Recnetly, U.S. Senators Charles Schumer (D-NY) and Mike Lee (R-UT) introduced a bill that would allow foreigners who spend at least $500,000 on residential property to obtain visas allowing them to live in the United States. The “Visa Improvements to Stimulate International Tourism to the United States of America Act”, or VISIT-USA Act is similar to an existing program that puts foreigners on a fast track to a green card if they invest at least $500,000 in an American business that creates at least 10 jobs.
The legislation would create a new homeowner visa that would be renewable every three years, but would not be a path to citizenship. There are a number of stipulations and restrictions, however:
- To be eligible, a person would have to buy a primary residence of at least $250,000 and spend a total of $500,000 on residential real estate. Other properties could be rented.
- The purchase would have to be in cash, no mortgage or home equity loan allowed.
- The property would have to be bought for more than its most recent appraised value
- Buyer would have to live in home for at least 180 days each year, requiring paying US Income taxes on any foreign earnings.
- Visa eligibility would be revoked if property was sold.
- Work visas still must be obtained to hold a job.
- Neither buyer nor dependents would be eligible to receive Medicaid, Medicare or Social Security benefits.
Some brokers say that a visa incentive to foreign buyers could potentially even triple sales in their markets.
“California, Florida, New York, Colorado, Hawaii, and Texas — those states will see a huge increase in demand,” Sandra Miller, a broker at Engel & Volkers in Santa Monica, told the Los Angeles Times.
This week, we released our Fourth Quarter report for the Manhattan Residenital Rental Market. Manhattan Residential Rentals Market Overview Q4 2011 reported here and summarized below was prepared by Miller Samuel for Prudential Douglas Elliman.
“Tight mortgage credit conditions continued to drive rental prices and activity higher.”
- The median net effective rent (face rent less landlord concessions) jumped 9.5% from $2,950 to $3,121 in the same period last year. The year-over-year-gains were consistent across all rental price indicators.
- The 2-bedroom and 3-bedroom markets outpaced their smaller counterparts,increasing 14% and 18.1% respectively over the same period.
- New rental activity (excluding lease renewals) was up 10% from 7,217 to 7,942 in the same quarter last year.
- About 7.4% of new leases had some form of landlord concession compared to the 40.5% in the prior year quarter. For those leases with concessions, the average amount was the equivalent of 1.2 months of free rent.
- Days on market—the number of days from original list date to lease signing—was at its second fastest pace of 37 days in 15 years, which is when we began tracking this metric.
The decision to sell an old apartment can be liberating. Old counter tops and kitchen appliances can start you dreaming of a fresh start in a new kitchen with shiny appliances and granite countertops.
But buyers are more discerning than ever, and squeaky or stained floors and cracked laminate countertops can sink a potential sale as fast as an outdated kitchen or bath.
Renovations before the open house can attract a buyer faster. Buyers today want move-in ready, a far cry from the boom years when buyers would buy anything with walls and a floor, and often will pass up the older units in need of updating.
It might go against the grain to spend money on an apartment you’re leaving behind, but it can be money well spent, setting your apartment above the dozen or so apartments a buyer is considering. You may not be able to add the cost of the renovation to your asking price, however in most cases, if you don’t renovate, you may need to reduce your asking price, causing people to wonder what is wrong with the place.
It may not make sense to spend a huge amount of money. With a fresh coat of paint and skillful staging, you can present a buyer with an attractive property, even if you can’t swing the $50,000 kitchen renovation. Of course every case is different and you should consult your broker when making a decision on whether a renovation is ‘worth it’ in order to sell.
Inspired by New York Times article by C. J. Hughes published November 4, 2011.
Our Q4 Manhattan Market Overview was released today and summarized below was prepared by Miller Samuel for Prudential Douglas Elliman.
“After a year of mixed economic news, the Manhattan housing market, while continuing to experience overall price stability, closed out the year with a slower pace of sales.”
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Median sales price was $855,000, a modest 1.2% increase from $845,000 in the prior year quarter. Price per square foot increased 5.6% to $1,117 from $1,058 over the same period.
- There were 2,011 sales in the fourth quarter, 12.4% less than 2,295 in the prior year quarter. The fourth quarter had the lowest number of sales since the same period six years ago, perhaps related to the unusual surge in sales in the prior quarter. Pending sales were also below the prior year level.
- There were 7,221 active listings at the end of the fourth quarter, essentially unchanged from the same period last year, but 2.6% less than the ten-year quarterly average of 7,412.
- Days on market—the number of days from the last price change if any to the contract date—saw a modest 5 day increase to 130 days from 125 days, still consistent with the 132 day average for the prior decade.
- Listing discount—the percent difference between the list price at time of sale to the sales price—fell to 4.9% from 8% in the same period last year.
MARKET RECAP
The news is understandably slow the week between Christmas and New Year’s Day. The most notable release was last Friday’s news on new home sales, which rose to an annualized rate of 315,000 units in November, a 1.6-percent gain over October.
To be sure, we have a long way to go until we reach the normalized construction rate of 1.5-million units per year. Nevertheless, we expect the new-home market to gain pace in 2012. After all, there are only 158,000 units in inventory. Even at the current slow sales pace, this equates to a record low six-month supply
Over the past three years, new-home construction has fallen far below historical norms and also below the level needed to keep pace with population growth. The fact is our country gains roughly 2.7 million people and one million new households annually.
You might not see supply as a problem. We are all familiar with the glut of distressed properties. Indeed, Bank of America expects eight million distressed homes to come to market over the next four years. These homes, we’ve so often heard, will continue to depress new home construction.
We view B-of-A’s outlook with a skeptical eye. There is a likely prospect that many of these distressed properties will simply go away. Destruction is too frequently overlooked in many supply projections. A house is not a permanent structure. Many are destroyed by fire, wind and flood each year. Many more are lost through simple decay and abandonment. Based on U.S. Census data, 300,000 homes are lost annually. That number will surely rise in years to come.
In short, the math – low inventory plus more households minus more home destruction – suggests to us a rebound in new-home construction. We are not alone in this contention, either. Wells Fargo projects that housing starts will continue to rise each year for the next five years before reaching once again the normalized construction rate of 1.5-million units annually by 2017.
Of course, projections are one thing, betting on those projections is another. Here, we see an encouraging trend. Big money is starting to wager on housing. The Wall Street Journal reports that many large hedge funds are investing billions in housing-related investments. Other investors have followed suit. Shares of homebuilders are up 30 percent over the past three months, making them one of the best performing investments in the market.
Up For A New Year
As we approach the end of the old year nearly all of us stop to ask, “How will the new year unfold?” Of course, none of us know with any certainty the answer to that question, but it can be insightful (and fun) to ponder. So, how will 2012 unfold, at least as it pertains to the housing and mortgage markets?
Both markets will obviously be influenced by economic growth, which, in turn, will spur job growth. We see a pick up in economic growth and job growth in 2012.
The economy has been growing at a sluggish rate for too long now. The United States is unique in that Americans tire of pessimism quicker than most other cultures, and then we do something about it. In our opinion, rising consumer confidence points to a lot of pent-up demand that is waiting to bust loose, and will bust loose in 2012.
A pick up in demand, in turn, necessitates new hires. In fact, a recent survey by CareerBuilder.com found that nearly one in four employers is keen to add new permanent full-time employees. These employers are simply waiting for a clear sign the coast is clear. We think they will get that sign in the first quarter of 2012.
Greater economic activity will obviously impact the housing market. We see accelerated sales volume in both the new and existing home markets. We also expect to see prices stabilize in the first half of the year, and then appreciate perceptibly in the second half.
As for the mortgage market? This is much more difficult to call. The Federal Reserve has stated it intends to hold rates low through 2012. However, all it takes are a few persuasive signs that the economy is back on track, and the Fed could easily backtrack from its stated goals. All we can say is that we would be much less surprised to see mortgage rates 50 basis points higher six months from today than 50 basis points lower.
Graph Courtesy from NY Times in an article by Vickie Elmer December 29, 2011. Data and Commentary provided by Fred Ashe, from DE Capital Mortgage.
Roughly 10,000 baby boomers turn 65 each day. Born between 1946 and 1964, there are an estimated 72 Million American baby boomers, all considering how to age and where.
In a new book “Unassisted Living: Ageless Homes for Later Life” (Monacelli Press; $45) Wid Chapman, Architect, and Jeffrey P. Rosenfeld, a gerontologist specializing in the relationship between aging and the built environment collected 33 examples of residences that have been designed to bridge the distance between ‘one’s vital and declining years’.
Design features such as lack of thresholds at doors, surfaces that diffuse sunlight and accessible bathrooms and showers all contribute to a house suitable for aging. Almost minimalist by design, the less-cluttered, more open pathways and fewer places to slip or bump into furniture are key. By removing tripping hazards and streamlining the design, accessibility is achieved.
Today’s baby boomers want to remain independent as long as possible. The whole idea of retirement is changing. Technology allows people to combine leisure and work from a remote setting. Gone is the idea of going south at a specified age. Connection to family, grandchildren, parents are keeping people in one area rather than becoming snow birds and migrating south.
From New York Times article on November 24, 2011 by Julie Lasky
In The News
By ·11/30/11: From The Real Deal: November Rents in Manhattan, Brooklyn avoid seasonal drop: “Despite the seasonal cooling of the residential rental market come the winter months, Manhattan rents barely flinched, according to a Manhattan rental market report released today by MNS, as prices dropped just 0.2 percent in November compared to the prior month. The rental market in Brooklyn showed similar strength, according to another report from the brokerage.” Read more about it at The Real Deal
12/3/11: From the New York Times: Taking the Tiny House Movement Tinier: “Glenn Grassi used his skills as a set designer in the construction of his portable 84-square-foot microhome, trying to maximize the space available. Read more about it in the New York Times
12/4/11: From the New York Times: Higher Loan Limits, Again for Pricey Markets: “Less than two months after lowering the maximum loan amount that could be backed by the Federal Housing Administration, lawmakers in Washington reversed course just before the Thanksgiving holiday and once again raised that limit, offering home buyers more financing options in a tight credit market”. Read more about it in the New York Times
12/4/11: From the New York Times: Help with a Down Payment: “The biggest barrier to buying a home these days is saving for the down payment, according to a survey released in September by Trulia. The best holiday gift some people might receive would be help with the down payment.“ Read more about it in the New York Times
In Recent News
By ·10/31/11: From The Real Deal: Related to bring cancer center to controversial UES site: “The Related Companies is bringing a state-of-the-art cancer treatment center to its Upper East Side development site” currently occupied by Rupert Playground. Read more about it at The Real Deal
11/3/11: From The New York Times: A City Shrinks, or So the Census Says: “According to its latest calculations, New York City has shrunk by more than two square miles, or the equivalent of Central and Prospect Parks combined.” Read more about it at the City Room Blog of the New York Times
11/6/11: From the New York Times: Salvaging Abandoned Bikes, Making Room for Others: “No firm numbers exist for how many bicycles sit abandoned in storage rooms around New York City. They decay uncounted in dim basements, mixing awkwardly with sleek new city cruisers and carbon-fiber racers, threatening to turn an increasingly marketable real estate amenity, the bicycle storage room, into something like a bone-filled catacomb.” Read more about it in the New York Times: 11/08/11: From Crain’s New York Business: Cuomo council seeks to boost city tech campus: “Group established by Gov. Andrew Cuomo proposes state aid for plans to build a graduate school or schools in NYC. Other projects include Hunts Point market and green manufacturing facility at the Brooklyn Navy Yard. Read more about it at Crains’ New York
It’s every parent’s worst nightmare; an accident harms your little darling, especially a preventable accident. Outlets, dresser drawers and cabinets filled with chemicals are child magnets. Being naturally curious, a child will explore everything with their hands and mouth. Choking, shock and strangulation hazards are everywhere.
Some advice from the experts:
- Start before the child comes
- Get down on their level. Crawl around on your hands and knees and see things from a child’s perspective
- Outlets: use outlet covers with horizontally sliding doors. Easy for parents to use, don’t need to be removed and reinserted. Check out Safety 1st Swivel Outlet cover about $2.25, or Levitons Decora tamper-resistant duplex receptacle, $2.50 at Home Depot.
- Choking and strangulation hazards: Cords on window treatments and power cords. Secure the electric cords out of reach with Safety 1st’s Cord Short’ner, about $4. Forego the venetian blinds for something that is completely cordless.
- Secure the TV to the wall, a child reaching and grabbing could tip the TV onto themselves.
- Secure furniture more than 30 inches tall with wall restraints. Be sure to screw the straps into a wall stud.
- With all the temptations in the kitchen and bath, toxic chemicals, sharp utensils, etc., think Operation Lockdown:
- Use latches that automatically reset upon closing. Safety 1st No-Drill Deluxe latch kit (about $31/set of 4) uses a magnetic handle to release the latch. Once installed, keeping track of the handle will be the hardest part.
- In the bath, get a toilet lock. KidCo makes one that automatically resets and is relatively easy to clean (about $15).
- Keep the bathroom doors closed and put child-proof doorknob covers on the knobs.
- Stairs: Use a child safety gate top and bottom.
While this list isn’t all inclusive, it gives you a good start. Consider calling in a consultant. Every home is different, and poses different potential hazards.
Based on New York Times article by Bob TedeschiOctober 26, 2011
* 50 Hotels to open in NYC through 2013: “Building a hotel in New York City is becoming more affordable than buying one, as demand from publicly traded investors helps drive a surge in property prices. Read more
* Are low prices behind increase in co-op board rejections?: “Co-op boards are rejecting buyers with increasing frequency, and according to New York Magazine that may have something to do with the bargain prices on apartments during the downturn.” Read more
* Wealthy Buyers still active in global cities: “The world’s wealthiest individuals are continuing to purchase luxury residential property in key international cities…” From The Real Deal Read more:
