Now What?

Friday afternoon I attended a meeting where no-one worked in real estate. In a discussion after the meeting ended, one of the participants discovered that I run a real estate brokerage. He asked me what kinds of things we sell. I told him that a big chunk of our business was in the market for properties between $2 million and $7 million. He was amazed. And in that moment I remembered something we too easily forget as we go about the work of selling our inventory every day: the prices are extraordinary!

In a city where studio apartments regularly cost considerably more than the price of the average house in the U.S., real estate agents can easily lose sight of the enormity of the amounts which our buyers and sellers are exchanging. This has multiple implications for us as agents, for our clients, and for all New Yorkers. For us, it means we can lose sensitivity to the significance of the decisions which our clients and customers are forced to make. For our sellers and buyers,  it means that small adjustments in price or terms can actually have significant dollar consequences. And for all New Yorkers, it means that the question of who can live where is ever more pressing.

For most agents at Warburg, doing deals in seven figures, or more, is the norm (although we certainly do plenty of six figures deals as well.) I am acutely aware in advising my agents about these transactions that years of experience in the market, and the stresses of trying to put deals together, can make us cavalier about amounts of money to which we would pay a LOT of attention in our own lives. When I hear someone say “They only have to come up another $50,000”, or “It is underpriced at $4,000,000”, I try to interject a gentle reminder that we are talking about, as the case may be, FIFTY THOUSAND DOLLARS or FOUR MILLION DOLLARS. For anyone, neither of these is a sum to be contemplated lightly. I have a similar reaction when a seller, after Googling a prospective purchaser, will say “They can easily pay another $100,000.” Perhaps. But the money is theirs to dispose of, not ours to command. It is all too easy for all of us, agents and principals alike, to lose sight of just how high the financial stakes are in this interchange we are arranging.

More profoundly, these ever increasing prices in both the rental and sales markets dramatically reshape our city. Thirty three years ago, my brother and his girlfriend bought a loft on the outskirts of what was then considered Soho, on Crosby Street. She was an artist, and this big raw space provided her with space for her printmaking and, as time went on, her framing business as well. They both liked the gritty feeling of the neighborhood. Garbage littered the streets, and the parking lot directly next door to them (where the swank Crosby Street Hotel now stands) provided cover for prostitutes and drug dealers. No one was thinking much about gentrification or investment.

Now, with luxury loft condos costing millions on Crosby Street and high end residential projects moving ever deeper into the Lower East Side, artists have moved first to Williamsburg, and then again to Bushwick. And today the likelihood of further gentrification in Bushwick, or Bed Stuy, or Harlem is on everyone’s mind. Little by little, all of Manhattan and most of the surrounding boroughs have morphed into investment opportunities. Nothing is inexpensive in Manhattan anymore, or Riverdale, or the surrounding areas in Brooklyn, Queens, and New Jersey.

So as time goes on, will we just be a city of the rich? Where will the people come from who make our city run?  Will they live in Mayor Bloomberg’s proposed “micro-studios”? Few of them live in Manhattan anymore, or in Park Slope, fewer all the time in Greenpoint or Long Island City or Whitestone.  What does it mean to live in a city in which only the wealthy (or the poor, ghettoized in failed “urban renewal” projects) can live? The truth is, we don’t know. But whether that is the environment we want, and what we should be doing about it, is a question about which all New Yorkers should be thinking.