Archive for Co-op

The Elliman 2004-2013 Decade Survey for Manhattan Co-op and Condo Sales was released recently at  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.

The Elliman 2003-2012 Decade Survey for Manhattan Co-op and Condo Sales was released recently and summarized below was prepared by Miller Samuel for Douglas Elliman.

Despite listing inventory falling to a record low, the number of sales edged higher for the third consecutive year

The Manhattan co-op and condo market finished 2012 with the second highest number of sales in the past decade after the 2007 peak. For the fourth consecutive year, housing prices showed stability but listing inventory fell to a twelve year low, likely placing upward pressure on housing prices in 2013. Record low mortgage rates have brought new buyers into the market despite tight mortgage lending conditions. We remain encouraged about the direction of the market and will continue to keep you informed of the trends.

  • The 2012 total number of sales was 10,508, 3.4% above the year ago total and 19.4% above the 2003 level. The number of sales remained 21.8% below the 2007 housing/credit boom peak.
  • Median sales price was $835,000, 1.8% below the year ago levels. Average sales price and price per square foot followed the same pattern, slipping 0.7% and 0.1% over the same period.
  • There were 4,749 listings available at the end of 2012, 34.2% less than the prior year and 21.9% below the 2003 total. Inventory is at the lowest level in 12 years since we began tracking the metric.
  • The number of days to sell a Manhattan apartment in 2012 was 172, a month and a half days slower than in 2011 as older inventory was absorbed from the chronic shortage of supply.
  • Listing discount, the percentage difference between the list price at time of sale and the sales price, was 5.6% in 2012, up from 4.3% in 2011 and above the 4.5% decade average


 Today, we released our Fourth Quarter report for the Manhattan Residential Sales  Market.  Manhattan Residential Rentals Market Overview Q4 2012 reported here and summarized below was prepared by Miller Samuel for Douglas Elliman.

“The Manhattan housing market was characterized by inventory falling to 12 year lows across the re-sale and new development markets.”

  • The number of listings fell 34.2% from prior year levels to a 12-year low of 4,749. As a result, the pace of the market quickened, with the monthly absorption rate falling to 5.5 months, the second fastest rate since 2000.
  • Overall price indicators were mixed. Median sales price slipped 2% to $837,500 and average sales price edged 1.1% higher to $1,461,473 over the year ago period.
  • There were a record 2,598 sales in the fourth quarter as looming changes to federal tax laws and general economic improvement elevated activity in an already improving housing market.
  • Listing discount, the percent difference between the list price at time of sale and the sales price, was 3.7%, down from 4.9% in the same period last year.
  • With the number of active listings falling for several years, days on market, the number of days from the last change in price to contract date, expanded by 47 days to 177 from the prior year quarter. The lack of new supply resulted in the absorption of listing laggards characterized by longer market times.


The Value of Light in a Co-op or Condo

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Light is perhaps the most subjective of the view-floor level-light trio but this is the logic Miller Samuel has used for years (based on the “paired sales” theory that isn’t very practical in an appraiser’s daily life) but it’s a good starting point, and of course it depends on the nuances of each situation


Graphic: Jhoanna Robledo –  New York Magazine , Commentary by Jonathan Miller of  The Matrix.


The Differences are narrowing between Condos and Co-ops

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If you’re looking to buy an apartment in New York City, you probably already know there are basic trade-offs between buying a co-op or a condo.  Co-ops usually are stricter in approval and building rules, but they make up a higher percentage of housing and are generally less expensive than condos.  But there’s more to it than that. 

Some neighborhoods have more condos for sale than co-ops.  However, the sometimes stringent application process and financial requirements for co-ops usually mean the buildings are more financially secure.

 Here are some factors to consider:


  • There are more co-ops (75%) than condos (25%) in New York City, but the gap is shrinking.
  • Certain neighborhoods with new developments have a higher numbers of condos because most new buildings are sold as condos.
  • Consider your style.  If your heart is set on a pre-war building, likely you’ll have to buy a co-op.

 Price Difference

  • According to Miller Samuel, the overall market statistics seem to show that on average condos cost as much as 40% more than co-ops.
  • A comparison of co-ops and condos with similar amenities and size conducted in 2006, showed the difference to be only about 9% more.  Condos are sometimes larger and they involve different closing costs due to the type of ownership.

 Approval Process

  • Historically only co-ops require very detailed applications with financial statements and tax returns, however, some condos are starting to require similar applications.
  • Condo boards cannot reject potential buyers, but they can pre-empt the sale by offering to buy the apartment on the same terms.  This rarely happens because few condo boards have the finances to make these purchases.
  • Co-ops generally require larger down payments, some as low as 20% of the purchase but many require 25-50% down payments and some don’t allow financing at all.
  • Financial requirements can make buying a co-op difficult for the self-employed and foreign investors.


  • Some co-ops have very strict rules, imposing restrictions on subletting or use as pied-a-terre.  But even some condos have rules for pets or noise restrictions, the same as co-ops.
  • Renting a co-op usually means getting board approval, if the building allows it at all, and usually only for limited rentals of 1-2 years at the most.  Most condos allow rentals or sub-lets.


Inspired by New York Times article.

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What Co-op Boards look for in your Financials

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Many co-op boards do a cursory examination of your application:  review financials, check references, interview and make a decision.  But what does it mean ‘review financials’?  In the old days, if the bank gave the ok for financing, that was ‘good enough’; but not anymore.

So what do they look at? 

  • Debt-to-income ratio    
    • Mortgage lenders generally want no more than 28% of a buyer’s gross monthly income to the mortgage payment (Principal, Interest, Taxes and Insurance), or a maximum of 36% for PITI and recurring debt (loans, credit card payments, child support, etc)
    • Co-op Boards usually want to see something closer to 25-30% debt-to-income
  • Income – liquid income
    • Generally the last 3 years of tax returns are reviewed for gross income and adjusted gross income
    • Earning Potential – if your earnings are less than board guidelines, or assets are too weak, but you can show potential for increased income, the board may approve with conditions such as a year’s maintenance held in escrow.
    • Debts
      • Boards also consider other debts, student loans, car loans, other mortgages.
  • Other Factors
    • Location – locations such as Brooklyn or Queens may be less likely to look for large assets and permit more financing than a building on Park Avenue in Manhattan
    • Building size – larger buildings could be easier to buy into than smaller buildings because one or two arrears owners have less impact in a 200 unit building than a 20 unit building.

Boards want to protect their co-op, choosing people who are the right fit.  They also need to stay within the boundaries of discrimination laws.  Reviewing the financials allows the board to decide whether to move forward or not without violating the discrimination laws.

Excerpted from Habitat article

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Maintenance Fees are More than Just Maintenance

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For most buyers in Manhattan, getting past the asking price of a co-op or condo is only the first in a series of seemingly insurmountable obstacles.  The monthly maintenance fee is the second.  From a few hundred dollars a month to a few thousand depending on the various buildings, most owners find the maintenance fee never goes down, and rarely stays constant.   Most are adjusted on an annual basis.

Buyers need to be concerned about the fee as a direct impact on the property value, not just because of the cash going out every month.  The maintenance fee covers operating costs:  Staff Salaries, management fees, heat, water and sewer and other items.  In co-ops, the real estate tax bill and underlying mortgages on the entire building is part of the maintenance fee, and is proportional to the number of shares you own in the co-op corporation.

Condos are different. The common charges still cover the operating costs the same as co-ops, but the property tax bill goes directly to the owner because of the different ownership type.  Condos may have more amenities but lower common charges due to this distinction.

According to the Council of New York Tax Cooperatives and Condominiums, the fees have skyrocketed over the last decade.  For example, the median maintenance fee for co-ops on the West Side of Manhattan rose by 59% between 2000 and 2009, while condo common charges increased by 38% city-wide for the same period.

Increasing Real Estate Taxes are the main reason for the rise in co-op fees.  Both the tax rate and the assessment of property values have increased in recent years.  On the West Side, co-op median real estate taxes increased by 116% between 2000 and 2009.   On the East Side in 2000, 23% of the maintenance paid was attributed to taxes; by 2009, that figure had risen to 33.3%, indicating that taxes were a larger portion of the maintenance fees.

Land Leases are another issue for increased maintenance fees for some co-ops.  As a number of co-ops do not own the land their building sits upon, rather rents the land.  Some of those leases are coming up for renewal soon, and the experts predict there will be a huge jump in cost.

Finding savings to offset the increases is difficult.  Most costs are fixed, including salaries, taxes, insurance, upkeep and utilities.  Several co-ops have hired consultants to check for water leaks, while others are switching to natural gas from oil heat.  Still others are metering each apartment’s utilities separately.

Many co-ops are refinancing their underlying mortgages to take advantage of low interest rates.  Others are generating income by imposing or increasing fees for using the bike room, moving in or out or renting a unit.

Reviewing a building’s financials will give a buyer an understanding of how a building spends its money.  If you disagree with how a building spends the fees, there’s little point in moving there.   See our Series on reviewing building financials starting with  ‘Tis the Season: Many Manhattan Coop Financial Statements Are Released In May.

Inspired by New York Times Article on Jan 15, 2012 by Jim Rendon.

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Our Q4 Manhattan Market Overview was released today and summarized below was prepared by Miller Samuel for Prudential Douglas Elliman.

“After a year of mixed economic news, the Manhattan housing market, while continuing to experience overall price stability, closed out the year with a slower pace of sales.”

  •  Median sales price was $855,000, a modest 1.2% increase from $845,000 in the prior year quarter. Price per square foot increased 5.6% to $1,117 from $1,058 over the same period.
  • There were 2,011 sales in the fourth quarter, 12.4% less than 2,295 in the prior year quarter. The fourth quarter had the lowest number of sales since the same period six years ago, perhaps related to the unusual surge in sales in the prior quarter. Pending sales were also below the prior year level.
  • There were 7,221 active listings at the end of the fourth quarter, essentially unchanged from the same period last year, but 2.6% less than the ten-year quarterly average of 7,412.
  • Days on market—the number of days from the last price change if any to the contract date—saw a modest 5 day increase to 130 days from 125 days, still consistent with the 132 day average for the prior decade.
  • Listing discount—the percent difference between the list price at time of sale to the sales price—fell to 4.9% from 8% in the same period last year.


Week in Review: News You Can Use July 8, 2011

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  • “Despite a banner month for Governor Cuomo, New Yorkers put their Trumpets down when it came to the Economy” Read all about it at Siena Research Institute
  • New York City Tax Commissioner Announces 10% Assessment Cap on Co-ops, Condos. “New York City Finance Commissioner David M. Frankel confronted his critics yesterday at a City Council Hearing in May, announcing he was placing a 10% cap on tax assessment increases for co-op and condo properties in the five Boroughs.” Read about it at Habitat.
  • AGs, Banks near $60B deal on Foreclosures. “America’s biggest mortgage servicers are closing in on a deal with federal and state officials to settle some of the thorniest foreclosure problems.” Read about it in the New York Post.
  • Manhattan rents rise with room to go higher. “The Manhattan apartment rental market has been heating up for months, and second-quarter market reports released today by residential brokerages Citi Habitats and Prudential Douglas Elliman show skyrocketing rents. Now, the question is how long the rent increases will continue.”  Read about it at the Real Deal
  • Homes Dark and Lifeless, Kept by Out-of-Towners “some Manhattan neighborhoods are assuming that vacant feeling the year round, because the people who own or rent apartments there actually live somewhere else most of the time” Read about it in the New York Times