UrbanDigs Nominated For Inman Award

Posted by urbandigs

Thu Jun 29th, 2006 12:34 PM

A: A big thank you to ALL our readers out there who helped make UrbanDigs a nominee for the prestigous Inman Innovator Award for Most Innovative Real Estate Weblog!

inman-innovator-award.jpg

Unfortunately I will not be attending the conference in San Francisco from July 26-28th, as my fiancee and I prepare for our long awaited wedding in Prague, Czech Republic in September. Needless to say, we have our hands full and my time until then is limited with clients and maintaining UrbanDigs!

But for anyone out there that is thinking of going, I know Lockart Steele of Curbed will be speaking and was told that Brad Inman does an EXCELLENT job with his conferences by Property Grunt. Brownstoner also had good things to say although he mentioned that he will be unable to attend as well.

Here are the other finalists who greatly deserve the nominations and I hate to say (just like Jonathan Miller said in his post), probably have a much better chance of winning than we do!

  • Rain City Guide

  • The Walk-Through

  • Center For Realtor Technology

  • Matrix (Jonathan Miller's Site)

  • SocketSite


  • Props to the editors of the other nominees for bringing such a great resource to real estate enthusiasts all across the country!

    GO DIGS!!


    Fed Watch: Expect Another 1/4 Point Hike

    Posted by urbandigs

    Thu Jun 29th, 2006 11:10 AM

    A: All eyes are on Ben Bernanke & Co. as the fed finishes its 2-day meeting today with their final say on monetary policy. Expect a 1/4 point rate hike as the fed continues to view the data and the lagging effects of 16 consecutive 1/4 point rate hikes over the past 2 1/3 years going into today.

    fed-funds-rate-bernanke.jpg

    Bernanke must show the tradable markets that he is in control and being aggressive in the fight against inflation. The biggest thing to look for in today's 2:15PM EDT decision on interest rates is NOT whether he will raise, we know he will, but the issued statement that goes along with the rate move. I would expect more of the same with a 'data-dependent' fed leaving the door open for another 1/4 point interest rate hike in August.

    Today's 1/4 move will bring the fed funds rate to 5.25% and will mark the 17th consecutive rate hike since Alan Greenspan started back in 2004.

    For all you newbies to UrbanDigs, the fed controls the fed funds rate to control price stability and guard against inflation creeping into the US Economy. As the fed raises rates, lending becomes more expensive directly affecting the minimum monthly payments that debt holders have to pay on mortgages, ARM's, HELOC's, credit cards and other rate sensitive debt. In short, the fed is trying to slow the economy by tightening credit making it more expensive for people/corporations to take out loans and making it more attractive for people/corporations to invest in fixed asset securities such as CD's. As interest rate's rise, cash becomes more attractive while investments buoyed by 'cheap money' (i.e. housing, new business loans, etc.) become less attractive.

    WHAT THE FED WILL DO: Raise 1/4 point to bring fed funds rate to 5.25% and issue an unclear, 'data-dependent' statement bringing undertainty over their next move in AUGUST even though consensus currently calls for a 75% chance of another 1/4 point hike

    WHAT THE FED SHOULD DO: Raise 1/2 point, issue a clearer statement that the 2+ year rate hike campaign is now over

    There is a growing debate why the fed should raise rates by 1/2 point and get it all over with (including me), but that will not happen. There is also a growing argument that former fed chief Greenspan should have raised rates more aggressively when he first started 2+ years ago, which would have put the results of monetary policy (which are lagging and take about 8-12 months to have an effect) on a faster timetable. This didn't happen so there really isn't much to talk about other than how the fed can learn from past mistakes.

    For those of you seeking to buy a home in the near future, be prepared for lending rates to continue to rise and plan accordingly.


    Renting a Co-op/Condo: Exercise Caution

    Posted by Toes

    Thu Jun 29th, 2006 08:50 AM

    With vacancy rates so low, real estate agents find themselves showing more condo and co-op apartments, despite their notoriety for being much more difficult apartments to rent than rental buildings.

    Tower58.jpg

    Renting an apartment in a co-op or condo has its pros and cons. You can usually find much better value for your money in a co-op or condo building because most people aren't willing to put up with the hassle and additional lead time needed to put together a board package and wait for it to be approved by a condo or co-op board. If you fall in love with a condo or co-op apartment, be prepared in advance that you WILL have to jump through extra hoops. That is why you are getting the apartment at a below market price.

    In addition to the paperwork required for a normal rental building (often consists of an application, credit check, one month bank statements, letter of employment, landlord reference letter, and one year tax returns), board packages usually require reference letters for each prospective tenant, agreement about the "house rules," and forms, such as a Carbon Monoxide Agreement, will need to be notarized. Agents then have to type up the package, add dividers, xerox a number of copies and deliver to the building's management company. Some boards take 2 days to review a package but some boards may take 15 - 30 days to approve applicants.

    Co-ops and condos charge "board fees" in addition to the rent, such as a "processing fee," "application fee," "move-in fee," "move-out fee," and more. Some of the fees are refundable, some are non-refundable. These fees can add up to $1,500 and even more, depending on the building. Some owners will absorb these costs into the rent for the apartment. Many owners will split the costs with the prospective tenants. Some owners will refuse to cover any of them. Carefully review the condo package requirements to make sure there aren't any extra fees that the owner "forgot" to mention.

    It is important when negotiating the rental of a condo or co-op building that applicants review the lease and any attachments to the lease (called a "rider") put together by the owner. There is a clause in the standard condo lease that says that if the common charges or real estate taxes in the building increase, that these charges can be passed along to the tenant. Make sure the owner is willing to strike this clause from the lease. Last year, many co-ops and condos saw a 5 - 8% increase in costs due to increased fuel costs. If the owners common charges and real estate taxes are $1,000 a month, your rent could suddenly increase by $80 a month.

    Many condo and co-op leases also do not have a renewal clause. Make sure that your lease comes with an option to renew if you plan on living there for more than one year. Some co-op buildings only allow sublets for 1, 2, or 3 years out of every 5. If you don't want to move out in a year, make sure the lease or rider grants you an option to stay longer.

    Most importantly, make sure you have a good feeling about the owner of the apartment. Remember that the owner is probably an individual, not an investment group or management group, etc. They are likely not members of the Better Business Bureau. You could get lucky and have a great landlord who will respond to problems immediately, such as appliances that stop working due to normal wear and tear. Or, you might have an owner that never returns phone calls when there is a problem. Or, beter yet, you might have an owner who insists on inspecting the apartment at any time with little notice.

    The moral of the story is: proceed with caution. You could get lucky. Or it could be a complete disaster. Go with your gut.


    Rutherford Place Price Adjustments

    Posted by urbandigs

    Tue Jun 27th, 2006 12:23 PM

    rutherford-place-condo.gif

    A: The Rutherford Place Condominiums at Stuyvesant Square is not a new development, but rather a condo conversion of one of NYC's great landmarked buildings which created 122 'unique contemporary mulit-level homes within a luxurious and opulent gilded age setting as conceived by J.P. Morgan himself'. OK. What interests me is the price adjustment for these 'opulent, luxury, gilded aged apartments' that are now cheaper for the public!

    Rutherford Place Condos are located on Second Avenue between 16th & 17th Streets in Gramercy Park.

    FEW PRICE REDUCTIONS EXAMPLES


    APT. 304: Reduced from $1.325M to $1.295M on 6/26/2006

    APT. 307: Reduced from $1.195M to $1.150M on 6/26/2006

    APT. 311: Reduced from $1.150M to $1.095M on 6/26/2006

    APT. 315: Reduced from $1.995M to $1.795M on 6/26/2006


    Amenities Include
    :

  • Spectacular newly restored historic marble entrance vestibule & lobby

  • Newly renovated elevators

  • Newly renovated windowed and climate controlled public halls

  • 24/7 Doorman announces visitors & accepts packages and deliveries

  • Valet & Maid services available

  • Rooftop sundeck, beautifully planted and comfortably furnished

  • Bike room on concourse level

  • Intercom communications to each apartment

  • Alarm system in each apartment

  • Convenient & Safe ATM located in the lobby



  • Kitchen Finishes & Appliances Include:

  • Poggenpohl European cherry cabinets

  • Jet Mist granite counter tops and backsplash

  • Brushed stainless steel drawer pulls and cabinet handles

  • Italian porcelain 18" X 18" floor tiles in black

  • Under-counter halogen task lighting

  • SubZero refrigerators

  • Bosch multi-cycle dishwashers

  • Dacor combination convection/microwave oven with hood vent

  • Viking all-gas stainless steel range with stainless steel backsplash

  • Kindred 18-guage 8" deep under-mount stainless steel sink




  • Notable Price Reductions

    Posted by urbandigs

    Tue Jun 27th, 2006 11:18 AM

    A: Another week, another set of price reductions to report over the last 7 days. Last week I noted 127 price reductions for Manhattan, while the past 7 days registers 129 price cuts, only slightly higher than last week's reported totals. Here are a few to keep an eye on.

    TOTAL PRICE REDUCTIONS THIS WEEK
    ---> 129 (2 more than last week)

    STUDIO PRICE REDUCTIONS

    215 East 73rd Street; Apt. 5G

    215-East-73.gif

    Size: 625 SFT
    # Beds: 0
    # Baths: 1
    maintenance: $861
    Asking: $359,000 (Reduced Twice From $425,000)
    Price Per Sq. Ft.: $574
    Marketed By: Paula Novick & Laura Gruber of Corcoran

    1BR PRICE REDUCTIONS


    240 East 55th Street; Apt. PH-C

    240-East-55.gif

    Size: 800 SFT + Wrap-Around Terrace
    # Beds: 1
    # Baths: 1
    maintenance: $1,463 (High; Read My Post Here)
    Asking: $539,000 (Reduced Three Times From $749,000)
    Price Per Sq. Ft.: $674 (Excluding Wrap Terrace!)
    Marketed By: Howard Spiegelman of Corcoran

    2BR PRICE REDUCTIONS

    245 East 54th Street; Apt. 11FG

    245-East-54.gif

    Size: 1,600 SFT (large 2BR)
    # Beds: 2
    # Baths: 2
    maintenance: $2,208 (A bit high)
    Asking: $1,395,000 (Reduced From $1.699M)
    Price Per Sq. Ft.: $937
    Marketed By: Eileen Mintz of Corcoran
    BONUS: Future 720 sq.ft. expansion possible ????


    Surviving A Housing Cooldown

    Posted by urbandigs

    Mon Jun 26th, 2006 11:09 AM

    A: Lets go into the minds of a buyer who is aware of the cooling housing market, wants to take advantage of the buyers market we are in right now, wants to buy now and lock in rates before they get too high, and wants to build wealth and enjoy the tax benefits of home ownership instead of renting. How would they survive a housing cooldown without taking a hit financially? Here are some tips to prepare for future bumps in the road!

    In this post you MUST understand that I am discussing a buyer in today's market who knows they will be buying (rather then renting), but wants to prepare properly for a housing cooldown in the hopes of surviving one financially.

    surviving-housing-cooldown.gif

    FIRST & FOREMOST, are you prepared to buy a house today? I find plenty of possible leads contacting me with the hopes of buying their first home, but when I discover their financial situation I am forced to be brutally honest with them and advise them to SAVE their money in order to be better prepared for homeownership! With that said, lets begin:

    SURIVIVING A HOUSING COOLDOWN

    1. BE FINANCIALLY ABLE - You are going to need significant liquid assets to buy your first home comfortably so that you will NEVER BE FORCED TO SELL, especially in the next few years!

    As you figure out what price range you can actually afford, analyze your total liquid assets and see whether you can actually afford the 10% or 20% down payment and the closing costs to do the transaction! Ideally, you want to put as much money down as possible in order to finance as little as possible in this higher interest rate environment. However, I understand that this is not always the case and that most people will choose to put down the absolute minimum in order to become a homeowner.

    Nothing wrong with that as long as you have enough liquid assets AFTER CLOSING COSTS (that is, down payment + transaction fees) to live comfortably. In general, you should have at least 6 months or so of monthly expenses (housing + debt's + living costs + tax payments) in liquid assets leftover after the deal is done. The more the better. The first year of homeownership should be considered the REBUILDING YEAR as you replenish your accounts by saving and sacrificing some luxury's that are not necessary to survive. The goal here is to NEVER, EVER be in a position where you are forced to sell because you ran out of money as a result of the home purchase!

    2. YOU WON'T HAVE TO MOVE - The second tip to surviving a housing cooldown is making sure you will NOT have to sell because of a job transfer or other unforseen job change (such as being laid off) over the next 2-3 years! If you are self-employed in an industry with fluctuating salary then be sure you have 1 years worth of monthly living expenses in liquid assets after closing!

    If there is a possibility of being transffered in the next 1-2 years, than now is NOT the time to buy! A job transfer will force you to sell your home during a buyers market when lending rates are rising. Not the best time to be forced to sell and not the best strategy for making money in real estate!

    3. LOOK FOR VALUE - Don't let emotion take control of your intentions to buy! Be disciplined and focus on paying for the permanent features of a property that will utlimately lead to the highest re-sale value down the road. As I mentioned before on UrbanDigs, these include raw space, location, light, and views! Paying top dollar for somebody else's renovations is NOT the best inmvestment strategy in a cooling housing market!

    The goal should be to get the most bang for your buck by buying the worst apartment, in the best neighborhood, in the best building with the most sunlight and nicest views! Very tough to achieve so do your best to at least satisfy most of what I just mentioned.

    4. TAKE THE PROPER LENDING PRODUCT - If you have to settle for a 3YR Interest Only ARM to buy your first apartment than you are buying too much house than you can afford and rationalizing the purchase by agreeing to take out a risky lending product! Not the right move! Call your mortgage broker today to find out where current interest rates are for 30YR fixed or 5YR or 7YR ARM's (not Interest Only) so that you have an idea of what your monthly costs will be based on your target price range. Educate yourself! If you put yourself in a position where your monthly housing payments can rise sooner than you would like, than you are setting yourself up for financial disaster! Higher monthly mortgage payments is one reason that could cause a homeowner to be forced to sell; something we are trying avoid!

    UrbanDigs Says: The homeowners who get hurt the most in a housing cooldown are those who are FORCED TO SELL! If you know you are going to buy because you want to start building wealth and enjoy the tax benefits of home ownership, than be sure to know the housing pitfalls that lead one to SELL when they don't want to! If you can weather a housing downturn then you can sell your property when YOU CHOOSE TO and at a time when housing gets back in favor again!

    Good Luck!


    Site Down Again

    Posted by urbandigs

    Mon Jun 26th, 2006 09:32 AM

    Twice in 1 week. I know, I'm sorry! I registered www.urbandigs.com back in June of 2004 when the idea for this site first hit me, although I didnt start it until Sept of 2005. Turns out the 2YR registration expired even though I thought I renewed the domain name. Sorry for the inconvienence! Now, back to work on content and I should have today's post up by noon or so.


    Fed Watch: Will Bernanke Raise 1/2 Point?

    Posted by urbandigs

    Fri Jun 23rd, 2006 09:26 AM

    A: My last 2 fed watch posts here on UrbanDigs (#1 & #2) explained why I think Bernanke & Co. should raise the fed funds rate up to 5.5% at next weeks meeting! Nothing has changed my mind since and in fact, now CNBC is starting to have guests on its show explaining why a 1/2 point hike would be warranted.

    I've been following the equity markets, commodities markets, and the fed and their reactions to current economic conditions since I was 13 and had $500 to invest in SGI (Silicon Graphics, Inc.), which has since gone bankrupt. Not the best investment now that I look back, but one that triggered an obsession for me in the tradable markets and monetary policy that continues today.

    bernanke-fed-interest-rates.jpg

    I respected former fed chief Alan Greenspan so highly for his service and his character in handling tough situations and traders expectations. At least he understood the importance of 'certainty' and the critical element of letting traders/investors know what was to be forthcoming. Bernanke is still learning this.

    Energy prices are STILL at uncomfortably high levels and right now we are seeing inflation pressures resulting from last years occurences. Remember, economic data released now is lagging and the fact that energy prices have remained this high for this long only leads me to believe that inflation pressures will only increase as we head into 2007. So, the fed is really very limited in combating these pressures to prevent future inflation and only has monetary policy as their biggest weapon in their arsenal.

    Every homeowner and prospective buyer out there are beginning to feel the effects of higher interest rates on their monthly mortgage, ARM's, HELOC's, credit card statements, and lending rate quotes that are related to each individual's circumstances. For example, if you are a buyer looking for a new home right now then you probably know that 30 YR fixed rates have increased steadily over the past 3 months or so. Another example would be a homeowner with a HELOC whose monthly payments have risen by 5-10% or so over the past year. The pain is not over as the fed is FORCED to raise rates further to combat inflationary pressures seen today and forecasted to come down the road (energy prices of $70/barrel are yet to effect economic data; in fact, economic data we see now has only been affected by oil prices from late last year).

    THE FED SHOULD RAISE 1/2 POINT NEXT WEEK TO PROVE THEY ARE FEARFUL OF INFLATION PRESSURES AND SHOW THE TRADABLE MARKETS THEIR HAWKISH NATURE AND WILLINGNESS TO DO ALL THEY CAN TO KEEP FUTURE INFLATION IN CHECK
    A recession is all but certain at this point, probably beginning in late 2007 and data proving one in early/mid 2008. I'm not to worried about that as recession's are a normal part of longer term sustainable economic growth (you can't just have an economy booming forever, there has to be bumps along the road). The goal is to limit the severity of the recession and avoid a depression at ALL costs! That is the tricky part right now. The fed may publicly acknowledge that they are trying their best to avoid a recession with their current 2+ year rate hike campaign, but I would think that every fed governor on the committee knows one is coming and is now trying to figure out how to control the inevitable recession the US is about to see! After all, rate hikes are intended to SLOW the economy!

    Fact is, inflation is the biggest problem the fed has to deal with and the trickiest one too. The best we can do is understand what is happening right now, and what is probably going to happen down the road to properly invest in it. What I see are 30YR mortgage rates of 7% by years end, 7.5% by mid 2007, and close to 8% by the end of 2007! The logic being that the fed's rate hikes take 8-12 months to funnel through the economic system and we are not even close to the final fed funds # yet. Right now the fed funds rate is at 5% and rising. Will it settle at 5.5%? 5.75%? 6%? No one knows for sure but what most experts will agree on is that it is 1 of these 3 #s!

    I would put my money on 5.75% given what I see right now. I'm hoping that the fed raises by 1/2 point next week and provides a clearer statement on future moves. That would be welcome to equity markets but unwelcome for lending rates and those holding alot of debt. Plan accordingly. In meantime, 2008-2009 is looking to be a prime time to buy real estate as sellers in these years are going to be faced with a very slow market as buyers deal with 30YR mortgage rates near 7.5-8% or so. If buyers aren't there, sellers must pull out their only weapon to move a property; price reductions.

    Lets see if I'm right or a lame duck! In the meantime, my bet is on cash and I expect the US dollar to see a nice recovery over the next 2-3 years or so as investors/hedge funds overweight cash until the next opportunity presents itself. When real estate in NYC dips, I look at that as a buying opportunity as bust cycles in our city are much shorter than almost every other market across the country and our boom cycles are longer than most markets.

    Just look at Jonathan Miller's post on the recently launched CME housing futures which shows NYC still gaining while other markets continue their declines.


    10% Commission? Another trend?

    Posted by urbandigs

    Thu Jun 22nd, 2006 01:20 PM

    A: Thanks to Rudolph at Sellsius Blog for this tip on a 5 week old listing at 333 E 55th where the seller is offering a 10% commission to move the property! This is not a new marketing tactic, but it definitely is the highest commission I've seen in my days as a broker. Will it work? No way!

    333-east-55.jpg

    Lamb Realty has the exclusive listing where this JR4 is asking $875,000 with a 10% commission incentive offered to the brokerage community to stimulate activity. Its tough to tell how much the seller added onto the asking price to accomodate the extremely high commission offered, but here is what I can gather about sales in this building:

    333 E 55th ACTIVES


    Apt. 4B ---> Asking $389,000 and 580 SFT (shares N/A)
    PPSF = $707
    Marketed By: Rena Black of Bellmarc

    Apt. 14D ---> Asking $875,000 (298 Shares)
    PPS = $2,936 Price Per Share
    Marketed By: Lamb Realty

    333 E 55th RECENTLY CLOSED

    Apt. 8E
    ---> SOLD FOR $575,000 and 270 Shares on 11/2/2005
    PPS = $2,129 Price Per Share

    Apt. 11E ---> SOLD FOR $580,000 and 290 Shares on 10/17/2005
    PPS = $2,000 Price Per Share

    So, it seems this JR4 which is probably the same size as the 2 listed above that closed late last year, is asking about $850 more per share in a slower market and rationalizing it with a 10% commission.

    I doubt the seller's strategy will work here in a slower housing market than late last year, but I certainly will be curious to see if a broker can convince a buyer to pay this much more than recent comps, to get his fat commission check.

    1 MAJOR FLAW: Even if the seller gets the higher price somehow, what happens if the buyer is financing 75% of the transaction, in which case the lending bank will send an appraiser over to verify the purchase price? How will the appraiser 'get the # needed' when the last 2 similar units sold for so much less? This broker has no answers to that one!


    Do Buyers Save w/ FSBO's?

    Posted by urbandigs

    Thu Jun 22nd, 2006 11:00 AM

    A: On a recent showing with one of my clients, where we had to wait 20 minutes in the lobby for the seller's broker to arrive, we started talking about FSBO listings and whether or not they offer a better value than listings with the brokerage community. As I explained to my client that this is not always the case, she mentioned that FSBO's can offer a lower price because they are saving the commission to be paid to the brokers. Is this true?

    Not Really. Here are some short answers.

    FSBO's are everyday people with full time jobs who want to pocket as much as possible from their home sale; which there is nothing wrong with. However, they are now in charge of fully marketing their property (which can add up to thousands of dollars before a buyer is found), valuing their property (which almost always ends up being higher than market value), and pre-qualifying and preparing the buyer's board package. Sounds easy right. Go try it sometime!

    fsbo-nyc-real-estate-apartments.jpg

    I notice that many FSBO's do NOT know how to value their property as they use their emotions during this process to come up with an asking price that they BELIEVE represents the true market value of the apartment. Not always the case. Most FSBO's start out with an asking price similar if not higher than traditional brokerage listings but may have more negotiability when responding to an offer. By no means do I see FSBO's asking price drastically lower than a property listed with a broker. So, its up to the buyer to convince the FSBO to accept a much lower price because trust me, they will try to pocket the money themselves!

    The majority of deals in NYC are co-broke's meaning that a buyer was brought to the deal by a representative broker. Most people do not have the time or the experience to find, evaluate, negotiate, and prepare to buy a property in NYC. So, instead they use a buyer broker to assist them throughout the entire transaction process.

    In regards to a FSBO who is NOT offering an incentive to the brokerage community, think of how many potential buyers out there are NOT being told of your property because you are selling on your own! In a nutshell:

    FSBO's NOT OFFERING AN INCENTIVE TO THE BROKERAGE COMMUNITY ARE GREATLY LIMITING THE BUYER POOL TO WHICH THEIR PROPERTY IS MARKETED. MARKETING TO A SMALLER BUYER POOL WILL LOWER THE CHANCES OF GETTING TOP DOLLAR FOR ANY PROPERTY


    Conclusion: Its a double edge sword for FSBO's. By choosing to sell on their own to try to save the 6% commission, they will be marketing their property to a much smaller buyer pool which in turn will most likely result in 'missing' that perfect buyer who is currently working with a broker. On a similar note, those buyers who are looking ONLY at FSBO listings in the hopes of getting a better deal will NEVER, EVER submit a full ask bid anyway as their very goal is to save as much money as possible on their home purchase. Not the ideal buyer in regards to a seller seeking top dollar for their apartment!

    Which now brings me to pricing! Are FSBO listings priced lower than traditional listings with a broker? Not always, and here are some real examples to prove it! These are comparable units (same apt type) in the same building where an owner is selling as a FSBO and a broker selling as an exclusive listing:

    400 East 74th Street

    OWNER ---> APT 404 ASKING $799K (Reduced from $849K)

    BROKER ---> APT 604 ASKING $800K


    720 Greenwich Street

    OWNER ---> APT 2E ASKING $695K (Reduced from $775K)

    BROKER ---> APT 3C ASKING $675K (Reduced from $769K)

    157 East 72nd Street

    OWNER ---> APT 15J ASKING $650K (Reduced from $690K)

    BROKER ---> APT 9G ASKING $630K (Reduced from $640K)

    Now what I do NOT know is the condition, views, light, etc. of these units so take what I list here as is! Fact is, FSBO's are just as greedy as owners who use a broker when they finally decide to go and sell their home; that is, in the sense that they do not say to themselves "well, I'm not using a broker or paying a 6% commission so I will lower my price and pass that savings on to the buyer". Yes sometimes you will find a value buying directly from an owner, but I wouldn't make it a priority during your property search or you might miss out on a good deal that happens to be listed with a broker!


    Bandwidth Exceeded Limit

    Posted by urbandigs

    Thu Jun 22nd, 2006 10:39 AM

    Oops! Sorry about that as I didnt think it would exceed the limit so quickly or that the site would be suspended.


    Condo Concerts - Developers Are Singing

    Posted by urbandigs

    Wed Jun 21st, 2006 12:53 PM

    A: How about that! Last Thursday I reported on a carnival + concert happening at Carl Schurz Park which was reportedly being thrown by developers of the 170 East End Ave new development. In today's NY Post, an article confirms that developer Orin Wolf of 170 East End Ave was indeed responsible for the invitation-only concert featuring Laurie Berkner and her band.

    Perhaps a new trend to market new developments in a cooling housing market? Here is the article:

    condo-concerts.jpg


    Notable Price Reductions

    Posted by urbandigs

    Wed Jun 21st, 2006 10:13 AM

    A: It's that time again. Another week, another look at notable price reductions across Manhattan. Here are some price cuts that should warrant your attention in the past 7 days.

    TOTAL PRICE REDUCTIONS THIS WEEK
    ---> 127

    STUDIO PRICE REDUCTIONS

    235 East 87th Street; Apt. 1L

    235-East-87.jpg

    Size: 600 SFT
    # Beds: 0
    # Baths: 1
    maintenance: $775
    Asking: $349,000 (Reduced Three Times From $390,000)
    Price Per Sq. Ft.: $582
    Marketed By: Lisa Holland-Davis of Halstead


    1BR PRICE REDUCTIONS


    333 East 75th Street; Apt. PHA

    Size: 1,000 SFT + 400 SFT Wrap Terrace
    # Beds: 1
    # Baths: 1
    maintenance: $2,002 (Above $2/SFT keeps asking price down)
    Asking: $699,000 (Reduced Twice From $775,000)
    Price Per Sq. Ft.: $699 (Excluding Wrap Terrace!)
    Marketed By: Cindy Bernat of Corcoran

    **OH SUNDAY 12-2PM**


    2BR PRICE REDUCTIONS


    101 W 81st Street; Apt. 710

    101-West-81.jpg


    Size: 1,200 SFT + 504 SFT Terrace
    # Beds: 2
    # Baths: 2
    maintenance: $1,934
    Asking: $1,395,000 (Reduced Three Times From $1.99M)
    Price Per Sq. Ft.: $1,162 (Excluding Wrap Terrace!)
    Marketed By: Rena Katz of Corcoran


    Real Estate Blogs Check - Other Markets

    Posted by urbandigs

    Wed Jun 21st, 2006 07:50 AM

    A: In case you were wondering how 'other markets' were doing as reported by bloggers from across the country, here is a roundup.

    MIAMI/ORLANDO

  • Miami Shows Weakened Condo Sales (Miami Real Estate News Blog)


  • Florida, It's A Great Place To Visit, But Don't Buy Real Estate There (Now) (Chicago MARE)


  • SEATTLE

  • What's Hot & What's Not in Seattle (RainCityGuide)


  • BOSTON

  • What Do You Get For The Money: $300K (The Boston Real Estate Blog)


  • SAN FRANCISCO

  • SAn Francisco Inventory Update: 6/15/2006 (SocketSite)


  • LAS VEGAS

  • Las Vegas High Rise Condos: Up, Up, And Away (Michelle Sterling's Blog)


  • CHICAGO

  • Is Interest in Chicago Real Estate Waning (Chicago MARE)


  • NEW JERSEY

  • Northern NJ May Residential Sales (Northern NJ Real Estate Bubble)


  • VIRGINIA

  • Charlottesville Housing "OverValued" (Real Central VA)

  • Are The Blinds Closed?

    Posted by urbandigs

    Tue Jun 20th, 2006 11:12 AM

    A: Here is a good one. I preach all the time here on UrbanDigs about spending your hard earned money on the permanent features of a property; such as location, raw space, light, and views. For this post, I will discuss the last 2 features mentioned; light and views. As you browse the internet for possible new homes be sure to note whether or not the blinds are OPEN or CLOSED in the listing! That can tell you immediately whether or not the property has good natural sunlight and views or NOT!

    NOTE: To err on the side of caution (as a broker who deals with other brokers on a daily basis) I will not list actual units or agents in this post!

    Use this philosphy:

    IF THE BLINDS ARE CLOSED IN THE WEB AD FOR A SPECIFIC PROPERTY, THAN AT THE VERY LEAST CALL THE BROKER AND ASK WHETHER THE APARTMENT GETS GOOD SUNLIGHT AND WHAT VIEWS/EXPOSURES THE UNIT HAS

    Uh-Oh CLOSED BLINDS - What Are They Hiding?


    blinds-closed.jpg

    *Whats behind the curtain? A neighboring building, a dark alley, a disgusting rooftop? TELL ME!

    and another...

    blinds-closed-1.jpg

    *this agent blatantly closed these curtains! I wonder why?


    Ahhh OPEN BLINDS - Nothing To Hide


    blinds-open.jpg

    Not the most scientific way to approach homebuying, I know, but a useful little way of saving some of your precious time! If you desire natural sunlight, and you certainly should for re-sale purposes, then make sure you do some more digging if the blinds are closed!


    "Shares" are Scarce for New Grads

    Posted by Toes

    Tue Jun 20th, 2006 08:25 AM

    walldividers.jpg

    I walked into my friend's room and before taking a good look around, I asked, "Patrick, why do you have photos of Jason's parents in your room?" Then it hit me. Bunk beds! My 24 year old friends had taken a two bedroom, put up a pressurized wall in the living room, and two guys were sharing a room. The only way they could afford living in a prime neighborhood in Manhattan in a doorman building was for 4 guys to share a 2 bedroom.

    The Caroline on 23rd St and 6th avenue is one of the few buildings left that will allow "shares." Recent grads flock to the building because they can't afford Manhattan rents without packing extra people into an apartment. Neighbors complain that the building has turned into a "fraternity house" because of the extra noise. Having extra people in each apartment puts more stress on the elevators, means people wait longer for a machine in the laundry room, and congests the common areas.

    In searching for an apartment for two recent grads moving to Manhattan with a budget of $2,800, I couldn't find a full time doorman building below 86th Street with availability that allows shares and pressurized walls. Why? Because every other college grad is looking for the exact same thing. Anything that comes on the market gets rented right away.

    Although many buildings, like "Rivergate" on 34th St. and 1st Ave., allow shares on a "case by case" basis, they really only allow shares in Junior-4s (one bedroom apartments with a separate dining area or home office). Junior-4s below 96th street in Manhattan are $3,200 and up (at Rivergate, they are closer to $3,600), which knocks my clients out of the running. In some cases, landlords will no longer allow two non-related people to share a two bedroom.

    So what can those with a restricted budget do? Some decide to put only one person on the lease and sneak the other roomate and a wall into the building. This move is risky. Doormen are not clueless. They can tell when "The Wall" or "Living Spaces" show up in their lobby. Many pressurized wall companies won't agree to put up a wall without the express written permission from the building.

    What are the ramifications of an illegal share? If one roomate is not on the lease, they may not be able to receive mail at the building and could potentially be evicted. If something goes wrong in the apartment, the roomate not on the lease can't call the management company to get it fixed, because they would alert the management that they had an illegal share. Essentially, the roomate not on the lease has to sneak into and out of their building every day, knowing they aren't supposed to be there.

    90 West Street allows shares, but no walls. In their model apartments, they used large furniture and bookcases to show how you can "convert" a one bedroom into a two bedroom without building an actual wall. Although the furniture option is great, it does little to soundproof the second bedroom.

    I finally found my clients a one bedroom that allows conversions at Carnegie Park, a gorgeous doorman building on 94th Street, with a pool and health club, for $2895. I hope they take it, because with rental vacancies as low as they are, if they wait much longer, there might be nothing left to share!

    Other resources:
    Room Dividers NY
    Japanese Screens
    WallZilla


    General Renovation Costs

    Posted by urbandigs

    Mon Jun 19th, 2006 02:39 PM

    renovating-costs.gif

    A: I get a lot of questions about how much it would cost to renovate a kitchen, or bath, or hardwood floor that I felt a need to post on it. Ideally, you want to find the worst apartment on the best block in the best building that is selling at a discount because of the condition of the unit. Don't avoid the wreck! Buy it!

    Example Wreck Listings


    1. Holly Hunt of Halstead's listing at 130 E 94th street

    2. Robin Morrissey's listing at 131 E 93rd street

    3. Pam Tomlin's listing at 157 East 72nd street

    4. Gary Kahn's listing at 46 West 65th street


    Example Fully Renovated Listings


    1. Jennifer Wilson's listing at 345 East 73rd street

    2. Susan Skinner's listing at 315 West 86th street

    Here is a breakdown of what to expect for apartment renovations:

    KITCHEN RENOVATIONS


    Low End (Ikea Cabinetry/GE Appliances) ---> $7,000 - 10,000

    Mid End (Home Depot Cabinetry/KitchenAid Appliances) ---> $10,000 - $15,000

    High End (Custom Cabintry/Bosch Appliances) ---> $15,000 - $25,000


    BATHROOM RENOVATIONS


    Low End ---> $5,000 - $7,000

    High End ---> $7,000 - $15,000


    HDWD FLOORING RENOVATIONS


    Floor Resurfacing ---> $2.00 - $3.00/Per SFT (Includes Sanding, Staining, & Water Based Poly) See my post for more details.

    New Floor ---> $15 - $20/Per SFT (Includes removal of old floor and installation of brand new flooring. Price varies depending on floor product used)


    ADDING A WALL


    Pressurized Wall ---> Up to $1,250 or so

    Permanent Wall ---> $3,000 - $5,000 (depending on electrical, closet added, use of glass bricks, etc.). See my post for more details.

    These costs are very general and should be used only as a guide when deciding whether or not to renovate your apartment. Also, keep in mind that there will be a renovation package that you MUST submit to your condo/co-op board along with fees to process the application for renovating.

    Assuming all goes well and you get approved, expect a temporary mess and a big headache as you deal with the dust, noise, and incovienence of contracting work during the renovation. This is one reason why renovating in NYC gets such a premium; not only is the buyer getting an updated apartment, but they do not have to deal with the headaches of planning, applying for, and actual work of the renovation process.

    UrbanDigs Says: Savvy real estate investors know that location and permanent features of a property are what people pay big bucks for! So, do your best to find an apartment in a desireable location (near public transit systems, restaurants, parks, bars, etc.), with as much raw space and views/natural light as possible that is in need of major work and TLC! Buy at a discount and then do the renovations yourself so that when you resell you can demand the premium that fully renovated apartments in NYC get!


    Better Act Fast in the Financial District!

    Posted by Toes

    Mon Jun 19th, 2006 08:56 AM

    The Financial District has become increasingly popular for recent graduates moving to NYC to work on Wall street. They know they will be putting in insane hours as first year analysts at companies such as Deutche Bank, so they want to live as close to work as possible. Most of the new luxury rentals in the Financial District are also paying the broker's fee, which allows recent grads to use their relocation bonuses towards the already high costs of moving to Manhattan.

    crest-nyc.jpg


    Matt, a 2006 college graduate, came into town last Tuesday to find a studio under $2,000 in the financial district for a July 1st move-in. 100 Maiden Lane had 6 studios available on Friday, but on Tuesday, they were all gone. Cheapest studio? $2,225. Monday afternoon, 45 Wall St had 3 studios available but Tuesday morning they called me to cancel our appointment. Between 10am and 12 noon, all 3 studios were rented.

    A John Street building and a Gold street building had studios for $1750 - $2000, but lacked any amenities, and weren't paying the broker fee. Despite the appealing rent, the buildings just weren't as nice as the luxury "fee-paying" buildings. When you amortized the fee into the rent, you could live in a much nicer and newer building for the same price.

    63 Wall, "The Crest," had one $2,025 studio for July 1 that Matt liked. We headed to 90 West and found a possibility there. An hour later, we went back to take the studio at 63 Wall Street, but it had just been rented. We went to 90 West Street to take Matt's second favorite apartment, but it had JUST been rented also! Matt put in an application in the nick of time for his third choice, an apartment for $2,005 at The Crest. With nothing left for July 1st, Matt had to take an apartment for August 1st, and will be sleeping on a friend's couch for his first 5 weeks as an analyst in NYC.

    As a broker, I know that the vacancy rates in the Financial District have gone back to what they were before 9/11. But even I wasn't prepared that the 12 options available to Matt on Monday afternoon would be gone Tuesday afternoon. Studios were literally disappearing before our eyes.

    The financial district is considered one of the last few places in Manhattan where you can get a "good deal." But if apartments in this area keep flying off of the shelf the way they are right now, you won't see buildings paying the broker's fee for much longer.

    The new condo buildings and condo conversions going up in the neighborhood, (20 Pine, The Cipriani Residences, Five Nine John Lofts, the Downtown Club, and Cocoa Exchange, just to name a few) will bring thousands of new residents to the area, as well as new stores, bars, and restaurants. Anyone who wants to take advantage of one of the last few "good deals" on the island of Manhattan - luxury rental buildings that pay the broker's fee - better get in soon, before all of the "deals" are gone!

    For additional information about the financial district's rebirth, check out:
    The Real Deal
    Miller Samuel


    Developers & Carnivals: 170 East End Ave

    Posted by urbandigs

    Thu Jun 15th, 2006 03:24 PM

    A: I took a stroll past the new development at 170 East End Avenue (between 87th & 88th Streets) this afternoon, to see how the Peter Marino project is going thus far, and noticed a carnival setting up on the Promenade. Sno cones, Cotton Candy, Games, and a concert stage is being set up on the East side near 86th street. Rumor has it that the whole bash is being thrown by the backers of the 170 East End Avenue new development, to draw attention to the project, the newly renovated Carl Schurz park and the family oriented atmosphere of this neighborhood.

    Frist off, here is a pic of the concert stage being tested out by an unidentified band (I lost battery power and couldn't take pic of makeshift carnival setting up on promenade):

    east-end-party.jpg

    Second, here is a look at the building status as of today:

    170-East-End-Avenue.gif

    ...and the poster showing a conceptual drawing of the finished building:

    170eea1.jpg

    Certainly an interesting marketing tactic should this rumor turn out to be true. Here are some listings from 170 East End Ave currently on the market:

    APT 4K

    Size: 1,008 SFT
    # Beds: 1
    # Baths: 1.5
    maintenance: $857
    RE Taxes: $425
    Asking: $1,015,000
    Price Per Sq. Ft.: $1,007
    Marketed By: Corcoran Sales & Design Center

    APT 5L

    Size: 1,330 SFT
    # Beds: 2
    # Baths: 2.5
    maintenance: $1,136
    RE Taxes: $563
    Asking: $1,675,000
    Price Per Sq. Ft.: $1,259
    Marketed By: Corcoran Sales & Design Center


    APT 12B

    Size: 2,717 SFT
    # Beds: 3
    # Baths: 3.5
    maintenance: $2,286
    RE Taxes: $51,133
    Asking: $5,395,000 (Reduced from $5,950,000 on 5/26)
    Price Per Sq. Ft.: $1,986
    Marketed By: Corcoran Sales & Design Center


    Cheslea House Condo's Swinging

    Posted by urbandigs

    Thu Jun 15th, 2006 07:41 AM

    chelsea-house-condo.gif

    A: What is going on at The Chelsea House Condo's where some units asking price are rising, while others are dropping based on initial prices entered into one system I use? Confusing, yes! Is this a computer glitch, a mis-entered listing, or a price update from the developer? You make the call.

    Here is what I see in the CHANGE REPORT I just ran for this new development:

    APT 3C

    11/13/2005 - $1,340,000
    11/30/2005 - $1,390,000
    6/13/2006 - $1,318,000

    APT 3D

    11/13/2005 - $1,526,000
    6/13/2006 - $1,425,000

    APT 4B

    11/13/2005 - $1,368,000
    1/26/2006 - $1,302,000
    6/13/2006 - $1,325,000

    APT 5A

    11/13/2005 - $2,023,000
    1/26/2006 - $1,866,000
    6/13/2006 - $1,595,000

    APT 5D

    11/13/2005 - $1,579,000
    1/26/2006 - $1,419,000
    6/13/2006 - $1,550,000

    APT 7E

    11/13/2005 - $2,122,000
    2/4/2006 - $1,853,000
    4/4/2006 - $1,725,000

    Just to list a few! Obviously new listings were originally entered into this system on 11/13/2005, with an update on a couple in January. But what's with the update yesterday?

    Now, here is the building listing from another system I use showing all the CURRENT ACTIVES and their asking prices. Things that make you go hmmmmmmm. This system lists NO price changes for most and looks as if these units were only first entered into the system 6 days ago.

    chelsea-house.gif


    New Chelsea & G. Village 1BR's

    Posted by urbandigs

    Wed Jun 14th, 2006 11:03 AM

    A: For those in the market to spend about $550-575K or so for a 1BR around the Chelsea/G. Village area, here are 2 brand new listings to keep an eye on.

    225 West 25th Street; Apt. 6C

    225-West-25.gif

    Size: 700 SFT
    # Beds: 1
    # Baths: 1
    maintenance: $641 (Below $1/SFT)
    Asking: $550,000
    Price Per Sq. Ft.: $786
    Marketed By: Pam Wolfe of Corcoran

    **OH SUNDAY JUNE 18th 12:00 - 1:30PM**

    60 East 9th Street; Apt. 217

    60-East-9.gif

    Size: 700 SFT
    # Beds: 1
    # Baths: 1
    maintenance: $817
    Asking: $595,000
    Price Per Sq. Ft.: $850
    Marketed By: Mary Ann Cotter & Dee Simonson of Corcoran

    **OH SUNDAY JUNE 18th 1:00 - 2:30PM**


    Fed Update: Issues With Data Dependence

    Posted by urbandigs

    Wed Jun 14th, 2006 09:40 AM

    A: Wow, wow, wow. This morning started off with an unwelcome Core CPI rise of 0.3%, exceeding estimates of 0.2%. Fed Funds futures briefly trade beyond 100% in predicting a June rate hike.

    According to CNN Money article:

    The core CPI now is up 2.4 percent over the last 12 months. That's well above the target of a 1 to 2 percent 12-month rise in the core CPI which is traditionally seen as within the Fed's comfort level.


    interest-rates-up.jpg

    Fed Chief Bernanke has said repeatedly over the past few months that future monetary policy will be more 'data-dependent', sending shivers down the spines of investors and traders because if there is one thing the markets don't like, its uncertainty!

    Now, the Core CPI data that came out this morning resulted in the fed funds futures contracts briefly going beyond the 100% mark in pricing in another rate hike at June's meeting! Thats bad for all those laymen out there with credit debt or adjustable rate mortgage products. The reason why 'data-dependent' judgement has issues is because technically speaking this Core CPI reading released this morning (which is showing a rise in inflation pressure) is really the result of monetary policy/economic activity from 9-12 months ago!

    I talk about this alot here on UrbanDigs. US Economic data is lagging, meaning it is reported from data that happened months ago, yet the fed is monitoring it today and making monetary policy calls from it that won't have an affect for at least another 9-12 months! Get it? This is why the fed is stuck between a rock and a hard place.

    Super high energy prices and precious metal prices from the periods of OCT 2005 - PRESENT are yet to show their ugly face in economic readings. Meanwhile the fed has no choice but to act on data it gets. The next 2 meetings are sure to be tough on equities investors and adjustable debt holders as more rate hikes are on the horizon. Even if the fed does pause, it is very possible that future data still will show the effects of past higher energy prices/commodities prices and will result in more rate hikes anyway.

    WHAT THE FED SHOULD DO: Raise 1/2 point! Get it over with, issue a clearer statement saying the fed will now PAUSE and watch the effects of monetary policy. That will make everyone happy and prove that Bernanke is tough on inflation.

    WHAT THE FED PROBABLY WILL DO: Raise 1/4 point and issue another 'data-dependent' speech in which 'further policy tightening might be needed' to combat inflation pressures.

    EFFECT ON STOCKS: Interest rate hikes in general are bad for equities as the fed acts to hinder economic growth. Stocks are forward/leading indicators and as such will price in a slowdown in advance of it actually happening. Just look at the last 2 weeks and ask any stockholder how it is to own equities in inflation fearing times. There's an old saying in the stock market world, "Don't Fight The Fed"!

    EFFECT ON US DOLLAR: As interest rates rise, the US dollar & fixed assets become much more attractive;. Short term CD rates right now are about 5.41% for a 1YR CD at Countrywide Bank. Not too shabby. Expect CD rates to continue to rise even AFTER the fed pauses. So, if you are going to invest in a CD, take out a short term one, 6 months say, and then lock in a higher rate when that expires!


    Developers Selling To Developers?

    Posted by urbandigs

    Tue Jun 13th, 2006 03:43 PM

    A: Perhaps a trend? Check out this article I found in the NY Post today regarding the commercial lot for sale at 39 East 29th Street!

    According to the article titled, "Condo Site Set To Sell", by Steve Cuozzo:

    Not only is the property a vacant lot, it's "completely entitled" for a 140,000 square-foot condo building that's already designed, said Studley Capital Transactions Group chief Woody Heller, who's fielding offers. Bids are due June 28. The owners have cleared the land and added to the planned tower's size through air rights, purchases and a bonus achieved under the city's inclusionary-housing program.

    "It's rare for a site to come pre-packaged this way," Heller said. He added the asking price is $400 per buildable foot.

    Market sources said they "expect" the site to sell for between $350-$400 a foot.


    Very interesting as the article concluded, "...In this case, they created enormous value by assembling all the pieces and are less inclined to realize the development process than to sell."

    39-east-29-street.gif


    Fed Watch: Expect A Rate Hike

    Posted by urbandigs

    Tue Jun 13th, 2006 03:05 PM

    bernanke-fed-interest-rates.jpg

    A: What a crazy past 2 weeks in the precious metal markets as those hedge fund/speculative investors continue to dump a huge amount of holdings causing the current correction. Core PPI readings were higher than expected and energy prices, although not at highs anymore, continue to be at uncomfortable levels in this inflation-fearing world we currently live in.

    Precious metal prices have been absolutely hammered over the past 2 weeks as traders unload huge positions and take profits after almost 1 year of incredible gains. Nothing uncommon about this and as far as the fed is concerned, keep it coming down! The higher precious metal prices are the more worried the fed will be that it will eventually cause inflation.

    Check out this 1 month chart of NY Gold courtesy of Kitco.com:

    NY-gold-prices.jpg

    ...and silver prices:

    silver-prices.jpg

    Energy prices remain close to the $70/Barrel mark and US Economic data, specifically Core PPI, continues to show inflation pressures as the fed gets closer to their June 28th meeting.

    According to CNN Money article:

    ...the core rate of inflation, which excludes food and energy, was up 0.3 percent in May, compared with more modest gains of 0.1 percent in both March and April. That was slightly higher than the 0.2 percent increase analysts had been expecting.

    The 0.3 percent rise in core inflation, excluding food and energy, was the biggest rise since a 0.4 percent increase in February. Wall Street has been plunging over the past five weeks as investors have grown increasingly worried that rising inflation pressures will prompt the Federal Reserve to continue pushing interest rates higher.
    Its gonna be very interesting to see what Bernanke does at this next meeting, but this trader/real estate agent still thinks a 1/4 point rate hike is in store. In fact, for those who expect a pause I would think there is more of a chance the fed will raise 1/2 point (50 basis points) and then issue a clearer statement than there is for no rate hike at all!

    Energy prices are still too high for the fed to sit tight as the inflationary pressure of higher energy prices is LAGGING, and doesn't show its ugly face until down the road! So, if energy prices are still high today, the fed has to worry about its effects 10-12 months from now!


    Are You Ready To Buy?

    Posted by urbandigs

    Tue Jun 13th, 2006 11:34 AM

    A: As a full time residential sales agent in NYC, I am constantly getting calls from refferals of past clients as well as new clients who see my ads in the paper or on my company's website. The first thing I usually realize is that most buyers do NOT know what they can actually afford and are already looking at properties that, in my opinion, will spread their finances too thin. Are you ready to buy or should you continue to prepare for homeownership?

    The worst thing a first time soon-to-be homeowner can do is buy too much house! Now I know that buying a home for the first time is very exciting, and that it is a very wise investment tax wise, but understanding exactly what you can afford based on your own lifestyle and monthly expenses is CRITICAL!

    BUYING A HOUSE THAT YOU FALL IN LOVE WITH THAT IS MORE EXPENSIVE THAN YOUR MAX BUDGET WILL DIRECTLY AFFECT YOUR QUALITY OF LIFE, LEADING TO UNECESSARY STRESS AND POSSIBLY PUTTING YOU IN A SITUATION WHERE YOU WILL BE FORCED TO SELL DOWN THE ROAD. IF YOU ARE FORCED TO SELL DUE TO MISMANAGED FINANCIAL DECISIONS YOU WILL NEVER GET TOP DOLLAR FOR YOUR INVESTMENT REGARDLESS OF THE CURRENT STATE OF THE HOUSING MARKET!
    finanical-advisor.jpg
    It is such an important topic that you MUST sit down one evening, go over every payment that you are responsible for every month, see what you are making AFTER TAXES, and figure out what you can afford for housing expenses on a monthly basis. Then call your mortgage broker BEFORE you start looking to find out what size loan you can get to keep your housing expenses under this max #, and get pre-approved for the loan in anticipation of submitting a bid!

    GENERAL TIPS TO SEE IF YOU ARE READY TO BUY


  • Keep TOTAL housing expenses (mortgage + maintenance + taxes) under 33% of your gross monthly income


  • Be sure to have at least 10 months of living expenses (housing expenses + min. credit payments + bill expenses + living expenses) in LIQUID ASSETS leftover AFTER you close on your new property. To determine this you must calculate the down payment + closing costs required for the transaction and subtract that from your total current liquid assets.

    *Some co-ops will require more than this in liquid assets as they want to be sure that you are financially able to afford the property and that you will always be able to pay your monthly maintenance bill. If you default on your maintenance bill, the other shareholders are left to pick up the tab!

  • Your job(s) should be stable, secure, and hopefully providing you with increasing salary year-over-year. If you are self-employed, boost your liquid assets after closing to 18-24 months worth of living expenses just to be safe!

  • Your credit should be as high as possible, hopefully above 700! A higher credit score means a lower interest rate and more choices of loan products/companies.

  • At least 3YR timeline to own. If you know for sure that you will be selling within 2 years, it probably will be wiser to rent and put your money to work instead of buying. Nothing against buying in NYC now, its just that your transaction costs for buying and selling real estate will make it tough to profit greatly from such a short-term investment.

    If you are a bit below these general tips I just laid out (such as you have 5 months of liquid assets, not 10 months saved up) then exercise financial discipline and hold out for now while you prepare yourself to buy at a later time. In meantime, you can gain product knowledge for your target price point to get an idea of what apartments are selling for, but don't get emotional and don't fall in love with anything until you are financially ready to go forward with the deal! Here is a general chart to use that shows you how much AFTER-TAX income you have set aside for housing can afford you in terms of size of loan to take out.

    NOTE: This is a very basic chart and requires some common sense on your part; I left aproximately $750-$1,800 worth of expenses for monthly maintenance + real estate charges for this graph. For example, if you ONLY have $800 of after-tax monthly income set aside for total housing expenses than obviously you couldn't afford to take out a $200,000 loan! So, use this chart as a general guide and feel free to ask me more detailed questions about your own financial situation on the LIVE CHAT if you like. Chart based on 30YR Fixed Loan @ 6.5%.

    mortgage-affordability-graph.jpg


  • New & Notable Listings Under $300K

    Posted by urbandigs

    Mon Jun 12th, 2006 11:03 AM

    A: There are never alot of choices when your budget is $275K or so in NYC, so when doorman studios under $300K pop up, you should get over there fast to take a look! These 2 are brand new listings both on the market since 6/5/2006. They are a bit pricey but without much competition the seller can get away with the initial ask close to $1,000/sft; so put your negotiations skills to the test should you decide to pull the trigger and submit a bid!

    Remember to keep emotion OUT of your decision to buy and try your best to spend your hard earned money on the unchangeable features of the property; such as location, view, light, and raw space! If there is an empty lot as a view for the property you are thinking of buying then you MUST do your research and see if a new development is planned and whether or not you will lose that light and view!

    160 East 91st Street; Apt. 2M

    160-east-91.jpg

    Size: N/A (looks about 325 SFT)
    # Beds: 0
    # Baths: 1
    maintenance: $426
    Asking: $289,000
    Price Per Sq. Ft.: N/A
    Marketed By: Lisa Holland Davis & Bruce Davis of Halstead

    **OH TUESDAY JUNE 13th 5:30 - 7:00PM**

    230 West End Avenue; Apt. 4A

    230-west-end-avenue.jpg

    Size: 300 SFT
    # Beds: 0
    # Baths: 1
    maintenance: $542
    Asking: $295,000
    Price Per Sq. Ft.: $983
    Marketed By: Ken Widerka of Citi-Habitats


    Primary Residence Tax Benefits

    Posted by urbandigs

    Mon Jun 12th, 2006 09:41 AM

    capital-gains-primary-residence-tax-relief.gif

    A: I've been recently asked this question a lot by my own clients so figured to make it into a post to clear up any confusion. If you are a homeowner or preparing to purchase your first home, here are the tax relief guidelines (as noted directly from the IRS) that you will have to meet to save the big bucks!

    To claim the maximum exclusion on the Capital gains on the sale of your home, you MUST first meet the Ownership and Use tests.

    OWNERSHIP & USE TESTS (Out of 5 YR Period)


  • Owned the home for at least 2 years (the ownership test), and


  • Lived in the home as your main home for at least 2 years (the use test)


  • Example 1 - home owned and occupied for 3 years.

    Amanda bought and moved into her main home in September 2002. She sold the home at a gain on September 15, 2005. During the 5-year period ending on the date of sale (September 16, 2000 - September 15, 2005), she owned and lived in the home for 3 years. She meets the ownership and use tests.

    Now that you are aware of the Ownership and Use Tests that you must pass, you can move on to how much you can deduct. Here are the Maximum Exclusions as noted on the IRS website.

    MAXIMUM EXCLUSIONS


    You can exclude up to $250,000 of the gain on the sale of your main home if all of the following are true:

  • You meet the ownership test


  • You meet the use test


  • During the 2-year period ending on the date of the sale, you did not exclude gain from the sale of another home


  • If you and another person owned the home jointly but file separate returns, each of you can exclude up to $250,000 of gain from the sale of your interest in the home if each of you meets the three conditions just listed.

    You can exclude up to $500,000 of the gain on the sale of your main home if all of the following are true.

  • You are married and file a joint return for the year (IT IS NOT REQUIRED THAT BOTH OF YOU ARE ON THE TITLE OR STOCK CERTIFICATE)


  • Either you or your spouse meets the ownership test


  • Both you and your spouse meet the use test


  • During the 2-year period ending on the date of the sale, neither you nor your spouse excluded gain from the sale of another home


  • If either spouse does not satisfy all these requirements, the maximum exclusion that can be claimed by the couple is the total of the maximum exclusions that each spouse would qualify for if not married and the amounts were figured separately. For this purpose, each spouse is treated as owning the property during the period that either spouse owned the property.

    UrbanDigs Says: The tax benefits that Uncle Sam provides to you for investing in housing in America is what makes it such a wise investment, and an investment that historically has proven to build wealth and appreciate over the long term. By understanding exactly what you need to do to qualify for the maximum exclusion, you are on the right track towards building wealth and living a financially sound and independent life! Good Luck!


    Why Timing The Market is So Difficult

    Posted by urbandigs

    Thu Jun 8th, 2006 09:47 AM

    timing-real-estate.jpg

    A: The main reason why timing the real estate market is so difficult is because, contrary to general belief, most apartments appeal to only a small group of target buyers. This is another reason why 'paper profits' are really meaningless until you go out and put your apartment up for sale. Believe it or not, chances are your apartment has features to it that will appeal to some buyers but NOT appeal to most! To get lucky, you need the perfect buyer to find, view, and bid on your property BEFORE you accept any other lower offer! Will the PERFECT BUYER come in time?

    When a wealthy 'ready to go' buyer comes to your OH and falls in love with your property, an aggressive bid is probably not too far away. Most sellers have a price in mind when they first put their apartment on the market. For example, a seller whose asking price is $799K will ONLY respond to bids higher than $725K and will ONLY accept an offer over $750K; usually these instructions are given to the seller's broker beforehand so that the representative agent can advise potential buyers on 'what they need to do' to get a deal done w/out giving out specific low-points that the seller is willing to go to.

    If a few months passes by with no offers (something commonplace in today's market), the seller might start to get nervous as they never thought it would go this long w/out selling. All of a sudden, the seller comes to the realization that perhaps their property is not worth what they thought it was. So, they lower the price to $775K in an attempt to stimulate activity.

    Another month passes and finally a low ball $700K offer is submitted from a very qualified buyer (a comfort for the seller especially when selling a co-op). The negotiations go slow, back-and-forth until they reach an agreement of $735K as the final purchase price (below the low-point the seller declared months ago); contracts get signed and the deal proceeds. This is actually a very accurate set of circumstances when describing the NYC housing market for sellers today. Which brings up the question:

    HOW CAN YOU GET TOP DOLLAR FOR YOUR PROPERTY IF YOU DO NOT HAVE THE TIME OR PATIENCE TO WAIT FOR THE PERFECT BUYER?


    You can't; which is why timing the real estate market is so difficult! What is the seller supposed to do? The apartment has been on the market for 3 months now and this was the only bid to come in, how are they to know whether or not another qualified bidder will come in and submit a higher price? You don't! You take what comes in at the time and depending on your own need to sell, you accept it or hold out in the hopes they/another will bid higher! This is where the luck factor comes into play.

    UrbanDigs Says
    : To time the real estate market perfectly you need a combination of a sellers market (which never lasts for too long anyway) and the perfect buyer to find, view, and bid on your property BEFORE you accept any other lower offer!

    Problem is, hindsight is 20/20 and when you receive that lower offer there is no way to tell if you will get a higher one by holding out. The threat of NOT receiving another 'as qualified' offer is usually enough to force the seller to accept the bid.


    NYC May 2006 Vacancy Report

    Posted by urbandigs

    Tue Jun 6th, 2006 11:20 AM

    A: Here are some stats that you might find useful on the NYC rental market for the month of May! Vacancy rates are broken down by neighborhood.

    vacancy-rate-new-york-city.jpg

    CONCLUSIONS: Murray Hill & Midtown West are leading the pack with the lowest vacancy rate while Chelsea moved into the top spot with the most apartments available. NYC vacancy rates are still VERY LOW and renters are forced to settle for much less than they hoped while paying much more than they want! All in all, if this trend continues expect more renters to consider buying (or at least prepare financially to buy) as the NYC housing market continues to cool and deals are sure to be found!

    I'll publish this monthly so you can keep tabs on the New York City rental market by neighborhood.

    Older vacancy reports can be found at the Citi-Habitats Market Reports webpage along with their bi-annual Black & White report.


    Fed Watch: Will Rates Rise in June?

    Posted by urbandigs

    Tue Jun 6th, 2006 08:06 AM

    interest-rate-bernanke.gif

    A: The fed meets at the end of June in what is setting up to be a very interesting debate: WILL THE FED PAUSE RAISING INTEREST RATES? Because Bernanke is so new I just have no idea whether he will throw a curve ball and PAUSE at the next meeting.

    According to NewRatings.com:

    Analyst Alexander P Paris of Barrington Research says that the Fed Funds futures market is pricing in a 72% chance of an interest rate hike on June 29.
    At least with Alan Greenspan I would know that during inflation fearing times he would be right on top of it (which what contributed to his reputation of 'overshooting') as his thinking was that the effects of inflation are far more damaging than the effects of a possible future recession (which may or may not occur).

    If I were to break it down and guess what the chances are for a hike or not, it would look something like this:

    75% Chance of 1/4 point hike (25 basis points)
    17% Chance of a PAUSE
    8% Chance of a 1/2 point hike (50 basis points) w/ clearer statement

    Why not! Its just a guess right. Since energy prices are still high and climbing (Oil near $73/Barrel), I just don't see how the fed can sit tight and wait. If anything, they must show their willingness to combat this very dangerous inflationary pressure. But who knows. Its a new fed chief and he might carve his own little personality into it and become the best fed chief we ever had. Maybe not. Certainly keep an eye on this upcoming meeting as we'll get our first insight into how Bernanke reacts in times like these!

    OTHER NEWS SOURCES, MARKETS & BLOGGERS THOUGHTS

  • A CNBC ALERT (from WSJ) this morning read: 'FED's POOLE: INFLATION EXEPCTATIONS TRUMP OUTPUT GAP. SEES UPSIDE BIAS IN RATES FOR JUNE MEETING'


  • Fed Funds Futures Rise to 80% chance of a rate hike at June's meeting with release of Fed Poole's statements.


  • The equities markets are certainly pricing in more rate hikes as stocks plummet on inflation fears and looming higher rates. According to CNN Money article:
    Inflation fears sent stocks plunging Monday after Federal Reserve Chairman Ben Bernanke warned that the central bank remains determined to keep lifting interest rates until price increases are under control. The Dow Jones industrials were off 155 points in late trading. Bernanke told an international monetary conference that while rising energy costs have helped slow the pace of economic growth, higher core inflation -- excluding energy and food -- is still a concern and could warrant more rate tightening.


  • Property Grunt (thanks to Curbed.com for bringing this to my attention) offers his insight on whether Bernanke will raise or not too:
    The economy has displayed some weakness in the last month, oil prices are as stable as Tara Reid's movie career and if anyone thinks that Bernanke is done with interest rates, well I want to know what their smoking.
    I could not have said it better myself!


  • And BubbleMeter's thoughts:
    They FOMC will reluctantly raise short term interest rates by another .25% in its June meeting because:

    1. It needs to tame inflation (especially asset inflation)
    2. Defend a sliding dollar (its at ~1.2950 now)
    3. Making sure money keeps flowing to fund US debt

    These three reasons to raise rates will trump the 'cooling' economy.
    Will this trio of bloggers actually be right? What do you think the Fed will do in June?

  • Notable Price Reductions

    Posted by urbandigs

    Mon Jun 5th, 2006 11:37 AM

    A: Here are some notable price reductions from the past 7 days that buyers should keep an eye on.

    1BR REDUCTION

    460 West 23rd Street

    460-West-23.gif

    Size: N/A
    # Beds: 1
    # Baths: 1
    maintenance: $529
    Asking: $499,000 (Reduced from $559K!)
    Price Per Sq. Ft.: N/A
    Marketed By: Chris Toland & Laurie Karpowich of Corcoran

    2BR REDUCTION

    49 West 12th Street

    49-West-12.gif

    Size: 1,300
    # Beds: 2
    # Baths: 2
    maintenance: $1,040
    Asking: $950,000 (Reduced from $1.1M - Now Under Mansion Tax!)
    Price Per Sq. Ft.: $731
    Marketed By: Robert Manzari & Bonnie McCartney of Corcoran

    3BR REDUCTION

    165 East 32nd Street

    165-East-32.gif

    Size: N/A (looks about 1,800 or so)
    # Beds: 3
    # Baths: 3
    maintenance: $1,900
    Asking: $1,795,000 (Reduced from $1,995,000!)
    Price Per Sq. Ft.: N/A
    Marketed By: Barbara Sagan of Corcoran

    Good Luck! I'll do this on a weekly basis covering 1-3 BR apartments that have been reduced since the past 7 days!


    NYC Inventory Check: APRIL vs MAY

    Posted by urbandigs

    Fri Jun 2nd, 2006 09:06 AM

    A: Here is the monthly report showing the # of NEW LISTINGS that have come to market across New York City. In the graph below I compiled data based on certain price groups and compared the # New Listings that came to market in APRIL vs MAY.


    Neighborhoods Included
    : Battery Park City, Central Park South, Chelsea, Clinton, E. Harlem, E. Village, Financial District, Flatiron District, Gramercy, Greenwich Village, Harlem, Little Italy/Chinatown, Lower East Side, Midtown, Murray Hill, SoHo, Sutton Area, Tribeca, Upper East Side, Upper West Side, W. Village

    inventory-aprilvsmay.gif

    CONCLUSIONS
    : Well on first glance I can't help but notice the surge in new listings in the $501K-$750K price group in May versus April; which is about a 51% increase month to month. In fact, every price group under $1M has experienced an increase in new listings with the excpetion of the little guys under $250K which stayed the same! The higher end listings data is erratic with a jump in the $3.001M+ price group but a notable decline in the $2.001M-$2.5M price group.

    I'm still a bit new at this graph stuff and anaylzing the data so if anyone has recommendations on how I can get a better dataset or if I should be anaylzing a completely different topic, please post a comment and let me know.

    Overall, new inventory that came to the market in MAY exceeded that of the month prior telling me that buyers have more to choose from and sellers have more competition. The data shouldn't be a surprise but seems useful to me when breaking it down per price group!

    CURRENT STATE OF NYC MARKET: Much of the same as I've been discussing lately on UrbanDigs. Buyers still have great control although they usually have to wait 1-2 months for a new listing to come down in price if not priced aggressively from the start. Time on market is still high for sellers forcing desperate homeowners to lower their price aggressively should they need to sell now! Buyers should keep their eyes open for these deals as they are popping up here and there! Lending rates are still trickling higher putting a bit of time pressure on buyers to lock in a rate sooner rather than later.

    Rental prices continue to rise and inventory remains super tight (around 0.65%) making buying a desired choice for those that are able to afford the initial closing costs (read post on "The Starter/Investment Property"). Condo/Co-op prices are still relatively high for new listings coming to market, but most apartments experience at least 1 price reduction before finding a buyer in this market; some apt's experience a 20% drop in asking price to spur buyer activity! Can you find the deals? Good Luck!


    Glossary of Real Estate Terms

    Posted by urbandigs

    Thu Jun 1st, 2006 11:42 AM

    Adjustable Rate (ARM)

    Adjustable-rate mortgage loan featuring an interest rate that moves up and down as market conditions change. ARMs generally offer a lower initial interest rate, but your mortgage payments may change (usually semiannually or annually). Rate changes are based on an index such as the one-year Treasury Index or the cost-of-funds index (COFi). Some ARMs can be converted to fixed rate.

    Affidavit of Title

    A written statement, made under oath by a seller or grantor of real property and acknowledged by a notary public, in which the grantor: (1) identifies him - or herself and indicates marital status; (2) certifies that since the examination of the title on the date of the contract no defects have occurred in the title; and (3) certifies that he or she is in possession of the property (if applicable)

    ALTA (American Land Title Association)

    Since any lending institution funding a loan for the acquisition of a condo or co-op property wants assurance of good title on the property, there is a special policy prepared for the benefit of the lender known as ALTA Policy.

    Amortization

    A schedule for repayment of a loan, including interest and principal, by regular installment payments. Mortgage loans are typically amortized over 15 to 30 years.

    APR (Annual Percentage Rate)


    The total yearly cost of a loan stated as a percentage of the loan amount: Includes the base interest rate, primary mortgage insurance, and loan origination fee (points). Use the APR to compare various loan programs, as all lenders are required to use the same guidelines in determining APR.

    Application Fee

    Often non-refundable, this is the fee charged by the lender to cover a portion of the costs of processing a loan application.

    Appraisal


    A professional opinion of the market value of a property. Sometimes, an appraised value may be dependent upon certain improvements or repairs being made.

    Assessed Value

    Value placed on a property by the tax assessor for property tax purposes. Assumable Mortgage A mortgage that can be taken over -assumed- by the buyer when a property is sold. Balloon Mortgage A mortgage that offers lower interest rates for a shorter term financing, usually seven years, and requires final payment or refinancing at the end of the term.

    Balloon Payment


    A payment of a loan that extinguishes the debt.

    Buy Down

    Payment of additional points to lower the interest rate of the loan.

    CAP

    Limit on the amount an adjustable rate mortgage may increase or decrease during specific intervals and over the term of the loan. This safeguard protects the buyer from dramatic changes in monthly payments.

    Capital Gain


    Taxable profit derived from the sale of a capital asset. The capital gain is the difference between the sale price and the basis of the property, after making appropriate adjustments for closing costs, fixing up expenses, capital improvements, allowable depreciation, etc.

    Closing Costs


    Expenses (such as loan fees, title fees, appraisal fees, etc.), over and above the price of the condo or co-op property, incurred by buyers and sellers in transferring ownership. Also called "settlement costs". Closing costs may be paid by the buyer, the seller or shared by both. In some cases, all or a portion of these costs may be included in the financing amount.

    Construction/end Loan

    A mortgage that finances the construction of a home and converts to permanent financing when the home is completed. It allows buyers to deal with only one lender, file only one credit application and pay only one set of closing costs.

    Contingency

    A condition that must be met before a contract is legally binding.

    Conventional Loans

    A loan secured by investors, but neither insured by the FHA nor guaranteed by VA. Both fixed rate and adjustable rate loans are available with conventional financing.

    Convertible ARM

    Some ARMs include a provision allowing conversion to a fixed-rate mortgage at specified times, typically during the first five years of the loan. Some lenders charge a premium for this option, find out the exact conversion terms and costs from your lender. This will help you decide whether this is a cost-effective option.

    Deed

    The legal document conveying title to a property.

    Disclosure Report

    Residential real property disclosure act, effective since October 1, 1994 in Illinois. Is an act relating to disclosure by the seller of residential real property. The purpose of this report is to provide prospective buyers with information about material defects in the residential real property.

    Discount Points or Points

    Any amount paid to the lender when a loan is originated to account for the difference between the current market-determined cost of interest and the actual lower interest rate of the loan. In most cases each point is equal to one percent of the original loan amount. Points may be paid by either the buyer or seller.

    Dual Agency

    Some states permit a real estate licensee to potentially act as a dual agent, that is, represent more than one party to the transaction. A licensee may legally act as a dual agent with the written disclosure and informed consent of a consumer in form required by law.

    Down Payment

    The part of the purchase price which the buyer pays in cash and does not finance with a loan.

    Earnest Money

    An amount of money, deposited by a buyer under the terms of a contract, that is to be forfeited if the buyer defaults but applied on the purchase price if the sale is closed.

    Equity

    The market value of a condo, co-op, townhouse property minus the amount of any existing loans or liens.

    Escrow Account

    A separate account for accumulating the portion of your monthly payments that will pay future taxes, insurance, fees, assessments and so forth. Depending on your lender and the financing you select, an escrow account may be required.

    Escrow Agent

    A disinterested third party appointed to act as custodian for documents and funds during the transfer from seller to buyer.

    FHA Financing

    A loan insured by the Federal Housing Administration (FHA) and made by an approved lender in accordance with the FHA's regulations. FHA requires that the property being purchased meets certain minimum standards. This mortgage may be easier to qualify for than a conventional mortgage, but it also has a lower maximum loan limit that varies depending on the average cost of housing in a given region. FHA loans require the borrower to pay mortgage insurance premiums (MIP) if the down payment is less then 20%. Fixed and adjustable rates are available with FHA loans.

    Financial Index

    An agreed upon basis for making interest rate changes on an adjustable rate mortgage. One example of a financial index could be the cost of U.S. Treasury Bonds. Fixed Rate The interest rate does not change during the entire term of the loan.

    Flood Insurance

    Insurance that compensates for physical property damages resulting from flooding. It is required for properties located in federally designated flood areas.

    Initial Interest Rate

    The interest rate charged for the first six or 12 months of an adjustable rate mortgage (before the first interest rate adjustment)

    Interest Rate Cap

    Limit on the amount an adjustable rate mortgage may increase or decrease during specific intervals and over the term of the loan. This safeguard protects the buyer from dramatic changes in monthly payments.

    Loan Commitment

    A written promise by a lender to make a loan under certain terms and conditions. These include interest rate, length of the loan, lender fees, annual percentage rate, mortgage and hazard insurance and other special requirements.

    LTV (Loan to Value Ratio)

    The ratio of the mortgage loan principal (amount borrowed) to the property's appraised value. On a $ 100,000 home, with a mortgage loan of $ 80,000, the loan to value ratio is 80%

    MIP (Mortgage Insurance Premium)

    The insurance issued by a government agency such as the FHA Mortgage Banker A company that originates mortgages exclusively for resale in the secondary market.

    Mortgage Broker

    An individual or company that for a fee acts as an intermediary between borrowers and lenders.

    Mortgagor

    The borrower of money or the giver of the mortgage document.

    Mortgage Pre-Approval Service

    A service offered by many lenders that allows you to qualify for financing before finding a property to buy.

    Note

    A written promise to pay a certain amount of money at a certain time at a certain interest rate.

    Origination Fee

    A fee charged by the lender for making a real estate loan - usually a percentage of the amount loaned, such as one percent. Not to be confused with an application fee.

    PITI (Principal, Interest, Taxes, Insurance)

    Stands for principal, interest, taxes, and insurance - the components of the monthly loan payments.

    PMI (Private Mortgage Insurance)

    Insurance written by a private company that insures repayment of the loan balance to the lender in the event of default by the borrower. Usually required for homes financed with less than a 20 percent down payment.

    Points or Discount Points

    Amount paid to the lender when a loan is originated to account for the difference between the current market-determined cost of interest and the actual lower interest rate of the loan. Each point is equal to one percent of the original loan amount. In most cases points may be paid by either the buyer or seller.

    Prepayment Privilege

    The right given to a purchaser to pay all or part of a debt prior to its maturity. The mortgagee cannot be compelled to accept any payment other than those originally agreed to.

    Rate Guarantee

    The lender's guarantee, usually for a specified period of time, that the interest rate in effect the date you apply for a loan (or at the time of approval) will be the final rate on your loan when closed.

    Refinance

    Replacing an existing loan with a new one to get a lower rate, switch from one loan type to another, or convert equity to cash. A refinance loan will involve various loan fees, just as with any other mortgage.

    RESPA Real Estate Settlement Procedures Act

    A consumer protection law that requires lenders to give borrowers advance notice of a condo or co-op closing costs.

    Secondary Mortgage Market

    The lender will frequently sell his loan to an entity in the secondary mortgage market. This secondary market has nothing to do with second mortgages, instead, it consists of government or private associations which buy loans from primary lenders. Often the loans are bought and grouped together in a pool for resale. The best known of the participants in the secondary mortgage market is FANNIE MAE, the federal national mortgage association. Fannie Mae buys and sells both first and second mortgages. GINNIE MAE tends to favor FHA and VA loans since they are stable loans but also buys conventional mortgages.

    Survey

    A drawing or map showing the precise legal boundaries of a property, the location of improvements, easements, rights of way, encroachments, and other physical features.

    Term

    The number of years before a loan is paid in full; 15 to 30 year terms are most common for home mortgages.

    Title

    A legal document evidencing a person's right to ownership of a property.

    Title Insurance

    Insurance to protect the lender (lender's policy) or the buyer (owner's policy) against loss arising from disputes over ownership of a condo, townhouse property.

    Title Option

    An attorney's opinion of a title, based on an Abstract of Title.

    Transfer Tax

    State or local tax payable when title passes from one owner of a condominium to another.

    Underwriting

    The process of evaluating a loan application to determine the risk involved for the lender. It involves an analysis of the borrower's credit worthiness and the quality of the property itself.

    VA Financing

    A loan guaranteed by the Veterans Administration (VA) to a qualified veteran and made by an authorized lender on an approved property. Fixed and adjustable rates are available with VA loans. The VA charges borrowers a funding fee.

    Warranty Deed

    A legal document used to convey title.


    OFHEO: Housing Update

    Posted by urbandigs

    Thu Jun 1st, 2006 10:50 AM

    A: Today's Calculated Risk post reveals The Office of Federal Housing Oversight (OFHEO) 2006 Q1 housing report released today which basically says, "Increasing sales inventories are apparently giving buyers greater bargaining power, while increasing interest rates are dampening demand," said OFHEO Chief Economist Patrick Lawler.

    OFHEO Housing Price Index Report

    HOUSE PRICE APPRECIATION BY STATE (period ending March 31, 2006)

    housing-appreciation.gif

    Notice how New York is #21 on the list with modest growth of 1.9% in the past quarter. Now compare that to states with city's that have experienced unsustainable growth over the past year or so (such as Arizona, Florida, & California) where markets in Phoenix, Miami, and Los Angeles are infested with speculative short term investors and new developments! For all you bubble lovers out there you must realize that NYC is a much different animal than housing markets such as Miami, Las Vegas, Los Angeles, & Phoenix!

    New York City is made up mostly of Co-op's (aprox. 75% of out total market) which require a strict board process to approve the transaction based on pre-determined financial and debt requirements (read my post, "Why NYC Will Lag in a Slowdown" & "Co-op Board Package"). The lack of speculators in the NYC housing market means less inventory will flood the market in a housing downturn and that more homeowners will choose to live in their investment rather than be forced to sell due to financial crisis. Plus the populaton in NYC continues to grow on this tiny island with limited developable land, driving rental vacancy rates to a 4 year low (0.65% or so). There will always be demand for New York City housing which is why our 'bust cycles' are historically short lived when compared to our 'boom cycles' (as prices drop, someone gobbles it up). I'll see if I can get a chart on this somehwere.

    On a side note, Calculated Risk is a great blog hosted by a senior executive, retired from a public company, with a background in investing, finance and economics. It has become a daily read for me and one that you should check out as well to educate yourself on a variety of markets and current events affecting them.


    Co-op Board Package

    Posted by urbandigs

    Thu Jun 1st, 2006 09:07 AM

    passing-coop-board.gif

    A: Here is the top page of a board package for a co-op in the UES where a list of items to be included are shown. Most of the questions Im hearing lately are about co-op board packages and if they could pass them. The problem is that every co-op board is different just like every private corporation is different; so you MUST contact the managing agent of the building you are buying into (seller broker normally does this prior to showing the property and meeting buyers) and find out exactly 'what they are looking for' to pass the board.

    QUICK TIPS

    1. Keep your debt/income ratio under 30%; with a grace range of 3-5% above that before raising a red flag. If yours is above 35% then be sure to ask the managing agent if the board will be OK with it.

    2. Make sure you have at least 1 years maintenance + mortgage expense in liquid assets AFTER closing costs. Closing costs will include your down payment + transaction fees. Co-op boards that require more than 25% down probably will require more liquid assets AFTER CLOSING too!

    3. Start collecting the most recent hard copies for ALL assets that you will be declaring. When you fill out the financial analysis form in the board package, use the EXACT #'s that each hard copy shows and then hand in that copy with the package (you want ALL assets listed to have the exact hard copy backing it up to show the board; mistakes raise red flags!).

    4. Focus on Reference Letters. Get at least 4 paragraphs from your friends and be sure all contact information is given (you dont want to hand in a reference letter that no one can call to check up on).

    5. Get a Gift Letter from your accountant if you received a large deposit from a family member to 'beef up' your financials for the board. If the hard copy shows the deposit, then you better supply the gift letter to back it up; it only helps.

    NOTE
    : This co-op board doesn't ask for PAY STUBS which is usually common for a co-op board package to ask for. So, be sure to save yours just in case you'll need them.

    SAMPLE CO-OP BOARD PACKAGE

    coop-board-package.gif

    *If you have any more specific questions about passing a co-op board, talk to me while I'm online for the LIVE CHAT.


    Lending Rates Update

    Posted by steve

    Thu Jun 1st, 2006 08:40 AM

    Here are the current rates for June 1st:

    30 YR. FIXED (up to $ 17,000)---> 6.625%
    30 YR. FIXED ($417,000 to $1,000,000)---> 6.75%
    15 YR. FIXED (up to $ 417,000)---> 6.25%
    15 YR. FIXED ($417,000 to $1,000,000)---> 6.25%
    10/1 YR. ARM* ---> 6.375%
    7/1 YR. ARM* ---> 6.25%
    5/1 YR. ARM* ---> 6.125%
    3/1 YR. ARM* ---> 5.875%

    *INTEREST ONLY ARM LENDING RATE WILL BE APROX. 1/8% POINT HIGHER

    Rates are still heading NORTH with positive economic news. If you've been on the fence and waiting for rates to drop, it doesn't look good. Now is a good time to lock as the market seems to be steaming ahead.

    Q1 productivity revised to a stronger 3.7%; unit labor costs component revised lower to 1.6%...(6/1/2006)

    Year-over-year, productivity is now up 2.5% while unit labor costs are up only 0.3%. This is good news for the inflation-anxious as strong productivity continues to hold down underlying business costs and the need to drive prices higher.


    Best,
    Steven