Archive for Move-ups

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-2014 reported here and summarized below was prepared by Miller Samuel for Douglas Elliman.

 “Manhattan housing prices continued to rise in the third quarter.  Rising inventory remained inadequate to meet the high level of demand”

3QTR Manhattan Sales

  •  The supply and demand imbalance has begun to push housing prices higher. Median sales price rose 4.2% to $908,242 from the same period last year. As a result of the shift towards more 3-bedroom and 4-bedroom sales, the overall average sales price jumped 17.4% to $1,684,729 from the prior year quarter.
  • The monthly absorption rate, the number of months to sell all inventory at the current rate of sales, increased to 5.3 months from the prior year record low of 3.6 months. As a result of limited supply and fast market pace, 49.2% of all transactions were sold at or above list price at time of sale.
  • Despite the third consecutive quarter with a year-over-year rise in listing inventory, supply remains 16.1% below the 14-year third quarter average of 6,957. Listing inventory jumped 27.6% to 5,828 from the prior year quarter, with a much larger increase seen with condos than co-ops.
  • Days on market, the average number of days to sell all apartments that closed during the quarter, expanded by 4 days to 92 days, marking the second fastest marketing time in 15 years.
  • Listing discount, the average percentage difference between the listing price at the time of sale and the sales price fell to 1.1% from 2% in the year ago 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.

Jan
23

Trading up? Be prepared to wait

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You’ve decided to move up to a bigger or better apartment.  You have all your ducks in a row, credit score is near perfect, your broker is the best in the business, but you’re not getting anywhere.    Listings are scarce and credit is tight, so you end up sitting out because you can’t find what you’re looking for, have been outbid or you can’t get a good loan.

Two-bedroom apartments are particularly challenging since the market is shrinking in this area, according to Miller Samuel.  The available number of two-bedroom apartments is down by 28.4% from the same period a year ago.   This is largely due to low equity since the fall of prices in 2008; selling may not net enough extra cash to move to a bigger or better place at a price move-ups can afford.  The down payment requirements also come into play here as people need to dig for the cash to make their next move. 

Financing is another barrier to moving up.  Only the strongest borrowers with the best credit scores and income are being approved for loans with the favorable rates.  Others who are self-employed or receive a large portion of their income in commissions and bonuses are meeting resistance, and if they can get approved at all, the rates are appalling.  Without reasonable loans, buyers are watching their dream homes get snapped up by others.

It seems that contracts are being landed by the most aggressive buyers.  They are the first in the door at an open house and can make up their minds quickly.

Tips:

Consider a lease-back - making the sale of your current place contingent on the option of renting from the buyers for a few months to help you find a new place in a tight market.

Get in Early – be the first in the door at an open house.  Many websites like Douglas Elliman allow you to save searches and will send you an email for every new listing that meets your criteria.

Be prepared – Make sure all your paperwork is lined up including your mortgage pre-approval and your financials so you can make an offer on the spot.

Work with the right team – A responsive broker and real estate attorney can make all the difference in a hot market.

http://www.nytimes.com/2012/12/16/realestate/trading-up-can-be-hard-to-do.html?pagewanted=all

This week, we released our Third Quarter report for the Hamptons & North Fork Sales Market.  Hamptons & North Fork Sales Overview Q3 2012 reported here and summarized below was prepared by Miller Samuel for Prudential Douglas Elliman.

“The East End market saw its highest number of third quarter sales in six years”

 

  • Number of sales increased 4.3% from the prior year quarter to 561, the metric’s highest third quarter total since 2006.
  • Listing inventory fell 14% from the prior year quarter to 1,924. Over the same period, the monthly absorption rate, or number of months to sell all listing inventory at the current pace of sales, was down from 12.5 to 10.3 months, the second fastest rate in over four years.
  • Median sales price fell 9.3% from $700,000 in the same quarter last year to $635,000, largely due to an increased number of lower-priced sales. Sales below $1M increased to 69.9% market share, up from 67.1% in the prior year quarter and above the five-year average of 66.5%.
  • Days on market, or number of days from the last price change to contract date, was 192 days, up from 170 in the prior year quarter.
  • Listing discount, the percentage difference between the list price at time of contract and the sales price, fell from 11.3% in the prior year quarter to 8.6%.

Oct
20

Legal Question: What is a 1031 Exchange?

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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

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You’ve found a great apartment, in the right location, a great price, in a terrific building; in fact it’s almost perfect. The problem is you need an extra room, for the baby, watching late night TV while your spouse sleeps or perhaps a home office. Now what?

The answer could be a temporary wall to carve out the extra space. But it needs to be done properly and meet certain safety standards. And you may need permission from building management or the Board.

Room Dividers NY,  1Wall 2 Rooms, and  All Week Walls   are a few of the many companies the city install pressurized walls. These so–called pressurized walls are made using only a tension system can accommodate most any size or shape of room, without leaving behind screws or adhesive residue when they are removed, but look and feel like ‘real’ walls. They can be attractive and functional, offering the privacy or separation needed for an office, TV room or extra bedroom. You may even be able to mount your flat-panel TV to one.  When the wall is no longer needed, it can be removed.

New York City is aggressively enforcing a long-standing but largely ignored code requiring approval from the Department of Buildings for permanent walls. According to the City Building Department, those wishing to divide a space need to rely on bookshelves or partial walls that don’t reach the ceiling. Temporary walls must not block exit routes or interfere with ventilation or sprinkler systems, as well as meet minimum room size requirements.

This new enforcement stems from a fatal fire in 2005 in the Bronx and subsequent criminal prosecution of the landlords and two tenants on manslaughter charges. According to the city, the illegal partitions put up by the tenants had disoriented the firefighters and lead to their deaths.

Safety is of paramount importance. Egress routes, maximum travel distances as called out by the building code as well as sprinkler coverage, smoke and carbon monoxide detectors should be considered before attempting to place a temporary wall.

Inspired by New York Times Article by Marc Santora.

Oct
27

Third Quarter 2011 Long Island Sales Report Released

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Today we released third quarter sales  for the Long Island residential market.  The Long Island Market Overview Q3 2011 reported here and summarized below was prepared by Miller Samuel for Prudential Douglas Elliman.

“Sales activity jumped above last year’s levels, as listing inventory slipped.  Negotiability between buyers and sellers held steady.”

  • Median sales price declined 3.2% to $365,000 from $377,250 in the prior year quarter. Average sales price followed a similar pattern, declining 3.9% to $457,496 from $475,946. The decline is largely attributable to last year’s federal homebuyers tax credit that had pushed sales prices higher.
  • There were 5,141 sales in the third quarter, 18.4% above the 4,343 total in the prior year quarter and 22.3% above the prior quarter total of 4,205. The current total is the fourth highest quarter in three years, led by three quarters significantly impacted by the federal homebuyers tax credit from the second half of 2009 through early 2010.
  • There were 21,462 listings on the market at the end of the third quarter, 1% less than 21,670 listings in the prior year quarter and 5.8% less than 22,772 listings in the prior quarter.
  • The average number of days to sell a property from its original list date to contract date was 116, nominally longer than 112 days in the prior year quarter.
  • The listing discount, or negotiability between buyer and seller, measures the percentage discount from the original list price and the sales price, was essentially unchanged at 6.5% in the third quarter compared to 6.6% in the same period last year.

The IRS earlier this month released the new form that eligible homebuyers need to claim the first-time homebuyer credit this tax season and announced processing of those tax returns will begin in mid-February. The IRS also announced new documentation requirements to deter fraud related to the first-time homebuyer credit.

The new form and instructions follow major changes in November to the homebuyer credit by the Worker, Homeownership, and Business Assistance Act of 2009. The new law extended the credit to a broader range of home purchasers and added new documentation requirements to deter fraud and ensure taxpayers properly claim the credit.

With the release of Form 5405, First-Time Homebuyer Credit and Repayment of the Credit, and the related instructions, eligible homebuyers can now start to file their 2009 tax returns. Taxpayers claiming the homebuyer credit must file a paper tax return because of the added documentation requirements.

The IRS expects to start processing 2009 tax returns claiming the homebuyer credit in mid-February after it completes the updating and testing of systems to meet the law’s new requirements. The updates allow the IRS to put in place critical systemic checks to deter fraud related to the homebuyer credit.

Some of these early taxpayers claiming the homebuyer credit may see tax refunds take an additional two to three weeks.

In addition to filling out a Form 5405, all eligible homebuyers must include with their 2009 tax returns one of the following documents in order to receive the credit:

  • A copy of the settlement statement showing all parties’ names and signatures, property address, sales price, and date of purchase. Normally, this is the properly executed Form HUD-1, Settlement Statement.
  • For a newly constructed home where a settlement statement is not available, a copy of the certificate of occupancy showing the owner’s name, property address and date of the certificate.

In addition, the new law allows a long-time resident of the same main home to claim the homebuyer credit if they purchase a new principal residence. To qualify, eligible taxpayers must show that they lived in their old homes for a five-consecutive-year period during the eight-year period ending on the purchase date of the new home. The IRS has stepped up compliance checks involving the homebuyer credit, and it encouraged homebuyers claiming this part of the credit to avoid refund delays by attaching documentation covering the five-consecutive-year period:

  • Form 1098, Mortgage Interest Statement, or substitute mortgage interest statements,
  • Property tax records or
  • Homeowner’s insurance records.

The IRS also reminded homebuyers that the new documentation requirements mean that taxpayers claiming the credit cannot file electronically and must file paper returns. Taxpayers can still use IRS Free File to prepare their returns, but the returns must be printed out and sent to the IRS, along with all required documentation.

Normally, it takes about four to eight weeks to get a refund claimed on a complete and accurate paper return where all required documents are attached. For those homebuyers filing early, the IRS expects the first refunds based on the homebuyer credit will be issued toward the end of March.

The IRS encourages taxpayers to use direct deposit to speed their refund. In addition, taxpayers can use Where’s My Refund? on IRS.gov to track the status of their refund.

http://www.youtube.com/watch?v=GkzB03uuGlg

More details on claiming the credit can be found in the instructions to Form 5405, as well as on the First-Time Homebuyer Credit page on IRS.gov.

Fed housing credit?

Fed housing credit?

Local media has been commenting since last August that New Yorkers seem to be blasé about the Recovery Package offer of $8,000 toward a new home. However, it was so popular nationally that Congress has extended that, and added a $6,500 offer for current owners who move.

Well, I wouldn’t pass it up if I were in the home market right now, and put my team to work finding out what you might buy with that free cash. Some new furniture and décor are obvious choices, and almost everyone needs something for their new home.

Or you could use it for other kinds of fun. Given my favorite pastimes, I might figure out how many lovely restaurant meals I could savor, including cuisine hot spots my wife and I usually reserve for special occasions.

But you have many other options. For about $600 to $1,600 you could score a pair of trendy Christian Louboutin shoes or boots at Saks, which offers 96 choices at your fingertips. Or there’s the current Prada event with hot items coming up, now available for pre-orders. While at Sak’s you could also pick up a steal on men’s watches, such as Breil Milano’s stainless steel chronograph strap watch at $1,250.

Or how about a Hermes bag? For classic Hermes, you can’t go wrong with the Birkin bag, starting at $6,000. Here’s a entire blog dedicated to the Birkin.

Here’s a tidbit from a local fashion blog: “Katie Holmes & Suri: Spotted on Madison Avenue of New York, little Suri had her own pint-sized version of Mom’s orange Hermes shopping bag. Later on, Katie was seen with a rare burgundy Garden Party Handbag that looked more like a boarding bag. The Hermes handbag offset her black pencil skirt and red heels. With all the goodies that could be stuffed into that spacious bag, Holmes was ready for anything.” The Evelyne, starting a bit under $2,500, is très chic now.

You can toast your new home with a rare champagne.  Dom Perignon Oenotheque 1993 is just $399.00 per 750 ml. bottle, limited to one per customer at Astor Wines.  Salon Blanc de Blanc, Le Mesnil – 1997 is more expensive at $459.99, but in greater supply.  You can buy a case of 6 for $2621.94.

Does your new co-op or condo allow pooches?  How about using your savings for today’s most expensive, pure bred, a Samoyed, starting at $3,000 or an English Bulldog at around $2,500.  On the other hand, if you adopt a nice homeless puppy from a shelter approved by the Humane Society, you’ll have lots of money to buy dog food and a really fancy collar, $18 and up from wwww.muttropolis.com.

And let’s not forget the sports fans.  How about season tickets to the Yankees next year?  Despite the World Series victory, top prices will actually decline, with field level seats at $250 per game for season ticket holders, down from $325 this year.

How much more stimulated could you get?  Check out my November 2 post  for housing stimulus dates and details. Go, Feds!

Buyers who can pay in full in cash for their co-op or condo apartments are in the driver’s seat.  Right now, being able to offer a seller a sure thing – with no surprises on the way to closing – will go a long way to assuring you of negotiating the best possible deal.

Pair some flexibility with cash, and you’ve got the magic ingredients of what I call FLASH.  Being flexible means being open to the seller’s needs in terms of setting the closing date – being ready to close immediately or allowing ample time for the seller to find a new home rather than demanding a quick move – offering to take care of needed repairs or accommodate the start of a school year.   With FLASH, you’ll find that the door to your new home is open, ready and waiting.

If you’re like most people – who can’t afford a full-cash sale – you can still find yourself in the “most attractive buyer” finals.  If you have great credit and can put down at least 20% on a jumbo conforming mortgage (up to $729,750 in New York), or at least 30% for higher mortgages, you’ll still set setting hearts aflutter.  Pre-qualifying for an adequate mortgage is a fabulous move to round out your VIP buyer profile

1 -The Numbers

  • Manhattan residential real estate has performed better than the broader U.S. real estate market.
  • Compared with losses of more than 40% for Los Angeles and San Francisco over the past few years, Miller Samuel reports in the third quarter 2009 Manhattan Residential Market Overview that the average price per square foot in Manhattan was $996 vs. $1289 as reported in the first quarter of 2008 , a price reduction of 23% from the peak.
  • Third-quarter 2009 data show prices declined at a lower rate while transaction volume surged 46%, a sign that the Manhattan market is starting to find its bottom.
  • As Donald Trump once said “It’s a water thing”. Manhattan is a landlocked island. While developers in most cities keep expanding outward, developers in Manhattan do not have this alternative.
  • Wall Street firms are expected to pay a record $140 billion in bonuses this year according to The Wall Street Journal. Regardless of whether these bankers deserve their lavish bonuses, their payday will boost Manhattan real estate prices.

2 -Capital of the World

  • Manhattan is a global must-see destination. Emerging markets like Brazil and China are creating wealth at a very high rate and churning out millionaires.
  • New York is often the first international destination new millionaires from emerging countries want to visit. It’s also one of the first places where they want to buy investment property or a pied-a-terre.

3- Diversity of Industry

  • Besides finance, New York has media, hospitality, advertising and professional services like law and accounting firms. These industries will be serving emerging-market economies and will benefit the local New York economy in terms of job creation and housing demand.
  • If not for the diversity of the current New York City economy, the unemployment rate would be even higher than 10.3% that was reported in August.
  • Sectors like education, health, leisure and hospitality have gained jobs, which partly offset the negative impact of the financial job losses.

4 -Quality of Life

  • New York City is one of the safest cities in the US.
  • The legal system is established and there is a better work-life balance compared with countries like China.
  • Transportation in Manhattan via the Subway system is efficient and reduces commuting time for those living in Manhattan.
  • The air in Manhattan is pristine compared to air in other global metropolises like Hong Kong.

Portions excerpted from NuWireInvestor reporting on a story written by Wei Min Tan of TheStreet.com

If you’re thinking about buying an apartment in Manhattan, this may be a great time to grab the gold ring.  Prices are much lower than the last few years – brokers are looking back to 2004-2005 for comparative prices (comps).  And mortgage rates are amazing – fixed-rate mortgages have been hovering in the 5% to 6% range, the lowest in the past 20 years except for a stray month here or there.  The experts don’t expect them to go lower and aren’t ready to predict when they’ll start going up again.

If you look at listings online, asking prices might still seem high. Sellers hate to let go of the peak value their apartments reached on paper in 2006 and 2007.  Be sure your buyers’ broker knows pre-bubble values and is an all-out negotiator for you.  Along with purchase price, negotiations can also include terms, asking the seller to pay some of the points, for example, or maintenance rebates or contributions to other closing costs . Think about finding a dedicated buyer’s broker.  He or she will negotiate harder for you and shouldn’t cost a dime, as broker’s fees should be built into the seller’s cost.

Start the process by making sure you can qualify to buy a coop or condo apartment:

  • Can you come up with at least 20% of the purchase price for a down payment?
  • Will your total housing costs (Mortgage + Maintenance–for a co-op — or Common Chargers + Taxes–for a condo) be at or under about 28 % of your income?  This ratio can be somewhat higher for a condo purchase.
  • Do you have an excellent credit score?  The best rates in NYC currently require a credit score of 760 or more. If you’re not there, note that a good mortgage broker can find fairly competitive rates with FICO scores of at least 720. If your score is below that, it’s a great idea to raise your score as much as you can before you start to shop.
  • Will you have the cash for closing costs and, what many co-op boards and/or lenders require, post closing cash reserves up to one or two years to cover mortgage, taxes, maintenance etc?

Why now?  The best answer can be found by asking recent buyers.  One new owner bought her one-bedroom co-op (with patio) in Soho in March. She had stopped looking late last fall because the prices were just out of reach.  But by early ’09 she could buy a lot more apartment than she’d expected, in a lot more locations. She ended up paying $490,000 a 15% reduction from the $569,000 asking price.  As the Time Out New York article points out in this case as well as two other examples, there are closing costs, some perhaps unexpected, beyond the simple purchase of the apartment.

Up-front costs

$98,000

Down payment on Soho apartment (20 percent of $490,000 contract price)

400

Appraisal

3,317

Bank, mortgage broker and closing costs (including credit report, loan origination, commitment and processing fees, flood certification and a document delivery fee)

2,125

Buyer’s attorney fee

1,500

Floor refinishing

1,349

Co-op fees (including building lawyer fee, first month’s maintenance and a not-yet-refunded $250 move-in deposit)

1,654

Interim interest charges (interest on the mortgage paid at closing)

1,250

Title fees (including bank lawyer fees, lien search and UCC filing)

500

Inspection (the seller tagged the sale “as is” before accepting the low offer, but still, “I wanted to know what I was getting into,” D’Agata says)

$110,095

Total
(We deleted $2,500 she’d put on another apartment where she didn’t get board approval.)

Monthly costs

$2,226

Mortgage payment (interest rate: 5.5 percent)

$29

Co-op insurance

$931

Maintenance charges and taxes

$3,185

Total

If you’re ready to make the move,  plan to live in your new place for at least three to five years and  have a comfortable cushion of post closing reserves, then it can make good financial sense to buy now.  Take a look around.  You may be pleasantly surprised at what you can afford.