Why NYC Real Estate is Seasonal

Posted by urbandigs

Wed Dec 28th, 2005 05:06 PM

nyc real estate

A: Because year end bonuses combine with a pickup in buyer activity during the first few months of a new year. Meanwhile, the summer is generally a time for NY'ers to get out of the city as much as possible with hot, humid weather settling in.


Its just the way it is. During the hot summer months of June, July & August most NY'ers want to jump from A/C filled work rooms to A/C filled cabs to A/C filled apartments. Being outside during these times with the heat reflecting off the building and streets, and brutal subway station waits, is a nightmare for all of us. Going out of your way to view apartments you might buy is usually not a priority. Rather, weekends at the hamptons and trips upstate or to VT/NH are the main thoughts in your head.

On the flip side, the months of January, February, & March are filled with year end bonuses, new year's resolutions, financial reflections, and residual holiday spirit. Plus, we are all here in the city! Open houses are usually filled with more would be buyers during the first 3 months of the year than they are during the dog days of summer!

Looking at it from a different viewpoint, humans are generally a group minded species. What does this have to do with it? Everything!

If you go to an open-house and see no one there, you will probably think LESS of the apartment and be in no rush to place a bid. However, if you go to an open-house and see a ton of people there with you, you will be MORE interested in the property and probably have a feeling of more time-urgency in placing a bid.


Its during the first 3 months of the year that you will see more people at the open houses. I recall the first 4 months of last year being a time of packed open-houses, multiple bids, best & final declarations, and offers over asking prices. Will it be the same this year? Probably not due to all the negative press in the papers recently about housing slowing. But it certainly will be more active than the past 4-6 months which saw the NY markets slow down a bit.

To sum up, the NYC real estate market is seasonal. We are about to enter what normally is a very active period for our markets. I know I will be keeping my eyes open to see if we are indeed normally active, or if we are abnormally slow which could point to some deeper underlying problems in the housing industry.


New Home Sales Tumble

Posted by urbandigs

Fri Dec 23rd, 2005 04:28 PM

nyc real estate

A: This surprising new home sales drop should adversely affect the hottest housing markets outside NYC, more than it hits us here. Markets such as Phoenix, Miami, & Los Angeles are particularly vulnerable.

New home sales in November fell to 1.25M units from a record high of 1.4M in October. Forecasters were predicting new homes sales to slump to 1.3M units, causing the surprise.

I wouldnt worry too much about this affecting the NYC housing markets as new constructions in this city could use a healthy correction from the $200-500/Sq. Ft. premium they are asking over exisitng homes.

Most sales in New York City are existing apartments. While this number is a negative surprise, and new home sales figures are more of a leading indicator than sales of exisitng homes, I would expect this to adversely affect regions of the country that have been red-hot first. Cities such as Phoenix, Miami, & Los Angeles whose housing markets have experienced unsustainable growth over the past few years will be hardest hit by this statistic, at least psychologically.




I've Decided to Sell...Now What?

Posted by urbandigs

Fri Dec 23rd, 2005 02:55 PM

nyc real estate

A: Price It. Prepare It. Market It. Show It. Negotiate It. Go Into Contract. Prepare Board Package. Close.

If you decide not to employ a professional real estate agent to handle your next real estate transaction and you are unfamiliar with this process, then you really should read this post to educate yourself before you put your property on the market.

NOTE: It is very hard to maximize your profit by selling on your own, due to the fact that your listing will not be included in the MLS system and the brokerage community. Most qualified homebuyers work with buyer brokers, and if there is no incentive for the broker, then that homebuyer will not see your property!

Now that this is out of the way, the first thing you need to do is PRICE your property. To do this, you need to find out what the last sold comparable units were in your building, and in surrounding buildings. Use your building last sold's as the more accurate guide and then price yours based on similarities/differences of yours to that one; i.e. Renovations, Views, Light, Condition, etc..Your monthly charges should also affect your asking price; lower charges = higher asking price. DO NOT OVERPRICE! Its better to UNDERPRICE the market, bring in a lot of activity, and hope for a bidding war!

PREPARE IT.Once your price is set, you need to get your apartment ready for showing. Paint, Clean, & Remove Big Furniture to make your apartment as spacious as possible. Put away your personal pictures. Always show the apartment when you get the most natural sunlight and put up some plants in the corners to liven the place up a bit. It helps!

MARKET IT. The most important place to market your property is on the NY Times website and Sunday edition print. It will cost about $150 or so for a 5 line ad in Sunday's paper, and about $125 for 2 weeks of online exposure. Be sure to mention the Open-House you plan to run for the coming Sunday! This is a must as any other newspaper or online website just wont bring in the qualified traffic that the NY Times will.

SHOW IT. Set up a Sunday Open House between the hours of 12:00 and 3:00PM, and put out some snacks and showsheets with your property's information, pictures and contact info. As people arrive, greet them and then leave them to browse. No one likes to be followed around as they look at an apartment they might buy. After they spend 5 minutes looking around, very politely, tell them of the building amenities and then subtly stick in the best points of your apartment; i.e. the southern exposure, the renovated kitchen, the Bosch appliances, etc..

NEGOTIATE IT. If priced right, you should receive an offer within 5-7% of your asking price within 3-4 weeks. If you don't, then you overpriced it and should strongly consider lowering your price, unless you are in no rush to sell. If an offer is too low, tell them you have "NO RESPONSE" to that offer. If the offer isn't too low, meet them halfway and see what their response is. Be sure to pre-qualify the buyer and check into their salary and liquid assets after closing costs! In the end, you should know what your lowest selling price is.

GO INTO CONTRACT
. As offers start to come in, you should be contacting your real estate attorney, who will prepare a contract of sale, building financials, and offering plan. Once you accept an offer, have your attorney send all documents to the buyer's attorney for review. You should expect a signed contract and 10% deposit sent back to your attorney within 5 business days. If 5 business days past and you have nothing, then your attorney should start pressing the issue to find out why.

BOARD PACKAGE. When you prepare a board package be sure all information requested is provided, and all financial numbers are backed up by hard copies. For co-ops, its always best to type up the package and triple check that everything is in order. Bank documents usually take the longest to get to complete a board package.

CLOSE. Assuming board approval, the attorneys will co-ordinate a closing date that is convienent for both buyer and seller and lending institution. Usually this is 3-7 business days after board approval.

Good Luck!


Sell Now? Or, Wait Another 1-2 Years.

Posted by urbandigs

Tue Dec 20th, 2005 04:26 PM

nyc real estate

A: If you intend to SELL within the next 1-2 years, and you qualify for 1 of the 2 most popular Tax Benefits (see post), then YES, plan to put your apartment on the market NOW, and specifically in the middle of January.


With interest rates still moving up and the current consensus being another one 1/4 point rate hike, possibly 2, it might be wise to cash out in the coming months as year end bonuses bring buyers back to the market.

If 30YR fixed rates are around the 6% mark right now, they will most likely move to the 6.375% - 6.5% range by this time next year, making it more expensive for buyers to borrow money for housing. While that is not enough to cause a nation-wide or city-wide housing crash, it is enough to slow down the housing market. From a risk-reward standpoint, it seems there is more downside risk than upside risk as we move towards the end of 2006.

If you own your apartment and were thinking of selling in the next 1-2 years, it might be safest to sell sooner rather than later, and take your profits to a 4% yielding money market account; such as EmigrantDirect.com. After all, 4% is not all that bad!

If you have owned and lived in your home for at least 2 out of the last 5 years OR if you intend to put your profits to work in real estate that is of equal or greater value than the property you just sold, it is also advised to sell your property sooner rather than later.

However, if you do qualify for either of these tax advantages but you planned on living in your home for the next 10 years, then try as best as you can NOT to evaluate what MIGHT happen in the housing market over the next 1-2 years. Over the long haul housing has proved time and time again to be one of the most solid investments you can make, and there are certain circumstances that would lead me to advise you to sell now. If those circumstances do not fit your long term investment plans, then dont act irrationally.

MY PREDICTION: Expect a housing correction between April 2006 and December 2007, leading to a good buying opportunity during the summer of 2007. Those homebuyers who have bought more property than they can afford and rationalized the purchase by taking out a short term creative mortgage product, will find themselves paying hundreds more in monthly costs as their ARM's expire. As sad as it is to me, expect disgraced homeowners to be forced to sell their properties at a loss over the next few years, when they discover they cant afford their mortgage payments.


Lower East: Blue Condo NYC

Posted by urbandigs

Thu Dec 15th, 2005 03:41 PM

nyc real estate

BLUE CONDO NYC is a new development located in the Lower East Side that will be comprised of 32 luxury condiminium residences.

The plaza of the BLUE's entryway will consist of planted bamboo and sculptural rocks in a stylish departuer of eveyrday NYC streetlife. The lobby will be modern and will have a 24HR attendent.

The architecture of BLUE is what sets it apart. Living quarters will include angled walls and rythmic colored glass with dramatic city views. The kitchens will include cool lines in metal and glass with sleek professional grade Viking appliances for a true culinary experience. The BLUE's bathrooms are spacious and feature pebble floors and soothing lighting.

BLUE is the brainchild of architect Bernard Tschumi, whose visionary work has received widespread acclaim in the design community and by the media. BLUE is Tschumi's first NYC project and according to him, .."captures the energy of the diverse population and eclectic buildings of the lower east side."

OK. So how much will it cost?


Interest Rates: Santa or Grinch?

Posted by urbandigs

Tue Dec 13th, 2005 03:42 PM

nyc real estate

A: Fed Chairman Alan Greenspan boosted the key feds funds rate by another 1/4 point today to 4.25%. Every time interest rates move up, buyers in the NYC Housing market face higher borrowing costs and can afford LESS of a purchase price.

HOWEVER: The Fed did change one aspect of his quarterly statement that is very widely watched by major trading markets and economists. Alan Greenspan dropped the description of current rate hikes as "accomodative", indicating that the Fed is closer to an END to interest rate hikes.

WHAT TO EXPECT: A RISE in Stock Markets as this was a very pleasant surprise. A RISE in demand for NYC Housing Markets as it appears more likely that only 1 more interest rate hike is in the works, and not 2! This should keep buyers happy knowing that 30YR Fixed rates will remain below 7% for a bit longer.

Its the basis of most of my fundamental analysis when I view the NYC housing markets. Where are interest rates going? Personally, I think we have another 2-3 interest rate hikes left in the tank (due to rising inflationary indicators such as gold & oil, and a fast growing US economy), which would inevitably bring 30YR fixed mortgage rates closer to the 7% mark. As interest rates get closer to or go above this level, sellers of New York City real estate should be prepared to lower their asking prices as buyers face higher borrowing costs.

I would expect the higher end apartments, the luxury 2-4 bedroom condos and co-ops, to get hit the hardest first, especially those in neighborhoods that are not near Central Park or a good school district. As most real estate professionals advise, LOCATION-LOCATION-LOCATION, this is where it becomes most true: IN A DOWN MARKET!

For example, a luxury 2BR condo on 85th & Madison Avenue (UES) will not experience as drastic a pullback in eventual selling price as a luxury 2BR condo near 28th street and 2nd avenue (Murray Hill) would. There will always be value in New York City for closeness to Central Park, and for being in a reputable school district, such as PS 6 in the Upper East Side. Apartments in these areas should be somewhat protected in a downturn.

In addition, studios and small 1BR's will also be somewhat protected, simply because of the fact that there is more demand for this type of apartment. As prices declince back to realty, buyers who were 'priced out' 6 months ago, all of a sudden will find good value and rush back into purchasing mode.

As for the end of the interest rate hike cycle, keep reading www.urbandigs.com for the latest information on the overall fundamentals that lead to the feds ultimate decision.


SoHo: 40 Mercer Residences

Posted by urbandigs

Tue Dec 13th, 2005 03:34 PM

nyc real estate

40 MERCER SOHO is another new development in the artsy and very popular neighborhood south of Houston St..

This development is being led by renowned hotelier Andre Balazs, who has created some of the most successful and influential hotels in the world. He is especially good at creating a unique mood and style in his projects, while setting new standards for luxury and service. 40 Mercer should be no exception.

Amenities are set to include 24 HR Hotel-like Concierge, Continental Breakfast delivery, soaring garden lobby lounge, block-through private park, The Pool House featuring an indoor T-Shape 50-Ft lap pool, fully equipped fitness center, steam room, sauna, jacuzzi, and private bar & lounge. There will also be massage & spa services available to residents. Additional terraces will be available for private use.

With exclusive marketing rights going to The Sunshine Group, you can go to the sales center at The Mercer Hotel, on 147 Mercer St., for more information on buying this new construction in SoHo.


A Bonus Rally in Housing?

Posted by urbandigs

Mon Dec 12th, 2005 01:35 PM

nyc real estate

A: Look for the demand of NYC Real Estate to 'return' as we get towards the end of January. As year-end bonuses are given out, buyers who have been waiting on the sidelines will have little reason not to finally 'go for it'! If your a seller, than you MUST read this.

As the NYC housing market takes a breather, buyers should be especially vigilint over the next 4-6 weeks. The reason for this is that historically speaking, the months of Jan-April are usually the most active and therefore the most bullish months of the year for NYC housing. And the main reason for this statistic is that bonuses (wall street and the like) will be put to work.

Since housing still has incredible tax benefits, and you can live in your investment, there will always be a demand for it. Add in a ton of extra money that is about to be handed out, and you have a pool of potential homebuyers that will be ready to go after sitting on the sidelines for the past few months. And it couldnt come at a better time for both buyers and sellers.

Over the past 3-4 months, housing prices have cooled down here in the city, setting the stage for some very nice deals in a tight market. There is some more supply out there, but not enough to cause a supply/demand downturn in the market. So, as we approach the months of January and February, expect to see more people at the open houses and expect to see more competition for that perfect apartment! Prices should start to rise as we enter February and sellers notice a lot more interest in their properties.

My advice to buyers who are anticipating buying NYC housing as their year end bonus comes in:


LOOK TO BUY SOMETHING SOONER RATHER THAN LATER TO TAKE ADVANTAGE OF THE RECENT SLUMP IN NYC HOUSING PRICES, BEFORE THE MARKET GETS THE INFLOW OF DEMAND DUE TO YEAR END BONUSES


Can you get OUT of paying Capital Gains?

Posted by urbandigs

Tue Dec 6th, 2005 10:18 PM

nyc real estate

A: Hmm. I wonder why real estate is such a WISE investment? Hmmm. Hmmm. Could it be tax benefits? YES! Read this very important post on taking advantage of Uncle Sam and build wealth for YOU!


I will start out this article with a early warning for all potential homeowners out there:

Keep an eye out for Tax Code Reform which seems very likely will change the tax benefits that current real estate investments produce


Now that 'another' housing related red flag just went up, lets analyze the 2 most commonly used tax benefits that can help you RIGHT NOW to avoid or defer paying Capital gains taxes to Uncle Sam!

1031 Exchange ('Starker' Exchange)


Allows a tax payer to defer the paying of taxes on a gain when an investment property is SOLD & a new property of like or greater value is PURCHASED. In other words, if you first purchased a property for $400K, and then 1 year later sold it for $500K, you can then defer the payment of taxes on the $100K Capital gain in this transaction, as long as you purchase another property worth $500K or more.


Primary Residence Tax Benefits


If you have lived in your property, as your primary residence, for at least 2 out of a period of the last 5 years, you will not have pay Capital gains taxes on the profit when you sell. This benefit equals up to $250K of tax-free gains for singles, and up to $500K of tax free gains for married couples. Of course, this is dependent on how you filed your last tax return; single or married.


Upper East: 170 East End Ave

Posted by urbandigs

Sat Dec 3rd, 2005 04:39 PM

170eea.jpg

Celeb architect Peter Marino's first project in NYC will be at the old Beth Israel Hospital that has already been demolished at 170 East End Avenue, between 87th & 88th streets.

While work on the foundation is sure to take at least another 6-12 months, and occupancy expected for late 2006, it is evident that this building will be the first ultra luxury new development in this very dog-friendly neighborhod of the Upper East Side.

Unfortunately, I found out that the developer paid aproximately $770 per buildable square foot for this real estate, which would lead me to assume that once marketing begins, 1-5 Bedroom apartments will start at about $1500 per square foot. In other words, a 700 Sq. Ft. 1BR-1BTH apartment at 170 East End Ave would cost you about $1,050,000.00! Its safe to say that the 2BR's up to the 5BR's will be priced higher, with view apartments being priced the highest.

Is it Worth it?

Tough to say at this point. What I do know is that co-ops and condo's around the 87th-89th & York/East End Ave area would most likely see nice price appreciations once these new units start selling in pre-construction marketing.


Financial District: 120 Greenwich St.

Posted by urbandigs

Sat Dec 3rd, 2005 03:37 PM

nyc real estate

120 GREENWICH ST is a new development in the Financial District.

This new building will be comrised of 102 smartly designed studios, one, and two bedroom condiminiums, many of which can be combined.

A solid pre-war construction with high ceilings, oversized windows, and wood flooring is planned. There will be a 24HR attended lobby with refrigerator storage for all you Fresh Direct fans out there.

Additional amenities will include a cultural concierge, live-in super, landscaped common roofdeck, fitness center, kitchens with brazilian green granite counters, 30" gas range with stainless steel oven, oak flooring, and a island range with halogen lighting.

It appears that Douglass Elliman is the sales contact for this new development, specifically, Elaine Schweninger. It also appears that pricing for this condo will start at about $950/Sq. ft. and can go up to about $1100/Sq. Ft..


Tribeca: Tribeca Summit

Posted by urbandigs

Fri Dec 2nd, 2005 03:41 PM

nyc real estate

TRIBECA SUMMIT in Tribeca is a historic landmark which was originally a warehouse with early 1900's architecture. It has been transformed into spectacular loft homes 'infused with light'.

The building proposes two inner courtyard gardens which open to the sky above. The gardens include landscapes of greenery & shimmering light sculptures.

Building amenities are set to include a landscaped sundeck, state of the art fitness center, designated childrens play area, and a parking garage for residents. Building services include a 24HR Concierge and a attended parking garage. River & City views seal the deal for this landmark in Tribeca.

I will post more info as I get it for Tribeca Summit.


Renovations That Make You $$$

Posted by urbandigs

Fri Dec 2nd, 2005 01:10 AM

nyc real estate

A: Renovations to Kitchens, Bathrooms, Floors, & Outdoor Space will get you the highest return on your investment at re-sale.

There are certain types of renovations that pay off very well in NYC, as opposed to any other housing market across the nation. Savvy investors and buyers are aware of these renovations that 'PAY OFF', and buy their next property with that focus. Needless to say, your apartment search should be limited to apartments that HAVE NOT been renovated thereby eliminating the net profit that is gained from the contracting work done.

The 4 MOST PROFITABLE types of renovations for homeowners are KITCHENS, BATHROOMS, FLOORS, & OUTDOOR SPACE.

All these renovations should add on about $1.50-$2 per price paid for contracting work to the eventual asking price at re-sale (depending on the quality of materials used). Obviously, if you install granite counters and BOSCH appliances, add on 2 times the price paid to your resale value. A simple formula can look something like this:


TOTAL CONTRACTING WORK x $2

TOTAL WORK DONE
Kitchen = $20,000
Bathroom = $5,000
Floors = $12,500
Outdoor Space = NONE
TOTAL = $37,500 of Renovations

With these high-end renovations, the formula would be:

$37,500 x $2 = $75,000

So if this particular homeowner purchased a apartment for $600K, and wanted to sell it now, he can safely list the apartment for $675K to the brokerage community.