Last May, Sara Bamber decided she'd had enough of paying $2,400 a month in rent for a one-bedroom apartment in Manhattan.

So the 37-year-old Bamber bought a $550,000 one-bedroom condominium in the West Village, putting down 10 percent from money she had saved over seven years. With a 51/8 percent interest rate loan over 10 years, she now pays $250 in monthly maintenance fees and a $3,150 monthly mortgage.

"The apartment has an elevator that opens directly into the apartment, and the balcony offers a view that overlooks the Hudson River and the Empire State Building," says Bamber, a strategic planner at a New York advertising agency. "It's worth it to pay more money now, because as an investment my apartment will appreciate in five years so that I can sell at a significant profit."

But because Bamber, who is single, was relying on her salary alone, she had to settle for a lot less space. (She had hoped to buy a two-bedroom.)

"It's heartbreaking to see how little you get for your money for amenities like square footage, fittings and fixtures," she says. "You assume you'll be able to buy a better quality home for a monthly mortgage that's equivalent to the amount you're currently paying in rent, but that isn't the case."

Despite high prices and the limits imposed by one-salary incomes, single buyers like Bamber are increasing in cities nationwide, real estate experts say. They account for 10 percent more of the national market than they did two years ago, according to the National Association of Realtors, a Washington, D.C.-based trade group. The singles' share of the market today is 32 percent, up from 22 percent in 2001.

Observers say the trend reflects social and financial factors: Many apartment buyers are getting married later in life, yet they want to build equity and gain the tax deductions that traditional homeownership offers, especially while interest rates are low. Investing in real estate allows buyers to leverage their money and therefore is one of the best ways for singles to build equity, says David Michonski, chief executive of Coldwell Banker Hunt Kennedy and president of the Manhattan Multiple Listing Service, which offers Manhattan apartment listings.

In 2003, the median price for co-ops and condos in Manhattan was $580,000, up 10 percent for the year, according to the Fourth Quarter Market Overview released by Miller Samuel Inc., a real estate appraisal firm. Co-op prices alone rose 18 percent in 2003, reaching the $500,000 mark for the first time, and condominiums alone were up 4 percent for the year, to $752,000.

Like the housing market in general, the strong co-op and condo market is being fueled by histo.rically low interest rates.

"You can get a 30-year mortgage under 6 percent, which is the lowest it's ever been in the apartment market," says Gregory Heym, director of research and chief economist at Terra Holdings, a holding company that owns Brown Harris Stevens and Halstead Property Co. "There are a lot of first-time buyers that can enter the market now. With interest rates being that low, all they need to do is to come up with a minimal down payment. There are many attractive financing plans that can help singles do that."

Furthermore, experts note, major tax law changes in the late 1990s allow single homeowners up to $250,000 in capital gains exemptions when they sell their apartment, as long as they have lived in it for two out of the last five years. (Married couples can keep up to $500,000 of any profit tax-free.)

So, for example, if a single person bought an apartment for $300,000 and met the residency requirements set out by the law, he or she could sell it for up to $550,000 and not pay any capital gains tax.

"That is quite an advantage . . . and one of the reasons why so many people have been looking to real estate as an investment," Heym says. "Not only can they deduct mortgage interest and a percentage of the maintenance they pay to their co-op for taxes, but they can also deduct a large part of capital gains when they do sell the apartment."

While most experts expect apartment values to appreciate 3 percent to 5 percent a year, they caution there may be short-term declines in the market. For example, Manhattan prices began softening just before the Sept.11, 2001, terrorist attacks as the city's economy slumped in the wake of a declining stock market. Average sales prices for all properties in Manhattan dropped from a high of $894,617 in mid-2001 to a low of $779,112 in the first quarter of 2003, according to Miller Samuel. But by the end of last year, average prices had bounced back to $903,259.

"Prices are high and demand is very strong," Heym says. Experts note the market has varied by neighborhood, with demand particularly strong for co-ops in the Upper East Side, east midtown, and downtown, while the high-priced condo prices have sagged in many locations. Overall, however, the market isn't likely to slow unless interest rates rise rapidly, Heym added, "and we don't expect interest rates to rise substantially for at least 12 months."

Prices also are being bolstered by a shortage of apartments for sale -- in part, because people are choosing to buy rather than rent.

"One of the things that can cause a drop in the market is overbuilding," says economist Heym. But so far that has not happened, he says. "When there are not enough people to buy them, existing apartments lose value. We have the opposite problem in Manhattan."

Higher sales prices naturally present higher obstacles -- and risks -- for single buyers who rely on just one income.

Single people are at a disadvantage, "because they only have one salary to qualify them for a mortgage," says Cynthia Crowley, president of the Manhattan Association of Realtors, a trade organization. With two incomes in the family, she said, "you have the benefit of falling back on the spouse's income should you lose a job or take a sabbatical. When you're a single homeowner, you don't have that safety net."

On the other hand, the advantages of being a single apartment buyer include not having as many considerations to weigh when selecting a property.

"Singles don't have to accommodate children or spouses," says Joanne Kennedy, chief operating officer of Coldwell Banker Hunt Kennedy, who adds that her Manhattan real estate brokerage has seen an increase in the number of single buyers. Last year her agents sold 400 one-bedroom apartments and 165 studios -- many of them to single buyers -- an increase of 20 percent over the previous year. "Singles have more options about the kind of housing," Kennedy said. "They are more likely to accept living in smaller apartments without a doorman and elevator, for example."

Furthermore, as the sole decision-maker about the property, "you don't have to argue over the apartment that you like best when you're single. You can get what you want," says Crowley.

Like couples, singles must weigh their specific needs before deciding what type of property to buy.

One factor they must worry about is being able to sublet in case their employer asks them to relocate. If the possibility of relocating is a concern, singles are better off buying a condo than co-op, because condos have fewer restrictions about subletting, most experts say.

The advantage of owning a condo is you don't have to sell the property; you can rent it out and come back to it, Crowley says.

If the condo board refuses your tenant, it has to find an appropriate replacement, which means it is more likely to accept your candidate for subletting, Crowley says. "It's called right of first refusal, which applies also in the event you decide to sell."

Crowley advises a one-year minimum sublet lease with a 90-day clause that requires the owner to give the tenant three months' notice to vacate if the owner wants to return.

There are many variations of subletting arrangements for co-ops. Some only allow rentals after the owner has lived in the complex a certain number of years; then the rental time may be limited to a year. And most leases allow the board to turn down a subtenant for any reason other than ones that violate anti-discrimination laws.

In addition to offering more fluidity in the rules, condos may be more attractive to singles because their boards generally allow more flexible financing than co-ops, Crowley says. Most condos allow financing up to 90 percent of the loan amount; co-ops typically restrict financing to a maximum of 75 percent of the loan, so they require more cash down.

On the other hand, condos also tend to be more expensive. Crowley says a smaller one-bedroom condo in midtown Manhattan can cost $300,000 to $450,000, while a co-op in the same area can cost as little as $180,000 to $300,000.

Furthermore, there are not as many condos as co-ops to choose from in Manhattan -- about 60,000 of the former compared to 180,000 of the latter.

"In my three- to four-month apartment search, I didn't look at one condo," says one 25-year-old buyer. "They are much harder to find and more expensive." With a 10 percent down payment scraped together from savings and inheritance money, the buyer ended up purchasing a studio co-op in Grammercy Park for about $350,000, with a 40 percent down payment (she asked that her name not be used because the sale had not yet closed).

Like Bamber, this buyer said she was seeking to build a financial base, even though she would have to stretch her means -- her monthly payments total $1,425: $850 for the mortgage and $575 for maintenance costs.

"I wanted to put money into something where I would see a return. I thought it was smarter to pay a mortgage to build equity rather than pay a landlord rent that was going towards nothing as an end result," she says. "But that security comes at a steep price. There is only my income to cover mortgage payments, down payment and bills."

Copyright © 2004, Newsday, Inc.