September 18, 2008 -- Manhattan's finest co-op apartments may have already lost a fourth of their value as a result of the financial crisis, and the worst is yet to come, says leading New York estate broker Kathy Sloane, of Brown Harris Stevens.
An owner of a five-million dollar Park Avenue apartment, only an average residence by investment banker standards, "may be lucky to achieve $3.5 million" a month from now, said Sloane, whose clients have included celebrities, the super-rich and prominent families including the Clintons.
"If someone saw a bid between $3.8 million and $4.2 million from a qualified buyer, take that bid," said Sloane in an interview to be broadcast on 20/20 Friday night.
"You can be Lehman Brothers or you can be Merrill Lynch, meaning you can go down with the ship," she said, "or you can say, look, there's a huge storm about to crash and we need to get to higher ground and make a plan."
In 2007, Sloane's sales exceed $200 million and her current listings include a $25 million six-bedroom apartment on Fifth Avenue and 14 other condominium and co-op apartments priced at over $1 million.
On Friday, Sloane's boss sought to distance his real estate firm from her comments. Hall F. Willkie, president of Brown Harris Stevens, said her views do not represent the views of Brown Harris Stevens "and are completely speculative, and at times factually incorrect."
Prices for some apartments in premier Park Avenue and Fifth Avenue co-operative buildings have soared to nearly $50 million in recent years, pumped up by the super-sized salaries and bonuses of investment bankers and hedge fund operators.
Now, they may not be so welcome.
"Five years ago, if you were an investment banker that meant big bucks and automatic entry. And today it is a dirty word," said author Holly Peterson, the wife of a multi-millionaire investment banker and the daughter of multi-billionaire financier Pete Peterson.
*Well known for her send-up of Park Avenue society in the book, Manny, Peterson says co-op boards will be afraid to approve investment bankers for sales "because they know your stock is worthless."
Across Manhattan, says Peterson, "the gilded age is over."
"People who are worth thirty, forty, fifty millions dollars lost it all," she said. "And now they have their apartments, and their country houses and their ski houses but they have mortgage payments on all of those. And they have no cash."
Real estate broker Kathy Sloane says she is still closing some deals and that now is also an opportunity of a lifetime for people who have cash saved.
"The people who can be liquid right away are in a strong buying position," she said.
And even those forced to sell, she says, will still make a profit over their original purchase price.
"We not talking about losses on the sale of your property, we're talking about adjusted profit," she said.
Still, it is a remarkable change of life for the investment bankers once known as the "masters of the universe."
"The masters of the universe are out there, figuring out which planet they're on right now," she said.
Willkie said, "While it is clear that there will be an effect, it would be irresponsible to provide a market forecast and we reamin confident in the fundamental strength and resiliency of our market over time."
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