November 2005 Archives

November 5, 2005

Passing The Co-op Board

Posted on November 5, 2005 at 2.20 AM

Have you ever been through the "experience" of buying a Coop? By far, it can be one of the most nerve wracking experiences anyone can go through. I work with folks that lose 20 lbs, gain 20 lbs, their hair falls out, or nail biting becomes their favorite time filler.

Why is this? What makes buying a Coop so much more involved and challenging than buying condo?

There are a host of reasons, some obvious, others not so. The almighty Coop Board approval is by far one of the biggest fear inducing aspects of the process, and that's NOT just getting past the board but preparing your financing, financials and all the other "fun" stuff they require of you, like letters of reference from up to 10 sources, for the package.

Presenting yourself as the most attractive candidate is no small feat and requires the experience and expertise of a group of professionals. To wit, your RE broker, your mortgage professional, and your attorney. The former two being the most important.

My job as a mortgage professional is multi-layered. Not only do I have to deliver you a competetive mortgage rate and package, I have to make sure that your housing costs fit the requirements of the board, and that the terms are acceptable as well too. In other words, whether an ARM or fixed rate mortgage is best and how that rate impacts your monthly payment, which ultimately impacts your housing obligation ratio.

Most coop boards do not want your monthly housing costs to be more than 25%-28% of your monthly income. So, you may want a 30 yr. fixed mortgage but the monthly payments put your ratios at 40%, and the coop board turns you down.

In the end, its up to your mortgage professional to put you into the best financial position when you present to the building board members, as well as be the lending product most suitable to your specific needs.

Michael

Murray Hill: Sundari Lofts

Posted by Noah Rosenblatt on November 5, 2005 at 3.02 PM

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The SUNDARI LOFTS is Andrew Heiberger's, Citi-Habitats original founder, first development project after leaving his rental powerhouse company and starting Buttonwood Development LLC.

Nestled in Murray Hill, between 32nd & 33rd streets, this 'sliver-like' new construction will be comprised of 2 towers: SOUTH TOWER & EAST TOWER. The SOUTH TOWER will be located on 32nd street between Madison & Fifth Avenues, and offer new residents a quiet and bright southern exposure. The EAST TOWER will be located on Madison Ave between 32nd & 33rd streets.

Units will be furnished with top of the line materials gathered from
different nations across the world. A keyless entry system will act as the security access for residents as the elevators open up directly into the apartment. With only 1 apartment per floor, privacy will define this new building.

Building amenities will include a 58' Lap pool, state of the art cardio fitness center, outdoor space with most units, and 24HR doorman + concierge.

The word right now is that the offering plan will be approved shortly by the attorney general, and that the brokerage community will be allowed to bring clients in sometime in November. While the sales office is not open yet, I do know that there will be an 'option' reservation process for buying pre-construction units. Rather than release a few units at a time, the sales team will contact the first option reservation for each unit to buy pre-construction, and if the reserved party passes, the next name on the list will be contacted.

maintenance is expected to be about $1.10-$1.30/Sq. Ft., and the building has filed for a 10 YR Tax Abatement, keeping monthlys relatively low for those that get in early!

More details to come as I get them in.

The Rate Game: Mastering The Fine Art

Posted on November 5, 2005 at 4.41 PM

nyc real estate

Greetings All New Yorkers Looking To Further Educate Yourselves on Masetring All Aspects of NYC Real Estate!

This is my very first post and I look forward to keeping our readers posted on topics that involve mortgage financing. Invariably, when I am on the phone with a client, the question most asked is

"where do you think rates are going?"

I LOVE that question for one reason: the only answer is "I don't know". After 7 years in this business, I truly believe it is the only honest answer. There are many factors that affect the direction that mortgage rates move. Perhaps the most influential, in a rather direct relationship, is the yield on the 10 year Treasury bond.

Its important to nore that:

As the 10YR Treasury Bond Yield moves up day to day, mortgages rates follow, moving up

Other factors influence the activity in this bond market and are so varied I'll pass on listing them all. So, the long of short of it is no one can really predict. However, the general consesus is that we are moving into a rising interest rate market. Case in point, over the last 2 weeks 30 year fixed rate jumbo mortgages have risen from 6% to 6.25% today, 10/13/2005. Again, the "feeling in the industry" is that they will continue to do so.

If you'd like to track rates, please log onto WellsFrago.com and go to the mortgage section, click on "today's rates" and you can sign up for email notification of rate movement. If you'd like to play with some numbers while you are looking for your apartment to see if you can afford it, visit My Personal Website at and you'll find tools to help you along.

In the mean time, feel free to contact me directly at any time with any questions. I'm here to help!

Michael

November 17, 2005

Housing Slowing...?

Posted by Noah Rosenblatt on November 17, 2005 at 2.19 PM

nyc real estate

A: The housing #'s didnt come in great. Statistics show that All 4 sectors of the US housing market have experienced declines in purchase prices and increases in time on the market.

The October Housing Starts # was released today and showed:

The Commerce Department reported that construction of new homes and apartments fell by 5.6 percent last month to a seasonally adjusted annual rate of 2.01 million units.

So, is housing slowing? YES! However, 2.01M units constructed is still a very good number and is only a decline due to the unsustainable growth experienced in previous quarters.

This is the first time in quite a while that ALL 4 regions of this country have experienced a decline in housing prices at the same time. The Midwest + West Coast were the worst hit with a aproximate 10% decline or so, while the Northeast was hit with a 7% decline or so.

SURPRISED? Im not! If you have been reading my posts on www.urbandigs.com, you shouldnt be surprised either. There are fundamentals that are clearly pointing to a slowing in the housing market. They include:

RISING RATES ---> INCREASED SUPPLY ---> PSYCHOLOGICAL STRAIN LOWERING DEMAND ---> TIMING (Coming off an incredible 3-4 years of growth)

Now, before you go and stop your plans of buying a new or second home, you have to think about WHY YOU ARE PLANNING TO BUY? I still believe that if you are secured in your job, and making good money, and have enough liquid assets to cover the starting costs of home ownership, that real estate is a great decision.

But if you are planning to move soon, or your job is not secure, or you just got a paycut, or you are about to incur higher living expenses for whatever reason without the rise in income, then THINK TWICE about buying right now! You might find your home worth 15-25% less if you are forced to sell in the next few years.

November 18, 2005

A Media-Driven Housing Slump...?

Posted by Noah Rosenblatt on November 18, 2005 at 10.06 PM

nyc real estate

A: Yes. Please note the date of this post, should you happen to read this after I wrote it. Usually, the first phase of a correction in a booming investment sector (such as housing) is a psychological one driven by media coverage. Notice a trend?

Im going to go out on a limb here and declare that the current slump in NYC real estate prices has A LOT to do with the media. Im not blaming the media, nor am I looking for any distractions to try to sway public opinion. Rather, I am simply pointing out that there has been a plethora (thank you, El Guapo) of 'frightening news' being written both online and in print media outlets, causing a psychological reaction to would be home buyers (Scaring them away).

I speak this way after earning a BS in Psychology from Union College, and having experienced first hand the most devastating stock market decline in recent history (while being a NASDAQ Equities trader from 1998-2003). I can't help but think back and realize that people are still not over the pain of that stock market crash. There are a lot of people that are comparing this recent housing boom to that of the dot com boom, and therefore are awaiting the crash. So, I can imagine how many first time would be homeowners out there are holding off purchasing simply because of the media attack on NYC housing, which is reminding them of the pain that so many experienced from the recent stock market crash.

That is what I think is going on RIGHT NOW, in the NYC housing market. Buyers are holding-off! Existing listings are staying on the market longer, and sellers are quickly lowering their prices in an effort to bring back the crowds to their open houses. How low do you go? No one knows!

Sooner or later, the media will have outstayed their welcome, as housing market bust articles go out of fashion. You'll start to see a stabilization in housing prices, maybe even a minor tick up, and then all of sudden, buyers will have fewer reasons to 'hold-off'.

Try to look at real estate from the point of view of 'looking forward', rather than look at outdated statistics or housing bust articles because rates just went up. We all know that already. But what is happening in the future? I'll tell you this:

The price of Crude Oil has dropped sharply in the past 6 weeks, the US dollar has continued its strong rise, Natural Gas prices have stabilized, & Gasoline prices have dropped. When Bernanke takes over the helm at the Fed, he will probably see inflation as less of a threat, and PAUSE raising rates. What will the outlook be on housing if this happens? Thats right, POSITIVE!

Speculators & Weak Homeowners WATCH OUT, as serious buyers are waiting for you to be forced to sell at a discount!

November 21, 2005

Will Growth Shift From Housing To Stocks?

Posted by Noah Rosenblatt on November 21, 2005 at 8.39 PM

nyc real estate

A: Looking at the fundamentals that are powering both the US housing markets & stock markets, it is looking more and more likely that general speculation could shift from housing to stocks. Keep an eye on the 'best of breeds' in the stock market for the next few years!

It has been a little over 5 years now since the stock market had topped out and started its painful descent to the bottomless pit. It was also around this time where smart money started pouring into real estate across the country. Even with the horrific tragedy of 9/11, housing was resilient and continued to power its way up to record levels! So now what?

Why not the stock market!

Its important to note that the stock market is a LEADING INDICATOR of the overall economy, looking forward a good 6-8 months or so at what is to come. That is why the market uses P/E ratios to value a stocks current bid and asking price. For all you homegamers, P/E means Price to Earnings ratio, and represents what the company is trading at compared to its expected future earnings. Generally, a growth stock has a higher P/E ratio due to the fact that earnings are expected to grow in the near future. Whereas cyclical stocks generally have lower P/E ratios to go with their more predictable and sustainable earnings potential.

Now, there are certain underlying factors that I see that would signal a 'second coming' of the stock market in the years to come.

First, a new Fed Chairman. Mr. Bernanke is set to take over as Chairman of the Fed (arguably, the 2nd most powerful position in this country) in January, as Mr. Alan Greenspan retires. The street likes Mr. Bernanke as the replacement Fed Chairman, and his straightforward manner in which he conducts himself.

Continue reading "Will Growth Shift From Housing To Stocks?" »

November 28, 2005

Outsdoor Space...CAN YOU FIND IT!

Posted by Noah Rosenblatt on November 28, 2005 at 2.43 PM

nyc real estate

A: The most Under-Rated amenity of a NYC apartment is outdoor space. Set yourself apart from 90% of the rest of the NYC housing market, and be patient to find that perfect apartment with a large terrace!

I am a VERY strong believer that when searching for good value in NYC real estate, there are a few standards and a few tricks that should be the focus of your attention. The standards of course include location, raw space, and good light/view. The not so obvious things to look out for are building financials, monthly charges and potential assesments, not paying for someone else's renovations, and my favorite, outdoor space.

If I were to put an estimate out there on the number of NYC apartments that have either a balcony or a terrace, it would probably be something like this.

90% NYC Housing Does NOT Have Outdoor Space
8% NYC Housing Has A Balcony (less than 100 Sq. Ft.)
2% NYC Housing Has A Private Terrace (100 Sq. Ft. +)

Looking for outdoor space is hard enough when you have the supply issues that are currently straining the market, but if you are devoted to this luxury amenity, patience is the key. WAIT WAIT WAIT until you find a distressed homeowner who needs to sell, and happens to have a nice terrace.

The thing about private outdoor space, rather than a building roofdeck (which is hardly ever used yet paid for by you in your maintenance charges), is that it adds so much to the quality of living in NYC. And since there is so little of it to go around, it will always demand a premium over housing that doesnt have it.

HOW DO YOU VALUE OUTDOOR SPACE?

Its a tough amenity to value, especially if you are a seller trying to figure out the purchase price that you will eventually ask. A good starting point would be about $400/Square Foot.

Look at the following analysis of a 800 sq. ft. 1BR in a DRMN/ELEV condo in the Upper East Side, as an example:

Apt. 15F WITHOUT Outdoor Space
Sells For $600,000

Apt. 15F WITH 5 x 10 Balcony
Sells For $620,000 (50 x 400 = $20,000)

Apt. 15F WITH 10 x 30 Terrace
Sells For $720,000 (300 x 400 = $120,000)

You can see how the formula works out. While there are minor characteristics about the outdoor space and building that should be taken into account as well (such as view of outdoor space, light, condition, etc), its a fair way to calculate how much you would expect to pay for this luxury!

When you go to sell your apartment, you'll have something that sets your listing apartment from about 90% of the overall inventory, and something that always helps to find a interested buyer fast!

November 30, 2005

Gold Up...Oil Down...Housing Flat?

Posted by Noah Rosenblatt on November 30, 2005 at 3.44 PM

nyc real estate

A: TO KEEP HOUSING HOT, WE NEED GOLD & OIL PRICES TO FALL SO THAT THE FED WILL KEEP RATES LOW!

Its a tough world to try to time the housing market right now, leading me to look at what the Fed looks at when deciding whether or not to raise interest rates or not. Its a strategy not employed by most people, probably because if you need housing, then you need housing!

But for those of you that are not pressured by a moving timeline, or any other outside circumstance, than you should be vigilant to what the fed is thinking, and where they are likely to go with interest rates. After all, if rates rise another 1/2 - 3/4 points, that should result in a meaningful rise in mortgage rates and make it more expensive to borrow money.

When its more expensive to borrow money, housing prices will come down to make it more attractive to would be buyers.

The price of gold is an indicator toward future inflation as well as the value of the currency market. As Gold prices rise, inflation remains a threat (causing the fed to want to keep raising rates to combat the threat), and worldwide currencies become less valuable of an asset. As currency supply continues to increase (especially the Dollar, Euro, and Yen), the supply of Gold continues to be constrained.

Right now, Gold is trading at multi-year highs and is starting to get the attention of the masses. That is a good and bad sign. Speculators will probably start to buy gold, pushing the price higher, but resulting in a lot weaker players in this market. I will not speculate here where I think Gold is going due to my lack of knowledge of this market.

But I will keep an eye on Gold prices. For the housing market to stay HOT, we need the fed to keep rates low. PLAIN AND SIMPLE!

So, Im hoping that Gold prices correct, and that the price of energy continues its slide. Crude Oil already has gotten hit, and looks likely to keep on moving lower. That is good for everyone, as the Fed will most likely PAUSE raising interest rates if the prices of Gold and Crude continue to fall.

If you are ever going to predict the future of housing, these are the things you MUST think about. It is all tied together, and knowledge is power. As we move closer to 2006, I should have a better idea of what the Fed will be doing with rates! Keep checking UrbanDigs if you plan on profiting from NYC real estate!