Archive for August, 2009

First Time Buyer $8000 Federal Housing Tax CreditIf you’re a first time homebuyer in New York City and you can close on an apartment by December 1st 2009,  you may be wondering how you can leverage the $8,000 tax credit to buy your first condo or co-op. The question then comes to mind, “How much can I afford or want to spend on my new home?”

The first thing you need to know is that a couple (or two individuals jointly) buying their first home who want to use the Federal Housing Tax Credit can only have an annual combined income of $150,000 or $12,500 per month.

When you apply for a mortgage, the first thing the mortgage broker or lender is will calculate is your debt-to-income ratio. This ratio takes into account your monthly debt including the monthly mortgage payment, maintenance (for co-ops) or common charges and taxes (for condos), student loans, car payments credit card payments etc. They like to see that your total monthly debt expenses do not exceed 40% of your monthly income. If your gross monthly income is $12,500, then your total monthly debt cannot exceed $5,000 (12,500 x 40%).

The calculation above may be adequate to receive financing for a condo purchase, but many coops only will allow your maximum monthly housing expenses (principal and interest payment on the mortgage and maintenance), to be typically 28%  of your monthly income (could be 25% or lower for some co-ops, which is the limit set by the co-op board, not the lender).

Using a limit of 28% for housing expenses, a buyer with an income of $12,500 per month would have approximately $3,500 per month to spend on housing expenses.

So depending on the amount you have for a down payment (assume at least 20%), the mortgage rate and other debt, you may be able to spend between $3500 and $5000 per month to for your Manhattan co-op or condo.

You can use this link to to adjust the variables and see what’s available for you based on your personal circumstances.

See a video here and read the FAQ here

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Flags of the worldThere is a common misconception that it is more difficult for foreign nationals than for American citizens to get a mortgage in NYC.  In fact, there are some restrictions, but it is perfectly possible for foreigners to get mortgages for New York City home purchases.

Foreign nationals obtain a mortgage like anyone else

Foreign nationals can approach local NYC banks, national lenders, credit unions and mortgage brokers to apply for a mortgage. Not all lenders offer foreign national programs, but they are readily available.

As a foreign national, one must be prepared to put a down payment as high as 40% of the purchase price—required by the lender because it typically will only loan 60-80% of the purchase price. Interest rates are reasonably priced and there are no forbidden property types so you can finance a condo and a co-op just as easily as a single-family home. Some lenders will require you to prove your Visa status or type of Visa you possess that gives you permission to be in the United States, be it for a business or a pleasure trip or to come to the U.S. to work, study, conduct business or immigrate.

Foreign nationals who hope to purchase co-ops will need to go before the co-op board, just as citizens do.  The co-op board may impose its own requirements such as requiring a green card, U.S. tax returns and other conditions. Co-op restrictions may make it more convenient for foreign nationals to purchase condos because the bylaws and rules of condo associations are typically less restrictive than those of co-ops.

If the purchase is strictly for investment purposes I would recommend the purchase of a condo. That said, in New York City, there are “condops” (a cross between a coop and a condo) which may allow you the flexibility as an investor but at a lower cost.

The bottom line is that a foreign national can obtain mortgage financing just like a The bottom line is that a foreign national can obtain mortgage financing just like a U.S. citizen would in order to establish a NYC mortgage. Find a lender that offers foreign national loans and apply for the mortgage. Then sit back and wait for information to be processed—just like a U.S. citizen would have to do.


Fantastic Lunch at Per Se Restaurant!

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We celebrated our anniversary at Per Se in the Time Warner Center at Columbus Circle. From the personalized menu wishing us a Happy Anniversary to the tour of the kitchen and wine cellar, it was an amazing day. Their service was stellar and the food was remarkable! We booked a reservation (on the wait list) for next month.

Enjoy the photos and beautiful presentation of our Chef’s Tasting Menu – you can almost taste the food with your eyes!

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Condops: Co-ops for the Free Spirit

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Co-op, Condo or Condop?

Co-op, Condo or Condop?

If you yearn for the freedom of condo living but your pocketbook won’t stretch beyond the co-op price range, a condop may be perfect apartment for you. To understand the differences and what they mean to your budget, here’s a quick rundown on the basics of modern living in Manhattan:  co-ops, condos and condops.

Co-ops are by far the most common form of apartment ownership in Manhattan – over 70 % of available apartments for sale are in co-op buildings. Co-op means cooperative ownership. Rather than owning your apartment, you become a member of the corporation which owns the entire building and you own shares in that corporation. Monthly maintenance fees cover building expenses including heat, hot water, insurance and staff salaries. In addition, your maintenance charge also  includes real estate taxes and  your apartment’s share of the underlying mortgage on the building. A portion of these maintenance fees (taxes and interest on the building’s mortgage) are tax-deductible.

Co-op boards play a huge role when you want to purchase or sell your home. You will be required to submit detailed financial information, tax returns, and personal and business reference letters and appear for a personal interview in order to gain the approval of the board before you can purchase your home. In addition, some boards may not allow you to sublet your apartment and may even have a say over the selling price, since a below-market sale could affect everyone else’s investment.

A condop is a co-op with less restrictive condo-type rules.

A Condo, short for condominium, is an alternative choice for apartment ownership. The number of available condos has grown in recent years, especially in new construction. When you buy a condo, you own your apartment outright just like you would own a single family house.  You don’t have to go through the board approval process.  And once you’ve bought, you have more control over your home.  Usually, you can rent it out to anyone you choose and when you are ready to sell it, you don’t need to deal with board approval for your buyer as you do in a co-op.

Monthly maintenance fees -called common charges- are usually lower than co-op maintenance charges, but don’t provide any tax deductions because there is no underlying mortgage on a condo and you pay property taxes on your apartment directly to the city.

So what’s a condop? Simply put, a condop is a co-op with less restrictive condo-type rules. With condops you still need to play well with others and you own shares in the co-op but the rules are often more relaxed than the standard co-op. Condops, like most condos,  may allow you to finance a higher portion of the price by requiring lower  down payments,  and usually there will be  no high-stakes personal interview with the board.

In a condop, like a co-op, some of the monthly maintenance fees are tax-deductible   but like a condo you’re usually relatively free to rent your apartment, use it as a pied-a-terre, may be able to have live/work space and may be able to sell your property more easily. Prices for condops are usually lower than comparable apartments in condos.

Not all condop buildings have these flexible rules, so you need to study individual listings carefully when looking for condops, and be sure your buyer’s broker and attorney are familiar with their structure.

Categories : Co-op, Condo, Condop, Properties
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1-Manhattan 2-Brooklyn 3-Queens 4-Bronx 5-Staten Island

1-Manhattan 2-Brooklyn 3-Queens 4-Bronx 5-Staten Island

Today, the New York City Economic Development Corporation (NYCEDC) released its July newsletter. The Economic Snapshot highlights the most recent information about New York City employment, consumer spending and real estate.
A continued decline in New York City employment rates will continue to put downward pressure on apartment prices in the near future. It also has a negative effect on consumer confidence, a leading indicator of housing prices in NYC.

On the other side of the equation, the large decrease in construction and building starts will help keep inventory moderated in the near to midterm. This may help increase the absorption rate and decrease the days on market for existing apartment sales.

Highlights of the full report include:

• Private Employment fell by 4,500 in June, after a decrease of 3,700 jobs in May.
• The unemployment rate rose to 9.5 percent in June from 8.9 percent in May.
• The Manhattan hotel occupancy rate in June 2009 was 86.9 percent, down from 89.5 percent in June 2008.
• Building projects (including new, additions and alterations) that started construction in NYC declined by 20.4 percent and infrastructure (non-building) project starts increased by 22.3 percent from the four months ending June 2008.
• Planned space for building project starts decreased 73.6 percent from the same period in 2008
• 729 residential buildings with 1,949 units of housing started construction, decreases of 37.7 and 82.5 percent respectively from the previous year
• Passengers in NYC area airports totaled 8.7 million in May 2009, down 8.3 percent from May 2008.
• Hotel occupancy was 86.9 percent in June 2009,down from 89.5 percent in June 2008
• The average daily hotel room rate declined the most in lower-priced hotels (charging between $125 and $175 per night).
• There were approximately 882,000 tickets sold during the four weeks ending July 26, 2009, a 10.7 percent decrease from the same period last year
• Broadway revenue during this period was roughly $78.7 million, a 4.4 percent increase from last year

Categories : Market Reports
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The combination of a tumbling stock market, where 401k holders watched the value crumble, and the decline of home prices has made it an attractive time to take the leap into buying a first home. Rather than watch their stocks, bonds, mutual funds and other investments continue to lose value, many first time buyers have cashed out all or some of their 401k and used it toward the down payment or for covering other costs.

Like any major financial decision, using a 401k to buy your first home has some good, some bad and some ugly things you need to be aware of.

The Good
• Great deals on purchases. The good news is that real estate prices have fallen to the point where you can find better deals and there’s a wider selection than in the recent past. It may even mean that you can buy a co-op or condo that you were never able to afford before the decrease in value.
• Upside appreciation. This also means that when real estate values return to normal that you’ll probably profit when you sell (assuming you sell for more than you paid and what you owe on the mortgage).

The Bad
• Loss of income. When you decrease the value of your 401k account, the lower principal balance means you have less money from which to earn interest, dividends and appreciation.
• Depletion of nest egg. Since the purpose of a 401k is to provide income for your retirement years, when you spend this money now, it’s not going to be available for tomorrow.

The Ugly
• Tax penalties. The ugliest part of early withdrawal from a 401k is that good old Uncle Sam hits you with tax penalties can really hurt—and it diminishes the amount you wind up with when you make a withdrawal.
• Fees. The investment firm that manages your 401k may also charge you a penalty or fee for liquidating the investments early, which may leave you with even less money than you anticipated.

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Mortgage rates include co-ops

New York State has just announced a new Federal tax credit for first-time home buyers.  The program will take effect in September.

  • Mortgage Credit Certificates (“MCC”) issued by SONYMA enables first-time homebuyers to convert 20% of their annual mortgage interest into a direct income tax credit on their Federal Tax Return for each year of the life of their loan;
  • MCCs can be used with any fixed-rate mortgage product offered by your lender;
  • Borrowers with MCCs can also take advantage of the $8,000 Federal first-time homebuyer credit (if closed by November 30, 2009)

There are limitaitions  on income ( $92,160 for 1 & 2 person households, $102, 520 for 3+person hosueholds) as well as purchase price limits ( $637,640for co-ops and condos ). Here are the details.

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Mortgage Trends for August 10, 2009

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Additional evidence appeared last week that we may be very close to the bottom of this recession. While it is the nineteenth straight month of job losses, July saw only 247.000 jobs lost with a tiny improvement in the unemployment rate. The ISM Manufacturing Index also revealed greater signs of life than expected. Mortgage rates did end the week with some upward pressure that may continue into this week, especially if the positive economic news continues.Freddie_Mac_08-10-09

While this week is packed with important economic data, the most influential news of the week could be the policy announcement that accompanies the Fed’s rate decision the Fed is expected to leave rates unchanged, but analysts are seeking hints on how the Fed will unwind itself from financial markets. This year, the Fed has purchased nearly every mortgage-backed security on the market. If the Fed hints it will begin slowing those purchases, we could see rates rise. However, if the Fed offers no hints, we may see some flattening pressure on rates, even with good economic news.Top_Economic_Reports_08-10-09

Data provided by Fred Ashe, Senior Loan Officer at Preferred Empire Mortgage Company, a sister company to Prudential Douglas Elliman.

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Mortgage Trends for August 3, 2009

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Last week held some good news for the economy. GDP for the second quarter of this year came in at a higher-than-expected – 1.0%. While there are a number of revisions to come before that One_Year_Mortgage_Rate_08-02-09number is finalized, it is a solid sign that the recession is beginning to fade.  However, all the news last week was not positive.  Consumer Confidence continues to slide downward, most likely due to continued challenges in the labor market.  While mortgage rates bounced around, they did not stray too far.Freddie_Mac_08-02-09

This week has two very important pieces of economic data that could help set a trend for mortgage rates over the next few weeks. The lSM Manufacturing Survey is due with expectations of another small tic upwards. If it comes in at or above expectations, we’re likely to see mortgage rates trying to nose upward as the week progresses. The week’s most influential report likely will be Friday’s employment data. After last week’s stronger-than-expected GDP numbers, an unexpected dip in unemployment would very likely power mortgage rates upward on Friday and well into next week.

Auction Results Push Mortgage Rates Lower

Mortgage investors were more focused on this week’s Treasury auctions than on the economic data. Overall, demand remained healthy for US Treasury securities, and mortgage rates ended the week a little lower. Major economic reports on Gross Domestic Product (GDP), Durable Orders, and Chicago PMI manufacturing contained mixed results and were roughly neutral for mortgage rates.

Top_Economic_Reports_08-02-09While recent Treasury auctions have seen stronger than average demand, investors remained cautious ahead of this week’s record supply of government debt. The auctions got off to a rocky start, with demand falling back to average levels for the 2-yr and 5-yr auctions. Strong foreign demand for the 7-yr Treasuries eased investor concerns, however, and mortgage rates improved after the auction. China, in particular, holds about $800 billion in US Treasury securities and is an enormous buyer. Chinese officials were in Washington this week meeting with US economic leaders, and the Chinese expressed concern that US budget deficits would reduce the value of its US Treasuries. Analysts believe that reduced buying from China caused the weaker than expected demand for the 2-yr and 5-yr auctions, but they fully participated in the 7-yr auction. With the US government issuing record amounts of new debt, investors will be closely watching for changes in China’s purchasing policy. Any perceived reduction in China’s demand would likely push long-term interest rates, including mortgage rates, higher.

This week’s housing market data was generally positive. June New Home Sales jumped 11%, the third straight month of increases. Inventories of unsold new homes fell to an 8.8-month supply from a 10.2-month supply in May. The May Case-Shiller index of home prices in 20 metropolitan areas rose 0.5% from April, following 34 straight months of declines. While the results varied greatly in different parts of the country, the increase in average prices provided support for the analysts who believe that the housing market has bottomed.

Week Ahead

Next week, the important Employment report will come out on Friday.  As usual, this data on the number of jobs, the Unemployment Rate, and wage inflation will be the most highly anticipated economic data of the month.  Early estimates are for a loss of about 333K jobs in July. Before the Employment data, the ISM national manufacturing index will come out on Monday. Pending Home Sales, a leading indicator for the housing market, will be released on Tuesday. Personal Income, ISM Services, Construction Spending, and Factory Orders will round out the schedule. Also notable, the Treasury will announce the size of upcoming Treasury auctions on Wednesday.

Data provided by Larry Weinstein and Fred Ashe, Senior Loan Officers at Preferred Empire Mortgage Company, a sister company to Prudential Douglas Elliman.

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It was going to be in iMAX and 3D at the “only real IMAX, not the new fake digital LieMAX. We got to the AMC Lincoln Square theatre at 68th Street and Broadway about 45 minutes early so we could get “perfect seats”  smack in the middle of the theater and  about 3/4 of the way up.

While we waited for the show to begin, we munched lots of popcorn and I began read the NY Times article by Micha Pollan: Out Of The Kitchen, Onto The Couch about “How American cooking became a spectator sport and what we lost along the way”. It seemd to explain to me the design of so many kitchens in new developments: Kitchen Stadiums. More on this another time.

Just as the movie started there was an annoucement “…as you know, only the first 20 minutes will be in 3D…” We were pissed but when the “signal” came to remove our 3D glasses we did and enjoyed the rest of the movie in “real” iMAX. Caveat emptor!

After the show we took a walk to the Time Warner Center to visit the Whole Foods Store stopping off at a small Farmers’ Market on 65th Street rght where Columbus Avenue and  Broadway cross.

Whole Foods Market at Time Warner Center

Whole Foods Market at Time Warner Center

Here’s the map and some more Flickr photos.

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