Archive for February, 2010


Mortgage Market Trends for week ending February 19, 2010

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Last week the Federal Reserve took center stage by raising its discount rate: the rate at which banks can borrow money directly from the Federal Reserve. While this move has very little immediate impact, the increase was widely viewed as a symbolic first step in beginning to remove the emergency measures put into place during this deep recession. The Fed’s meeting minutes also provided some more insight into future Fed moves. In addition to letting certain programs expire as planned, the Fed will create some new tools that will enable it to “mop up” excess cash in the market. These new tools, in conjunction with its primary method of adjusting the Fed Funds rate, will be targeted at keeping inflationary pressure under control.

This week, and coming weeks, could begin to see mortgage rates become more volatile as the market digests everything coming out of the Fed. We’ll also get new and existing home sales data this week. With housing and employment as the weakest link, any positive news could push rates upward.

Graph Courtesy from NY Times in an article by Bob Tedeschi February 17, 2010. Data provided by Jeff Carpenter, Director of Finance, GFI Mortgage Bankers, Inc.

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In this buyers’ market when negotiating for a Manhattan co-op, condo or townhouse, having flexibility with regard to the date of closing  (some sellers may want to close later rather than sooner depending on their circumstances)  AND having cash (something I call FLASH) you will surely get you the best deal.

With regard to financing, many buyers and sellers believe that the purchase of a coop, condo or townhouse in Manhattan will either have or not have financing contingency.  But there are actually three options when it comes to the loan financing provision.

The latest version, the co-op contract spells out these options and allows the attorneys to choose one of them. Although the standard condo and townhouse contract forms do not contain a similar provision, an experienced attorney could add it into a rider.

The options are as follows:

#1 Contract contingent upon purchaser obtaining a loan/financing commitment

#2-Contract NOT contingent upon purchaser obtaining a loan/financing commitment, but purchaser may use loan financing to complete the transaction

#3 purchaser may NOT use loan/financing (i.e. must all cash and can’t have a loan)

The existence of #3 is particularly important not only in today’s lending environment, but to leverage maximum negotiability.  When placing an all cash offer the seller will want to know that it is, in fact, ALL CASH and that the purchaser will not even apply for financing.

This post was taken from a tip written by Alex Suslensky, Esq. and published in PDE Title’s Spring Newsletter. PDE Title is a Prudential Douglas Elliman Real Estate company.

Foreign purchasers of Manhattan real estate often take title to the property through a legal entity rather than in their capacity as individuals. Some of the reasons they opt for this can be privacy issues, income tax deferral issues, gift/estate tax concerns, the need or desire to shield the foreign investor’s own assets from liabilities arising from the ownership of U.S. real estate, and whether it is expected that additional investors will acquire equity interests in the property.

It is imperative that prior to signing the contract of sale the foreign purchaser receives competent legal and international tax advice as to the proper structure to use in order to accommodate the investment.

Foreign purchasers should be cognizant of the fact that certain types of entities in which they want to take title may not be available to persons that are NOT citizens or permanent residents of the United States, such as an “S Corporation”. In using this particular entity the investor would soon discover for one, that it may not be available to them and that the income generated by the U.S. real estate would likely be subject to double taxation.

This post was taken from a tip written by Filippo Cinotti, Esq.and published in PDE Title’s Spring Newsletter. PDE Title is a sister company of Prudential Douglas Elliman Real Estate.

Categories : Foreign, Investors
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Which Spot In Central Park Was Voted Most Romantic?

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As the snow falls heavily in Manhattan, I received an update from the Central Park Conservancy. Reminding me of Valentines Day (note to self: Send flowers to Les),  I did wonder which was the most romantic spot in Central Park.

The answer? Bow Bridge. Check this and see what so many have said about Bow Bridge. Even in  the snow of winter! Or read about Central Park’s most romantic stories

The story behind Bow Bridge…

  • Named for its resemblance to a violinist’s or archer’s — or Cupid’s — bow, Bow Bridge’s dreamy setting over the sprawling Lake has inspired many a lovers’ stroll.
  • Designed by Central Park co-designer Calvert Vaux and his assistant Jacob Wrey Mould and built in 1862, Bow Bridge is the second-oldest cast-iron bridge in the United States. The Bridge spans 60 feet across the Lake, linking the cultivated and flowering landscape of Cherry Hill with the rustic and sprawling woods of the Ramble.
  • Bow Bridge is one of the most photographed spots in the Park and is provides the romantic backdrop for many wedding proposals and classic film shots.

Don’t worry spring is on the way…

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Manhattan 10-Year Townhouse Sales Trend Analyis 2000-2009

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Recently we reported the Manhattan 10-Year Townhouse Market Report for 2000-2009.   The 10-year sales trend analysis summarized below was prepared by Miller Samuel for Prudential Douglas Elliman.

  • There were 402 Manhattan townhouses listed for sale at the end of 2009, 24.2% below the 530 listings available in 2008. Listing inventory was similar to the levels seen ten years ago reflecting the fixed nature of turn-of-the-century housing stock.
  • The 2009 median sales price of a Manhattan townhouse—defined as a 1-5 family residence that can be delivered vacant—fell 31.9% from the record set in 2008 to $3,400,000 from $4,995,000.
  • There were 149 townhouse sales in 2009, down 1.3% from 151 sales in the prior year. The average annual number of sales over the past decade was 249 sales, indicating that the number of sales over the past two years have been below trend levels.
  • The listing discount, the amount buyers and sellers have to move to agree on price, expanded to 15.3% in 2009 from 6.9% in the prior year.
  • The days on market for townhouse properties was 142 days in 2009, faster than the 155 days in 2008.
  • The decline in market conditions left more sellers “chasing the market” when setting list prices

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Mortgage Market Trends for week ending February 5, 2010

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According to comments this last weekend by Treasury Secretary Timothy Geithner the risk that the economy will slip back into recession is lower now than at any time in the past year. While the probability of a “double-dip recession” may be unlikely,  Geithner believes the current recovery is likely to be very uneven. Some evidence of this was certainly present in last week’s ISM Indices. The services index managed to stay above 50, indicating a slight amount of growth in service industries. while the manufacturing index bolted to its highest level since 2004. While the Labor Department employment data did show signs of an improving labor market, other measures released last week were not as positive. Overall, we are at a point where mortgage rates might slip slightly, but the risk of a quick upward movement continues to grow.

This week has a bit less economic data than last week, but with Retail Sales data due, we could see rates moving upward, especially if sales come in stronger than most analvsts are predicting.

Graph Courtesy from NY Times in an article by Bob Tedeschi January 28, 2010. Data provided by Jeff Carpenter, Director of Finance, GFI Mortgage Bankers, Inc.

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Manhattan 2000-2009 Residential Sales and Market Anlaysis

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Approximately 92,000 co-op and condo sales transactions from more than 6,500 buildings over the last ten years were analyzed. Each of the 53 different market areas have been presented with data tables and charts as well as a summary matrix that compare 2009 to the prior year (2008) and prior decade (2000).

  • After setting records in 2008, all three price indicators declined in 2009. This is the first time that any of the three price indicators have posted year-over-year declines since 1996.
  • The 2009 median sales price of a Manhattan apartment was $850,000, down 11% from the record set in 2008 at $955,000
  • Manhattan housing prices have doubled over the past decade. Price per square foot increased 105.6% to $1,073 from $522 in 2000.
  • There were 7,430 sales in 2009, 27.9% fewer than were sold in 2008. However, the release of pent-up demand from the first half of 2009 caused the second half to see a surge in sales activity.
  • The annualized pace of sales in the second half of 2009 was 9,400 units, higher than the 9,178 average annual number of sales over the last decade.
  • There were 6,851 listings on the market at the end of 2009, 24.6% less than 9,081 listings in 2008, which was the highest level of inventory in the past decade. The 2009 inventory level was in line with the 6,860 average annual inventory level since 2000.
  • Over the past decade, the Manhattan condo market has surpassed the co-op market in sales, beginning with a 40% market share and ending with a 54% market share. The gain was primarily due to the addition of new development sales to the housing stock.

The 2000-2009 Manhattan Market Report relaeased today and summarized above was prepared by Miller Samuel for Prudential Douglas Elliman.

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Mortgage Market Trends for week ending January 29, 2010

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While last week had some economic data released, non-market events seemed to dominate. Fed Chair Bernanke was reconfirmed by the Senate. but with the smallest number of votes in the Fed’s history. This may foreshadow some interesting battles ahead for monetary management in the US in coming months. The Fed also met, leaving interest rates unchanged again. However, its policy announcement confirmed the end dates for a number of market support programs. including a March 31st termination of the Fed’s program of buying mortgage-backed securities. In addition to all this, GDP came in at a brisk 5.7%, Consumer Confidence and Sentiment increased, and existing home sales cratered. Everything seemed to come out in balance, and mortgage rates barely budged.

This week, we may have a bit more focus on economic data with the ISM reports and employment data. With signs pointing toward economic recovery, even a tepid one, a decrease in unemployment and net gain of jobs in January could push mortgage rates upward into next week.

Graph Courtesy from NY Times in an article by Bob Tedeschi January 28, 2010. Data provided by Jeff Carpenter, Director of Finance, GFI Mortgage Bankers, Inc.

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