Archive for Foreign

 

Douglas Elliman released the October 2013 report for Manhattan & Brooklyn Residential Rental Markets.  The October 2013 Elliman Report for the Manhattan & Brooklyn Rental Markets reported here and summarized below was prepared by Miller Samuel for Douglas Elliman.

 “Manhattan rental prices weakened, caused by summer sales surge that poached demand” Mahattan_Brooklyn_Rentals_10-2013

This summer’s record sales activity pulled some of the demand from the Manhattan rental market, causing prices to slip slightly from prior year levels. Vacancy rates rose to more normal levels as marketing times and negotiability remained tight and the use of landlord concessions were limited. We don’t expect much relief in rental prices for tenants anytime soon as the economy continues to improve and mortgage lending conditions remain tight.

  • Median Manhattan rental price for October fell 1.6% below the same month last year to $3,150.
  • This decline was the second consecutive year-over-year drop, following the September drop that broke the 26 consecutive month record without a decline.
  • The use of landlord concessions in Manhattan remained limited, used in only 3.7% of all new rentals with an average rental equivalent of 1.2 months.

As they have for most of 2013, Brooklyn’s rental prices continued to rise. The pace of the market remained fast, with rapid marketing times and less negotiability than we saw last year. New rental activity was brisk, as tenants continued to resist rental price increases at time of lease renewal, seeking out greater affordability but with limited options. We anticipate tight market conditions through the remainder of the year

  • Other than last May, in Brooklyn all monthly year-over-year rental price indicators have not declined in 2013.
  • Brooklyn median rental price rose 6.8% to $2,699 over the prior year quarter.

Douglas Elliman released the Third Quarter report for Manhattan Residential Co-op and Condo sales market.  The Manhattan Sales Quarterly Survey of Co-op & Condo Sales for 3Q-2013 reported here  and summarized below was prepared by Miller Samuel for Douglas Elliman.

 

“The third quarter was a period of records and near records as sales surged and inventory fell sharply.”

Manhattan_Sales_3QTR_2013

Our third quarter housing market was one of the most active in decades. Manhattan experienced the second highest number of sales in more than 24 years and the most sales in six years. Our agents helped buyers navigate rising mortgage rates, bidding wars and the lowest inventory in 13 years. It’s an exciting period for our real estate market as we look forward to continued improvement into the next year.

  • The 3,837 sales in the third quarter were 30% above last year’s total and second highest only to 3,939 in the second quarter of 2007.
  • Listing inventory dropped 21.9% to 4,567 from the prior year quarter, the lowest since it was tracked in 2000.
  • The sales share of 1-bedroom apartments reached 40.5%, a 15-year high as co-op sales expanded to 62% share 9-year high. The shift to lower priced units in response to rising rates caused overall median sales price to slip 2% although individually, co-op and condo median sales price rose 0.8% and 3.7% year-over-year.
  • Days on the market, the number of days from the last price change to the contract price, collapsed to 88 days from 191 days in the prior year quarter. The elevated year ago level reflected the absorption of languishing older listings as inventory began to fall sharply.
  • Listing discount, the percentage difference between the list price at time of sale and the sales price, fell sharply to 2% from 7.2% in the prior year quarter.

In 1971, the city launched the 421a program as an incentive for developers to build projects on underused or unused land.  Today, a record number of condos have a 421a status.  Ranging from 10 years duration below 96th Street to 15-25 years in Upper Manhattan, the exemptions do have an expiration date.  The exemptions start to decrease annually after the first two years, which usually means rising common charges.

Historically, condos will sell for a higher price if the common charges are low.  While in development, the developer will set the rate for the monthly charges until a board is in place.  Luxury buildings with high-end amenities like rooftop decks, concierges, etc. may have lower common charges while the 421a Tax Abatement is in force.

Once the tax abatement expires, condo boards are generally scrambling to find ways to reduce costs.  Some condo bards have taken the drastic action of terminating their contracts with property management and hiring an on-site manager.  This extreme step takes a dedicated hands-on board to oversee the manager, decrease costs and look for ways to raise revenue.  Board members are generally volunteers, so finding people willing to give their time for the community is sometimes difficult

Some condo boards find other ways to chip away at the expenses; cutting staff, renegotiating mortgage rates, installing high-efficiency lighting in the common areas, and other similar strategies. Some cost-cutting measures come with risk of reduced services, but the upside remains – lower common charges generally create higher selling prices.

 

Inspired by The Real Deal Article by Hayley Kaplan

Douglas Elliman released the August 2013 report for Manhattan & Brooklyn Residential Rental Markets.  The August 2013 Elliman Report for the Manhattan & Brooklyn Rental Markets reported here and summarized below was prepared by Miller Samuel for Douglas Elliman.

“The Manhattan rental market has not seen a decline in rents for 26 consecutive months.”Aug_2013_M&B_Rental

  • The Manhattan median rental price increased by 1.8%, to $3,150 from the same month last year. The last time this metric posted a decline was in June 2011, an unprecedented 26-month run. Concessions from landlords continue to be rare with only 2.5% of all new rentals offering some sort of special rewards, averaging the equivalent of 1 month of free rent.
  • Over the past several months, rents in Manhattan continued to rise, but at a much slower rate than we experienced earlier in the year. The number of rentals jumped this month as tenants sought greater affordability at the time of lease renewal. Negotiability and marketing times were low as the use of concessions by landlords remained rare. The tight mortgage lending and improving economic conditions are both helping to keep rents near record levels.
  • Median rental price in Brooklyn increased 4.6% to $2,850 from the same month last year, reaching a 5-year high. Average rental price and average rental price per square foot increased by 3.6% and 6.9% respectively from the same period last year
  • The number of new rentals in Brooklyn surged from this time last year as tenants sought relief from the rising rental prices. More potential tenants did this by seeking new places to rent in lieu of renewing existing leases. The price of a rental reached the highest level seen in over five years. Properties have been renting at a faster pace as negotiability continued to decline, consistent with the tight market.

Aug
25

Brooklyn Rents on the Rise – Rivaling Manhattan Prices

Posted by: | Comments Comments Off

Brooklyn, once thought of as the affordable alternative to Manhattan, is seeing a steady climb in rental prices.  Especially in the Williamsburg, Greenpoint, Brooklyn Heights and Cobble Hill neighborhoods, the average rent climbed to $3,035 in July, an 8.2% increase according to the Elliman Report for Manhattan and Brooklyn Rentals for July 2013.

Long time Brooklyn residents are concerned about being priced out of the market as more and more people are finding Brooklyn to be their primary option when looking at rentals, causing demand to go up, along with the prices.  Manhattan’s rents have been rising for more than two years, but the growth seems to be slowing.

 

Excerpted from NY Post column 

Douglas Elliman released the June 2013 report for Manhattan & Brooklyn Residential Rental Markets.  The June 2013 Elliman Report for the Manhattan & Brooklyn Rental Markets reported here and summarized below was prepared by Miller Samuel for Douglas Elliman.

 

“The rate of rental price growth is beginning to show signs that the pace seen over the past two years might not be sustained”

Manhattan_Brooklyn_06-2013_Rental

  • After two months of slowing price growth in Brooklyn, there was a jump in rental prices for June, the largest gain in nearly a year. The rise in rents was consistent across all sizes. Properties are taking somewhat longer for landlords to rent and negotiability was basically unchanged from this time last year. Similarly to Manhattan, we don’t see much weakness in the direction of rental prices over the coming year.
  • There wasn’t much relief for Manhattan renters in June. Median price edged up slightly as rents remained at high levels and landlord concessions such as free rent were rare. Although negotiability remained unchanged, it is taking a bit longer than last year for landlords to rent their apartments. We don’t see much change on the horizon as tight credit and rising employment are expected to continue over the next year.

Douglas Elliman released the September 2013 report for Manhattan & Brooklyn Residential Rental Markets.  The September 2013 Elliman Report for the Manhattan & Brooklyn Rental Markets reported here and summarized below was prepared by Miller Samuel for Douglas Elliman.

“The heavy Manhattan sales volume siphoned off some of the excess demand in the rental market causing prices to slip.”M&B_rentals_09-2013

 After more than two years of rising rents, Manhattan prices slipped a bit as compared to last year. Rents haven’t been rising as quickly as they did in the previous year and the mortgage rate jump last spring pulled many would-be renters into the sales market by the end of the summer. Landlord concessions continued to be rare, but tenants continued to resist rent increases at the time of lease renewal by seeking better affordability if it could be found. With rising mortgage rates and tight credit we expect rents to remain at a plateau for the coming quarters.

  • Median rental price slipped 3.1% to $3,095 from the same period last year. This was the first year-over-year decline since June 2011, as heavy sales volume pulled more renters into the purchase market, incentivized by concerns over rising mortgage rates. The use of concessions by landlords remained limited to 2.7% of new rentals, averaging a 1.2-month rental equivalent.

 

Brooklyn rental prices continued to rise at a fast pace reaching their highest level in five years. Marketing times were faster and there was limited negotiation of list price. An increasing number of renters challenged by higher prices were seeking out affordability rather than renewal. We expect this trend to continue into next year.

  • Median rental price increased 10.4% to $2,800 from prior year levels, second only to the prior month which had been a 5-year high.

Douglas Elliman released the May 2013 report for Manhattan & Brooklyn Residential Rental Markets.  The May 2013 Elliman Report for the Manhattan & Brooklyn Rental Markets reported here and summarized below was prepared by Miller Samuel for Douglas Elliman.

“The rate of rental price growth is beginning to show signs that the pace seen over the past two years might not be sustained.”M&B_Market_May_2013

Strong price growth has defined the Manhattan rental market for the past two years. Landlord concessions remain rare and vacancy rates are still very low. Marketing times remain short and there is limited negotiation on price. The key drivers of high demand include improving New York City economy and tight mortgage lending conditions, both of which are expected continue through the year.

For the second consecutive month, Brooklyn rental price growth slowed from year ago levels but it is not yet clear whether this is a sustainable trend.  The market has enjoyed strong growth for much of the past two years and the number of new rentals jumped as more tenants opted to search for affordability rather than renew. The key drivers of tight credit and rising employment remain firmly in place and we expect Brooklyn rents to remain elevated over the near term

Comments Comments Off
May
16

When Foreign Persons Sell

Posted by: | Comments Comments Off

In New York real estate sales there is one sure bet; you will pay taxes.  Whether you are a US tax payer or a foreign investor, the State of New York and the US Government will get their cut.

The question is when will you have to pay up?  The rules are a bit complicated, but one of our favorite legal bloggers, Jerry Feeney explains it like this:

For New York State: people who sell real estate in New York State, whether they are individuals, trusts, estates, or LLCs, must pay the tax at closing on the estimated gain as a condition of the sale, unless they are exempt from payment at closing.  Most transactions are exempt.  However, the exemption is only about the timing of the tax payment, not the obligation to make the payment.   Make no mistake; the seller is accountable to the taxing authority to account for the gains.

If you are a New York State resident, and/or the property being sold was the principal residence of the seller for 2 of the last 5 years, the exemption from paying at closing applies.

For example:  A seller who has owned a condo in New York City that is used as a second home, and is a New Jersey resident must fill out the applicable tax foand remit the tax payment on the estimated gain from the sale or they cannot close.  This is a very good reason to have a good accountant on retainer.

For United States Taxes, people who sell real estate in the United States must also certify at closing if they are exempt from the federal withholding requirement on real estate unless the sales price is $300,000 or less and the property is acquired for a primary residence.  If not, the seller must certify that they are exempt from withholding.  Face it, most New York City real estate is over $300,000.  There are 2 ways the seller could be exempt; if they are U. S. citizens, or resident aliens.  Others are ‘foreign persons’ under the statue and must withhold 10% of the purchase price unless they have obtained a withholding certificate from the IRS approving a smaller withholding.  These certificates can take up to 90 days to obtain, sometimes more, so be sure your attorney starts the process early to ensure a smooth closing.

For Example:  A Canadian citizen who does not have any immigration status in the U.S., and who sells an investment property would be required to have 10% withheld at closing, which must be remitted to the U.S. Treasury.  This seller would then need to file a U.S. Tax return for the year that the property was sold, regardless of whether they have any other U.S. income.

It is vitally important that your team include a qualified attorney and accountant to help you navigate these treacherous and complicated waters.

Based on article by Jerry M. Feeney,  Esq., Residential Real Estate Attorney.

This post is provided as informational proposes only and should not be construed as legal, accounting or tax advice by the RealEstateGeezer. You should seek advice from a qualified professional.

 

Oct
20

Legal Question: What is a 1031 Exchange?

Posted by: | Comments Comments Off

Q:  What exactly is a 1031 Exchange?   Is it true that you do not have to pay capital gains taxes when you use a 1031 Exchange?

A:  A “1031 Exchange” refers to Section 1031 of the Internal Revenue Code.  A 1031 Exchange enables a seller of an investment property to defer paying capital gains taxes on their sale by taking the proceeds from the sale of the investment property and purchasing a replacement (“like kind”) property.

The seller does not avoid paying capital gains taxes.  Rather, the seller defers paying capital gains taxes, which enables the seller of an investment property to use the entire proceeds from their sale to purchase another property.  

Important Tip:  Please note that the seller must comply with very specific rules in order to utilize a 1031 Exchange and an accountant or attorney should be consulted beforehand.

Information provided by Neil B. Garfinkel, REBNY Residential Counsel Partner-in-charge of real estate and banking practices at Abrams Garfinkel Margolis Bergson, LLP

This post is provided as informational proposes only and should not be construed as legal, accounting or tax advice by the RealEstateGeezer. You should seek advice from a qualified professional

Comments Comments Off

This week, we released our Second Quarter report for the Manhattan Residential Rental Market.  Manhattan Residential Rentals Market Overview Q3 2012 reported here and summarized below was prepared by Miller Samuel for Prudential Douglas Elliman.

“Brisk market pace continues as rental prices continue to rise and marketing time remains near a 20-year low”

  • Median rental price was $3,195, up 10.2% from $2,900 in the same period last year.
  • Net effective median rental price (after concessions) was up 8% over the same period.
  • Landlord concessions accounted for 2% of all rentals with an average of 1 month free rent.  This compared to 8.6% of all rents in the same period last year

Comments Comments Off

The friendly rivalry between London and New York City just tipped in New York’s favor in the global competition for wealthy buyers of million-dollar homes.  According to a recent study by Knight Frank, an international property consulting firm in London, the difference hinges on the tax burdens faced when heading to the closing tables in each city, with New York real estate purchases  over $3.1 million (about £2 million) resulting in about half as much in transaction taxes as those in buying in London.

In March, the British government raised the ‘stamp duty’ on properties valued over £2 million from 5% to 7% of the total purchase price.  Offshore corporations pay a staggering 15% to capture the revenue from wealthy foreigners who are the biggest buyers of central London properties.  For years, they have been legally avoiding paying stamp duty by structuring their deals through offshore entities.  Foreigners will also be subject to capital gains taxes when they sell their British properties.  The total sales in central London over £2 million has fallen by at least 3% from April to July compared to the same period in 2011.

Members of the London real estate community are outraged, saying the government is trying to wring more revenue from a thriving part of the British Economy.

European countries, who are struggling with recession and deficits, including France and Italy, have made similar moves to extract more from the wealthy.

Many billionaires who are, for the most part, obsessed with secrecy, tend to hide their identities inside complex corporate structures to protect their privacy.  These corporate structures will now cost buyers additional tax to protect their privacy.

The big question is, will the higher cost of buying in London and other cities in Europe drive high-end buyers to New York?  Even though New York is lagging in revenues, and already impose a ‘mansion tax’ on purchases of more than $1 million, there haven’t been any serious moves to push real estate taxes higher at this point.

Inspired by New York Times article

Jun
17

In the News

Posted by: | Comments Comments Off

6/11/12  Manhattan apartments tip furthest in favor of buyers in last six years:  Amid rising rents, buying a Manhattan apartment hasn’t looked this sensible since 2006. Citing data from appraisal firm Miller Samuel, Bloomberg News reported that in the first quarter the average cost of buying was 20.8 times more expensive than the annual cost of renting, the smallest spread since the end of 2006, when buying was 20.4 times the cost of renting. In the second quarter of 2008, the multiple was 26.7.   Read the full article at the Real Deal

6/11/12:   For Comedian, Leading Her Condo Board Is a Serious Matter:  To sit on the board of a condominium or cooperative in New York City is to exert exquisite control over your building, to decide who gets to buy Apartment 12C and to pick the color of the lobby wallpaper. But it is also a position that comes with neither compensation nor thanks, and it requires sitting through hours of bickering over questions like whether the doormen ought to wear little caps. The ranks are often dominated by retirees, real estate brokers and lawyers.   Read the full article in the New York Times 

6/13/12  American buyers join foreigners in flight to city’s luxury market:  Wealthy Americans have been lost in the hysteria over foreign buyers descent upon the city’s luxury real estate market, but in the last week domestic buyers have returned with a vengeance. The Wall Street Journal noted that two apartment deals totaling $110 million closed Monday to foreign buyers.  Read the full article at the Real Deal 

6/14/12  Hospital for Special Surgery Unveils Plan for New Building:  The Hospital for Special Surgery unveiled plans Wednesday to build a 207,000-square-foot, 13-story ambulatory care facility.  The proposed building would included three floors of operating rooms for ambulatory surgeries — where patients stay up to 23 hours — along with a floor for recovery.  Read the  full article at DNAinfo.com

Jun
10

In the News

Posted by: | Comments Comments Off

6/3/12  Tourists Drive Retail Surge in Manhattan:  Tourists are spearheading a retail spending surge in Manhattan, with $52.4 billion expected to pour into the cash registers of clothing stores, electronics shops and other outlets by the end of 2012, according to a report being released Monday.  See the article in the Wall Street Journal 

6/6/12  Foreign investment in NYC commercial properties doubles, Knakal says: VIDEO:  While foreign investment in New York City residential real estate has captured the headlines, Massey Knakal Realty Services Chairman Robert Knakal appeared on CNBC’s “Street Signs” this afternoon to say foreign investors have also sought commercial properties (see video above). He reported seeing twice as much foreign investment in real estate thus far in 2012 as he did during the same period last year.  See the Video and read the article at The Real Deal 

6/6/12  New York Hospitals Look to Combine, Forming a Giant:  A proposal to bring together NYU Langone Medical Center and the Continuum Health Partners network would change how medical care is delivered in the city.  See the full article in the New York Times   

6/7/12  Reports:  Manhattan rental market gets even tighter:  With rents again hitting record highs, vacancy rate dips below 1%.  See the entire article at The Real Deal

Jan
20

Enticing Foreign Investors – Buy a home get a Visa?

Posted by: | Comments Comments Off

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.

Source:  Los Angeles Times story

Categories : Buyers, Foreign, The Process
Comments Comments Off