From the NYT:
For people scrambling to make their way in the real estate market, there are many routes, and one of the most adventurous involves buying what brokers often describe as wrecks (fixer-upper is the more diplomatic term). An anemic inventory combined with increasing reluctance to shell out huge sums of money for other people’s taste is sending a growing number of buyers to places they can redo to their own liking, right down to the shape of the kitchen island and the color of the bathroom tile.
These buyers willingly shoulder the often formidable financial and emotional costs of stripping a place to the studs and rebuilding it so as to end up with exactly the sort of home they want and may save money along the way.
Real estate brokers and analysts report a significant uptick in Manhattan in the number of buyers seeking properties in need of major overhaul, alert for such tipoff phrases as “bring your contractor and your imagination.”
According to Jonathan J. Miller, the president of Miller Samuel, the real estate appraisal firm, an analysis of sales of properties rated as “wrecks” or in “fair” or “poor” condition jumped 40 percent between the fourth quarter of 2011 and the same period in 2012. Between those two Decembers, the increase was a hefty 83 percent, indicating soaring desire for such properties at year’s end.
As for the limited inventory driving this trend, “the listing of properties in Manhattan fell 34 percent from the fourth quarter of 2011 to the same period last year, the lowest level we’ve tracked in more than 12 years,” Mr. Miller said. “So we’re seeing more creative and flexible buyers who are faced with a lack of choices as inventory remains tight. As a result, we’ve seen an increase in sales of places in poor condition — a k a wrecks.”
“There are always buyers who want places they can put their mark on and don’t want to pay for someone else’s renovation,” said Doug Perlson, RealDirect’s chief executive officer. “And in the last few months, with inventory so light, especially for middle-of-the-road buyers, we’re seeing more appetite for these properties. Buyers are seeing an upside to purchasing a home where they can both get a better deal and start from scratch.”