Archive for Co-op

May
08

How’s the Market – April 2015

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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.

 

AV_Med_SP+DOM_04-2015

 

Disc_AP_04-2015

 

Sales_Region_04-2015

 

 

 

 

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Douglas Elliman released the First Quarter report for Manhattan Residential Co-op and Condo sales market.  The Manhattan Sales Quarterly Survey of Co-op & Condo Sales for 1Q-2015 reported here and summarized below was prepared by Miller Samuel for Douglas Elliman.

 

1QTR2015_Manhattan_Sales

  • The Manhattan housing market continued to show strong results, but did not keep up with the record pace set last year. Price trends showed more stability than we’ve seen over the past few years and overall inventory increased slowly. Sales levels remained above average and properties sold more quickly than they did last year. We look forward to very active spring and summer market periods.
  • Median sales price was essentially unchanged at $970,000 as compared to the prior year quarter and was the fifth highest quarterly result in 25 years. Considered the gateway for the first-time purchase market, the market share of co-op studio and 1-bedroom sales expanded.
  • The luxury market showed weaker results than the over all market as all price indicators fell short of last year’s levels and listing inventory expanded at a faster pace than re-sale inventory. Luxury median sales price declined 10.6% to $5,142,162 from the prior year quarter. Luxury listing inventory rose 14.1% to 1,575 from the prior year quarter.
  • Although the number of sales fell 19.5% to 2,661 from the prior year 25-year record, it was the third highest first quarter on record. Listing inventory expanded 5% to 5,243 from the prior year quarter, however much of the gain came from new development. Approximately 39% of co-op and 60% of condo sales in the first quarter were paid for with cash for a weighted average of 47%, up from 45% in the prior year quarter.
  • Days on market, the average number of days to sell all apartments that closed during the quarter, fell by 15 days to 100 days over the same period.

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Douglas Elliman released the Fourth Quarter report for Manhattan Residential Co-op and Condo sales market.  The Manhattan Sales Quarterly Survey of Co-op & Condo Sales for 4Q-2014 reported here and summarized below was prepared by Miller Samuel for Douglas Elliman.

Manhattan_Sales_4QTR_2014

“All Manhattan price indicators showed robust gains from the prior year quarter, largely driven by low inventory and higher than average demand.”

 

Manhattan housing prices continued to rise, but the market remained challenged by the lack of inventory. Sales activity was high, but did not equal the record volume achieved last year. New development market share continued to expand with more new offerings coming online in 2015. The current market pace remains brisk with nearly half of all sales resulting in purchase prices that were at or above the asking price. Based on the strong finish for 2014, we are anticipating an active market going into 2015.

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.

Sep
04

How’s the Market – August 2014

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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.

 

AV&MED_SP_DOM_08-2014 - Copy

DISC_AP_08-2014 - Copy

Sales_Region_08-2014 - Copy

 

Douglas Elliman released the Second Quarter report for Manhattan Residential Co-op and Condo sales market.  The Manhattan Sales Quarterly Survey of Co-op & Condo Sales for 2Q-2014 reported here and summarized below was prepared by Miller Samuel for Douglas Elliman.

 

“Manhattan housing prices continued to press higher, driven by low inventory and seven consecutive quarters of year-over-year sales growth”

 

  • Manhattan median sales price increased 5.2% to $910,000 from the prior year quarter.  Much of the gain came from the co-op market, which comprised 59.5% of sales and a Q2_2014_Manhattan_Sales9% raise in median sales price.
  • The number of sales that closed at or above list price at the time of contract was 45.9%, the highest level reached since 51.6% in the third quarter of 2008.  Although the number of sales increased 6.3% from the prior year quarter for the seventh consecutive quarter, the increase was well below the 27.6^ average growth of the past 4 quarters.
  • The easing rate of sales growth, along with rising prices, has allowed inventory to expand.  Inventory expanded 18% to 5,659 from the prior year quarter with the gain largely attributable to the condo market
  • Listing discount, the percentage difference between the list price at time of sale and the sales price, was essentially unchanged at 2.8% from the prior year quarter.
  • Days on market, the number of days from the last price change to the contract date, fell by roughly half to 96 days from the prior year quarter as languishing listings were sold off.

The Elliman 2004-2013 Decade Survey for Manhattan Co-op and Condo Sales was released recently at Elliman.com  and summarized below was prepared by Miller Samuel for Douglas Elliman.

 “The number of sales reached second highest level in 25 years as listing inventory fell to a 14-year low.”

Manhattan Decade Report

  •  After 4 remarkably stable years with activity hovering just over the 10,000 sale threshold, the number of sales jumped 21.2% to 12,735 from the prior year level to the second highest total in 25 years. A record of 13,430 sales was set in 2007.
  • Median sales price edged up 2.4% to $855,000 from the prior year.
  • Average sales price increased 1.9% to $1,443,753 and average price per square foot rose 4.6% to $1,136 respectively year-over-year.
  • Listing inventory fell 12.3% to 4,164, from prior year levels to a 14-year low.
  • Days on market, the number of days from the last price change to the contract date, fell 29.7% to 121 from the prior year.
  • Listing discount, the percentage difference between the list price at time of contract and the sales price, fell to 3% from 5.6% in 2012.

Manhattan_Sales_Q4_2013Douglas Elliman released the Fourth Quarter report for Manhattan Residential Co-op and Condo sales market.  The Manhattan Sales Quarterly Survey of Co-op & Condo Sales for 4Q-2013 reported  here and summarized below was prepared by Miller Samuel for Douglas Elliman.

“The market was characterized by record fourth quarter sales volume, record low inventory and record condo prices.”

  • There were 3,297 sales, up 26.9% from the prior year period, to the highest fourth quarter sales total in 25 years.
  • With the surge in sales in the fourth quarter, inventory could not enter the market fast enough to meet demand, causing inventory to fall 12.3% to a record low of 4,164 from the prior year quarter.
  • The individual co-op and condo markets indicated that record low inventory and record high sales were finally pressing prices higher. Co-op price indicators showed robust price gains in the lower half of the market and the condo median sales price set a 25-year record high of $1,320,000.
  • Listing discount, the percentage difference between the list price at time of sale and the sales price, slipped to 3.6% from 3.7% in the prior year quarter.
  • Days on market, the number of days from the last price change to the contract date, dropped by nearly half to 95 days from 177 days in the prior year quarter as supply evaporated.

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.

Sep
02

Co-op & Condo Tax Abatement – New Rules

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In New York City, real estate taxes are an important part of the value, and it seems the rules are about the change.

According to Jerry Feeney, Residential Real Estate Attorney   the following is a summary of the changes.  As always, it is important to see qualified advice when dealing with legal and tax matters.

 

  • Primary Residence:  The apartment must be the owner’s primary residence to be eligible for the abatement, and parking spaces and storage units are excluded.  This important change is effective July 1, 2014.  Non-residents who received the abatement in 2011/2012 will see the abatement phase out in 2012/2013 and 2013/2014.  By 2014/2015 the abatement will be completely phased out for non-residents.
  • Multiple unit ownership:  Ownership of 4 or more units in the same building disqualifies the owner from any abatement, regardless of whether one of them is a primary residence.   If one owner owns 3 or fewer units, and one is the primary residence, the abatement will apply to all of the units.  If none of the three units are owner occupied, none will get the abatement.
  • Other Exemption/Abatement programs:  This change in the law will not affect other real estate tax relief programs, but recipients of certain relief programs are ineligible for the co-op/condo abatement, without regarding primary residence status.  These programs are (a) J51, (b) 420c and 421a, b, and g. (c) HFDC, (d) DAMP, (e) Mitchell-Lama, and (e) clergy.  Personal exemptions, however, will have no impact on the receipt of the co-op/condo abatement.  Examples of these programs are:  (a) STAR, (b) disabled homeowner, (c) senior citizen, and (d) veterans
  • Trusts:  In determining principal residence for a unit owned by a trust, NYC Finance requires that the unit is the principal residence of the beneficiary of the trust, trustee, or in the case of a life estate, the life estate holder.

 

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

 

Information provided by Jerry M Feeney, Residential Real Estate Law 

 

May
07

Bigger Loans = More Hoops to Jump Through

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Jumbo loans, for most lending institutions, are defined as mortgages over $625,500, and they come in three sizes: small, medium and large. Face it if you’re buying in New York City and need a mortgage, you’ll likely be seeking one of these jumbo loans.

While several banks offer these Jumbo Loans, the may have different requirements.  For Example

  • EverBank offers a Jumbo Loan up to $1.5M and requires a 20% down payment, and 12 months of cash reserves; a loan from 1.5M to 2.5M requires a 30% down payment and 18 months cash reserves; and over $2.5M requires $35% down and 2 years of cash reserves.
  • Bank of America offers a jumbo loan up to $1M with a 20% down payment; a $2.5M to $5M loan with 30% down; and $5M+ loans require a 35% down payment.
  • Wells Fargo Home Mortgage has several tiers starting at $417,000 to $2M with 20% down payment and 12 months cash reserves.  After that, for every $1M above the $2M requires an extra 5% down and additional cash reserves.

While most lenders build in some flexibility to their loan programs, expect to see credit score requirements of 720 and above and debt-to-income ratios of 40% to 43%.  You might be able to get more favorable terms if you have a strong financial profile.

Some other things to think about:

  • Relationship:  The first place to look is the lender where you do the majority of your business.  If you have a strong relationship with your lender already, they may be more likely to relax their requirements.
  • Identify liquid assets:  Some lenders will accept assets such as stocks that can be liquidated easily if the borrower does not have sufficient cash reserves to meet the tier requirements.
  • Shop sooner rather than later:  The new Consumer Financial Protection Bureau rules go into effect in early 2014.  These protections will tighten standards for verification of borrower income or assets and make interest-only loans difficult or impossible for many borrowers to obtain.

Based on Wall Street Journal article by Anya Martin

Last winter lawmakers in Albany enacted an extension to the 17.5% tax abatement through June 30, 2015, but they placed a restriction that excludes pied-a-terres.  Since all homes owned by LLCs and Trusts are considered pied-a-terres, they are excluded from receiving the abatement, according to the city’s Department of Finance.  According to spokesman Owen Stone, “We have not changed our interpretation of the law – the law has changed.  Under the previous law there was no restriction, and LLCs and Trusts could qualify, under the new law, they do not.”

This new law could affect approximately 7,700 homeowners who are concerned with their privacy and the convenience of owning property in a trust.  Some experts are saying the new law is penalizing people who want this privacy or convenience, even as the breaks are seen as essential to the market’s growth.

Even the most strict co-op boards who did not allow pied-a-terres have allowed them in recent years for trusts and LLCs, as long as only the trust holder lives there.

Based on article at The Real Deal

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Apr
26

Pet Owners and New York City Apartments

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Pet friendly buildings, no pets allowed and all variations in between face pet owners when looking for a new apartment.  Some pet-friendly co-ops and rental buildings place restrictions on number, size and breed of pet.  What’s a pet owner to do?

Some pet owners will offer large sums of money to cover potential damages to flooring  and lobby carpets.   Some large dog owners will fudge the pet’s weight and breed to gain entrance to a building.  Some co-op boards require interviews and references for the pet (see our article Board Interview for Pets ).  Pet-friendly co-ops and rental buildings have many restrictions on pets.  Many pet-owners are devoted to a certain breed, and choosing a different (smaller) breed is hardly a compromise in their eyes.

During the market slump when many landlords were desperate to fill vacancies, you could move an elephant into your apartment.  Now that the market is tight, landlords are choosier.    Restrictions on pets have become the norm, especially with large dogs and certain breeds like Dobermans and Rottweilers.   In almost all cases approval is required for more than two animals. 

Buildings generally have rules for many reasons.  People are frightened of animals, especially big scary looking pets; there are concerns about property damage; barking disturbs the peace of other residents; jumping and nipping make people uncomfortable; and multiple cats can cause unpleasant odors.   Add to that that there are millions of people with fears, phobias and allergies, and it’s little wonder that pets are becoming even more of an issue.

There are generally exceptions to the rules.  Service dogs for people with disabilities can be allowed with proper documentation.  If the pet owner can provide proof the animal is trained as a service animal and documentation from a licensed medical professional, they might get a waiver. 

 To a pet owner, the pet is part of the family.  Finding a place for them can be frustrating and heartbreaking often causing the owner to pass on an otherwise great place for the humans to live. Nearly half the apartments that would be otherwise acceptable will be taken out of consideration if you have pets.  Patience, persistence and compromise are required when looking for an apartment when apartment hunting with Fluffy or Fido.

 

Based on New York Times article.

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Apr
21

Legal Question of the week: Lost Co-op Stock and Lease

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Q:  I am selling my co-op.  I have turned my apartment upside down and inside out, inspecting every scrap of paper and I cannot find my Stock and Proprietary Lease for the apartment.  I’ve contacted the managing agent who is requiring me to not only execute a Lost Stock and Lease Affidavit, which I understand is common, but they also are requiring me to post a bond.  Is this common practice?

A:  No, it is not common practice for a co-op to require a shareholder to post a bond if the shareholder loses their stock and lease.  While the co-op has a right to request a bond, generally, the co-op simply requires the shareholder (or the party who lost the stock and lease) to execute a Lost Stock and Lease Affidavit.   Lost Stock and Lease Affidavit generally states that the shareholder (i) is unable to locate the stock and lease, and (ii) is required to indemnify the managing agent and co-op for any loss that the co-op incurs as a result of the loss of the stock and lease.  The shareholder (or the party who lost the stock and lease) will likely incur a fee in connection with the Lost Stock and Lease Affidavit.

 Important tip:  One of the first questions your real estate broker should ask a seller of a co-op apartment who has the original stock and lease.  If the shareholder has a loan, then it is likely that the original stock and lease will be in the possession of the lender.  If the stock and lease is lost,, the managing agent for the co-op should be contacted immediately so as to determine the co-op’s procedures concerning lost stock and leases.

 

Based on REBNY article by Neil B. Garfinkel, REBY 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.

Categories : Build Your Team, Co-op
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 Q:  I am considering purchasing a condominium unit in a small building, but the condominium board does not have an accountant prepare audited financial statements.  Is there a requirement that condominium and co-op boards have accountants prepare audited financial statements?

 A:  No, there is no requirement that boards have accountants prepare audited financial statements.  However, audited financial statements prepared by an accountant provide assurance that the financial statements fairly reflect the building’s financial position.  Consequently, an audited financial statement will provide a prospective purchaser with confidence that they have an accurate picture of a building’s financial condition.  Purchasers considering a condominium or co-op that does not have audited financials should proceed with caution when conducting their due diligence.

 Important Tip:  As mentioned in a past Legal Line Question of the Week, audited financial statements for a condominium or co-op are one of the due diligence items that your real estate broker should request from the seller or managing agent as soon as possible in order to expedite the transaction.

 Based on REBNY article by Neil B. Garfinkel, REBY 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