeowners regain enough equity to sell.

CoreLogic said today that it projects prices will rise at an annualized rate of 3.9% through 2017 after climbing 7.3% in 2012.

Phoenix, Atlanta

Of the 150 metropolitan areas tracked by the National Association of Realtors, 9 out of 10 showed price increases in the first quarter from a year earlier and areas such as Silicon Valley, California; Phoenix; Atlanta; and Reno, Nevada, saw gains of more than 30%, the group said. Prices declined in 17 markets, including Edison, New Jersey; Champaign-Urbana, Illinois; and Allentown, Pennsylvania.

“This is a good spring for sellers in a hurry,” Jed Kolko, chief economist for Trulia, said in a telephone interview. “Buyer demand is stronger than we’ve seen it in years and it’s been strong enough to lift sales despite tighter inventory.”

The buying frenzy was on display at a March open house in Brooklyn, a borough of New York City where the median price rose 14% to US$515,000 in the first quarter from the prior year as the number of listings plunged 45%, according to Douglas Elliman Real Estate and appraiser Miller Samuel Inc. Over two hours, 300 visitors streamed into a three-story brownstone in Crown Heights and it went under contract for more than the asking price less than a week later, said Barbara Brown-Allen, a Douglas Elliman agent who represents the seller.

Brooklyn Boom

The fear of losing out on mortgage rates that are close to the lowest on record is spurring the rush, Brown-Allen said. The up-and-coming Brooklyn neighbourhoods of Crown Heights, Bushwick and Bedford-Stuyvesant have surged in popularity during the past year because buyers have been priced out of Manhattan and more exclusive Brooklyn neighbourhoods, such as Park Slope and Cobble Hill, she said.

“It was a zoo — sometimes there were over 100 people in the house at a time,” Brown-Allen said. “Once the inventory is this short, you have a lot of people vying for the same properties.”

Above Asking

Even in markets like Boston, where CoreLogic put home-price gains at a moderate 8% in March, demand is high. Often, homes spend only one day on the market, said Cliff London, a broker with the RE/MAX Home Team in the suburban town of Needham, Massachusetts.

“By the time the first open house is over the offers are coming in, sometimes above asking price,” London said. “There’s a lack of quality inventory — that’s fuelling it.”

In much of the country, inventory has been drained by institutional investors such as Blackstone Group LP and Colony Capital LLC buying single-family homes, often foreclosures, to turn into rentals, said CoreLogic Chief Economist Sam Khater.

Blackstone, the largest buyer in the U.S., spent more than US$4-billion on 24,000 rental properties last year. The company recently bought 1,400 residences in Atlanta, the biggest bulk deal for the fledgling homes-for-lease industry. Such purchases helped to drive prices up 12% in March from a year earlier in Georgia, where values only rose 1.2% six months earlier, Khater said.

Moderating Prices

Appreciation in Arizona is moderating as investors look in other markets for better yields, Khater said. Prices in the state rose 17% in March from a year earlier compared with a 20% increase in September 2012, he said.

Vitner of Wells Fargo said investors are buying properties as quickly as they can and when they leave, housing will take a hit. Investors accounted for 19 percent of sales in the U.S. in March and even more in some former bubble markets, according to the National Association of Realtors.

“The problem is if they don’t earn a high enough return, they all walk away,” Vitner said. “Investors accounted for a larger proportion of the housing recovery than people realize.”

While the tightness in the existing-home market is driving up sales for new homes, homebuilders can’t increase production fast enough because of labor shortages and rising competition for lots in the best locations. There were 153,000 new homes available for purchase in March, just 10,000 more than a five- decade low in mid-2012.

Not Done

In Menlo Park, builders are selling houses long before they’re completed, said Keri Nicholas, a Realtor with Coldwell Banker in the affluent Silicon Valley town. Land is in such short supply that they’re buying million-dollar homes to knock down and put up mansions, she said.

A three-bedroom house Nicholas listed for US$2-million last month received four offers from builders. It sold to an owner- occupant who paid all cash, she said.

In south Florida, 20 condominium towers with more than 3,300 units are under construction, according to Peter Zalewski, owner of Condo Vultures LLC, a brokerage and consulting firm based in Miami. Another 14,600 units are planned, about three- quarters of them for Miami-Dade County, where the crash left dozens of unfinished and failed condo projects, now mostly filled with renters, he said.

“I don’t think there’s any question that we’re in the early stages of the next great south Florida construction boom,” Zalewski said.

The conditions that have propelled prices up for the past year won’t last, said Joel Naroff, president of Naroff Economic Advisors Inc. in Holland, Pennsylvania.

“We’re eventually going to see mortgage rates increase, supply increase, and affordability decline, so you probably cut price gains at least by half,” Naroff said. “It will be a slowdown, not a crash.”

The average rate for a 30-year fixed mortgage climbed to 3.51 percent in the week ended today, up from 3.42 percent and the highest since early April, McLean, Virginia-based Freddie Mac (FMCC) said in a statement. The average 15-year rate increased to 2.69 percent from 2.61 percent.

Home-loan costs have increased after hovering close to record lows early this month. Low rates are fueling a frenzy of demand in some markets as buyers compete for a tight supply of properties. While values remain well below their peak, 133 of the 150 metropolitan areas tracked by the National Association of Realtors had price increases in the first quarter from a year earlier. Areas such as San Francisco, Atlanta, Phoenix and Reno, Nevada, saw jumps of more than 30 percent.

“In many ways, it’s the same mentality as what saw in the boom,” Jonathan Miller, president of New York-based appraiser Miller Samuel Inc., said in a telephone interview. “The only difference is that we have tight credit that is keeping the process close to honest for the time being.”

The record rate for a 30-year mortgage is 3.31 percent, reached in November, according to Freddie Mac. The 15-year average fell to a record-low 2.56 percent this month.

An open house for a five-bedroom brownstone in Brooklyn, New York, priced at $949,000 drew 300 visitors and brought in 50 offers. Three thousand miles away in Menlo Park, California, a one-story home listed for $2 million got six offers last month, including four from builders planning to tear it down to construct a bigger house. In south Florida, ground zero for the last building boom and bust, 3,300 new condominium units are under way, the most since 2007.

The U.S. spring homebuying season has been marked by a frenzy of demand fueled by the Federal Reserve’s drive to push down borrowing costs, a scarcity of listings and Wall Street’s new appetite for foreclosed homes. While values remain well below their peak, economists including Stan Humphries of Zillow Inc. and Mark Vitner of Wells Fargo & Co. assert prices in some areas are rising at an unsustainable pace — a dramatic shift from early 2012, when billionaire Warren Buffett said housing “remains in a depression.”

“It’s a big change from a year ago,” said Paul Willen, a senior economist at the Federal Reserve Bank of Boston. “You’ve gone from hearing horror stories about people losing money to hearing stories of frenzy — lots of traffic and multiple offers.”

Price Surge

U.S. home prices jumped almost 11 percent in March from a year earlier, the biggest gain since the height of the real estate boom in 2006, CoreLogic Inc. reported last week. Values are rising faster than incomes, an indication that prices may fall in some cities once higher mortgage rates erode affordability, Humphries said. Investor purchases will inevitably cool, adding another potential hit to the market, according to Vitner.

The gains in some U.S. areas aren’t sustainable for a healthy market, said Dean Baker, co-director of the Center for Economic and Policy Research in Washington.

“If prices keep going up at this rate for another six months, we will have a bubble, and people will get hurt,” he said in a telephone interview.

U.S. buyers spent three times their annual incomes on homes at the end of last year, and those properties were 15 percent pricier relative to incomes than before the housing bubble of the mid-2000s, according to data from Seattle-based Zillow. Markets such as Silicon Valley, Southern California, Boston and New York will look expensive relative to incomes when mortgage rates rise, Humphries said.

‘On Sale’

“The Fed has put every home on sale because of its actions,” Humphries said in a telephone interview. “We’re not saying you should ignore the sale sign and not pay a cheaper price. We want people to be aware of the fact that this is unusual and not bake these expectations of high appreciation into their long-term calculus.”

The average rate for a 30-year fixed mortgage was 3.42 percent last week, and reached a record low of 3.31 percent in November, according to Freddie Mac. That compares with an average rate of 6.24 percent from 2001 to 2006.

It’s too early to say another bubble is emerging. So far, the biggest gains are limited to hard-hit markets such as Phoenix and Las Vegas and thriving job centers such as San Francisco, while prices are falling in cities such as Chicago and Indianapolis, according to CoreLogic. Nationally, existing- home sales are about a third off a 2005 peak and home construction is down by 66 percent. Also, in contrast to the easy lending of the boom years, mortgage standards are strict.

Spotty Recovery

In areas such as Long Island, New York, and Omaha, Nebraska, price gains are within moderate growth levels of 3 percent to 5 percent, according to the National Association of Realtors. In other cities, demand remains stagnant and the market is far from overheated.

Homebuyers in Erie, Pennsylvania, a port on Lake Erie in the northwest part of the state, are still finding plenty to choose from, said Debra Fries, a local agent with Coldwell Banker Select. The median home price in the area fell 5 percent to $105,000 in the first quarter from a year earlier, according the Realtor group.

“We don’t have any bubbles,” Fries said. “We’re steady as a stream.”

U.S. home prices fell 35 percent from their July 2006 peak to the bottom in March 2012, and are still 29 percent off their high, according to the S&P/Case-Shiller index measuring 20 U.S. cities. Nationally, prices dropped so much during the crash that they remain about 7 percent undervalued, based on comparisons with historical prices, incomes and rents, Trulia Inc. said this week, introducing a feature on its website called “Bubble Watch.”

Eight Markets

Still, the recent price surge has made eight U.S. markets – - including Orange County, California; Houston; and Portland, Oregon — overvalued, the San Francisco-based real estate data company said.

The housing market has defied predictions of a tepid recovery by many economists. A year ago, Moody’s Analytics Inc. said prices in 2013 would climb 1.6 percent. The company revised its projections upward for each of the last six months and now expects an increase of 7.5 percent this year. Gains probably will moderate in 2014, said Celia Chen, a Moody’s housing economist who predicts a 4 percent rise as homebuilding ramps up and underwater homeowners regain enough equity to sell.

Phoenix, Atlanta

Of the 150 metropolitan areas tracked by the National Association of Realtors, 9 out of 10 showed price increases in the first quarter from a year earlier and areas such as Silicon Valley, California; Phoenix; Atlanta; and Reno, Nevada saw gains of more than 30 percent, the group said. Prices declined in 17 markets, including Edison, New Jersey; Champaign-Urbana, Illinois; and Allentown, Pennsylvania.

“This is a good spring for sellers in a hurry,” Jed Kolko, chief economist for Trulia, said in a telephone interview. “Buyer demand is stronger than we’ve seen it in years and it’s been strong enough to lift sales despite tighter inventory.”

The buying frenzy was on display at a March open house in Brooklyn, a borough of New York City where the median price rose 14 percent to $515,000 in the first quarter from the prior year as the number of listings plunged 45 percent, according to Douglas Elliman Real Estate and appraiser Miller Samuel Inc. Over two hours, 300 visitors streamed into a three-story brownstone in Crown Heights and it went under contract for more than the asking price less than a week later, said Barbara Brown-Allen, a Douglas Elliman agent who represents the seller.

Brooklyn Boom

The fear of losing out on mortgage rates that are close to the lowest on record is spurring the rush, Brown-Allen said. The up-and-coming Brooklyn neighborhoods of Crown Heights, Bushwick and Bedford-Stuyvesant have surged in popularity during the past year because buyers have been priced out of Manhattan and more exclusive Brooklyn neighborhoods, such as Park Slope and Cobble Hill, she said.

“It was a zoo — sometimes there were over 100 people in the house at a time,” Brown-Allen said. “Once the inventory is this short, you have a lot of people vying for the same properties.”

Above Asking

Even in markets like Boston, where CoreLogic put home-price gains at a moderate 8 percent in March, demand is high. Often, homes spend only one day on the market, said Cliff London, a broker with the RE/MAX Home Team in the suburban town of Needham, Massachusetts.

“By the time the first open house is over the offers are coming in, sometimes above asking price,” London said. “There’s a lack of quality inventory — that’s fueling it.”

In much of the country, inventory has been drained by institutional investors such as Blackstone Group LP and Colony Capital LLC buying single-family homes, often foreclosures, to turn into rentals, said CoreLogic Chief Economist Sam Khater.

Blackstone, the largest buyer in the U.S., spent more than $4 billion on 24,000 rental properties last year. The company recently bought 1,400 residences in Atlanta, the biggest bulk deal for the fledgling homes-for-lease industry. Such purchases helped to drive prices up 12 percent in March from a year earlier in Georgia, where values only rose 1.2 percent six months earlier, Khater said.

Moderating Prices

Appreciation in Arizona is moderating as investors look in other markets for better yields, Khater said. Prices in the state rose 17 percent in March from a year earlier compared with a 20 percent increase in September 2012, he said.

Vitner of Wells Fargo said investors are buying properties as quickly as they can and when they leave, housing will take a hit. Investors accounted for 19 percent of sales in the U.S. in March and even more in some former bubble markets, according to the National Association of Realtors.

“The problem is if they don’t earn a high enough return, they all walk away,” Vitner said. “Investors accounted for a larger proportion of the housing recovery than people realize.”

While the tightness in the existing-home market is driving up sales for new homes, homebuilders can’t increase production fast enough because of labor shortages and rising competition for lots in the best locations. There were 153,000 new homes available for purchase in March, just 10,000 more than a five- decade low in mid-2012.

Not Done

In Menlo Park, builders are selling houses long before they’re completed, said Keri Nicholas, a Realtor with Coldwell Banker in the affluent Silicon Valley town. Land is in such short supply that they’re buying million-dollar homes to knock down and put up mansions, she said.

A three-bedroom house Nicholas listed for $2 million last month received four offers from builders. It sold to an owner- occupant who paid all cash, she said.

In south Florida, 20 condominium towers with more than 3,300 units are under construction, according to Peter Zalewski, owner of Condo Vultures LLC, a brokerage and consulting firm based in Miami. Another 14,600 units are planned, about three- quarters of them for Miami-Dade County, where the crash left dozens of unfinished and failed condo projects, now mostly filled with renters, he said.

“I don’t think there’s any question that we’re in the early stages of the next great south Florida construction boom,” Zalewski said.

The conditions that have propelled prices up for the past year won’t last, said Joel Naroff, president of Naroff Economic Advisors Inc. in Holland, Pennsylvania.

“We’re eventually going to see mortgage rates increase, supply increase, and affordability decline, so you probably cut price gains at least by half,” Naroff said. “It will be a slowdown, not a crash.”

In fact, you too would be able to afford the kind of digs reserved for the rich and famous — especially since big-name celebs have their Manhattan dreamhouses on the market right now.

Maybe you’d like Madonna’s palatial Central Park West duplex (current listing price: $19.95 million) or maybe hip-hop mogul Russell Simmons’ Financial District two-level home is more your style.

The New York City homes of celebrities can range from a few million dollars to the tens of millions. On average, the sales price in the high-end luxury market was $5 million during the first quarter of this year.

But buyers don’t have to shell out extra money for a place once owned by a boldface name.

“It doesn’t ensure some sort of premium,” said Jonathan Miller, a real estate appraiser. “And if there is, it would probably be modest. It’s more about the property.”

If you should find yourself suddenly able to afford a celebrity’s apartment, it may be best to act fast.

Leonard Steinberg, managing director at Douglas Elliman, who has had celebrity clients, said a famous face attached to a property could attract publicity to a listing.

“It certainly can provide a good provenance to the building,” said Steinberg. “There’s definitely a vast interest level these days in anything related to a celebrity.”

Built in 1839, the 22.5-foot-wide home has only been owned by only three families over its 175-year life. Its most famous owner, John Philip Sousa, invented the sousaphone and penned marching ballads, including Marine marching standard “Semper Fidelis” and “The Stars and Stripes Forever,” and was also a committed technophobe. “These talking machines are going to ruin the artistic development of music in this country,” he testified to Congress in 1906, presaging the rise of Skrillex.

The most recent owners are the Raineros; Gildo Rainero purchased the property in the 1960s. Though he carved into nine apartments, the house has been stitched back together over time and then some. The developer, Gildo’s grandson William Rainero, has added a story to the house, and hired Clodagh Design to redo the interiors, with stone, exposed brick, steel and plenty of glass. While the front face of the house is for the most part still the 19th century Georgian style you’d expect from the Village, the back is nearly all glass.

The property is now listed with Town for $28.9 million, a number that was gradually lowered from last year’s $31.5 million ask. (While the property is Town’s most expensive listing in Manhattan, it won’t be the most expensive in Greenwich Village: that honor belongs to 11 West 10th Street, appraisal guru Jonathan Miller tells us, which sold for $34.5 million in 2007, at the height of the last bubble.)

In terms of amenities, the house is no slouch. While most townhouses have only a single kitchen, this one has four—the normal one plus a catering kitchen and two outdoor cooking spaces—including one designed by New York-by-way-of-Florence restaurateur Silvano Marchetto. There’s also a 700-bottle wine cellar and an espresso maker built into the wall (why not?). Plus, it includes all the normal things you’d expect from an eight-digit townhouse—a lounge, a screening room, a full-floor master suite, a zen garden and a roof deck—plus some things you wouldn’t, like views of both One World Trade Center and the Empire State Building. Not to mention the coal chute that’s been repurposed into a stone-faced waterfall.

Landsmith LP paid $32.5 million this month for 250 Houston-area houses that were built last year. The firm, which began buying properties to rent in 2009, has 2,000 lots for new homes under contract and expects to purchase a total of 4,000 new houses this year, according to San Francisco-based Chief Executive Officer James Breitenstein.

Just as investors flocked to Atlanta after picking through foreclosures in Phoenix, they’re now seeking deals from builders who want to lock in sales or sell property quickly. The appeal of buying newly-built homes that are typically more expensive than repossessed ones is growing as the number of borrowers facing foreclosure falls to the lowest level since 2008 and after prices of bank-owned properties was driven up by Blackstone Group LP (BX), Colony Capital LLC and other private-equity firms snapping up tens of thousands of houses.

“A big part of our business plan is to execute this strategy,” Breitenstein said in a telephone interview. “It’s a way to control your pipeline and not have to fight with the herd.”

The share of mortgages in foreclosure, meaning the lender filed to repossess the property, fell to 3.55 percent in the first quarter from 4.39 percent from a year earlier, the lowest in four years, according to a Mortgage Bankers Association report last week.

Dwindling Supply

“The dwindling supply of such properties may be cause for concern among some institutional investors whose residential business models depend crucially on being able to snap up these bargains,” Paul Diggle, an analyst with Capital Economics Ltd. in London wrote in a note after the Mortgage Bankers report.

Demand from rental investors may bolster some homebuilders, which have rallied 22 percent this year and more than doubled since the end of 2011. Steve Eisman, who rose to fame betting against subprime mortgages during the housing crash, said last week that investors should buy shares of builders and land as the housing market strengthens.

“While homebuilders are cheap, they have not priced in how much fundamentals have improved,” Eisman, founder of Emrys Partners LP, said at a conference in New York.

New home sales also have “higher economic multipliers and local impact relative to existing home sales,” Sam Khater, deputy chief economist with CoreLogic Inc., wrote in a newsletter published today. “For example, the sale of every new home requires the equivalent of five full-time jobs for 12 months.”

Capital Starved

Builders selling to Landsmith have mostly been capital-starved smaller operators, according to Breitenstein, rather than publicly-traded companies such as D.R. Horton Inc. or PulteGroup Inc. (PHM) Other investors have bought small numbers of houses from the largest builders.

American Homes 4 Rent, a Malibu, California-based company headed by Public Storage founder B. Wayne Hughes, bought from Lennar Corp. (LEN), KB Home and M/I Homes Inc. in Florida’s Hillsborough County, according to property records.

Blackstone, which has acquired more than 24,000 houses over the past year, bought five Lennar homes in Hillsborough County since September. The new houses, which sold for $200,000 to $257,000, are in areas with low crime and good schools and can make money from rent or price appreciation, according to Eric Elder, spokesman for Invitation Homes, Blackstone’s single-family rental division.

“It was an opportunistic buy,” Elder said in a telephone interview. “It’s not a specific bullet point in our strategy.”

Vegas Houses

American Residential Properties Inc. (ARPI), a Scottsdale, Arizona-based rental company that raised $288 million in an initial public offering last week, bought 21 to-be-built Las Vegas houses last year from William Lyon Homes (LWHS), the last of 325 lots in a subdivision that opened in 2003.

“If we can make the numbers work, we’ll look at that the way we look at any other opportunity,” American Residential Chief Operating Officer Stephen Schmitz said in a telephone interview.

Wall Street-backed investors began buying single-family rental homes in the last few years after prices plunged more than a third from the 2006 peak and more than five million homeowners lost property to foreclosures, bringing institutional capital to what has been a mom and pop industry.

‘Massive Supply’

While low prices and record-low interest rates have made homes more affordable, many potential buyers are unable to get a mortgage because they don’t have money for a down payment or lack high enough credit scores to borrow. The U.S. homeownership rate dropped to 65 percent in the first quarter, down from 69 percent in 2004 and the lowest rate in 17 years, according to Commerce Department data. For people younger than 35, an age group when families begin raising children and buying home, the ownership rate fell to 37 percent last year from 43 percent in 2004.

“The massive supply of homes coupled with the significant drop in prices create an opportunity for investors to acquire homes at significant discounts while delivering housing solutions for many displaced residents,” Colony American Homes, the rental division of Thomas Barrack Jr.’s investment firm, said in a regulatory filing.

Colony has raised $2.2 billion and acquired more than 9,500 homes in eight states as of April 21. The average house was 26 years old, 1,760 square feet (164 square meters) and cost $159,000.

Highest Yields

Las Vegas; Indianapolis, Indiana; and Orlando, Tampa and Jacksonville, Florida, have the highest yields on rentals according to a report last month by Goldman Sachs Group Inc. Those yields are higher on foreclosed homes, which typically sell at a 30 percent discount to other properties, according to the report. In Las Vegas, for example, the yield on bank-owned properties is 8 percent compared to 6.2 percent for other rentals, after factoring in vacancy rates and costs, such as taxes and insurance.

The median resale home price in 150 U.S. cities jumped 11.3 percent in the first quarter to $176,600, the biggest price rise in seven years, the National Association of Realtors reported May 9. Prices soared 31 percent in Atlanta, 30 percent in Phoenix and 27 percent in Las Vegas, the real estate group reported from Washington.

The largest rental investors have bought faster than they can find tenants. Only 55 percent of Colony’s homes, most of which were purchased within the last six months, were leased, according to a regulatory filing this month.

Assembling Portfolios

Landsmith has specialized as a mid-sized player in the single-family rental industry, buying homes for itself and assembling portfolios of as large as 200 leased-up properties that it sells to larger investors. The company is in the process of closing deals this month to buy 87 rentals in Raleigh, North Carolina, for $5.1 million and 118 homes in Nashville, Tennessee, for $11 million.

It paid an average $130,000 for the 250 Houston-area homes, Breitenstein said. The rentals are sprinkled around 12 communities where builders sold most of the houses to owner occupants, he said.

The new houses have low maintenance costs and are more efficient to manage than more scattered properties, Breitenstein said. About 98 percent of the Houston residences are already leased for $995 to $1,500 a month, according to an offering memorandum obtained by Bloomberg News. Tenants are willing to pay a premium of $50 to $100 a month to occupy a brand new home, according to Breitenstein.

‘Smell New’

“They like the smell of new,” he said.

While fewer bank-owned properties are coming to market, the number of new homes for sale has increased — slowly — rising 5 percent from a year earlier to 153,000 in March, according to Commerce Department data. That compares with a high of 572,000 in July 2006.

The new homes sold for a median $247,000, up 3 percent from a year earlier. Average prices rose 9.3 percent at Lennar, 10 percent at PulteGroup and 14 percent at D.R. Horton during the companies’ most recent quarters as they emphasized improving profit margins over sales volume.

“Our goal is improve the bottom line better than we improve the top line,” D.R. Horton CEO Donald Tomnitz said during an April 26 earnings call.

Builders sell houses to Landsmith at a discount compared with owner occupants, because they don’t have to pay real estate broker fees and it’s easier to raise project financing if a large number of sales are guaranteed, Breitenstein said.

‘Bullet-Proof’

“We help builders by giving them a bullet-proof takeout,” said Breitenstein, who declined to name the builders to keep his competitive edge.

Building new homes to sell to landlords was a viable option in markets such as Charlotte, North Carolina, a year or two ago, according to John Burns, chairman of John Burns Real Estate Consulting. The opportunity to build new homes as rentals may have passed as land, lumber and labor prices rise and more buyers seek new houses amid a tight supply of existing homes, he said.

More Sense

“Today, it makes way more sense to sell,” Burns said in a telephone interview from Irvine, California.

Beazer Pre-Owned Rental Homes Inc., a venture formed by private-equity firm KKR & Co. and Beazer Homes USA Inc., started last year with a portfolio of 190 houses in Phoenix and Las Vegas, hasn’t been able to find new houses to rent that fit its criteria, according to CEO Patrick Whelan.

“It’s harder to make the math work on new houses to rent, and they are often located in inferior submarkets,” Whelan said in a telephone interview from his office in Scottsdale, Arizona. “Buying for less than replacement cost is a key metric we focus on. Obviously, if you’re buying new, you’re buying at full cost, including builder margin.”

Last year, builder Hovnanian Enterprises Inc. and its investor GTIS Partners debated whether to sell or rent units in Vistabella, a 70-unit townhouse community in Boynton Beach, Florida. They opted to sell, a decision that’s been vindicated, according to GTIS Chairman Tom Shapiro.

Debate Over

“I’d say the debate’s over now given what’s happened in the for sale market,” Shapiro, whose New York-based firm has $2.3 billion under management, including 5,000 rental homes and 30,000 lots, said in a telephone interview. “Had rents kept increasing and prices stayed low, I think we could’ve gotten there. Today, I don’t think it will be your best economic option.”

The economics of building to rent depend mostly on the price of lots, which Landsmith tries to keep below 25 percent of the final costs, Breitenstein said. Ready-to-build lots in Texas markets, such as Houston, are about 20 percent of the cost of a home, compared with as much as 50 percent in coastal California markets, according to Jeff Meyers, a housing consultant with Beverly Hills, California-based Kennedy-Wilson Holdings Inc.

“In Texas, the land isn’t such a big component,” Meyers said in a telephone interview.

Landsmith started tying up land in 2008 and 2009, when prices had plunged to pennies on the dollar, buying foreclosed subdivisions from banks and builders who ran out of cash. For now, it makes financial sense to keep some of the new houses as rentals.

“The key is executing quickly enough and moving fast enough,” he said. “In a year or two, this might not work.”

At the same time, those who arrived last year or the year before, face their own dilemma — to look for a new place or stay put, as their leases expire en masse.

For rental brokers, this is a time to clean up, or make up for a slow winter. But this year things are different.

Rent rates have remained flat and existing tenants facing some of the lowest vacancy rates in years, are choosing to renew their leases rather than risk a very tight rental market.

In the past, owners who had a turnover of 10% a year, now have “close to zero,” said Marc Lewis, chairman of AC Lawrence.

“This is unheard of in Manhattan. Normally this is the time of year that leases come up. Usually there is a glut of inventory. With this in mind, tenants at the end of their leases should take a close look at the market and their options before committing to making a move,” he said.

Manhattan’s vacancy rate for the month of April was a paltry 1.58 percent, below the average over the past five years, according to Miller Samuel Inc. and Douglas Elliman. The Upper East Side has the lowest vacancy rate at 1.04 percent.

Rental prices are up 6.5 percent over last year, but were virtually unchanged from March, according to Douglas Elliman. Because of low vacancy leading to limited options for tenants, landlords have decided to continue to be stingy with doling out concessions.

Douglas Elliman reported that only 4.7 percent of all leases signed through the brokerage in April had any kind of concession, while Citi Habitats reported that number to be slightly higher at 9 percent.

As far as prices are concerned, three bedroom apartments are the units that have seen the biggest price jump since last month, from $4,949 a month for leases signed in March, to $5136 a month on average for those signed in April, according to Citi Habitats.

Two bedroom apartments in elevator buildings were also up more than the rest, jumping 3.3 percent, or $100 dollars more from March to April, according to AC Lawrence.

Although, they still have lower overall prices, Harlem and Washington Heights were the areas that saw the highest percentage jumps from March to April. The average price for a rental uptown rose by 13.2 percent, the highest in Manhattan, according to Miller Samuel Inc.

In Harlem, the average rental price has gone up more than 18 percent since 2012, while the number of new rentals has dipped by 41.7 percent since last year.

That is leading to limited low-cost options for those looking to move, putting landlords in the drivers seat.

Brokers are reporting that the landlords’ market is leading to some of the largest rent increases for existing tenants they have seen in a while.

“In the past, it was very common for an owner to give a ‘home discount’ to an existing tenant,” said Lewis. “They thought it was better to not have a vacancy as the loss of rent and painting and cleaning cost was not worth the increase.

“Now, with rents up as much as 30% in the past five years, owners are in many cases asking for full rents on renewals. Tenants don’t really have many options so they are paying 10-30% more to stay put.”

“It’s consistently one of the most coveted things in the apartment,” says Kelly Mack, president of Corcoran Sunshine. “It’s a rare opportunity to step outside your door, enjoy a moment of peace and serenity. In large-scale towers, outdoor space is even more difficult to find and people are really willing to pay up for it and pay a significant premium.”

How much of a premium?

Exterior space trades at somewhere between “25 to 50 percent” of the interior price per square foot, says Jonathan Miller, president and CEO of the appraisal firm Miller Samuel.

So if you have an apartment with interior space that’s valued at around $2,000 per square foot, 1,000 square feet of outdoor space can add somewhere between $500,000 and $1 million to the price of the residence.“The increase,” adds Miller, “represents the greater functional utility of the space.”

Click here for our top outdoor picks.

By this, Miller means that an undivided 1,000-square-foot terrace is probably worth more than four 250-square-foot terraces because the former is more useful.

Properties with outdoor space are difficult to land. “Outdoor space is one of those things you’d pay a premium for because it’s usually either a penthouse apartment or ground-floor garden,” says Shaun Osher, CEO of Core.

Rare or not, there’s no question that there’s been an uptick in units with outdoor space that have traded in the last decade.

“In 2000, about 9 percent” of apartments sold had terraces, Miller says. “In 2012, it’s closer to 12 percent.” Apartments with balconies and gardens have also been selling. “Another way to look at this is, it’s now roughly one out of four sales that has some sort of outdoor space — terrace, garden, balcony, patio. Twelve years ago it was roughly one out of five.”

And when developers run out of units with private outdoor space, they tout their building’s common courtyards or landscaped roof decks — for instance, the forthcoming 150 Charles St. features a good 40,000 square feet of green space. At 455 W. 20th St., the condo building within the grounds of the General Theological Seminary, there’s a block-long enclosed garden that looks like something out of Oxford. Buildings like the Schumacher, at 36 Bleecker St., bandy about the names of their courtyard designers (the Schumacher tapped Ken Smith, who did MoMA’s roof garden). Each of these new developments is selling condos for well over $2,000 per square foot, making them some of the most expensive real estate in the city.

But whether it’s a still-under-construction super-pad or something already built, the city offers some outstanding options for those who want to get outdoors.

Nothing better confirms Sassen’s observations than Miami’s rapidly ascendant real estate market. Hard-hit by oversupply and underfinancing after the 2008 crash, Miami has not merely survived, but is now thriving at record levels.

Last summer, a 10-bedroom/30,000 sq ft compound on Miami’s Indian Creek Island sold for a record $47m; while in March, US “infomercial” entrepreneur Ajit Khubani reportedly paid $34m for a 16,000 sq ft penthouse at developer Ian Schrager’s 26-unit Miami Beach Edition project – a record for a Florida condominium. An 18,253 sq ft penthouse is now on sale for $50m at nearby Faena House, where 45 condominiums are being designed by Foster + Partners, and a 17,000 sq ft penthouse on top of South Beach’s 10-year-old south tower of Continuum is now listed for $39m.

“Unlike before the recession, luxury Miami developers are building far fewer ‘mass-market’ projects with hundreds or even thousands of units,” says Peter Zalewski, of local property consultancy Condo Vultures. “They’re focusing on maximum pricing rather than maximum capacity.”

Such figures represent the top end of the Miami market but prime property values have grown at all levels, from Atlantic-front South Beach across to Downtown and the Miami Design District, northward to Mid-Beach and up to Sunny Isles Beach. Indeed, agent Knight Frank says high-end Miami real estate prices rose by 19.5 per cent last year – the highest in North America and the fourth highest in the world, after Dubai, Bali and Jakarta.

Prime Miami real estate (defined by Knight Frank as the top five per cent of the market) now averages between $1,300 and $1,440 per sq ft, with average sector condominiums now $1.57m and single-family homes $2.02m, according to a mid-April report by Douglas Elliman Real Estate. The firm says Miami’s high-end market begins at $730,000 for condominiums, and $850,000 for single-family homes.

Already costlier than metropolises such as Tokyo or Mumbai, Miami prices are predicted by Knight Frank to grow by five to 10 per cent this year as more buyers enter an increasingly shrinking premium property pool. map of Miami, Florida

Although domestic buyers, particularly New Yorkers, have shown interest in the highest-end projects such as Faena House and Edition, foreign buyers – notably Brazilians, Argentines and Venezuelans – remain the strongest players in Miami. Last year, foreigners comprised some 60 per cent of the city’s total market, according to the Miami Association of Realtors.

“Certain key prime markets have bounced back stronger than ever and Miami is one of them,” says James Price, Knight Frank’s head of international residential development. “Aided by international buyers, the level of [over]supply that had brought the market down has completely reversed itself.”

A recent report by realtor Douglas Elliman found that Miami’s property inventory shrunk 12.5 per cent in the first quarter of 2013 compared with 2012 – and a full 30 per cent from 2011. The number of distressed properties – the short-sales and foreclosures that dominated recession-era sales – fell nearly 25 per cent from last year and almost 50 per cent since late 2010.

Today, says Ron Shuffield, head of Christie’s affiliate EWM Realty International, Miami’s property inventory hovers between four and six months, well below the nine to 12 month threshold required to maintain market health. “Building in Miami came to a near-halt for almost five years,” he says. “We have a substantial number of projects being built but they’re still two to three years from completion.”

According to CVR Realty, across South Florida nearly 125 towers with 17,700 units are either under construction or in the development stages – nearly half in Miami itself.

As in New York, Miami developers are associating many of their highest-end projects with top architects: Foster’s Faena House, John Pawson at Edition, Denmark’s Bjarke Ingels at the Grove at Grand Bay, Mexican Enrique Norten at South Beach’s One Ocean and 321 Ocean, Zaha Hadid’s One Thousand Museum and Herzog & de Meuron at Jade Signature.

Developers are also thinking bigger: units at Hadid’s building will reportedly start at roughly 4,500 sq ft, while apartments at Norten’s One Ocean average roughly 3,000 sq ft. “Buyers want larger spaces; simpler spaces that are functional from moment one,” says Edgardo Defortuna, founder of Fortune International, which is building Jade Signature. “Adding a name like Herzog & de Meuron takes it to the next level” – and adds roughly 20 per cent to the price.

With dozens of new projects now in development and apartments at Edition and Faena now topping $3,000 per sq ft, Miami’s undersupply could shift into overabundance – or at least overpricing. “The ingredients and conditions are certainly there for another bubble,” says Condo Vulture’s Zalewski. “Two-thirds of all Miami sales are still under $300,000, so it’s hard to see the highest prices continuing to appreciate at such rapid rates.”

Yet with prices still 37 per cent below their pre-recession peak, local agents say Miami may even be undervalued – at least compared with premium markets in London, Hong Kong or New York. Meanwhile, bank financing has now become far scarcer across the US, helping Miami’s market to develop what Shuffield calls “its own set of checks and balances” to ensure new projects remain solvent. “The bulk of new condo buyers are purchasing in cash – with deposits of 50 to 70 per cent. These new terms are giving the market far greater stability.”

In both markets, the number of new rentals (i.e. tenants who decided to not renew their leases) slowed down. “I see this metric as a measure of resistance to a landlord’s rent increase at renewal,” says Miller. “I think landlords and tenants are becoming a bit more in sync on high rents, and more tenants are signing renewals than they were before.” Basically, tenants are starting to face the facts: rents are high everywhere, so why go through the hassle of finding a new apartment when the rent won’t be any lower? Plus, Miller says that landlords are “realizing that they need to reduce some of the churn in recent months,” so they are more favorable to renewals.

The drivers of high rents remain the same. “Rising employment and tight credit,” explains Miller. These factors are “tipping people back into the rental market even though they would have normally purchased, but don’t qualify.” Still, Miller notes that it’s somewhat surprising that the rental market is still strong when the purchase market is also strong: “The improvement in the regional economy probably isn’t being given enough credit (sorry—no pun intended).”

The Brooklyn market remains tight, with the average days on the market falling from 76 days in March to just 37 in April. Last April, it was at 52 days. In Manhattan, the vacancy rate, which Miller notes is a better measure of availability than inventory, is unchanged from the same time last year, thus it’s still below the five year average. The East Side continues to see the lowest vacancy rate; at 1.04 percent, it’s down a smidge from last year. Across the park, the West Side saw the highest vacancy rate at 2.2 percent.

Landlord concessions remain unchanged; they still barely exist. Less than five percent of transaction included a concession, and even then, it was only about equal to about 1.1 months of rent. Long-gone are the good ol’ days when two to three months free rent was offered are nearly half of all leases.

Market reports being released on Thursday showed a low vacancy rate and a tight inventory. The average rent in Manhattan rose by $139 to $3,367 a month in April, compared with March, a one-month increase of 4.3%, according to a report by Citi Habitats, a brokerage firm that represents many renters.

“It is going to be more difficult to find a desirable apartment,” said Mark Menendez, the director of rentals at Douglas Elliman. “There is a lack of inventory and a huge demand.”

The tight market, he said, is in turn leading many renters to renew leases with their current landlords, or request extensions so they can look for new apartments later in the year. This will lead to further tightening of the market.

Rents normally drift lower during the fall and winter, and rise modestly in the spring and summer with the end of the school year, when many new college graduates move to the city, and when families with children prefer to relocate.

But as the economy recovered from the financial crisis over the last few years, rents rose significantly. They hit a record in August of $3,461 a month, according to Citi Habitats, and since then fell to a low of $3,211 in January, a drop of 7.2%, raising questions about whether rents would remain low in the spring.

Gary Malin, the president of Citi Habitats, said that last year landlords had raised rents faster than incomes were rising, and there was a pushback from tenants.

Now after that pause, “we are starting to see that rents are starting to go up,” he said. “There is no weakness in the market at all,” with rentals showing a “very strong” performance throughout Manhattan, according to Mr. Malin.

Mr. Malin attributed this to a strengthening economy, including an increase in corporate relocations from other parts of the country so far this year, compared with the same period last year.

Shawna Aschmies, a Citi Habitats broker, said with inventory so tight, she was advising some past clients to try to extend their leases for a few months to see whether more apartments come on the market later in the year, others were giving up on Manhattan, and finding more space for less money in Brooklyn or Queens.

A few weeks ago, she found a $3,100 a month two-bedroom apartment in the East Village for Marie Clare Brush, a fashion designer, and her roommate, a software engineer.

But the apartment was small, and had only one bathroom, so they kept looking.

Now Ms. Brush said that with help from Ms. Aschmies she found a bigger apartment—with a new kitchen with stainless-steel appliances, two bathrooms and several skylights—for $2,800 a month in Greenpoint, Brooklyn. It was farther from the subway than she would have preferred.

“It is slim pickings,” Ms. Brush said. “You have to decide what you can compromise on and what you can’t compromise on. You have to keep your options open and look at neighborhoods that aren’t generally known. “

Jonathan Miller, president of appraiser, Miller Samuel Inc., said that this year landlords have been less aggressive in raising rents for their existing tenants, resulting in more tenants renewing leases, leaving fewer apartments available on the market.

The tight market was also driven by rising employment, slowly improving economic growth, Mr. Miller said.

He said that the renters who want to buy rather than rent, will find little relief in the sales market: Sales inventory is at a 12-year low, and credit conditions remain very tight.

The median rent for a Manhattan apartment in April was $3,195 per month, a 6.5 percent increase from $3,000 per month in the same month last year, a report from Douglas Elliman shows. In April, there were 4,287 rental transactions in Manhattan, up 1.4 percent from a year earlier.

Meanwhile, the vacancy rate in Manhattan dropped to 1.28 percent, a 12 percent decline from the 1.46 percent rate in March, numbers from Citi Habitats show.

“It’s going to make for a very competitive summer,” said Gary Malin, president of Citi Habitats, the city’s largest brokerage. “You will see a vacancy rate sub 1 percent very soon.”

The reason continues to be that constrained supply in the sales market and tight restrictions on mortgage lending are keeping certain would-be buyers in the rental market longer, said Jonathan Miller, president of appraisal firm Miller Samuel and author of Elliman’s report, adding that this year is “on par” with a “robust” 2012.

“It’s somewhat surprising, because sometimes rental and sales markets move in opposite directions, and in Manhattan they are both moving up,” he said.

And, heading in to the busy summer rental season, the price increases and tight supply show no signs of letting up, particularly for apartment hunters interested in smaller unit types Downtown.

“We’re moving into the meat of the market,” said Mark Menendez, Elliman’s director of rentals, who predicted a summer of slow but steady price increases.

Demand for studios Downtown — particularly in the West Village and mostly from newcomers to Gotham — is the major force in the Manhattan rental market at the moment, Menendez said.

In March, average prices for studios showed the steepest rent increase, Citi Habitats’ figures showed, and April was no different. The average rent for a studio was $2,048, up 3 percent from a month prior, when the figure was $1,986, per Citi’s report.

“The majority of the activity that we are seeing now is coming from the entry level,” he said.

There is also a higher number of hybrid customers — that is, people considering buying or renting, based on what is available — on the hunt for new digs, Malin said.

“Interest rates are still incredibly attractive,” he said.

Over the river, price growth has been more modest, despite last month’s roaring market, Miller said.

“After several months of very robust year-over-year growth, [Brooklyn rents are] only up 1 percent, so the numbers there seem to be more volatile than in Manhattan,” he said. “But rents are still rising.”

Indeed, the median rent in Brooklyn increased to $2,700 per month, up a mere 1 percent from $2,673 at this time last year, the Elliman report shows.

However, the volume of rental transactions was up 10.9 percent, to 357 from 322 year-over-year, which could indicate continued resistance from renters, with many opting to find a new place rather than suffer rent increases.

Still, insanely low vacancy and inventory are a concern for the whole industry, experts said.

“Any new product that comes online is always at the highest end of the marketplace,” Malin said. “We need to add some more units.”

The company is inviting investors to assess the property this week and submit plans for potential use, Verizon said today in a statement. It expects to keep the first 10 floors of the 31-story structure, a 1920s-era building whose lobby and exterior are designated as New York City landmarks.

By offering the space, located at 140 West St., Verizon aims to capitalize on a renaissance of the area following the Sept. 11 attacks more than a decade ago. The building is across the street from One World Trade Center, now the tallest tower in the U.S., which will open next year. The real estate could be used as retail, restaurant, hotel or residential space for the burgeoning neighborhood, Verizon said.

“Lower Manhattan — especially the World Trade Center neighborhood — is destined to be an important tourist and commercial center for the world, and the plan that Verizon is proposing is in concert with that grand vision for the area,” John Vazquez, vice president of global real estate, said in the statement.

Cushman & Wakefield Inc. has been hired to market the space, said Nicholas Derasmo, a spokesman for the New York-based brokerage.

Dual Disasters

Verizon’s tower, formerly the New York Telephone Co. building, has suffered two blows in recent years. The structure was damaged during the Sept. 11 attacks in 2001 when terrorists destroyed the original World Trade Center, requiring Verizon to embark on seven years of restoration. The devastation caused hundreds of windows to be blown out and steel girders punctured the building, according to MacRostie Historic Advisors LLC, which consulted on the rehabilitation project.

It was struck again last year by Superstorm Sandy, which flooded the building. The view of Verizon’s opulent lobby under water became a symbol of the storm’s destruction after the company posted a picture of the damage on the Web.

It’s become increasingly attractive to convert New York office space into housing, something that’s already happened to previous Verizon buildings. Manhattan apartment prices climbed 5.9 percent in the first quarter from a year earlier as buyers competed for a tight supply of properties, according to a report by appraiser Miller Samuel Inc. and brokerage Douglas Elliman Real Estate.

Doing Math

“With the lack of housing supply, especially in the new development space, I think every company, individual or institution with a building that has conversion potential is doing the math on whether they should take advantage of current conditions,” said Jonathan Miller, president of New York-based Miller Samuel Inc.

One Verizon office building in Chelsea on 18th St., which was sold in 2009 to a partnership led by JDS Development Group, was converted to a luxury condominium called Walker Tower. The 24-story project, where a top floor penthouse was listed for sale at $55 million, is expected to be completed this year.

Just four blocks from Verizon’s 140 West St. building is the landmark Woolworth Building, where the upper floors are being converted into 40 luxury apartment units. An investment group led by New York developer Alchemy Properties acquired the top 29 stories last year for $68 million, according to research firm Real Capital Analytics Inc.

Earlier Deals

Verizon has previously sold parts of other buildings, including 1095 Avenue of the Americas and 375 Pearl St. The company maintained communications equipment at both locations.

With 140 West St., Verizon will retain the executive offices and boardroom on the 28th and 29th floors, in addition to the lower floors. The building will still house both network and administrative employees and it will remain the corporate headquarters, said Ray McConville, a spokesman for the company.

As part of the move, about 1,100 mostly customer-service workers will be relocated to a call center in Brooklyn. Verizon said it is planning to make improvements, including a fitness center, at the Flatbush Avenue site.

Verizon shares rose 1.7 percent to $52.92 at the close in New York. The stock has climbed 22 percent this year.

The buyers of Steinway Hall are in informal talks with the city’s Landmarks Preservation Commission and zoning officials about what they may build on the site, which includes the piano maker’s building and an adjacent parcel at 105-107 W. 57th St. that they purchased last year. The investors had plans for a 700-foot (213-meter) tower and now estimate that air rights acquired in the Steinway deal would allow them to go taller — potentially as Manhattan’s third-tallest residential building.

“It will certainly be taller than 900 feet,” said Michael Stern, managing partner of JDS Development Group, which agreed in March to buy the 16-story Steinway Hall and land beneath it with Property Markets Group and Atlantic Development Group. “What its ultimate height will be is yet to be determined.”

The JDS group’s project sits at the center of a high-rise construction boom in midtown Manhattan as developers seek to take advantage of soaring luxury-condo demand. It’s on the same block as the current tallest residential building in the city, Extell Development Co.’s One57, which has set records with two condo sales valued at more than $90 million each. Three blocks away at Park Avenue and 57th Street, Harry Macklowe and CIM Group are building a skyscraper on the former Drake Hotel site that’s slated to rise even higher than the Extell property.

Manhattan Icons

The 57th Street corridor, near such New York icons as Central Park and the luxury shopping district of Fifth Avenue, is appealing to international investors who are seeking Manhattan residential real estate as a haven for cash, according to Jonathan Miller, president of New York-based appraiser Miller Samuel Inc.

“It’s this new high-tower district that has a global appeal,” he said. “It’s almost a new segment of the market: high-end residential immersed in Midtown.”

The median price of new-development Manhattan condos climbed 36 percent in the first quarter from a year earlier to $1.33 million, as a dearth of supply intersected with a surge in demand for luxury units from local and international buyers, Miller said. The number of new units on the market dropped 42 percent in the quarter to 872, according to a report from Miller Samuel and brokerage Douglas Elliman Real Estate.

JDS and its partners plan at least 45 luxury condos on the 57th Street site, said Stern and Kevin Maloney, chief executive officer of Property Markets Group, which is also developing the 24-story Walker Tower in Chelsea with JDS.

Steinway Landmark

Plans for the combined site may include a condo tower with retail at the base or a hotel with condos above it. How Steinway Hall can be incorporated into the project is under discussion with landmarks and zoning officials, Stern and Maloney said. As a landmark, the building can’t be demolished.

The eventual height of the tower, to be built at the 105-107 W. 57th St. site, is “not a contest to us,” Stern said. “We’re just going to try to find the most desirable configuration.”

Unimpeded vistas of Central Park begin at 225 feet, according to Stern.

“It’s all about the views, so we want to maximize the square footage we have above the break of unobstructed park view,” he said.

Part of the site is in a special Midtown zoning district that doesn’t restrict building heights, according to Stern. The development rights acquired with the Steinway purchase allow the companies to expand the number of square feet they can build, including going higher, he said.

“You can probably pull enough out of Steinway,” Maloney said. “The air is there.”

Pricey Views

At 900 feet, JDS’s project would be about the height of the One Bryant Park office tower without its spire, and rank as New York’s third-tallest residential tower, according to Emporis.com, a website that collects data on skyscrapers. One57, where Extell expects residents to begin moving in this year, is the current highest at 1,004 feet. Macklowe and CIM’s 432 Park Ave. would rise to 1,397 feet upon completion in 2015. More than a third of the units in that building have already been sold, the firms said in March.

Building trophy apartments with lofty views gives developers, who are paying high prices for land, the best return on their investment, according to Miller.

“Property values rise as you go up, so the higher you go, in theory, the more you can sell those properties for,” he said.

Helicopter Views

Extell was one of the earliest adopters in the latest condo wave, breaking ground on One57 in 2009. Buyers have been putting down deposits based on floor plans, a model apartment in the 6,000-square-foot offsite sales office and photographs by a camera mounted on a drone helicopter that show views at different elevations of the 90-story tower.

Extell has increased prices at least twice. A 6,200-square- foot full-floor apartment on the 88th floor was listed for $67 million in September, a 28 percent markup from its initial offering price in June 2011. The 87th-floor unit was increased to $64.5 million, or 36 percent more than in June 2011, sales documents filed with the New York state attorney general’s office show.

The JDS group expects its Steinway Hall deal to be completed this month. Steinway Musical Instruments Inc. (LVB), the maker of its namesake pianos, agreed to sell its stake in the property for $46 million, plus an undisclosed amount to be held in escrow. The land beneath the building was purchased from a separate, unnamed owner.

The narrowness of the 105-107 W. 57th St. site means the developers probably won’t try to match the Extell tower’s height, Maloney said.

“When you get that high with such a narrow building, it might cause the floor plate to be so inefficient, it may rule it out economically,” he said. “It could rise very high, but I don’t think it’s going to be higher than One57.”

A Manhattan apartment is staged with faux furniture by inFormed Space.

Mr. Pinter’s entire line of furniture is an illusion. The Noguchi-inspired coffee table, the contemporary white sofa, the posh art pedestal—all are made of a lightweight material similar to that used to make milk cartons.

“I can bring a two-bedroom apartment up in four nylon bags,” said Mr. Pinter, whose company, inFormed Space, creates origami-like polypropylene furniture that can be folded flat and then installed in a matter of hours.

As the housing market continues to climb, so-called prop furniture is returning to form. What started as a byproduct of the early-2000s sales boom is making a comeback with new, stylish offerings of faux furnishings, including look-but-don’t-sit sofas, cardboard bed frames and fake electronics. Some offer slick finishes while others come in a variety of homey slipcovers.

The apartment Mr. Pinter was staging—a three-bedroom penthouse in a midrise condo—fell into foreclosure in 2008. Now, one of the listing agents, Mark Reznik of A&I Broadway Realty, is preparing to put the fully renovated space on the market for about $2 million.

Soon after arriving in the empty apartment, Mr. Pinter and his associate, Michael Smith, squatted down in a spare bedroom and began to bend, crease and clasp their white polymer panels.

“It is a little like sausage being made,” he said, joking that the process bears little resemblance to the finished product.

Within three hours, the living and dining areas were staged with geometric sofas, faux art canvasses on the walls and a contemporary white resin sculpture provided by artist Dave Stevenson, which balances on a fake pedestal.

The package costs about one-third the price of traditional staging, which could run several thousand dollars for a luxury apartment. Mr. Pinter charges $1,199 a month for a three-bedroom rental set and doesn’t require a multimonth commitment.

Mr. Pinter launched inFormed Space earlier this year and has so far staged about seven listings. Of those listings, a $925,000 unit is in contract, and another sold for almost $1.3 million.

“I see this as a phenomenon of a market that’s waking up,” said Jonathan Miller, president of Miller Samuel Real Estate Appraisers & Consultants. Mr. Miller said these kinds of novel approaches to real-estate marketing appear at the beginning of every new development boom cycle, as in the early 2000s.

Kevin Nielsen, a co-owner of NextStage Furniture in Sioux Falls, S.D., has seen his business ebb and flow with the market. Founded in 2008, the company creates collapsible cardboard furniture with slipcovers for homes mostly in the $300,000 range. “When the market tanked, staging was hurt first,” he said.

Since the past year, he said, sales are picking up, Web traffic is rising and he is in the process of rolling out a new, more contemporary line of furnishings. He is distributing his collection to representatives in Southern California and Nova Scotia, Canada. A “starter kit,” including a sofa, dining table and queen-size bed, costs about $600 before shipping.

None of the furniture is functional. But should someone mistakenly plop down on the corrugated bed frame, for example, they likely would be fine. “I’ve taken a nap on them before,” Mr. Nielsen said.

The faux-electronics business also is enjoying a boost from the housing market’s gains. Kenneth Guo, the owner of the Taiwan-based Real Electronic Props, said 2013 has gotten off to an auspicious start. Mr. Guo, who started in the plastic injection and molding business, switched to making replicas of flat-screen TVs in 2004, as the demand for such props started to pick up.

The fake TVs look identical to the real thing, but the electrical wiring is left out, allowing Mr. Guo to sell the devices at a low price to a mix of clients, although the majority are home designers. The popular 52-inch model retails for about $250. “We’re trying for a 60-inch and 65-inch, because of a lot of inquiries,” he said. The company ships internationally and maintains a Jamestown, N.C., warehouse that opened in 2010 for U.S. orders. In a good year, he said, he sells about 1,000 units.

Kelly Young, at Kelly Young Design Associates in Plantation, Fla., said her company expects to order more prop electronics from Mr. Guo to stage model homes as new-home construction picks up in the Fort Lauderdale area. Staging is a kind of fantasy, she said, and the goal should be to create experiences. “You want a home buyer to walk into the spaces and really feel like they could be sitting at [the] table,” she said—which is why they also buy fake videogame consoles (for the kids) and fake laptops and tablets.

There is also a more practical reason to use the props: sticky-fingered visitors. Brokers say minor theft is an unavoidable part of open-house tours. “It doesn’t matter what it is—stuff walks,” said Mary-Jo Swiatkowski, office manager at Kelly Young.

Local real estate entrepreneurs met and shared their ideas over bagels and coffee. At a panel discussion moderated by realtor David Brause, participants shared views on the booming LIC real estate industry’s present and future.

Panelists included Eric Benaim, president and CEO of Modern Spaces, Jonathan Miller, president and CEO of Miller Samuel Inc., Andrew Nimmer, principal of The Local Hostels, Michael Phillips, chief operating officer of Jamestown and Jason Sheftell, real estate editor for the New York Daily News.

The panelists discussed what they believe makes LIC a destination for visitors and people looking to settle down. They noted the easy public transportation access, closeness to Manhattan and the affordability of the community’s real estate.

According to Benaim, whose business has gone from residential sales and leasing to project development and marketing, prices for real estate in the area range from about $2,500 to $50,000,

“I think Long Island City is the gateway to all of Queens,” said Sheftell. “It’s the very beginning for this neighborhood.”

The story in New York is not nearly that good and no one seems to be taking much notice of it.

The accompanying chart tracks the Case-Shiller index for the 20 largest markets against its index for the New York area. As you can see, the region has failed to follow the national rebound. In fact, New York showed a gain in only the last two months and prices remain below where they were a year ago.

The story is better for New York City. The first-quarter report from the Real Estate Board of New York for the entire city advanced 7% to 480,000 in the past year. Manhattan apartments rose 6% to $820,555, according to Miller Samuel. (These are median not average numbers. It is crucial to use median because the averages are inflated by a few very expensive luxury apartment sales and distort the New York figures when compared with national figures).

It is true that New York did not suffer as severe a decline as the rest of the country, but the housing figures are telling us something. While the city is enjoying a robust recovery measured by jobs, the suburbs are stagnating because they don’t have the growth engines of the city’s economy—tourism, TV production, tech and higher education. In addition, the trying times in financial services hurt the suburban markets a lot because so many bank and finance executives live there.

Nationally, the major issue in housing is whether the recovery will be sustained because it is being driven by sales to investors who want to rent properties and then flip them and the end to the wave of foreclosures, which depressed the market.

The New York region’s housing market depends on an improved economy in the suburbs, and there is not much evidence that is happening anytime soon.

After the Wall Street crisis in 2008, the Canadian real estate market barely skipped a beat, but New York and the rest of the country suffered. The few Manhattan sales that did occur in the months following September 2008 were discounted by as much as 25%.

The upswing

More recently, 1Q 2013 has been a period of banner sales with bidding wars and rising prices. Market conditions New York hasn’t experienced with such exuberance since 2007. According to the Elliman Report, a Manhattan real estate sales report prepared by Miller Samuel Inc., “Sales activity expanded despite plunging listing inventory. Supply continued to decline as listing inventory dropped 34.4 percent from the same period a year ago, the steepest drop in the 12 years this metric has been recorded. However, the number of sales increased 6.3 percent to 2,457 as consumers fought tight credit conditions to take advantage of low mortgage rates.”

Miller Samuel Inc. continues with, “All price indicators posted year-over-year gains. Median sales price rose 5.9% from the same period last year to $820,555.”

Luxury pause

The flourishing market conditions are similar across all market segments, however, the luxury market which represents the top 10 percent of condo and coop sales, showed a negligible decline in median price from $4,125,000 in 1Q 2012 to $4,015,000 in 1Q 2013 and a more significant decline from $4,440,150 in 4Q 2012.

This downward adjustment is best explained as a resting period after a flurry of high-end sales rushed to close in 4Q 2012 to beat an increase in capital gains tax effective January 1st. Another key factor is a shift in motivation. Prospective sellers witnessed a fast moving market at the end of 2012 and seized the opportunity to sell at a premium. As a result, 1Q 2013 listing inventory for the luxury sector increased 7.6 percent over the previous quarter. The additional inventory took some pressure off buyers to respond quickly, but not completely since the inventory for luxury homes is still down 15.4 percent from 1Q 2012.

Low Inventory

The sharpest decline in listing inventory is in the new development sub-category which fell 41.7 percent from the same quarter last year. For a few years after the crash, new development projects were put on hold while developers had a wait and see attitude. It’s only recently, that new developments came to market. Developers are playing catch up to provide sufficient supply and they’ve conveniently stumbled upon a pent up demand that’s allowing them to fetch top dollar for each new project. Accidental or planned, the delay in building has paid off for the developer as new development prices far exceed peak 2008 benchmarks.

Loft Increase

The Manhattan loft market segment experienced an 8.8% increase in median sales price and a 20.3% increase in average sales price over the prior year quarter which is the highest average price increase of all market segments. This growth underscores the continued high demand for loft style living which is unique to the downtown market.

Condo vs Coop

Condos saw a 13.8 percent increase in median sales price from the prior year quarter and coops increased a modest 1.9 percent. One of the quirks of Manhattan real estate is the infamous coop. 75 to 80 percent of home ownership in Manhattan is in the form of a cooperative. The remaining 20 to 25 percent are condos. Condos offer freehold ownership and coops generally have restrictive policies.

The flexibility of freehold ownership and the low availability of condominiums make them more desirable, which creates a price variance for the two types of ownership. The average price per square foot for a Coop in 1Q 2013 was $925 compared to $1377 per square foot for a condo in the same quarter.

Home prices in the U.S. jumped a whopping 9.3 per cent in the year to February, according to the Standard & Poor’s/Case-Shiller home price index.

It’s a clear sign that the U.S.’s half-decade-long housing slump — which wiped billions from household balance sheets — is finally coming to an end.

Things have been particularly strong at the top end of the U.S. market. Forbes magazine recently declared the country has entered “the era of $100-million homes.”

“I’m at the point where I’m calling this a new category of housing,” Miller Samuel CEO Jonathan Miller told Forbes. “It is something that’s come of age in the past two years in response to global economic turmoil, where wealthy individuals are looking for ways to invest, and ultra-high-end real estate seems to be the asset of choice.”

When it comes to $100-million homes, the same cardinal rule of real estate still applies, Forbes says: Location, location, location. A house has to be located in one of the U.S. most expensive zip codes in order to break the $100-million barrier.

But pedigree also matters.

“A home tied to an esteemed public figure can offer unique bragging rights, even when the connection isn’t a happy one, as with Casa Casuarina, the $100 million Miami Beach mansion where Gianni Versace was murdered on the front steps,” Forbes reports.

The top end of Canada’s housing market is nowhere nearly as opulent (or as dramatic). Even though home prices in Canada are about 62 per cent higher, on average, than U.S. house prices, the most expensive home for sale in Canada, the last time HuffPost checked, was listed for only $28.8 million.

We use the world “only” loosely here, of course.

While the mass openings were more the result of coincidence than design, they “reflect New York’s ascendancy as a true world capital”, according to historian Andrew Berman, executive director of the Greenwich Village Society for Historic Preservation (GVSHP). “New York may only have truly passed London for the title after the first world war, but this was when the city’s pre-eminence began.”

This potent mix of economic, cultural and technological expansion also left its mark on the era’s residential architecture, particularly on Manhattan’s then-ascendant Upper East Side. Indeed, with Grand Central Terminal as its main entry point, and the green expanse of Central Park as its key calling card, Park Avenue began to emerge as the East Side’s main thoroughfare in the years leading up to the first world war. As on nearby Fifth Avenue, Park Avenue would eventually be flanked by the grandiose apartment buildings that quickly supplanted single-family town houses as the most desirable dwellings for wealthy Manhattanites.

Just beyond Park Avenue, two such buildings – 150 East 72nd Street and 11 East 68th Street – are simultaneously celebrating their centenary while being converted into premium, luxury condominiums. Located roughly five blocks apart, and close to the 69th Regiment Armory (whose annual contemporary art fair also debuted in 1913), the projects are relatively small for New York. But their attributes – bay windows, copper-cladding, 12ft-high ceilings – foreshadowed the Upper East Side’s architectural evolution for the next 20 years.

At 150 East 72nd, 32 rental apartments have been whittled down to 20 new condominiums, while at 11 East 68th Street, known as the Marquand, 41 rental units will be converted into roughly 30 homes. Named after railroad magnate Henry Marquand, a founder of the Metropolitan Museum of Art and the site’s original owner, the building has been redesigned by architect Lee Mindel, whose firm Shelton, Mindel & Associates is best known for designing private residences for clients such as George Soros and Sting and Trudie Styler.

Both buildings reference the era’s embrace of European architectural styles with brick and limestone cladding and rigidly symmetrical, minimally embellished façades. And inside, appropriate materials have been sourced to evoke the projects’ richness and provenance. “We’re using the same Tennessee marble that was used to build Grand Central Terminal,” says developer Harry Macklowe, whose firm Macklowe Properties is building 150 East 72nd Street.

Rising to nearly 15 floors each, these buildings also reflect the technological advancements that were transforming America’s construction industry, such as elevators and the steel frame. These technologies were pioneered in Chicago, the historical home of the skyscraper and the city that gave birth to the influential City Beautiful movement. Established as a response to late-19th century tenement crowding, the movement advocated large-scale urban planning schemes, incorporating parks and open spaces, across the nation.

“New York has always looked to Europe for inspiration, and from Italian to French, Gothic to Renaissance to Federal, the architectural styles during this period were [from] all over the map,” says historic preservationist Tara Kelly, executive director of the Friends of the Upper East Side Historic Districts. “But 1913 was sort of a magical moment, when architecture, investment and grand gestures towards civic pride all came together.”

As in 1913, the Upper East Side of Manhattan remains a mostly residential district, and buyers – unlike at flashier Midtown projects – are predominantly American. “Most of our buyers already live in New York neighbourhoods such as Chelsea or Tribeca,” says Macklowe, who is also building the 1,400ft 432 Park Avenue, which will open in late 2015 as New York’s tallest building. “They now want bigger homes close to Central Park and near many of New York’s best private schools.”

Accordingly, both 150 East 72nd and the Marquand are dominated by large-sized apartments – three- to five­bedrooms at the former; four- to six-bedrooms at the latter. Both Macklowe and Marquand developer Ziel Feldman, founder of HFZ Capital Group, say such sizes come at a premium. Prices at 150 East 72nd Street – slated for occupancy this summer – begin at just over $6m for the 2,300 sq ft smallest units and rise to $20m for the largest penthouses. Homes at the Marquand will range from roughly 3,900 sq ft to between 7,000 and 8,000 sq ft, says Feldman, and begin at roughly $15m. As at 150 East 72nd Street, two apartments will be offered per floor and residents should begin moving in by late autumn.

This autumn is also when the top 30 floors of the century-old Woolworth Building in the City Hall neighbourhood are due to begin their long-delayed transformation into around 40 luxury apartments. Capped by a five-floor penthouse in the building’s neo-gothic cupola, and anchored by a restored 55ft basement swimming pool, the Woolworth’s apartments are expected to be priced at roughly $3,000 per sq ft. That may be standard for luxury Upper East Side projects such as 150 East 72nd Street or the Marquand, but it’s more than double the average price of nearby apartments.

So will the Woolworth Building’s architecture and heritage – and 100th anniversary – be enough to lure top-of-the-market buyers to a still “transitional” neighbourhood? Jonathan Miller, a local analyst at Miller Samuel, believes so. “For a building like the Woolworth, in this segment of the market,” Miller says, “nothing would surprise me.”

A review of 214 Manhattan townhouse sales that closed between July 2010 and March 2013 shows that wider townhouses don’t necessarily sell for a higher price per square foot. Indeed, the overall closing price of a home has more to do with location and layout than width, according to the data, compiled by StreetEasy. For example, a 13-foot, four-bedroom townhouse at 35 West 12th Street in Greenwich Village sold for $5.2 million back in 2011, while a nearby 20-foot, two-family townhouse at 69 Bedford Street fetched a mere $2.6 million that same year.

The average price for a townhouse was $5.3 million in 2012, according to the most recent Douglas Elliman townhouse market report, prepared by Miller.

“It really does become an issue of ego more than anything else,” said Jed Garfield, president of Leslie J. Garfield & Co., a brokerage that specializes in townhouse sales. “I’ve sold houses that are eight feet wide and 40 feet wide and there’s no appreciable difference between the widths.”

Instead, a better marker of value, the data sample shows, is how far a townhouse’s width deviates from the Manhattan average — 19.1 feet on the East Side and 19.7 feet on the West Side, according to the Elliman report.

For example, J. Christopher Flowers sold the 50-foot-wide Harkness Mansion at 4 East 75th Street to art mogul Larry Gagosian for $36.5 million in 2011, at a price of $1,682 per square foot. Last year, a 12.5-foot-wide townhouse at 153 East 78th Street sold for $6.1 million, or $2,083 per square foot — $401 more per square foot than Flowers’ former home. (Of course, Flowers famously paid $53 million for the Harkness Mansion in 2006.)

“As they get more wide they get rare,” said Chris Halstead, an executive vice president at Halstead Property, who is listing an 18-foot-wide townhouse at 333 East 82nd Street, which is priced at $2.5 million less than the 22-foot-wide house next door. “That [rarity] contributes to how attractive they are to buyers. As the homes get wider, there are fewer of them.”

That said, wider townhouses still carry a certain prestige. The wider the townhouse, the more flexibility a buyer perceives in the overall floor plan, said Miller.

But, he warned, excessive additions can decrease value. He remembers appraising a 15-foot-wide townhouse on the Upper East Side in which the owner had installed an elevator. The elevator took up nearly half the width of the floor plan and greatly decreased the value of the property, he said.

“It turns out that throwing amenities at a property and not considering a key attribute like width can detract from the value,” Miller said.

While flexibility in layout is dependent on width, a poorly designed use of space will decrease any value gained from extra width, he explained.

Townhouse specialist Paula Del Nunzio, a senior vice president at Brown Harris Stevens, said that her clients often request homes wider than 20 feet, but not for their layout potential. Instead, they are looking for legacy.

“The wider mansions were often created by extraordinary original architects,” explained Del Nunzio, naming icons like Stanford White, C.P.H. Gilbert and John Duncan.

The widest townhouses, she added, have a unique magnetism because they were crafted for “clients of the Gilded Age, who sought to reproduce an American version of the palaces of Europe.”

Del Nunzio is currently listing the 40-foot-wide townhouse of Broadway producer Hal Prince for $21 million and a 25-foot-wide historical Greenwich Street townhouse, built in 1819 and asking $19.5 million. Just as buyers covet wide townhouses, there is also demand for the exclusivity of skinny townhouses. Manhattan’s slimmest townhouse, at 9.5 feet wide, is on the market for $3.5 million, or $3,530 per square foot. The 990-square-foot, four-story house at 75 1/2 Bedford Street includes a renovated basement, three bedrooms and two bathrooms.

“There is some cachet behind having the tiniest townhouse around,” said Sofia Song, head researcher at StreetEasy. “You can boast about that.”

The listing inventory for Manhattan townhouses has remained relatively stagnant during the past decade, decreasing slightly by 3.5 percent since 2003, from 426 listings to 411, Elliman’s report shows. Such scarcity in townhouse supply has major implications for how buyers perceive the value of unalterable attributes like width.

“The listing inventory is remarkably consistent because the housing stock isn’t changing,” Miller said. “You’re not seeing new development. You’re seeing rehab, but you’re not seeing new construction.”

A review of 214 Manhattan townhouse sales that closed between July 2010 and March 2013 shows that wider townhouses don’t necessarily sell for a higher price per square foot. Indeed, the overall closing price of a home has more to do with location and layout than width, according to the data, compiled by StreetEasy. For example, a 13-foot, four-bedroom townhouse at 35 West 12th Street in Greenwich Village sold for $5.2 million back in 2011, while a nearby 20-foot, two-family townhouse at 69 Bedford Street fetched a mere $2.6 million that same year.

The average price for a townhouse was $5.3 million in 2012, according to the most recent Douglas Elliman townhouse market report, prepared by Miller.

“It really does become an issue of ego more than anything else,” said Jed Garfield, president of Leslie J. Garfield & Co., a brokerage that specializes in townhouse sales. “I’ve sold houses that are eight feet wide and 40 feet wide and there’s no appreciable difference between the widths.”

Instead, a better marker of value, the data sample shows, is how far a townhouse’s width deviates from the Manhattan average — 19.1 feet on the East Side and 19.7 feet on the West Side, according to the Elliman report.

For example, J. Christopher Flowers sold the 50-foot-wide Harkness Mansion at 4 East 75th Street to art mogul Larry Gagosian for $36.5 million in 2011, at a price of $1,682 per square foot. Last year, a 12.5-foot-wide townhouse at 153 East 78th Street sold for $6.1 million, or $2,083 per square foot — $401 more per square foot than Flowers’ former home. (Of course, Flowers famously paid $53 million for the Harkness Mansion in 2006.)

“As they get more wide they get rare,” said Chris Halstead, an executive vice president at Halstead Property, who is listing an 18-foot-wide townhouse at 333 East 82nd Street, which is priced at $2.5 million less than the 22-foot-wide house next door. “That [rarity] contributes to how attractive they are to buyers. As the homes get wider, there are fewer of them.”

That said, wider townhouses still carry a certain prestige. The wider the townhouse, the more flexibility a buyer perceives in the overall floor plan, said Miller.

But, he warned, excessive additions can decrease value. He remembers appraising a 15-foot-wide townhouse on the Upper East Side in which the owner had installed an elevator. The elevator took up nearly half the width of the floor plan and greatly decreased the value of the property, he said.

“It turns out that throwing amenities at a property and not considering a key attribute like width can detract from the value,” Miller said.

While flexibility in layout is dependent on width, a poorly designed use of space will decrease any value gained from extra width, he explained.

Townhouse specialist Paula Del Nunzio, a senior vice president at Brown Harris Stevens, said that her clients often request homes wider than 20 feet, but not for their layout potential. Instead, they are looking for legacy.

“The wider mansions were often created by extraordinary original architects,” explained Del Nunzio, naming icons like Stanford White, C.P.H. Gilbert and John Duncan.

The widest townhouses, she added, have a unique magnetism because they were crafted for “clients of the Gilded Age, who sought to reproduce an American version of the palaces of Europe.”

Del Nunzio is currently listing the 40-foot-wide townhouse of Broadway producer Hal Prince for $21 million and a 25-foot-wide historical Greenwich Street townhouse, built in 1819 and asking $19.5 million.

Just as buyers covet wide townhouses, there is also demand for the exclusivity of skinny townhouses. Manhattan’s slimmest townhouse, at 9.5 feet wide, is on the market for $3.5 million, or $3,530 per square foot. The 990-square-foot, four-story house at 75 1/2 Bedford Street includes a renovated basement, three bedrooms and two bathrooms.

“There is some cachet behind having the tiniest townhouse around,” said Sofia Song, head researcher at StreetEasy. “You can boast about that.”

The listing inventory for Manhattan townhouses has remained relatively stagnant during the past decade, decreasing slightly by 3.5 percent since 2003, from 426 listings to 411, Elliman’s report shows. Such scarcity in townhouse supply has major implications for how buyers perceive the value of unalterable attributes like width.

“The listing inventory is remarkably consistent because the housing stock isn’t changing,” Miller said. “You’re not seeing new development. You’re seeing rehab, but you’re not seeing new construction.”

According to Coldwell Banker’s luxury market report, many of these properties reside in the same few zip codes: New York, Beverly Hills, Aspen and Montecito, but surprisingly a few of the country’s highest priced abodes are in less conspicuous locations, such as the Broken O Ranch just west of Great Falls, Montana, which recently had an asking price of $132,500,000.

Jonathan Miller, chief executive of New York real estate appraisal firm Miller Samuel, Inc told Forbes, “It is something that’s come of age in the past two years in response to global economic turmoil, where wealthy individuals are looking for ways to invest, and ultra-high-end real estate seems to be the asset of choice.” And there is nothing conservative about these acquisitions. Some are palatial estates well over 10,000 square feet with amenities like ballrooms that fit 200 guests, 50-seat home theaters and regulation-sized athletic facilities. Then there are the penthouse spreads with private elevators and terraces with jaw-dropping views.

Want to see what a $100 million home looks like? We’ve rounded up ten in the slideshow below. • The Penthouse at The Pierre Hotel $125 million New York, New York Listed by: Sotheby’s Homes • Miami Beach Residence $100 million Miami Beach, Florida Listed by: Realtor.com • DeGuine Estate & Lands $100 million Hillsborough, California Listed by: Sotheby’s International Realty • Midtown Duplex $115 million New York, New York Listed by: Corcoran Group • Carlwood Drive Residence $125 million Los Angeles, California Realty Executives International • Silicon Valley Mansion $117.5 million Woodside, California AOL Real Estate • Maison de l’Amitié $125 million Palm Beach, Floriday Wall Street Journal • Broken O Ranch Land $132.5 million Montana SOLD by: Swan Land Company • Crespi Hicks Estate $135 million Dallas, Texas • Oprah Winfrey’s Promised Land $50 million Montecito, California CORRECTION: This previously stated that the home was valued at $2.7 billion. This is Oprah Winfrey’s net worth.

Located blocks from the ocean and the bay on a thin peninsula of land that makes up the coastal community of Belle Harbor in the Rockaways, Anzalone’s prized colonial home with “old world charm” was inundated with 12 feet of seawater that filled the basement to the ceiling and a few feet of the first floor.

“My husband and I struggled,” said Anzalone, who ultimately decided to move forward with the purchase of the home worth around $750,000. “People think we’re absolutely crazy.”

Throughout the New York metro area, Superstorm Sandy left behind difficult decisions for prospective buyers and sellers of damaged homes on the market.

Some buyers have decided to move forward but now must negotiate how repairs will be completed. Others are reneging and looking for escape clauses in their contracts. Realtors are taking inventory of their listings in flooded neighborhoods, while banks are sending appraisers out in droves to re-evaluate homes in the wake of the storm.

For the last eight years, Anzalone has rented in Brooklyn’s Bay Ridge neighborhood with her husband and their 3-year-old daughter. Now, planning to go ahead with the purchase of the home in Rockaways, she expects home insurance premiums to rise 10 to 20 percent, and she is working with an attorney to negotiate with the seller to make necessary repairs.

Other buyers in contract have decided the risks are not worth closing the deal.

Richard R. Rodriguez, a real estate attorney who represents Anzalone, is helping two other clients try to escape from contracts on homes that were damaged.

“Everyone has the same concern: the neighborhood,” and how it will recover, said Rodriguez.

In one case, Rodriguez said he plans to use a clause in the buyer’s contract that required the deal to close by the end of October, just two days after Sandy hit. The buyer will most likely lose a few thousand dollars by walking away, a cost Rodriguez considered “not bad.”

Attorney Jay Freedhand is representing a buyer who planned to close on a nearly $2 million home last week in Far Rockaway. But after the city’s Department of Buildings deemed the house severely structurally damaged, the buyer wanted to renege. Freedhand is now looking for outlets to stop the sale stemming from the city’s damage classification.

“We don’t know what that legally means,” said Freedhand. “We need to figure out exactly what the government order actually means. That part is unprecedented.”

In hard-hit Hoboken, New Jersey, contracts began fraying shortly after the storm moved inland, even on homes that were not damaged by the storm. Gene Cordano, director of sales for Halstead Property in New Jersey, said he lost three deals in contract.

“They decided they didn’t want to deal with the possibility of flooding in the aftermath,” said Cordano, who said he considered the loss “a blip on our radar screen.”

With some New Jersey residents dislocated by the storm, Cordano said he expects to see available housing units quickly filled.

“The question being asked going forward is, ‘Did this building flood during the hurricane?’ And that will be answered by, ‘yes,’ in many cases,” Cordano said.

Of the roughly 140 properties listed in Hoboken, an estimated 56 percent were flooded or otherwise damaged in the storm, Prime Real Estate Group Co-Chief Executive Officer Jesse Halliburton said.

“There is definitely going to be a time period when consumer confidence is going to be lower and less likely to make a quick decision,” Halliburton said.

“It’s crossed my mind that property prices could drop,” Halliburton said.

Robin Shapiro of Robin Shapiro Realty said the sand drift against her own home in the Rockaways was 3-feet-high the day after the hurricane. After digging out, Shapiro said she fielded calls from real estate flippers looking for cheap deals, but Shapiro, who still lost two deals in contract after the storm, did not foresee prices would significantly decline.

“There are only so many oceanfront properties,” she said.

Jonathan Miller, president of the real estate appraisal firm Miller Samuel, agreed buyers will continue to idolize beachfront properties, but a sobering effect on the market, should there be one, would most likely come from lenders and insurers.

“It’s going to come down to cost and access to credit. Lenders right now are essentially afraid of their own shadow. They are looking for reasons not to lend,” said Miller. “Even if a home has flood insurance, lenders may be wary and look for a reason to not issue a mortgage.”

That’s what happened last week when Adria and Dr. George C. Roush’s updated unit in the historic complex at 200 N. Ocean Blvd. sold for a recorded $2.12 million. The buyer was Samuel “Sandy” J. Bloomberg, acting as trustee of a family trust in his name, along with co-trustee James H. Grandberg.

Before this month’s deal, the last sale at Warden House dated to 2006, when the Roushes paid about $1.6 million for condo No. 3, their 1,778-square-foot condo about a block from the beach. They transferred ownership of the two-floor unit to Adria Roush’s name in 2007.

The apartments are among Palm Beach’s most intriguing, at least as far as their architectural history is concerned. They were carved out of a 40-room, Mediterranean-style mansion designed in 1922 by noted society architect Addison Mizner; the house was converted into condos by Palm Beacher Bob Eigelberger in 1980.

Eigelberger’s revamp — along with his similar “adaptive restoration” of nearby Bienenstar, another celebrated historic mansion — earned its own place in island history when it received the Preservation Foundation of Palm Beach’s inaugural Robert I. Ballinger Award for historically sensitive renovation in 1988.

The Roushes completely overhauled their two-bedroom, two-bathroom apartment in 2009, adding a third bedroom and a half-bath in the process. The update created a light-and-bright apartment with a “transitional twist,” according to the Corcoran Group’s property description prepared by listing agents Paulette Koch and her son, Dana Koch.

Among the apartment’s features are crown moldings, Venetian-plaster walls, an antique mantelpiece, a stainless-steel kitchen and a sophisticated Lutron lighting system.

“This apartment is outstanding in every way possible. It really takes your breath away,” says Paulette Koch, who had priced it at $2.75 million.

Corcoran Group had the listing for a little less than two months before it went under contract in early January.

“People are also looking for ‘turnkey’ and ‘easy,’ and this was one of those,” Koch adds. Neither she nor her son would comment further on the sale or the parties involved.

Folks with New England ties figured prominently on both sides of the deal. The Roushes have a home in Greenwich, Conn. Dr. Roush, who specializes in internal medicine, is affiliated with St. Vincent’s Medical Center in Bridgeport. His wife, meanwhile, is a jewelry designer known professionally as Adria de Haume.

Buyer Bloomberg, meanwhile, founded Tweeter Home Entertainment Group, a now-defunct multi-state chain of audio and video electronics stores that was based in Canton, Mass. In 2008, Bloomberg and his wife, Carolina, sold a 2.3-acre parcel they owned through a trust in her name at 1040 S. Ocean Blvd. in Manalapan for $9.2 million, property records show.

“We moved in a week ago and we love it,” says Sandy Bloomberg, who has other homes in Massachusetts and Vermont. “It’s a wonderful apartment and a great location.”

*

New market analysis — In case you missed it, houses are moving again in Palm Beach. The number of single-family homes that sold during the first quarter of the year was up substantially compared to the same period a year ago. So confirms an analysis of data, including selling prices, drawn from data in the local multiple listing service and just released by the Douglas Elliman agency.

Thirty-three Palm Beach houses sold in January, February and March, compared with 18 in the first quarter of 2012, according to the Elliman report. The independent analysis was prepared for the agency by Miller Samuel Inc., a New York City-based real estate appraisal and consulting firm.

A key reason for the increase in transactions? The gap between the asking prices of properties and the prices they actually fetched has narrowed substantially, says Jonathan Miller, who heads Miller Samuel. Expressed as a percentage, that gap fell from nearly 20 percent in last year’s first quarter to 13.5 percent this year, according to the report.

In other words, buyers and sellers have increasingly found themselves on the same page during negotiations.

“Properties are moving off the market,” said Miller. “And what you’re seeing is that higher-quality properties move more quickly.”

Year-over-year first-quarter comparisons show prices also were up in the single-family sector, with the median sales price jumping nearly 42 percent to $2.8 million. The median is the price at which half of the houses sold for more and half for less.

Also noteworthy: Bigger houses sold during the first quarter of this year versus the same period last year. The average size of the properties sold between Jan. 1 and March 31 of this year was 4,351 square feet – an increase of 11 percent in square footage over those that sold in the first quarter of 2012. That hike “partly caused the large increase in price indicators,” the report says.

On the condo scene, the first-quarter figures were not quite as buoyant, with the number of condos sold falling from 59 to 54. The median condo sales price in January, February and March of this year, meanwhile, was just about flat, at $397,500, when compared to last year’s figure.

The report does not take into account sales of properties that were not listed in the MLS, nor do the sales prices necessarily match those recorded with the deeds by the Palm Beach County Clerk’s office.

Miller prepared similar first-quarter reports for the markets in Miami, Fort Lauderdale and Boca Raton, where Douglas Elliman also has brokerages; similar reports are available for New York City and nearby areas.

You can see the complete Palm Beach analysis by clicking the “Florida” link at Elliman.com/MarketReports.

Just 15,303 homes were on the market, according to the first quarter report he released Thursday in conjunction with Douglas Elliman Real Estate.

The report showed sales fell 14 percent quarter-over-quarter to 3,905, but stood 2.9 percent greater than the 3,795 recorded during the first quarter of 2012. (Generally, year-over-year statistics are better indicators of the market because it accounts for seasonal housing cycles.)

Long Island’s median sales price sank 2.6 percent on both an annual and quarterly basis, to $341,000. Broken out by county, the median sales price in Suffolk (excluding the Hamptons) was $295,000; in Nassau it was $388,000.

Whereas superstorm Sandy was cited as a big factor in a Hamptons market report released earlier this week, both Miller and Douglas Elliman chief executive Dottie Herman played down its affect on this report’s finding. “People who want to live on the ocean, want to live on the ocean,” Herman said. “That’s never going out of style.”

Miller noted that even in the hardest-hit communities, in particular the South Shore of Nassau County, many would-be sellers are waiting out the rebuilding process before they list their homes. So while the number of South Shore sales fell by nearly a third to 107 in the first quarter, the median sales price of those homes slipped just 0.8 percent to $328,000.

However, in the long-term, the increased cost of home ownership in the area — from increased premiums, flood-proof construction and potentially higher property taxes to compensate for lost revenue — might yield a weaker real estate market.

Both Herman and Miller pointed to the inventory shortage as having the biggest impact on the market. Inventory on Long Island declined 24.8 percent year-over-year, leaving less than a year’s worth of supply — and that’s not because buyers are snapping up homes. Sales increased just 2.9 percent annually.

“What’s happening is fewer listings are coming on the market because you have a lot of people on Long Island with low or negative equity,” Miller explained. (A recent report found about one in 10 Long Islanders owes more on their home than it’s worth.)

Those owners, he continued, have no reason to sell because they can’t trade up, especially with today’s tight credit standards. That, in turn, impacts aggressive home hunters. Without as many suitable options for new purchases even they become reluctant to list their homes, which perpetuates the cycle.

“Inventory is falling far faster than sales are rising and it’s largely credit-related,” Miller said.

A 12.2 percent annual rise in newly pending home sales — or homes that entered contract during the first quarter — indicates that the inventory shortage could become even grimmer, which might finally apply some upward pressure on pricing.

That’s good news for Herman and her stable of agents, who have begun encountering bidding wars on particularly desirable properties. However, she noted that agents must be careful offers don’t outpace appraisals, otherwise the tight lending environment becomes an issue.

“Financing is still an issue on the Island,” she said, “it’s a little too tough to get credit.”

Home sales and prices in the tony enclave plummeted in the first quarter of this year, according to reports released today by the area’s largest residential brokerages.

“We had this mad rush at the end of the year and that poached first quarter activity largely in the high-end of the market,” said Jonathan Miller, president of appraisal firm Miller Samuel.

The average sale price dropped 29.4 percent, to $1.22 million from $1.72 million, compared to the same period in 2012, according to Douglas Elliman’s quarterly report, compiled by Miller. The average price of a Hamptons home in the fourth quarter of 2012 was $2.13 million, or 91 percent less than the previous quarter.

Average prices dropped in all Hamptons markets except for Bridgehampton, according to Brown Harris Stevens’ report. In Bridgehampton, prices increased 29.1 percent year-over-year to $2.13 million from $1.65 million, the report says.

The village of East Hampton posted the biggest year-over-year price decline, according to the Corcoran Group’s report. The average sale price for a home in East Hampton declined 76 percent year-over-year, to $1.41 million from $5.8 million, Corcoran’s report says.

Despite the price drops, the number of transactions increased 20.9 percent year-over-year, to 347 sales from 287 sales, Elliman’s report shows. The growth is the result of an increase in demand coupled with low mortgage rates, Miller said. However, since the previous quarter, the number of transactions fell 34.4 percent, to 347 from 529.

“The biggest characteristic in the market is actually what happened in the fourth quarter versus the first quarter,” he added. “The impact was quite profound on the East End.”

Indeed, the rush to complete transactions before the Jan. 1 deadline absorbed sales that normally would have closed in the first quarter, according to Brown Harris Stevens’ report. Some 239 sales closed during the first quarter of 2013 — 13 percent fewer than the first quarter of 2012, the report says.

In Manhattan and Brooklyn, a similar pre-fiscal cliff rush has meant “chronically low”inventory levels, as well as prices that have stayed steady. However, inventory hasn’t fallen nearly as far year-over-year in the Hamptons, Miller noted, declining only 4.9 percent, to 1,437 listings from 1,511 listings.

That said, the second quarter is “shaping up to be more consistent with seasonal trends,” Miller said, noting the increased activity he is seeing now.

Ernie Cervi, a managing executive director at Corcoran’s Bridgehampton’s office, noted that his agents have been busy in recent months.

“This is our season,” Cervi said. “This is when we’re the busiest.”

Home sales and prices in the tony enclave plummeted in the first quarter of this year, according to reports released today by the area’s largest residential brokerages.

“We had this mad rush at the end of the year and that poached first quarter activity largely in the high-end of the market,” said Jonathan Miller, president of appraisal firm Miller Samuel. The average sale price dropped 29.4 percent, to $1.22 million from $1.72 million, compared to the same period in 2012, according to Douglas Elliman’s quarterly report, compiled by Miller. The average price of a Hamptons home in the fourth quarter of 2012 was $2.13 million, or 91 percent less than the previous quarter.

The Corcoran Group via The Real Deal Average prices dropped in all Hamptons markets except for Bridgehampton, according to Brown Harris Stevens’ report. In Bridgehampton, prices increased 29.1 percent year-over-year to $2.13 million from $1.65 million, the report says. The village of East Hampton posted the biggest year-over-year price decline, according to the Corcoran Group’s report. The average sale price for a home in East Hampton declined 76 percent year-over-year, to $1.41 million from $5.8 million, Corcoran’s report says.

Despite the price drops, the number of transactions increased 20.9 percent year-over-year, to 347 sales from 287 sales, Elliman’s report shows. The growth is the result of an increase in demand coupled with low mortgage rates, Miller said. However, since the previous quarter, the number of transactions fell 34.4 percent, to 347 from 529.

“The biggest characteristic in the market is actually what happened in the fourth quarter versus the first quarter,” he added. “The impact was quite profound on the East End.”

Indeed, the rush to complete transactions before the Jan. 1 deadline absorbed sales that normally would have closed in the first quarter, according to Brown Harris Stevens’ report. Some 239 sales closed during the first quarter of 2013 — 13 percent fewer than the first quarter of 2012, the report says.

In Manhattan and Brooklyn, a similar pre-fiscal cliff rush has meant “chronically low”inventory levels, as well as prices that have stayed steady. However, inventory hasn’t fallen nearly as far year-over-year in the Hamptons, Miller noted, declining only 4.9 percent, to 1,437 listings from 1,511 listings.

That said, the second quarter is “shaping up to be more consistent with seasonal trends,” Miller said, noting the increased activity he is seeing now.

Ernie Cervi, a managing executive director at Corcoran’s Bridgehampton’s office, noted that his agents have been busy in recent months.

“This is our season,” Cervi said. “This is when we’re the busiest.”

The walk is obviously a fundraiser that will cover 5k or a little over 3 miles with a $25 entrance fee. There will also be a GRAND PRIZE to the person who raises the most money! Now, just know I will website and ARF’s website. be the one who raises the most. YOU GOT A BONE TO PICK WITH THAT?! If your interested in hanging with Bella, Russell, Jill Rappaport and me you can get more info from Bay Street theatre on their

Now it’s a good time to paws and get the latest news on Hamptons real estate as Douglas Elliman released it’s latest “Elliman Report: Hamptons Sales 1Q 2013.” As you’ve been hearing the market has been brisk the past few months and the new market report confirms it. 2013 started at a rapid pace tail end of the year. If you want more details you can download a copy of the report from Douglas Elliman. with lots of activity and less inventory. While prices slipped slightly, appraiser Jonathan Miller of Miller Samuel suggests this may be due to many high end sales in the prior quarter happening because of tax-incentives to close by the

Finally, some have a bone to pick with the Hamptons and the fact it’s just gotten too darn expensive out here! Recently I had a chance to sit down with my friend author Stephen Gaines and LTV host and Southampton Press editor Dawn Watson about the state of the Hamptons economy. Take a look and in the meantime, I’ll stop hounding you with my horrible puns!

According to Town and County Real Estate, home sales fell nearly 20 percent in the quarter in the Hamptons, while the median home sale price fell 8 percent to $750,000. The company said many of the sales that hit the books in the first quarter actually originated in the fourth quarter of 2012, when the region was still reeling in the aftermath of Sandy.

Sales in the $1 million to $2 million range fell 15 percent, according to the report, while sales in the $3.5 million to $5 million range dropped nearly 53 percent.

On Town and Country’s report, Bridgehampton sales represented a bright spot, recording a 150 percent jump in sales in the $1 million to $2 million range. Also, Bridgehampton was the only area to record sales in the $5 million to $10 million range.

Meanwhile, a report by Brown Harris Stevens cited a 13 percent drop in average sales price, a decline the company blamed on a rush of fourth quarter buyers who looked to close on their homes before capital gains taxes rose in 2013. The company also saw a 13 percent drop in closings in Hamptons and a 40 percent drop in sales $4 million and above. Like Town and County, Brown Harris Stevens saw a spike in Bridgehampton, where sales above $4 million rose 80 percent.

Lastly, real estate firm Douglas Elliman saw similar drops, citing a 5 percent drop in median sales price, a 29 percent drop in average sales price and a 5 percent drop in listing inventory.

On a positive note, the Elliman report claimed the number of sales in the Hamptons jumped nearly 21 percent.

According to Town and County Real Estate, home sales fell nearly 20 percent in the quarter in the Hamptons, while the median home sale price fell 8 percent to $750,000. The company said many of the sales that hit the books in the first quarter actually originated in the fourth quarter of 2012, when the region was still reeling in the aftermath of Sandy.

Sales in the $1 million to $2 million range fell 15 percent, according to the report, while sales in the $3.5 million to $5 million range dropped nearly 53 percent.

On Town and Country’s report, Bridgehampton sales represented a bright spot, recording a 150 percent jump in sales in the $1 million to $2 million range. Also, Bridgehampton was the only area to record sales in the $5 million to $10 million range.

Meanwhile, a report by Brown Harris Stevens cited a 13 percent drop in average sales price, a decline the company blamed on a rush of fourth quarter buyers who looked to close on their homes before capital gains taxes rose in 2013. The company also saw a 13 percent drop in closings in Hamptons and a 40 percent drop in sales $4 million and above. Like Town and County, Brown Harris Stevens saw a spike in Bridgehampton, where sales above $4 million rose 80 percent.

Lastly, real estate firm Douglas Elliman saw similar drops, citing a 5 percent drop in median sales price, a 29 percent drop in average sales price and a 5 percent drop in listing inventory.

On a positive note, the Elliman report claimed the number of sales in the Hamptons jumped nearly 21 percent.