Archive for April, 2012

Apr
30

New York City Rents continue to Climb

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According to an analysis of the rental market by Citi Habitats, the average rent in Manhattan is a mind-boggling $3418 a month, surpassing the all-time high set in 2007 during a booming economy.

Tenants are feeling resentful; already staggering from a year or more of rent increases.  Many feel trapped, because it is too costly to move or stay.  This could cause renters to shift their focus from renting to buying, but that may not be an option for some due to lack of down payment or credit issues.

According to Jonathan J Miller, president of the appraisal firm Miller Samuel, “When you see rents rising, it is usually reflective of a strong economy, but that is not the case now”.  Prices are being driven up by a tight credit market that forces people to stay in the rental market and limits new construction.

Some renters will opt pay more for less – a smaller apartment for less or the same rent they’re paying now.  Even so, moving expenses, broker fees and deposits can take even that option off the table.  Others are making the decision to share, even putting up temporary walls where allowed and sacrificing a living room.

Even the outer boroughs like Queens and Brooklyn are seeing spikes in the rental prices. 

Rental averages are up in every category, with one-bedrooms rising the most, by 6.5 percent over the past year, to $2,747, according to the Citi Habitats report. Studios rose 3.6 percent, to $1,953; two-bedrooms climbed by 6.1 percent, to $3,865; and three-bedrooms rose 4 percent, to $5,107.

There are some exclusions to the average rental price.  Since the majority of New York’s rental apartments in Manhattan are rent-regulated in some fashion, they are not included in the average.  Also, smaller landlords that do not use brokers   would not be included.  Renters could find that smaller landlords are more willing to negotiate because they would rather keep a happy tenant with a good payment track record, than to have a vacancy for an extended period of time.

There seem to be few options for renters until developers start to bring more new units to the market, or until another market crash to contain the out of control rents: 

  • Stay put and try to negotiate or suck it up
  • Get a roommate or two
  • Move to another rental, neighborhood or town
  • Buy

Based on New York Times article.

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Apr
30

In the News

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4/25/12  ‘Sex and the City’ Townhouse sold for $9.85 million:  The home at 64 Perry Street, listed for $9.65 million in early March with sold for $9.85 million, according to city records.  Read the full article at The New York Observer 

4/26/12  Useful  Vocabulary for Building Watchers:  Here are a few  architectural definitions that anyone who wants fluency in New York architecture will find useful.  Read the full story in the New York Times  

4/26/12  Prudential Douglas Elliman releases “The Elliman Report:  Long Island Sales 1Q 2012”:  Mild winter weather brought consumers into the market earlier than usual, causing the number of signed contracts in the Long Island housing market to jump from year ago levels. Housing prices were mixed, as buyers of lower priced properties took advantage of record low mortgage rates. Although properties took slightly longer to sell, listing inventory fell to its lowest first quarter total in six years. Despite the slow improvement in the national economy, we are encouraged by the state of the market in 2012.  See the full repor

4/26/12:  Prudential Douglas Elliman releases “The Elliman Report:  Hamptons & North Fork Sales 1Q 2012”:  The Hamptons and North Fork housing markets showed stability in both price and sales activity. Just as we have seen in prior quarters, the high end of the market continued to show strength. While it took somewhat longer to sell a typical property this quarter, listing inventory continued to decline. Considering the slow pace of our national economic recovery and tight credit, the East End housing market has continued to hold its own.  See the full report 

4/27/12:   Space Shuttle Enterprise’s Historic Flyover Wow’s New Yorkers: Did you see it?  Hundreds of space shuttle shuttle fans braved the chilly temperatures and biting wind Friday Morning along the Hudson River here to catch a glimpse of NASA’s prototype orbiter as it flew past the Intrepid Sea, Air and Space Museum it will soon call home.  See the full article on Yahoo! News 

4/27/12:  Threats, stormy Exits and…:  The setting for the closing on an apartment in the East 50s was a lawyer’s office. Things seemed to be going well between the sellers until the wife found out the price her husband had received for the apartment.  This is New York City, where real estate transactions can literally take on the trappings of a blood sport. Unlike most other parts of the country, it is a place where lawyers are invariably involved in the transaction; at the very least, this increases the number of people around the table.  Read the full article in the New York Times 

4/27/12  Brokers See Bright Future for 2012’s Residential Real Estate Market: The Real Estate Board of New York (REBNY) has released the results of its Residential Brokers Survey for the first quarter of 2012.  With the unseasonably warm weather and favorable market conditions, brokers saw an uptick in activity this quarter and are optimistic about next quarter.  Of the brokers surveyed, 69 percent reported that they thought the first quarter of 2012 was better than the previous quarter.  Additionally, 76 percent of brokers reported that they expect the second quarter of 2012 to be better than the first, a 16 percent increase from last quarter. 

 Their optimism was based on the improving activity in the market.  The survey found that 70 percent of brokers reported completing executed contracts of sale this quarter, a nine percent increase from last quarter.  Another highlight from the first quarter of 2012 was that 74 percent of brokers reported closing rental transactions at or above asking prices, which is a 13 percent increase from this time last year.  In addition, 26 percent of the brokers reported closing sales at or above asking price, a nine percent increase from the fourth quarter of 2011 and a 4 percent increase from the first quarter 2011.

 “Brokers feel changes in the market first and we count on them to help us gauge where the market is headed,” said REBNY President Steven Spinola.  “Based on the survey results, it’s clear that broker’s optimism is coming from an improving market and that their view that 2012 will be a strong year for New York City real estate is justified.” 

 The survey also found a near perfect record of 99 percent of brokers reporting that they received a coop board approval in less than 90 days from the time a completed coop board application was submitted.

 Similar to last quarter’s findings the top features/amenities this quarter were: 1) doorman building, 2) laundry in unit, 3) private storage space, and 4) on-site fitness center.
 The survey was sent to REBNY’s Residential Broker Members.  404 brokers took the survey this quarter.  See the REBNY Q1 2012 Residential Broker’s Survey Results

Apr
25

The Opposite View of the Neighbor’s Windows

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The building you live in is lovely; the amenities fit your needs.  You love your apartment, except… the view from the balcony is less than stellar.  Across the courtyard, you see broken windows, torn curtains and water damage.  What’s a person to do? 

Well, you could send a letter to the occupant with a check offering to pay for repairs and new curtains, and risk offending the occupant, or you could walk across the courtyard and visit in person.  Ask them if they noticed the view from outside their apartment.  Maybe they ordered new curtains already, or maybe they’re broke and cannot afford the repairs.  Maybe you could offer to help with the repairs if it is within your comfort zone and budget so that you can improve your view.  Stay friendly, even if they tell you to mind your own business. 

Or, you could just ignore it…

Based on New York Times Article.

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Apr
23

In the News

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In The News

4/16/12  The world’s most expensive one-bedroom condo?:  And you think New York Apartments are expensive?   A one-bedroom penthouse condo was listed recently in Tokyo for 1.8 Billion yen roughly $22 Million.  The apartment is 4,400 square feet and loaded with amenities.  Read the full article at Yahoo! Real Estate

 4/19/12:  Prudential Douglas Elliman Releases Brooklyn Sales Market Report for 1QTR 2012:  The Brooklyn market continued to enjoy stabilizing prices and a steady level of new development activity. Mortgage rates dropped to record lows, which helped lower priced co-op sales retain greater market share. Listing inventory fell below the five-year average, in turn tightening the listing discount negotiated between buyers and sellers. Despite the economic challenges facing the region, Brooklyn continued to be one of the better performing housing markets in New York City.  Get the report from Prudential Douglas Elliman here.   

4/19/12:  Prudential Douglas Elliman Releases Queens Sales Market Report for 1QTR 2012:  Record low mortgage rates helped create a surge in lower priced co-op sales in the fourth quarter that continued into the new year. This trend combined with the decline in listing inventory has brought some stability to the market. Although prices softened somewhat over the past year due to tight credit and a weak economy, we are encouraged with the progress of the Queens housing market so far this year.  Get the report from Prudential Douglas Elliman here.

4/19/12  Rental website Rentenna.com seeking “hottest doorman” in the city:  Rentenna.com, a website for locating New York City rental apartments, is sponsoring an unconventional beauty contest, the Wall Street Journal reported — for New York City’s doormen. The start-up began accepting nominations for the city’s most attractive doormen last week, the Journal said, and more than three dozen have been put forward by their tenants so far.  Get all the details at The Real Deal

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Apr
22

6 Secrets for a Serene Buying Experience

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6 Keys for a Serene Buying Experience

Buying a home is the single biggest purchase most of us will ever make. For many, it is a transaction full of fear, worry, and stress. Here are a few secrets to help the stress melt away.

  1. Education. Since most of us fear what we don’t understand, educate yourself. Ask questions, and own up to not understanding something. The only ‘stupid’ question is the one that is not asked. Keep asking until you understand the answer.
  2. Surround yourself with experts. Finding the right people to help you through the transaction can make all the difference. They will help you manage expectations. Board approvals and financial statements are fraught with pitfalls that your Real Estate Agent and accountant can help you navigate.
  3. Be Prepared. Like a Swiss watch, real estate transactions have a lot of moving parts. Any one delay could send the whole timeline into a tizzy. Make sure you plan for delays like attorney reviews and board approval, and add in some breathing room to reduce the stress. 
  4. Expect the unexpected. Even when you think you’ve covered all the bases, there can be challenges that will try your patience. The board application can be long and tedious, seemingly prying into every aspect of your life. Requests for clarification give you a chance to fill in the blanks that could mean the difference between approval and denial. 
  5. Control what you can. Focus your energy on the parts of the transaction you can control; working on your credit, saving, and finding trusted professionals who will guide you through the process. Having a clear vision of your daily life and personal finances in your new home will help you see past the obstacles to the goal. “An obstacle is what we see when we take our eyes off the goal.” Focus on the goal, and let your trusted professionals guide you through the obstacle course.
  6. Let go of the rest. There’s a big difference between knowing what can happen and planning for the possibility, or dwelling on every possible disaster. If fate throws up a roadblock, take a deep breath, consult your experts, and make the best decision you can.

Inspired by Trulia article by Tara-Nicholle Nelson

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Apr
16

In the News

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4/9/12 Lux Life:  3 Pads sold for over 20M last week: Despite the Easter and Passover holidays, the affluent pulled out the stops in Manhattan, snapping up the former Fifth Avenue homes of a famous financier and a copper heiress.  Read the full article at Crain’s New York Business

4/12/12:  Audits Find Flaws in City’s Property Assessments:  The audits note that for many years the city used one methodology, called net income capitalization, to determine property valuations. For the 2008-9 fiscal year, the city switched to another method, called gross income multiplier. Then, without advance notice to homeowners, it reverted to the original methodology for the 2011-12 fiscal year. Read the full article in the New York Times

4/13/12  Exclusive 1st Quarter 2012 Elliman Report for the Miami, Florida Market:  The Miami housing market experienced the highest market share of non-distressed sales in several years, with a surge in both condo and single-family sales activity. The luxury and the non-distressed markets both continued to see upward pressure on prices. Distressed sales activity is expected to pick back up over the next year, which will help the market gain better footing for the long term. Foreign buyers continue to play a key role in driving sales demand, incentivized by the weak US Dollar. We anticipate an active Miami housing market over the next several quarters.  Read the report from Prudential Douglas Elliman 

 

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Apr
13

How’s the Market? March 2012

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While Quarterly Sales Reports show closed activity for the previous quarter, monthly Contract Signed reports are the ‘crystal ball’ of closed sales to come.  Granted all contracts signed for any given month may not close in the next month,  and some may not close at all but most (over 95%) will become closed sales which will become part of the next Quarterly Sales Report.

In the following charts and graphs you can see how the market stacks up against last month and this month last year.

 

 

 

 

 

Apr
13

Quarterly Market Stats

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This week, we released our First Quarter report for the Manhattan Residenital Rental Market.  Manhattan Residential Rentals Market Overview Q1 2012 reported here and summarized below was prepared by Miller Samuel for Prudential Douglas Elliman.

“Landlord concessions continue to be the exception, as rental demand and prices press higher”

  • Median net effective rent was $3,064 for the first quarter, 9.1% higher than $2,808 in the prior year quarter.
  • Rental price per square foot increased to $52.57, reaching its highest level since the third quarter of 2008, just as the credit crunch began.
  • The listing discount, the spread between the original list price and rent, compressed in the first quarter to 2.2% from 2.7% in the prior year quarter. This was consistent with the 14.3% increase in new rental activity over the same period.
  • Use of landlord concessions fell to 11.1% within all new rentals from 36.8% over the same period last year.
  • New rentals of studios increased 16.1%, 1-bedrooms increased 13.5%, 2-bedrooms increased 14.5% and 3-bedrooms increased 20.7%. The 4-bedroom rental market decreased 21.5% over the same period.

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The IRS recently ruled may interest many taxpayers who co-own property with a person who is not their spouse.

Basics of the home mortgage interest deduction

  • Taxpayers who itemize deductions on Schedule A can include interest paid on mortgages with certain limitations:
    • Only interest paid on a loan secured by a principal residence and second home is deductible
    • Only deduct interest on loans for which they are legally liable, so paying someone else’s mortgage doesn’t count.

Once the above conditions are met, the following applies:

  • Only interest on the first $1,000,000 of debt for first and second residences combined can be deducted, for Single or Married filing Jointly and married filing separately, the limit is reduced to $500,000 each.
  • Only the interest on the first $100,000 of home equity loan debt.
  • In this example, an unmarried taxpayer with a mortgage and home equity line of credit could deduct the interest on $1,100,000 in total.

Recently the IRS ruled that, for an unmarried couple who jointly owns the home together the $1,100,000 limit applies to the residence, not the taxpayer.

  • One or two homes which are the principal and second homes cannot provide more than a home mortgage interest credit on $1.1 million of debt total regardless of how many people own the homes.
  • Once the $1.1 million of interest deduction is used from the first and second home, no further interest deduction can be claimed.
  • In this example John and Jane own two homes jointly but are not married.  Home one has a mortgage debt of $1.5 million and home two has a mortgage debt of $1 million, with no home equity line of credit on either property.  According to the ruling, John and Jane cannot together claim interest on more than $1 million of total mortgage debt.  However if John owned home one and Jane owned property two, then each taxpayer could claim the full limit providing they were otherwise eligible.

 Tax planning becomes very important in this situation.  Seeking the advice of a qualified tax professional can be extremely helpful prior to purchasing a home to be sure the structure permits maximum deductions.

 

Based on blog article by Jerry M Feeney, Residential Real Estate Attorney.  Information in this article is to be used for informational purposes only, and not to be considered legal, tax or financial advice by the Real Estate Geezer.

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Apr
10

Where to Eat on the Upper East Side

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View Michael Lomonaco in a larger map

Michael Lomonaco shares some of his Upper East Side Favorites

Pizza by the Slice:  Italian Village 

Pizza by the Pie:  John’s Pizzeria

Cheap Burger:    J.G. Melon 

Fancy Burger:  Jones Wood Foundry  

Sandwich:  2nd Ave Deli

Coffee:  Oren’s Daily Roast

Bagels:  Tal Bagels 

Chinese:  Pig Heaven 

Breakfast:  E.A.T 

Bar:  Bemelmans Bar at the Carlyle

Ice Cream/Gelato:  Sant Ambroeus

Falafel:  Melange Food Fair

Late Night Eats:  Cascabel Taqueria 

Date night:  Crown 

Can’t-miss Neighborhood Spot:  Sandoro’s   


From Serious Eats NY

Apr
04

In the News

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3/30/12 In Manhattan Pizza War, Price of Slice Keeps Dropping:  “In the amped-up war of commerce and 75-cent pizza on the Avenue of the Americas in Midtown, a perilous moment is approaching. Circumstances suggest that ravenous New Yorkers might soon witness 50-cent pizza, 25-cent pizza or, yes, free pizza.”  Read the full article in the New York Times.

4/2/12  NY ranks as No. 1  global business center:  “Thanks to investments in public transportation, cultural amenities and education, New York surpassed London, Paris and Tokyo as the city with the most global clout.”  Read the full article at Crain’s NY Business.

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Today, we released our First Quarter report for the Manhattan Residenital Co-op  & Condo Sales Market.  Manhattan Residential Co-op & Condo Sales Market Overview Q1 2012 reported here and summarized below was prepared by Miller Samuel for Prudential Douglas Elliman.

“Employment conditions have continued to slowly improve, inventory levels have remained modest, and new development stabilized, but tight mortgage underwriting conditions remain a challenge to the market.”

  • Median sales price was $775,000, 0.9% below $782,071 in the prior year quarter. Price per square foot increased 6%, and average sales price increased 0.8% over the same period.
  • The S&P’s downgrade of US debt, paired with the European debt crisis, Wall Street bonus concerns, and large swings in the stock market indices all contributed to the market’s slowed pace leading into the first quarter. As a result, the number of sales slipped 3.5% to 2,311 from 2,394 in the prior year quarter.
  • Active listing inventory slipped 0.6% to 7,560 in the first quarter from 7,605 in the prior year quarter, but remained consistent with the 7,478 quarterly average over the past ten years.
  • Days on market—the number of days between the last price change, if any, and the contract date—saw a 25-day increase to 152 days from 127 days as older inventory was sold off.
  • Listing discount—the percent difference between the list price at time of sale to the sales price—increased to 6.3% from 4.5% in the same period last year.

After finding the perfect New York Home, finding a quick, easy and appropriate method of financing may be almost as challenging.  Morgan Stanley  Smith Barney is offering an alternative financing option and counseling on how those choices may impact their overall wealth management plan.

If you:

  • Need quick access to funds
  • Want to avoid traditional mortgage fees
  • Are finding it challenging to obtain a traditional mortgage for new construction or investment property
  • Are required to verify you have sufficient liquid assets to support the purchase
  • Want to use a bridge loan as a short term strategy
  • Are purchasing a second home and wanted to use equity in primary residence as down payment value of primary home has decreased significantly

Securities Based Lending using the Portfolio Loan Account may be for you.

  • Allows borrowers to use eligible securities in their brokerage account as collateral.
  • No  origination, maintenance or facility fees
  • Access to available credit without having to reapply for each new loan
  • Quick application process, with access to credit in approximately five business days.

This post is based on a document provided by Amit Michael Kapil at Morgan Stanley Smith Barney and is to be used for informational purposes only, not to be considered legal, tax or financial advice by The Real Estate Geezer

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Apr
01

Mortgage Market Trends for Month ending March 31, 2012

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 MARKET RECAP

One week’s worth of data does not a trend make. We say that because of renewed concern the housing rally is set to peter out because of a burst of sub-par news.

The news on lower existing and new home sales was disappointing, to be sure, but hardly a foreboding omen. The news on pending home sales, which tracks contract signings for existing homes, wasn’t all that bad either. The index was down 0.5% in February, but the index has been up for the most part over the past six months. Sometimes a little perspective is needed.

Pessimism was further heightened by the S&P/Case-Shiller home price index, which showed another price decline. Month-over-month, the average price declined 0.5 percent in January. Year-over-year, the average price is down 3.8 percent.

The fear properties in various stages of foreclosure and delinquency will continue to roil the market is on the rise. We are not terribly concerned though; the attenuating factor being foreclosed and delinquent properties are a well-vetted, well-understood variable. More important, it’s an improving variable. Data from CoreLogic show that faster REO-clearing rates and improving employment and low mortgage lending rates point to a sustained housing-market recovery.

In our opinion, frustratingly low appraisals and too-stringent lending standards are more pressing issues for many buyers and sellers. Loosening the tethers on both, and particularly the latter, would go a long way toward keeping the recovery on course.

A strong economy would also go a long way toward sustaining the recovery. The good news is the economy continues to grow. The final number on gross domestic product shows that the economy grew 3.0 percent in the fourth quarter of 2011. This latest reported quarter was much stronger than the 1.8 percent growth reported in the third quarter of 2011.

The employment data support the notion the economy is growing. Yes, we are aware that Federal Reserve Chairman Ben Bernanke recently warned that improvements in the labor market may not be sustained, but we think otherwise nonetheless: Job creation has accelerated in recent months. Concurrently, jobless claims have decelerated. In fact, the latest report on weekly jobless claims shows the four-week moving average falling to its lowest level in four years.

Of course, the state of the economy always impacts credit markets. Interest rates dropped this past week when Bernanke stated he thought the economy has yet to reach full-recovery mode. Investors equivocated and money moved from stocks and commodities into U.S. Treasury securities. The mortgage market responded in kind, and we saw lending rates drop five to 10 basis points across most offerings.

We can’t say for sure how long rates will stay down. We’ve seen a marked increase in volatility in lending rates in March. We think volatility will remain high going forward, which is why we feel impelled to say that the risk of waiting for lower lending rates outweighs the benefit of substantially lower lending rates materializing.

The Most Persuasive Sign it’s Time to Lock and Load

Economist Hyman Minsky is the author of a persuasive short monograph titled “The Financial Instability Hypothesis.” Minsky basically states that the longer a market appears stable, the less stable it actually is because of excessive speculation and leveraging of that market.

We’ve been in a 31-year bull market in U.S. Treasury securities. That is, long-term real yields – yields adjusted for inflation – have been trending down since the early 1980s. A recent analysis by Credit Suisse shows that real rates on long-term Treasury securities are down to 50 basis points, or 0.5%.

Such a low rate doesn’t compensate for opportunity cost and time value. In fact, the real interest rate is so low today, even the early 1900s can’t boast of such low rates.

We’ve been in a very long bull market in bonds. Long sustained trends tend to lull participants into complacency. In turn, complacency tends to ratchet up the use of leverage. We don’t know how much leverage there is behind this lending market, but we suspect more than there was 30 years ago Carry trade – borrowing short term to buy long-term credit instruments – has been a very lucrative, easy-money trade over the past decade.

The point is, 31 years is a long time, record lows don’t last forever, and neither does easy money. If Minsky’s hypothesis holds, the odds interest rates could rise in the near future is much higher than many borrowers think.

Graph Courtesy from NY Times in an article by Vickie Elmer April 1, 2012.  Data and Commentary provided by Fred Ashe, from DE Capital Mortgage.

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