No Need To Rush Into A Rate Lock

Posted by urbandigs

Wed Feb 28th, 2007 10:36 AM

A: With the stock market selloff yesterday, Greenspan mentioning the 'R' word in a speech, Cheney being targeted by the Taliban, Asian stocks selling off, and corporate profits and margins showing signs of peaking, bond prices rose bringing yields down. As you know from reading UrbanDigs, a great indicator as to the short term movements of lending rates is the yield on the 10YR Treasury note. Lets see what has happened the past 5 days that leads me to think mortgage rates might come down a bit more in the very near term.

In my past post titled, "Why Rates Are Going Higher", I discussed the relationship of short term rate swings to the movements in yield of the 10YR Treasury Note. Specifically, I stated:

With the 10YR moving significantly higher over the past few months, it tells me that the bond market is a bit more worried about inflation and future monetary policy than the stock markets. Whatever the reason, it should cause lending rates and your credit card rates to RISE over the next month or so.
And that it did! The average 30YR fixed jumbo rate climbed from 6.05% to about 6.25% or so from mid December to early February. Thankfully, it seems the trend is about to change course.

Bankrate has a graphing tool that lets you compare mortgage trends to economic indicators, but seems very aggressive in their reporting. I don't recall rates being as low as this tool suggests, so just use it to show the relationship between rate trends and the 10YR:


Now, take a look at what the yield on the 10YR Treasury note has done in the past 5 days alone; showing a drop in yield to about 4.5%:


With the sharp drop in yields expect lending rates to continue to follow suit over the next week or so and drop a bit further.

Conclusion: If you have recently signed a contract of sale and deciding what day to lock in that rate, you probably have time on your side. While anything can happen on a day-to-day basis, for those who like to eek out as much savings as possible before they lock in a rate, keep an eye on the 10YR (watch CNBC or read Yahoo Finance) in the coming days to see if this trend continues, holds, or reverses course. If it continues to fall or holds steady, a slight drop in lending rates will likely be in our very near future.

Otherwise, no need to focus too much on this. It shouldn't have any impact on what is going on right now from a macro standpoint and shouldn't cloud your investment decision to buy or rent.

$350K & Under Newbies

Posted by urbandigs

Wed Feb 28th, 2007 07:31 AM

A: Got a tight budget in a rough NYC housing market for buyers? With a frenzy going on, cheap deals are very hard to find. Check a few of these listings new to the open market asking under $350,000.

220 East 82nd Street; Apt: 3RE


First Came on Market: 2/12/2007
Asking Price: $350,000
maintenance: $605 (looks good for size)
Size: Aprx 500 SFT
PPSF: $700/sft assuming 500 sft
Marketed By: Theresa Bateman of Halstead

200 East 36th Street; Apt 4J


First Came on Market: 2/23/2007
Asking Price: $349,000
maintenance: $561 (again, good for size)
Size: 425 SFT
PPSF: $821
Marketed By: Eileen Hsu of Elliman

240 East 55th Street; Apt: 2A


First Came on Market: 2/20/2007
Asking Price: $285,000 (wow - this is going to sell fast!)
maintenance: $712 (ok for size)
Size: 550 SFT
PPSF: $518 (did we go back in time?)
Marketed By: Patricia Cliff of Corcoran

301 East 63rd Street; Apt: 4K


First Came on Market: 2/21/2007
Asking Price: $339,000
maintenance: $623 (good for size)
Size: 500 SFT
PPSF: $678
Marketed By: David Lewandowski & Ronald Lense of Elliman

These are by far the best valued properties that are NEW to the market in the past 2 weeks priced under $350,000. While I didn't check out any of these listings, if you are in the hunt for a new home and on a tight budget, I would definitely go to some of these open houses to see if it might work.

Timing The Market & Monetary Policy

Posted by urbandigs

Tue Feb 27th, 2007 05:29 PM

A: Timing the housing market is extremely difficult but not impossible. You have to understand that like in poker, you'll never time it perfectly. In no-limit texas hold'em (a poker game that is just way too much fun), I put my bets on my skill of play and observations at the table rather than in luck. I strongly believe that I can outsmart my opponents either before the flop or post flop regardless of the cards I'm holding. With respect to timing the real estate market, its kind of similar. You'll never be perfect and like in no-limit hold'em, you will get beat sometimes by NOT timing the market perfectly. Thats just the way it is. However, by using some savvy observations as to where monetary policy is headed down the road you can get close to timing the market. Here is why! Originally Published August 1, 2006.

Monetary policy is set by the FOMC and fed chief Ben Bernanke to control price stability and fend off inflation. The goal is to keep the economy growing, fend off inflation, and price stability in our currency. Sometimes it all doesn't work out that way as the real world does what it wants. But I do know this:

By sticking to this mantra and following the fed's direction with interest rates (an understanding of global geo-political conditions, inflation pressures, and US economic data will help in deciphering the fed's statement and their most likely course of action at future meetings) we can get fairly close to timing the housing market; BUT NOT PERFECT!!! You must understand those last 3 words! You will NEVER time the market perfectly!

Now, lets look at a chart of the last 5 years or so of both monetary policy and the growth in the housing market. First monetary policy since early 2000:


Now, lets look at a chart of the US housing market since early 2000 and see if we can deduce any information (this was only chart I could find so it will have to do):


Hmmm. So, monetary policy bottomed out mid-2003 after undergoing a massive 600 basis points rate easing cycle (thats 6% to all you home gamers). Notice how the housing price chart didn't really show a huge jump in gains from 2000-2003 (jump from 165K to about 190K). The real jump occurred between mid 2003 and late 2005, a good two and a half years AFTER monetary policy bottomed out. Therefore we can deduce that home buyers between late 2001 and early 2003 timed the market perfectly (that is if they chose to sell recently or are in the process of selling).

Note that this time period of late 2001 to early 2003 represents the NEARING OF THE END OF THE RATE EASING CYCLE & THE BOTTOMING OUT OF THE FED FUNDS RATE. Since monetary policy is lagging in its effects, it is fairly safe to say that a GOOD TIME TO BUY IS WHEN THE FED IS NEARING AN END TO A RATE EASING CYCLE, as the results of the after-effects are shown in the above house price chart.

On the flip side, note that the drop off in house prices since early 2006 represents THE NEARING OF THE END OF A RATE TIGHTENING CYCLE. We are still waiting for the results of what happens AFTER the fed finishes their rate tightening cycle. However, we can safely say that a GOOD TIME TO SELL IS WHEN THE FED IS NEARING AN END TO A RATE TIGHTENING CYCLE.

Look here for a visual representation of what I just said:


Make sense? Read it all again if your a bit confused. The effects of monetary policy are lagging so when the fed cuts rates to stimulate the economy by making money less expensive to borrow, the real world doesn't see the effects for a good year or so. As in recent past history and dictated by the charts above, it was from early 2003 to late 2005 that the housing market saw incredible gains, about 2 years AFTER the fed starting cutting rates and 2 years AFTER rates bottomed out! Not an exact science or a crystal ball, but certainly a good guide!

What To Expect Heading Into Summer

Posted by urbandigs

Tue Feb 27th, 2007 12:25 PM

A: Just a quick thought I want to pass on to you as so many of my clients and new buyers emailing me are wondering what to do. Here are my thoughts based on my experience and what I see now.


Frenzy Will Last Until May - There is a plethora (thats right El Guapo) of buyers right now looking to buy a new home in Manhattan. Open houses are packed and bidding wars are becoming a common tale. If you are an active buyer, I don't need to tell you this. The good news is that this surge in activity usually comes at this time of the year and never lasts forever. I expect another 2-3 months to work out this surge in demand. During this time, prices will stay towards the higher end for new products hitting the market and sellers will remain tight with their negotiations.

Inventory is Tight / Getting Tighter - I am finding it very hard to locate good products that meet my buyer clients needs. When I do, they don't last long. When we submit a bid, I get a phone call from the broker that tells me "...we have multiple bids in. I'm expecting a best & final situation shortly". If you are forced to buy in the next month or so, get on the ball and see every property that meets your needs ASAP!

I expect inventory levels to shrink in NYC as new reports come out in the coming months
. If you can wait for the frenzy to die down, great. However you will most likely sacrifice having as many options as you see now to choose from. With so many buyers out there, I just don't see how inventory levels can rise from this point on. Expect a tight market heading into the summer!

Manhattan Real Estate Sales Will Surge - Since real estate reports are lagging and come out AFTER the deals are done, expect to see very bullish reports on the Manhattan real estate market in the coming months.

More specifically, JAN - present has been VERY active to say the least with many property's going into bidding wars. As a result, this will lead to strong data reports on NYC housing as we head closer to summertime which no doubt will intrigue the mass media into a number of articles about a market turnaround. The psychological effect of this positive media might lead to some strength in the beginning of the normally slow summer.

My advice remains the same as I noted back in January when it all began:

AS A BUYER - Don't try to low-ball or wait out a housing downturn if you plan on signing a contract in the next 1-3 months! If you do, you will NOT get the response you hope for as the seller's broker most definitely is reporting the rise in activity to their client. If you choose to wait until March or so you may not find the inventory as attractive as it is today. If all this buyer activity results in what I expect it to, you will later on see sales volume come in very strong during the months of January & February, removing a lot of unsold inventory that has built up over the past few months.

AS A SELLER - No one can tell you when to sell your home. That is your call. But, if you have been planning on selling your home in the next 3-6 months, it might be worthwhile to get it ACTIVE NOW and get in on some of this action! You may even be able to price slightly higher than you were original thinking to test out the market, as it is times like these (that is, a surge in buyer demand) where sellers get their price or more a good percentage of the time. Don't overprice tremendously unless you have a huge terrace, incredible views, or an unbelievable renovation (although the first two are the best reasons for pricing higher as I'm not convinced buyers will pay top dollar for a very high end renovation job).

Worthwhile Links

Posted by urbandigs

Tue Feb 27th, 2007 10:10 AM

A: I'm very busy servicing my buyer clients right now in the face of a frenzied market, so I will have to hold off on new posts for the next day or so. In meantime, there are some great reads in the blogosphere that will give you some different angles and perspectives on the housing market.

Making Sense of the NYC Real Estate Market
(True Gotham)

WSJ: Home Lenders Cut the Flow of Risky Loans (Calculated Risk)

What is a Flip Tax? (NYHouses4Sale)

What Happens to Your Loan Once You Close (Mortgage Reports)

When Brokers Blog (NYMag - featuring yours truly!)

When Renters Reach the Breaking Point (NYTimes)

No Finance Contingency Comeback?

Posted by urbandigs

Fri Feb 23rd, 2007 09:51 AM

A: Say it ain't so! In a clear sign that the Manhattan real estate market is in full frenzy mode, I just experienced my first deal where the seller is requesting a removal of the 'finance contingency' that is part of the contract of sale. This type of tactic was very common in the months of JAN-APRIL of 2005 when bidding wars were everywhere and a good product was very difficult to find. While I won't go out and say that today's market is exactly like it was 2 years ago, it is active enough that one seller is risking a deal by asking for a No Finance Contingency contract.


First let me just define a few things here for you:

No Finance Contingency Contract of Sale: Every contract of sale includes a financing contingency that simply means the deal is contingent on the buyer obtaining financing at the appraised purchase price. Should the buyer not be able to obtain a loan commitment, then the deal falls apart as stated in the contract of sale and the deposit is returned to the buyer. When a seller asks for a NO FINANCE CONTINGENCY deal, in essence they are requesting to REMOVE the financing contingency from the contract of sale putting pressure on the buyer to obtain a loan to close the deal. Should the buyer in this case not be able to obtain a loan commitment, than the buyer must come up with the cash to proceed with the closing or risk losing some/all of their deposit.

I wrote about this on March 1st, 2006 in a post titled, "No Finance Contingency Explained". In the comment thread was a response by NYC real estate attorney Peter Graubard, who I recommend often to my clients. It stated:

When a buyer agrees that there will be no financing contingency, the financing contingency clause that is already in most contracts is simply omitted.

All mortgage commitments have conditions attached to them that need to be satisfied prior to closing. The conditions range from an appraisal of the apartment, to the approval by the bank of the co-op or condominium, to something that needs explanation by the borrower. Also, if a mortgage commitment letter is issued by the bank, but the borrower's financial condition takes a turn for the worse after the commitment is issued, but before closing, the bank may withdraw the commitment (i.e. if the borrower lost his/her job prior to closing). In this event, a buyer who has signed a non-contingent contract is in jeopardy of not being able to close and losing his/her contract deposit.
The question that comes to my mind is whether or not this seller is seriously considering losing a deal over this request? Is the market that frenzied that this strategy, if backfires, will still lead to another similar deal in the very near future? So what do you do? It really depends on the buyers comfort level and desire for the property.

First off, you should ask your lender to investigate the property/building in question. According to Wells Fargo Private Mortgage Banker Michael McGivney:
"I like to remove the risk for the buyer at the very beginning by providing a loan commitment rather than a pre-approval before any contract is signed. That way the buyer knows ahead of time what their risks are and can take comfort in proceeding with a No Finance Contingency deal."
Michael McGivney went on to point out the 3 biggest risk factors that could lead to failure in obtaining a loan commitment letter after one's credit/income/assets are reviewed:

1. Land-lease Building - Building lease must be reviewed and updated by lender
2. Property Valuation - Appraisal must come in at asking price. If it comes in below, the lender will only commit to a loan at the appraised price leaving the buyer to make up the difference at closing
3. Owner/Occupancy Rate - Lenders like to see a building with an owner/occupancy rate above 70% or so. Once you get below 60%, some lenders might not be able to produce a loan commitment for the buyer as the risk of default in the building due to a larger # of investors is higher. Read my post on Owner/Occupancy Rate Explained.

Here is my advice for the prospective buyer in the deal:

Buyer is Confident in Obtaining A Loan: Getting a loan today is still very easy as tighter lending standards for the most part have not hit many of the major lending institutions. So, it really boils down to your own financial situation. Assuming you pass the credit, income, and assets part of a lenders review, ask your mortgage broker to review the building in question. If possible, try to get a commitment rather than a pre-approval letter from your lender. Being upfront with your lender is very important in this situation. Tell them everything about you, the no finance contingency deal, and the building in question.

Buyer is NOT Confident in Obtaining A Loan: If you have bad credit, a non stable or low paying job, and little assets than you should be concerned about this type of a deal. If anything, discuss the situation with your lender and reconsider the seller's request for omitting the finance contingency in the contract of sale. Everything is negotiable, especially this, and in the face of losing a deal I don't see how a seller can rationalize passing up a market valued offer simply because they want a NO FINANCE CONTINGENCY deal. Remember, it's a strategy that sellers can get away with in a sellers' market where if they pass on the deal, they will have no problem finding a similar buyer.

S & P To Launch Home Price Index

Posted by urbandigs

Thu Feb 22nd, 2007 10:44 AM

A: This is fairly interesting and compliments the introduction of real estate options trading that recently launched at the CME. The index will take the already launched 20-city Case/Shiller home price index to cover ALL areas of the country and will be reported on a quarterly basis.

I still don't think it will be followed too closely in the first few years of its launch, however it could become a good indicator in the future once a baseline is established. One major flaw with this type of indicator is that real estate is LOCAL and as such makes a national home price index quite misleading about your hometown market. In addition, the fact that it will be reported on a quarterly basis makes the index lagging and therefore more of a economic indicator on how housing is doing nationally, rather than a leading indicator on where housing is likely headed.

According to Yahoo News:

"For most Americans, their home is one of their most important assets. In a time like now when there are mounting questions about the future direction of the overall housing market and its impact on the economy, an accurate measure of national home values is particularly important," says David Blitzer, Managing Director and Chairman of the Index Committee at Standard & Poor's. "Therefore, Standard & Poor's is pleased to expand the coverage of our S&P/Case-Shiller Home Price Indices to include a comprehensive, national measure of the value of single family homes across the United States."

This index will NOT include coverage of New Construction, Condominiums or Co-ops. So, for all those Manhattanites seeking any clues as to the direction of NYC real estate, your stuck reading sites like UrbanDigs, Matrix, TrueGotham, Comitini, Brownstoner, PropertyGrunt, and others for street level reporting on what is happening right now in this fast changing marketplace.

Blogging For Transparency: NYC Heats Up

Posted by urbandigs

Wed Feb 21st, 2007 09:13 AM

A: Many of my colleagues just couldn't understand my passion for blogging and taking 2 steps back in my own business to put the time into what I consider making Manhattan real estate more transparent! That is why I do it; to bring to you street level information on what is going on right now in New York City real estate. Is it a buyers market, a sellers market, who has control, etc..Hopefully, I've gained a level of trust with my readers after 20 months of doing this and the thousands of hours I put into my content to try to educate you on investing in this marketplace. But if didn't, perhaps the NY Times Page one article from 2 days ago will help.


Thanks to Jonathan Miller for pointing this one out as I actually missed the article.


Since the new year began, a burst of activity has broken out in Manhattan and several Brooklyn neighborhoods as New Yorkers frenetically hunt for co-ops, condominiums and town houses, sending prices higher despite sluggish sales in many other cities.

Preliminary indications from real estate firms showed that this increased activity, with open houses jammed and bidding wars taking place, has occurred in all price ranges -- from tiny studios in the East Village to red-brick mansions on the Upper East Side -- in counterpoint to the heavily weighted record sales of luxury properties that led the market in the late summer and fall.
Although this article came out on February, 19th it was probably being worked on during January to get the facts right before publishing. Hence the lag!

For those of you who read UrbanDigs daily you would have known this street level observation since January 10th, and hopefully heeded my advice:

January 10th, 2007
- Market Report: Buyers Out in Full Force

AS A BUYER - Don't try to low-ball or wait out a housing downturn if you plan on signing a contract in the next 1-3 months! If you do, you will NOT get the response you hope for as the seller's broker most definitely is reporting the rise in activity to their client. If you choose to wait until March or so you may not find the inventory as attractive as it is today. If all this buyer activity results in what I expect it to, you will later on see sales volume come in very strong during the months of January & February, removing a lot of unsold inventory that has built up over the past few months.

AS A SELLER - No one can tell you when to sell your home. That is your call. But, if you have been planning on selling your home in the next 3-6 months, it might be worthwhile to get it ACTIVE NOW and get in on some of this action! You may even be able to price slightly higher than you were original thinking to test out the market, as it is times like these (that is, a surge in buyer demand) where sellers get their price or more a good percentage of the time. Don't overprice tremendously unless you have a huge terrace, incredible views, or an unbelievable renovation (although the first two are the best reasons for pricing higher as I'm not convinced buyers will pay top dollar for a very high end renovation job).

February 12th, 2007 - Market Update: Very Active Buyer Pool

February 16th, 2007 - NYC Housing Defies Odds

Even Peter Comitini reported on this surge in activity in early January as well!

January 9th, 2007 - Open House Attendance Soars

But the most useful report was the first one from January, 10th! It's now 6 weeks later and if you didn't take that advice, especially if you were a buyer with a time pressure, you are kicking yourself with the strong competition and lack of inventory to choose from right now. Hopefully, you aren't in that situation though.

UrbanDigs Says: I hope I don't need to prove myself anymore to my readers! I'm an honest, ethical, and passionate blogger who just gets a high out of innovative ways to make real estate more transparent and to discuss tips to best profit from it! The internet is a great thing and for those seeking to profit on New York City real estate, the blogosphere offers you real time opinions and observations about the market that you are considering investing in. Times are changing and you should change with them! In the end, a more transparent real estate market will only help you make more educated and timely decisions! Blog on!!

Mortgage Report: February 20th - 23rd

Posted by steve

Tue Feb 20th, 2007 04:08 PM

Mortgage rates dipped a little bit last week and showed some signs of improving. Here are the rates for today:

30 Year Fix (Under $417k): 6.125%

30 Year Fix (Over $417k): 6.25%

7/1 Adjustable Rate Mortgage: 6%

5/1 Adjustable Rate Mortgage: 5.875%

New & Notable: Prices Staying High

Posted by urbandigs

Tue Feb 20th, 2007 12:54 PM

A: Here are a few select property's to go and check out it if it meets all your needs. The market is still very healthy right now and every time I go through these new listings every week I'm noticing that pricing by sellers is staying at the high end! In short, sellers are confident with higher asking prices and testing the waters given the surge in buyer activity.

320 West 89th Street; Apt: 5B


First Came on Market: 2/14/2007
Asking Price: $875,000
maintenance: $1,156 (just over $1/sft is good)
Size:1,100 SFT
PPSF: $795
Marketed By: Carolyn Zweben of Douglas Elliman

203 West 81st Street; Apt 4C


First Came on Market: 2/15/2007
Asking Price: $1,695,000
maintenance: $1,893
Size: N/A
Marketed By: Greg Kammerer of Corcoran

115 East 87th Street; Apt: 26E


First Came on Market: 2/14/2007
Asking Price: $930,000 (high floor, renovated, and location make this stand out)
maintenance: $1,121 (ok for size)
Size: 1,000 SFT (JR4 probably could be converted to 2BR)
PPSF: $930
Marketed By: Patricia Palermo of Corcoran

Maintenance Charges: The Hidden Devil...!

Posted by urbandigs

Tue Feb 20th, 2007 10:50 AM

A: They are. If your monthly maintenance + real estate charges equal more than 1.65x the total square footage, then you better make sure the asking price of the property has been lowered to compensate for the higher cost of carrying the apartment! Read this post to see why
! Originally Published November 29, 2005.

nyc real estate

The situation is experienced by almost all buyers of NYC real estate at some point in their apartment search.

How Does Total Monthly Expenses Affect the Value of an Apartment?


Your monthly maintenance charges consists of different fees depending on whether you are buying a Co-op or Condominium in NYC.

For CONDOMINIUM: Includes fees associated with the overall uptake and maintenance of the building and its services.

For Co-op: Includes fees associated with the overall uptake and maintenance of the building and its services + real estate taxes.

Since Maintenance Fees are variable fees, chances are you will be faced with Rising Monthly Maintenance Fees at one point or another. So, in order to make a Wise Investment with your 100's of Thousands of Dollars, it is important to understand why they fluctuate and its effects...

Each building is like a different company, lets say a publicly traded company for arguments sake. Some publicly traded companies, like for instance INTEL CORP. (NASDAQ: INTC), owns a great place in the market for semiconductor chips which can be analogous to owning an apartment in a great location of NYC; lets say 84th & Madison Avenue. Chances are, this will not change unless an outside force, such as a natural disaster should hit the area.

The marketing and branding that INTEL spends so much money on, can be analogous to the outside appearance of the building, or building amenities. Is the lobby extravagant? Is there a roof-deck? Gym? Doorman? Well, you get the picture.

Finally, the quarterly earnings report that INTEL releases every 3 months can be directly compared to the 2 years of financial statements that the buyer's attorney will go over before advising you to SIGN THAT CONTRACT!! Needless to say, I hope you have a INTEL type of report, rather that one that resembles ENRON or WORLDCOM!!

Starting to make sense to you?

The building's maintenance fees have a direct relationship with the financial health of the building you are about to buy in. If there were major repairs recently on the building such as roofwork or facade repair, than chances are the operational costs of these projects took a nice chunk of change out of the building's reserve fund. For all you first timers out there:

BUILDING RESERVE FUND: Monies put aside by the building, and paid by the owners or shareholders, to be used to pay for the overall maintenance and upkeep of building and its services. Building amenities such as a 24HR Doorman, gym, or roofdeck, will increase the overall costs of running the building and these services.

TIP: The building should have at least 4 months worth of overall monthly building expenses in the reserve fund for future repairs. Anything less, raises a red flag, and leaves the board little options OTHER THAN charging a maintenance assessment at some point down the road!!

For me, I like to use the following formula for assessing whether or not an individual apartment's maintenance charges are a signal of strong financial sense.


For instance
: A 800 Sq. Ft. 1 Bedroom apartment in a Co-op Building Charges $760/Month in Maintenance.

760/800 = 0.95



= UNDER 1.15

*NOTE #1: Since Co-op Maintenance Charges include your real estate taxes, you must COMBINE the monthly carrying charges (CC) and the real estate taxes when calculating for condominiums.
**NOTE #2: Just because you came out with a figure over 1.65, using that formula, doesn't mean your building is about to go down the toilet! There can be a number of reasons for this, such as recent building work done that led to a temporary monthly assessment. It just means that the VALUE of the property poses a risk at resale, due to the high monthly costs, and will result in a lower purchase price than apartments that have a maintenance score under 1.0.

In the end, you MUST buy the best VALUE FOR YOUR MONEY, that has the best chance for APPRECIATION IN RESALE, come time for you to sell.

Holding The Crystal Ball

Posted by urbandigs

Mon Feb 19th, 2007 11:57 AM

A: Do you hold the crystal ball? Does Jonathan Miller? Does Brownstoner? Does Grunt? Does Sellsius or Rain City Guide? Perhaps True Gotham does? Housing on a national level is falling, not so in NYC real estate, so maybe BubbleMeter is holding the crystal ball. What about the Digs? Nope. Not me. No one is holding the crystal ball and with everything that all these great bloggers write about you must keep your focus on one very important thing: EVERYONE NEEDS A HOME! IS OWNING THE RIGHT CHOICE FOR YOU?


Don't get caught up in the whole debate right now that is going on about the nationwide housing market. If you plan on owning for medium to long term, let's say at least 4-5 years, then you should seriously consider buying over renting as the tax benefits, equity building, and ultimate price appreciation over the longer term will more than make up for any short term pain you might endure knowing that your house is worth a bit less than what you paid for it.

WHO CARES! Your NOT planning on selling! You need a home to live in! And you can afford to live there comfortably! Who cares what the short term price fluctuations are for your home. And to boot, rental prices are at a peak after rising for the past 3 years straight! Rental inventory is so low right now that it is almost gauranteed that you will wind up settling for an apartment you don't really like, in a neighborhood that wasn't your first choice, and at a price far higher than you first thought!

Maintain your investment focus so that you can make clear, transparent decisions that suit your own needs best! Some of these include:

  • Knowing What You Can Afford

  • Keeping Emotion OUT of Your Decision To Choose A New Home

  • Educating Yourself on Your Price Point

  • Excelling At Your Job - Maintaining A Rising Income

  • Controlling Debt - Preparing Credit For Home Ownership

  • Fact is, inventory levels for the sales market right now are high enough to find good deals! And, mortgage rates have ticked down over the past 3 months or so falling from July highs of about 6.79% to current levels about 6.375%. The main reason for this drop is falling yields on treasury's due to the fed's PAUSE from a long interest rate hike campaign. Basically the bond market is betting on lower rates in the near future; possibly due to a recession predicted to hit the country over the next year or 2.

    While these temporary lower rates will not SAVE the housing market from a short term correction, it does give potential buyers a good case when deciding whether to rent or own. Since rates are still historically low, the numbers might make more sense to buy.

    Forget predictions or reading every article that comes out on the housing market and instead focus on the right or wrong reasons to buy a new home. Some of these include:


    1. Because you've worked hard over the past few years and are now earning a great salary that is only expected to continue to rise.
    2. Because your credit is perfect and you can lock in a great rate.
    3. Because you have been saving up cash for a while now and can easily afford a down payment on a home and still have enough liquid assets leftover to cushion your lifestyle.
    4. Because you know you will NOT be selling within 3 years.
    5. Because you love where the new home is and are comfortable with the asking price.


    1. Because you just got a new job and are making more money than you ever did before.
    2. Because you saved up enough money to afford a down payment but will be broke after that.
    3. Because you refuse to rent and through away money.
    4. Because you are unsure of where you might be 2 years from now.
    5. Because you are unsure of your job security.
    6. Because your family or friends own and are telling you to buy also.
    7. Because you found an apartment with a terrace that you MUST have.
    8. Because your credit is poor.

    Be smart. Buy for the right reasons. If you are questioning any aspect of buying a new home, talk to your accountant or financial planner to get a devil's advocate side of the equation. Who knows, maybe they will save you from an inevitable financial disaster!

    For me, that means renting as I am an independent contractor whose salary is unknown and job security non-existent. Furthermore, I honestly don't know where I might be in 2 or 3 years being that I just got married and the kids are now a more consistent discussion. So, I have 2 pretty big reasons against buying right now that could cost me tens of thousands of dollars if I end up buying today and selling in 2 years and the housing market remained flat during that entire time; the transaction fees alone would cost me tens of thousands and with no price appreciation at resale, I lose money in the end.

    So, I'll rent and get 5.5% in a money market account for the time being and look to buy again in the near future when I know my future plans are more concrete and my job/sales business, or at least salary, is higher and more transparent.
    Originally published October 12, 2006.

    NYC Housing Defies Odds

    Posted by urbandigs

    Fri Feb 16th, 2007 09:12 AM

    A: Housing on a national level is showing some serious weakness as the fourth quarter report from the NAR shows the largest price drop on record as markets with price declines now outpace those with gains. Also, Housing Starts tumble 14.3% in January, well below anaylsts expectations. Yet, Manhattan real estate seems to be very healthy right now. What gives?


    I've said this numerous times and even wrote about it in a number of posts:

    NYC Real Estate LAGS in a slowdown and LEADS in recovery's of housing cycles
    I wrote about this in my post titled, "Why NYC Will Lag in a Slowdown", back in February of 2006. Anyway onto the numbers which are more representative of the national market than the New York City market!

    Home Prices Slump

    According to CNN Money article:
    The slump in home prices was both deeper and more widespread than ever in the fourth quarter, according to a trade group report Thursday.

    Prices slumped 2.7 percent in the fourth quarter compared to the fourth quarter a year earlier, according to the report from the National Association of Realtors (NAR). That's the biggest year-over-year drop on record and follows a 1.0 percent year-over-year decline in the third quarter. Vacation markets, where investor-buyers had driven up prices during the building boom of 2005, were particularly hard-hit.
    No surprise here. Markets ripe with speculative investors and second homes are always the first and hardest to get hit after a long bull run.

    Housing Starts Tumble 14.3%

    This was a nasty number released about 15 minutes ago. According to another CNN Money article:
    Housing starts plunged in January as the latest government reading on the battered housing market came in much weaker than forecasts.

    New homes started in January fell 14.3 percent to an annual rate of 1.41 million from the 1.64 million pace in December, the Census Bureau reported Friday. Economists surveyed by had forecast a 1.6 million rate for January. Applications for new home permits, which is generally viewed as a measure of builders' confidence in the market, fell 2.8 percent to an annual 1.57 million rate from 1.61 million a month earlier, which was a bit below economists' forecast of a 1.59 million pace.
    This is a number that is more true for the national market than it is for the Manhattan real estate market and should be treated as such. Nevertheless, this was a very weak number and could pose psychological problems to NYC's market if buyers get scared about what is going on nationally. However, I believe the effect if anything will be minimal on a psychological level.

    So why is Manhattan real estate doing so well right now? Here are a few ideas:

    1. Economy - The economy is very strong, especially the labor market, giving alot of people high paying jobs. Where there are good jobs and salary's, there are prospective buyers. Right now, the buyer pool in New York City is very healthy. With a strong buyer pool, sellers are experiencing a very good market right now and getting very close to their 'hopeful' purchase price.

    2. Inventory - As the buyer pool remains very healthy and more apartments go into contract, inventory levels and the number of well priced products to choose from is shrinking. Quite simply, if its priced right it will sell within 4 weeks. I am noticing a shortage in good products to recommend to my clients and even when I do find one a bid of only 4% below ask is not getting the response that we hope for.

    Expect Manhattan inventory levels to remain tight on the buy-side tipping the scale more towards a sellers market; that is, a market that is favorable to sellers due to tight inventory levels and a very strong buyer pool.

    3. Lack of Speculators - We know that NYC is 75% co-op and as such is not as speculator friendly as many other national markets, such as Miami. A market like Miami is very speculator friendly and actually allows a buyer to buy pre-construction and sell before they even close on the property! Not so here in NYC. Most people wind up buying a co-op and have to go through an extensive board review process to make sure you are financially able to own the property. In addition, policies on subletting, parents buying with children, and property use as a 2nd home restrict many from even considering buying.

    In the end, it all adds up to a lower level of speculative activity and as a result adds to the overall strength of the market in the face of a more widespread housing slowdown.

    4. Demand - There is just a surge in demand to live in this incredible city! It's almost as if there is a new trend on two separate levels. First, I am noticing a trend with my buyers who want to live closer to where they work. Second, I am finding that more and more clients are either retired or semi-retired and are looking to move back into NYC; as they first lived here when they were younger and have been waiting to move back after their kids are out of college and settled. I would be very interested to know anyone that has data on this trend? All in all, there is no shortage of demand to live in New York City right now.

    5. Rental Costs - With vacancy rates for rentals still hovering below 1%, landlords were able to maintain higher asking prices for their units. With the increased costs of renting and the shortage of inventory to choose from, potential renters are considering buying if its a viable option given their financial situation. As rental rates flatten out, it will be interesting to note any changes in trends. However, I wouldn't expect anything significant in the near future. Higher rental prices make the buy vs rent decision a tougher one for those financially able to purchase and who have a timeline to own of greater than 4 years.

    UrbanDigs Says: I would expect the frenzy to last a few more months and then start to die down as we get into the summer months. This is the seasonal effect. I would also expect the national market slowdown to hit NYC at a lag, perhaps in a year or so, and especially if the housing slowdown leads to policy changes in lending; which is starting to happen. I still would like to go on record for saying that the biggest threat to NYC housing looking forward is tighter lending standards and job weakness towards the end of the year. For now, enjoy the ride and I'm curious to see how it all plays out!

    New Design & Services

    Posted by urbandigs

    Thu Feb 15th, 2007 08:05 AM

    After 20 months of planning, 6 months of new services brainstorming, and 3 months of training 4 hand selected agents at my Citi-Habitats office I am ready to launch a new BUY-SIDE CONSULTING service based on the investment philosophies and strategies that I discuss often here on

    Please bear with me as the blog undergoes this new enhancement and the new buy-side consulting page is fully launched and web ready. Expect bugs for the first few days, temporary template pics and some color mis-alignments on pages of the blog. Im shooting for a Monday finale to officially introduce this new service and I am very excited about it as it will bring to you savvy real estate services focused on educating buyers about the Manhattan market and about real estate investing & property valuation for products here in NYC.


    A more detailed explanation of this service will come when everything is ready. Thanks!

    New & Notable: Past 7 Days Only

    Posted by urbandigs

    Wed Feb 14th, 2007 10:38 AM

    A: 253 New listings to report on in Manhattan below 96th street and above the Financial District. Here are some new and notable listings worth noting should you be in the hunt for a property that meets your needs.

    Sorry its been a while since I did this, but I've been real busy lately and these new and notable posts take more time than regular posts as I have to sift through 250+ listings to find what seems to be the best values based on location, price, size, and monthly expenses. As always, I don't review every aspect of these listings nor do I visit these listings prior to their posting on

    61 East 11th Street; Apt: 7


    First Came on Market: 2/12/2007
    Asking Price: $2,200,000
    maintenance: $1,269 (well under $1/sft is rare)
    Size:2,200 SFT
    PPSF: $1,000
    Marketed By: Lisa Conway of Halstead

    129 West 22nd Street; Apt 2nd Floor


    First Came on Market: 2/12/2007
    Asking Price: $3,395,000
    maintenance: $3,000 (again, under $1/sft)
    Size: 3,600 SFT
    PPSF: $943
    Marketed By: Reid Price & Brett Miles of Corcoran

    100 West 57th Street; Apt: 7N


    First Came on Market: 2/12/2007
    Asking Price: $899,000
    maintenance: $1,836 (ok for size)
    Size: 1,200 SFT
    PPSF: $749
    Marketed By: Lolly Totero of Corcoran

    345 E 81st Street; Apt: 9N


    First Came on Market: 2/13/2007
    Asking Price: $569,000
    maintenance: $924 (good for size)
    Size: 725 SFT
    PPSF: $785
    Marketed By: Kathie Hannaford of Corcoran

    Lenders Starting To Tighten..!

    Posted by urbandigs

    Tue Feb 13th, 2007 11:15 AM

    A: Wow! It's starting earlier than I thought. Check out this corporate email from an insider at Fremont Investment & Loan, a division of Fremont General Corporation (NYSE: FMT), published on Calculated Risk today.

    Here is the corporate email published on Calculated Risks post titled, "Fremont lending Changes":

    Sent: Monday, February 12, 2007 1:54 PM
    Importance: High

    Due to general negative Industry sentiment, due to recent articles in the media, and the ripple effect to the secondary market, Fremont has made the difficult decision to speed up some changes that were set to take place later in the year. PLS READ BELOW.

    2nd MORTGAGES ELIMINATED effective TODAY!!!!!

    Any Prequals out there that are 80/20 or combo loans, pls contact me by email asap for new pricing, with an outside second if available from IBC or other lender, or as a 100% or straight one loan

    AA CUT BACKS AND HUGE CHANGES – any files that have been priced on the AA program need to be looked at ASAP, pls email me and attach a copy of the prequal with 1003 and Credit

    Note: Fremont is typically at the forefront when making changes to programs, I would urge you to expect our competitors to be making similar changes in the next few weeks. Fremont ’s goal is to be here for the long term, thankfully we are self funded with tons of capital and reserves….We will be here to close your loans.

    Thank you for your patience and understanding in these tough times in the industry.

    More Details will be communicated later today ... I apologize for the barrage of emails, but I wanted to make sure that everyone is aware of what is going on ...

    Thank you.

    Fremont Investment & Loan

    UrbanDigs Says: If this email turns out to be the real deal, it takes blogging to a new level of providing true insights to readers about the changing funamentals of real estate investing. I love blogging and I love reading Calculated Risk. It adds so much transparency to real estate and gives readers an inside look at what is happening NOW in real estate across the country! These lending changes are inevitable and will ripple through to the bigger banks in time. For now, expect the smaller banks and sub prime lenders to start out with these tighter standards which ultimately restrict purchasing power. And if you forgot, read my post I wrote, "Credit Crunch: Tighter Loan Standards?", that was publised 2 weeks ago containing my thoughts on this very issue.

    Co-op Board Package Red Flags

    Posted by urbandigs

    Tue Feb 13th, 2007 10:39 AM


    A: When preparing a Co-op board package, either on your own or having the broker do it, there are a few things that you should know that are considered 'red flags' in the eyes of most Co-op boards.

    : Every Co-op board sets unique policy's for their building's stance on board approval, subletting, pied-a-terre's, pets, renovations, and re-selling. Before a buyer's offer is accepted, either the seller or the seller's broker should pre-qualify the buyer based on information that is gathered from the building's Managing Agent regarding what the board looks for in accepting the prospective purchaser.

    There are certain items that are cause for concern as they could possibly raise a red flag when the board meets to review the prospective purchaser. Here is a discussion on each of them.

    1. Debt/Income Ratio Over 30%: Your debt to income ratio (DTI) is a key indicator of your true financial picture. It is definitely the lending industry's measure of fiscal health. Your debt to income ratio is calculated by dividing monthly minimum debt payments (excluding utilities, food, entertainment) by monthly gross income. The higher this ratio, the more burden there is on the individual to make payments on his or her debts. If the ratio is too high, the individual will have a hard time accessing other forms of financing. A Debt/Income Ratio above 30% starts to raise a red flag in the eyes of board members because it increases the risk that the buyer will default on payments (especially maintenance payments) in the future.

    2. Declining Income Reported on Tax Returns: Most board packages will request the past 2 years of Tax Returns be submitted by the prospective buyer. It's always good to have successively increasing reported income on these tax returns as it shows that you have a stable job with a rising salary. Basically it tells the board that you are in good financial shape. However, if you had a SHARP decline in reported income over the past 2 years (i.e. Reported Income of $75,000 in 2004 but $50,000 in 2005) it will raise a red flag to board members reviewing your application. Declining income tells a story of a worsening financial situation and may cause the board to ask more questions or dig deeper into your financial history before considering accepting your application.

    3. Hard Copies Do NOT Match Financial Anaylsis Form: When submitting the board package ALL #'s provided in the financial analysis form should MATCH UP PERFECTLY with the hard copies that are usually requested to be submitted. For example, if you state that you have $123,456.14 in your checking account and $23,498.46 in stocks than you better have the hard copies to back that up TO THE PENNY! As the board reviews your financial analysis form they will look to the hard copies provided as proof that you really have what you state you have in liquid assets. UrbanDigs Tip - Do it in reverse! Collect your hard copies first that you intend to submit with the board package and then take the statement balance and copy that into the appropriate section on the financial analysis form (this way you know for sure that all data you enter about your liquid assets has the exact amount on the hard copies to back it up).

    4. Incomplete/Missing/Poorly Written Reference Letters: You may think that the personal and professional letters of reference are the easy part of the board package, so be careful NOT to discount the importance of these letters (Read my post on Reference Letters Layout). If the board asks for 5 Personal Letters & 3 Professional Letters of reference than make sure you hand in ALL OF THEM! Not only that, but make sure you tell your friends and work associates to type up the letter and include a good 3-4 paragraphs of information describing their relationship with you, why you would be perfect for this building, and contact information so that the board may follow up if needed. Don't skimp on the reference letters as I know for a fact that some boards weigh this aspect of the board package very heavily!

    If you are selling a Co-op apartment be sure to know every detail of what the board will look for BEFORE accepting anyone's offer. Now that you know what the board wants and some of the RED FLAGS that boards look out for, you should be able to assess whether a particular buyer is in good shape to be accepted. Although a Co-op board may reject a buyer for any reason they wish, this is a good set of guidelines to follow to put the prospective buyer in the best possible light for passing the board! Good Luck!

    Market Update: Very Active Buyer Pool

    Posted by urbandigs

    Mon Feb 12th, 2007 08:24 AM

    A: If I were to describe how the NYC real estate market is right now, it would have to be VERY ACTIVE. Take it for what it is, buyers are out there in full force putting pressure on those with time pressures to move.


    I'm a real estate broker. I currently ONLY represent buyers as my last sales exclusive sold in 2 weeks, after a short bidding war. Right now, I have a very broad range of buyer clients, 10 in all, 18 if you count some buyers who have asked me to work with them but aren't ready to buy just yet. My clients price point ranges from $400,000 to $3 Million. The majority are between $1M - $2M. Every OH or appointment I go to is very busy these days. I am finding that between 2-5 people at a showing during the short time we are there is the norm right now. Take it for what it is. If your a buyer right now, than you probably have noticed the increase in traffic recently.

    I reported on this shift in the NYC marketplace about 4 weeks ago in my post, "Buyers Are Out In Full Force", but at that time it was just the beginning of the trend and I wasn't sure whether it would last. Well, it has! If you don't believe me fine, I really don't care. I just like to tell people what I see out there when Im with clients, and let you decided whether or not I'm full of sh*t. You can't get more real than reports from the field. Below is what I have noticed over the past 5 days of working with my buyer clients.


    155 E 76th Street

    150 E 69th Street
    150 E 69th Street
    1601 Third Avenue
    301 E 79th Street
    53 Horatio
    350 E 62nd Street


    20 W 90th Street


    The Hit Factory Condominiums

    I have also lost 2 bidding wars, including that $1.7M one I wrote about last week, and submitted bids for 2 separate clients that garnered no response even though the bid submitted was within 5% of asking. In those cases, the seller already accepted a higher asking price but the deal fell through and the buyers backed out. So now the seller has a certain price in mind and is less willing to negotiate with new bids.

    This tells me that sellers are getting details of the changing marketplace from their hired brokers and are adapting their strategy's with negotiating with clients. In short, they are tightening up and not as willing to negotiate as they were only a few months ago! I wouldn't go as far as say that the current market is a seller's market, but if it I had to rate it on a scale of 1 to 10, with 10 being the most active sellers market and 1 being a very slow buyers market, I would probably rate it a 7.

    Now you may not see the data on what I'm describing for months as any eventual change won't be recorded until a contract is signed and the deal closes some 2-3 months later. Real estate data is a lagging indicator of the marketplace leaving you guys with very few options to get a true, inside look at what is really going on in the Manhattan real estate market. I try to assist in this transparency problem by blogging here on Whether or not you believe me is an entirely different issue.

    Assuming you do understand that what I talk about here is as accurate as it gets, lets discuss what you need to do about it:

    BUYERS WITH A TIME PRESSURE - Get moving fast! See as many property's as possible over the next few weeks and make a move sooner rather than later. If you are pressured to purchase a property AND close within 3 months or so, you need to pick out the best of breed product in your price point NOW! If you don't, you'll get stuck later on with a mid-tier product.

    BUYERS WITHOUT A TIME PRESSURE - Take the next 1-2 months to learn the product in your target price point. Try to wait for the frenzy to die down a bit. In these environments, you lose negotiating power and are less likely to secure a transaction at the purchase price you were hoping for. I wouldn't expect the frenzy to last longer than a couple of more months leaving the summer months as your buying opportunity with the threat of less inventory to choose from.

    SELLERS: Well, you should know that now is as good a time as I have seen recently to be selling your apartment. I wouldn't get greedy or start raising your asking prices too high, but I would keep an open communication with your hired seller broker and find out if the increase in activity has hit your property. If it hasn't, your price is too high. If it has, chances are a bid is not too far away! It really depends on where you originally priced your property and the selling strategy you and your broker employed. If you messed up and overpriced, now is your chance to correct it and still get a good purchase price for your home. If you don't sell your home in the next few months, what chance do you have heading into summer when traffic is known to drop siginificantly!

    NYC Real Estate Data Book 2007

    Posted by urbandigs

    Sun Feb 11th, 2007 09:11 PM

    A: Thanks to The Real Deal's Data Book 2007 for compiling this set of data for the New York City real estate market in 2006.

    * The most expensive zip code in New York City is 10007.
    * In 2006, the median apartment price for Manhattan was $750,000.
    * The apartment inventory in New York City is following the same seasonal pattern as it has since 2001.
    * Average price per square foot in Manhattan for an apartment is $984.
    * Average Manhattan apartment price is $1,214,379.
    * The average cost for a two-bedroom rental is $3,200 a month.
    * Total population in New York City is 8,000,000 people.
    * There are roughly 2,000,000 rental units and 925,000 owner units.
    * The Bronx, which has roughly a million more people than Staten Island, has roughly the same number of owner-occupied units: 102,000 and 103,000, respectively.
    * There are 1,000,000 rent-stabilized apartments and 59,000 rent-controlled apartments in New York City.
    * There are roughly 30,000 real estate sales agents and brokers in New York City.
    * The biggest developer in New York City is The Related Companies.
    * There are about 20,000 condos units that were planned for development in Manhattan for 2006.
    * The total number of units planned for all the boroughs is 32,191.
    * The largest office landlord in New York City is Tishman Speyer with 40.5M square feet of space, with almost half in Manhattan.
    * World Trade Center site leaseholder Larry Sivlerstein owns 8,000,000 square feet.
    * Manhattan's biggest office tenant is Citigroup with 5,000,000 square feet.
    * The biggest sale in the history of the city happened when Extell Development, a newly formed group, bought a 77-acre lot in Manhattan for $1.8 billion from Donald Trump.
    * -The top office lease for New York City was Morgan Stanley, leasing close to 500,000 square feet from Wachovia.
    * Average asking rent in Manhattan for office space, depending on the neighborhood, ranged from $28 to $60 a foot.
    * McDonalds is the largest retailer in the city, with 284 stores. There is 102,000,000 square feet of retail space in New York City.

    "An Offer is In, Not Accepted": Enough..!

    Posted by urbandigs

    Fri Feb 9th, 2007 08:51 AM

    A: I'm venting! I'm telling you right now that I'm venting in this post and I can care less how my fellow brokers view me after reading this. I'm a straight shooter in dealing with clients and fellow brokers and expect the same in return. Either an offer is accepted and a contract is out or its not! End of story!


    I just can't take it anymore. Im sorry. Over the last 4-5 weeks I must have heard at least 4 times from the listing broker when I called to schedule an appointment that, "...just letting you know I have an offer in, that has not been accepted, so please tell your client".

    WHY WHY WHY! Is it because you are lazy and only want to show the apartment to direct clients or brokers with clients who are extremely serious? What purpose does this serve? Tell me! I'm right here and I want to know! Does your seller know you are doing this and turning off potential buyers who don't want to get involved in any bidding war; especially against themself!

    It's very simple. Either you have an offer that is serious and in the range of acceptability by your client, or you don't. Saying you have an offer in w/out it being an acceptable offer either financially or price wise, makes NO sense! What good does it serve? Oh, my goodness, an offer is in. I better tell my client that they better act fast because someone else put in an offer that was not accepted. Sometimes I wonder if the broker's that practice this scare tactic even understand its self-defeating nature?

    Do you see how ridiculous this sounds, yet it happens so often here in NYC? Case in point, I'm going to share with you my experiences but leave out the brokers involved:


    300 W 53rd Street - Elliman broker had this listing for a while. On one occasion I called to schedule an appointment for my client, and the broker told me an offer was in; not accepted. But that we better get in fast and bid as close to ask as possible to get the property. This was 6 weeks ago. So, I took my client in. Three open houses later, the apartment is STILL on the market for $549,000. So, we go back to an open house about 3 weeks after our first weekday visit. This time, the broker was there with a colleague who took me aside before I left with my client. She said, "...just so you know, we have an offer over $500,000 so if your client wants it, tell him to bid fast and over $500,000".

    Why tell me this? I know your lying! If you had a bid over $500,000 than accept it! Its a condo with no board approval process and your getting $1,000/sft for the property. Honestly, if I was the seller I would take it and run! But did they? Apparently not. The listing is no longer with the Elliman broker and was removed from the system. If there was an offer over $500,000 that got accepted, I would have seen it in the central systems and the webad would definitely still be up pending a signed contract.


    155 E 76th - Now this guy did it right! It was a new listing and I wanted to get my client in as soon as possible to view it. After setting up an appointment with the broker, he never said anything about an offer being in! However, the next day he calls me to say that they just go an accepted offer and a contract is being sent out within 1 day. He also asked me if I would like to keep the appointment or cancel. I cancelled and asked him to keep me in the loop if a contract doesn't get signed.

    This broker never said anything about an offer being in when I setup the appointment because nothing was accepted yet. Which is the right way to go about it. When the offer was accepted and deal sheet put into place to proceed, then he called me and told me about it. Very respectful and tells you something about how some brokers work for their clients and towards fellow brokers.

    In this day and age, with real estate cooling and buyers being very savvy it just doesn't make any sense to play games. Brokers should be professional and ethical about how they treat clients and fellow brokers. I guess what I'm saying is that there should be more 'strictly business' agents out there who focus on getting the job done right and fairly with their clients best interests in mind.


  • If the buyer was not financially qualified to pass the board in the first place

  • If the bid was below the 'acceptable range' of the seller


  • If multiple bids are in and best & final is declared

  • Everything else is garbage! Saying "...I have an offer in & its NOT accepted" simply means NOTHING HAS CHANGED and the PROPERTY IS STILL AVAILABLE. Get it!

    UrbanDigs Says To Brokers: Unless you have an OFFER ACCEPTED & CONTRACTS OUT or about to be sent out, don't even mention anything to other brokers unless they or the client specifically ask you if any bids are in. Then it is OK to say, "yes we have had a bid submitted but it was not accepted". But using the phrase, "I have an offer in that wasn't accepted" as a scare tactic is outdated and misleading. Who cares that an offer is in. The buyer who submitted that offer might be playing games or unable to qualify to pass the board. In both cases, the offer as far as I'm concerned is non-existent. In fact, if I was the seller broker hired to market the property I wouldn't even pass on an offer from a buyer who wasn't able to pass a co-op boards preset financial guidelines for purchasing; after all, part of my job is to pre-qualify potential buyers. Until a contract is signed, the apartment is still available and should be marketed fully. End of story. I think its time for a change.

    More Transparency Can Clean Up Industry

    Posted by urbandigs

    Thu Feb 8th, 2007 01:06 PM

    A: I recently had a realization as I was submitting a bid on behalf of a client and was told by the listing broker that a higher offer was submitted and that we had one chance to up our bid. I was told the offer was accepted already, but that no contracts were sent out so that my clients had one last chance to get the property; so we upped our bid and I had to advise my client on the hardest aspect of my job --> how high to go. And then it dawned on me. If there were only a one-stop site that has complete data on co-op and condo sales in Manhattan, only then will I be able to see whether or not the listing broker was being honest or unethical.


    A little over a week ago the NY Times had a story called, 'Agents of Angst', which went into detail on how real estate agents are a step below used car salesman in terms of reputation. Here is an excerpt:

    A Harris poll conducted last year that ranked occupations in terms of prestige placed real estate brokers at the very bottom of a list of 23 professions. (Firefighters and doctors were at the top.)

    To start with, brokers are salespeople, so buyers with suspicious minds would naturally suspect brokers of trying to sell them something they don't necessarily want or need. But brokers also admit that some real estate agents help to perpetuate stereotypes with classic bait-and-switch schemes and by putting their own desires to close a deal over a client's best interests. The fact that brokers themselves sometimes find it hard to trust one another only compounds the level of suspicion in real estate.
    Yea yea yea.. I know all of this. Which is one of the reasons I started blogging in the first place so potential clients have a window into how I work, think, view the markets, and treat clients. But how could it get better?


    Think about it. If an agent knew in advance that the actual price of the property would eventually be made public and be accessible to anyone with internet access, than how could they get away with unethical behavior when the deal is closed? The situation would in essence change the playing field, I would think, as agents could now be accused of unethical behavior or not observing their fiduciary responsibilities to their client (the seller) and risk losing their license and credibility in the field. Well, assuming they have credibility.

    For example, consider this situation in a world where ALL transaction data is made public within a week of closing:

    Sally Seller Broker is hired to market property at $500,000 ---> Buyer Broker Bob submits a bid of $465,000 on behalf of their client ---> Sally Seller Broker receives bid of $455,000 from a direct client with NO buyer broker ---> Sally Seller Broker ONLY submits direct client's bid to seller ---> Deal closes for 455,000

    Although the deal is now closed and Buyer Broker Bob can't do anything to reverse it, he will be able to see very clearly that Sally Seller Broker acted in their OWN best interests and never disclosed a competing bid to their client, the seller. Sally Seller Broker was acting this way to ensure a higher commission for herself; and the seller never had a clue. But Buyer Broker Bob does and can now contact REBNY, DOS Licensing Services, MEDIA outlets and perhaps even the seller if he kept proof of the bid being submitted before any contract was signed.

    Perhaps if Sally Seller Broker knew in advance that unethical behavior (that caused this industry to get such a bad reputation in the first place) would be easily revealed at the close of the deal, they would be less likey to commit such acts and more likely to behave ethically and in their clients best interests. Which is all we can strive for.

    SITES TRYING TO HELP - One of my favorite NYC real estate aggregators and search engine. I use it quite often for my own clients and find it very useful. Recent upgrades in services offered allow you to pay $10/mth for access to comparable sales data collected.


    ACRIS System - City provided Automated City Register Information System. Has co-op sales and is free to use. Need to know LOT/BLOCK # or NAME of buyer. Cannot enter building address.
    - All purpose building/unit data resource. Co-op comps listed by date after you go in and select a neighborhood.

    UrbanDigs Says: Its hard being an honest salesman! But hopefully help is on the way. By making real estate transactions completely transaparent, brokers, buyers, and sellers will be able to tell whether or not their higher offer was ever submitted to the seller by the hired listing broker. Should you find that the deal did in fact close for a sizeable amount UNDER what your client's bid was, and you know for a fact that your bid was submitted BEFORE any offer was accepted and contract signed, well then you now have a complaint to file against the unethical party involved as long as you have the records to prove it. Hopefully this new world of transparency that is soon to be upon us will help CLEAN UP this industry of some sorts of foul play via the realization that it won't be so easy to get away with anymore!

    Now that my client's bid of $1.7M is in, its just a waiting game to hear whether it was accepted or not. Should it not be accepted, I certainly will keep my eyes open to what this apt eventually sold for by looking it up on public records. Only then will I know what we were up against and whether or not there really was another higher bid submitted!

    Donald Trump - Bringing Sexy Back?!

    Posted by Toes

    Thu Feb 8th, 2007 12:35 PM

    Donald%20and%20Mel%20Headhsot.jpg Justin%20Timberlake%20Headshot.jpg

    Last night, I went to see Justin Timberlake with three girlfriends at the Garden. Who should roll in and sit four rows in front of us?! Donald Trump and Melania! I was so excited, I couldn't contain myself, and I never get excited about celebrities. Then again, what real estate agent with a passion for the business hasn't read, like, every single book Trump has written.

    I tried to get past his security guard to give him my biz card, since he was sitting with the masses, but alas, no dice. His security promised to give the Don my card (yeah, right!). Mr. Trump didn't seem too into the concert, though, barely a head bob or a sway. His seats were really not worthy, I would have expected him to be stage center. He and Melania sat for half of the concert. The mostly female crowd (which also consisted of the "I dragged my boyfriend here" contingent) was crazy, everyone was dancing, and the energy was incredible!
    Unfortunately, Donald and Melania left a few songs early, missing "Sexy Back," and my favorite Saturday Night Live skit, "Dick in a Box!"

    Since I wrote a note on the back of my card asking Mr. Trump to check out UrbanDigs, maybe he will read my post. Mr. Trump - you rock! Way to keep in touch with the younger generation. Next time, it's ok to get into the concert - we will still love you!

    Check out Mr. Trump's book co-authored with the author of "Rich Dad, Poor Dad," Robert Kiyosaki.

    And Trump University Real Estate 101: Building Wealth with Real Estate Investments

    Credit Update: HSBC Warns of Bad Debts

    Posted by urbandigs

    Thu Feb 8th, 2007 11:55 AM

    A: I know some of you guys HATE that I talk about this stuff, but its important. I stated months ago that I thought the 2 biggest threats that would extend the housing correction are tighter lending standards & weak jobs reports. The weak jobs data I'm on record for stating I think will occur during the 2nd half of 2007; closer to the end of 2007. However, the tighter lending standards seem to be right around the corner.


    If you are interested in the fundamentals that affect housing cycles, then start reading Calculated Risk daily; its just a great read about a variety of economic data and corporate trends that could ultimately affect real estate. According to a recent post titled, "Mortgage Refinancing Gets Tougher", published in the WSJ:

    ... borrowers are getting caught short by a changing housing market -- one in which home prices have flattened and lenders are beginning to tighten their standards after a long period of making mortgages easier and easier to get...

    These new challenges come ... when .... about $1.1 trillion to $1.5 trillion in ARMs ... will face rate increases this year ... The MBA expects borrowers to refinance as much as $700 billion of those mortgages.

    ... there are signs that some lenders are beginning to tighten their standards. ... [as an example] This month, Wells Fargo & Co. will begin reducing by 5% the maximum amount it will lend to certain riskier borrowers in "declining" markets. Those markets, covering more than 150 counties in two dozen states, include parts of California, Florida, Michigan and Ohio.

    The change "reflects the tighter requirements of our investors," a Wells spokesman says. "I think all lenders are experiencing this kind of tightening of credit standards."
    And to make matters worse, HSBC Holdings, a huge global bank warned late yesterday that charges for bad loans will be more than 20% higher than expected. According to Yahoo Finance:
    "Foreclosures have shown a higher severity" than expected, Chief Executive Michael Geoghegan said on a conference call. "The major impact was taking into account adjustable mortgage resets."

    HSBC had said in December that the main risk in the near term was in personal lending in the United States, where increases in short-term interest rates are hitting people with adjustable-rate mortgages.
    Folks, I'm not making this stuff up. These are the things that LEAD to policy changes that could ultimately affect the playing field of real estate investing. The whole purpose of UrbanDigs should be to expand your knowledge of real estate investing and to understand more clearly the fundamentals that affect housing cycles. Sure, its always fun to talk about new deals and what apartments wont last long on the market, but that in itself doesn't educate you! What is the old adage?
    Give a man a fish, and he'll eat dinner...Teach a man to fish and he'll eat for life
    The goal of UrbanDigs will always be to hold an open forum to dicsuss market trends, fundamentals affecting the housing market, NYC real estate tips and tricks, and most importantly to be FORWARD THINKING in my posts so that you (the buyer, seller, or owner) can view the real estate market from a slightly different perspective and hopefully learn something along the way!

    Blog on!

    A Caution Against Buying Too Soon

    Posted by Toes

    Wed Feb 7th, 2007 01:59 PM


    I have an amazing exclusive at 7 W 96th Street, a 600 sq ft one bedroom for less than $417K. The apt is crying out for a buyer to give it just a little TLC. I like to say that each apartment has a story, and this apartment's history is long and a little bit sad.

    In 2005, the sellers were working with a broker who put a student with parents paying cash for the apartment up for board approval. They went to contract at $520K when NYC was at the absolute height of the market. The sellers, thinking they were going to net over $460K from their sale, bought a new apartment.

    The building does not allow parents buying for students, so naturally, the buyer was turned down. The sellers put the apartment back on the market, this time with the building's management company as the listing firm.

    A Toes Tip: In general, I caution against using a small management company to market your apartment. Typically they have few sales agents and no one has ever heard of them so no one is visiting their website to check out their new listings. So unless a management company sales agent is very aggressive with NY Times and Craigslist ads and open houses, and keeps the listing very current in the Real Estate Board of New York's (REBNY's) database so other brokerage firms know about it, the apartment is not going to get very much exposure. The less exposure your property gets, the lower the price it is going garner.

    The apartment sat on the market for months, beginning a steady price decline as the media touted the "Bubble," which scared buyers out of the market. Finally, the price landed at $425K, and remained there for several months.

    After an apartment is on the market for about 8 weeks, buyers and brokers start thinking that something is wrong with it, and they stop showing it unless there are significant price drops. A full year and a half after the apartment went on the market, my manager brought me in to take on the listing because I have had success in reviving stale listings. I took on the listing at the same price as the last broker, $425K, and began my usual marketing blitz. Here is the listing today:


    Asking Price: $417,000
    maintenance: $784
    Doorman: Yes
    Size: Aprox 600 sft from floorplan
    PPSF: $695
    Flip Tax: None
    Pre-War: Yes

    **OPEN HOUSE** Sunday Feb 11th, 2:00 - 3:00PM

    I had a professional photographer take photos and do a virtual tour, sent a mailing to the three closest buildings, put it on our website and in the NY Times print and online editions, advertised frequently on Craigslist, and featured the apt prominently in my e-newsletter, which goes to 2,350 friends, clients, and other contacts.

    The result was quite incredible:

    1st Open House: Over 30 people

    2nd Open House: Aprox 20 people

    3rd Open House: Aprox 20 people again

    Only 3 buyers had seen the apartment in its past life on the market, which had been just 2 weeks before.

    The rule of thumb in the industry is that if 30 buyers see an apt and/or 30 days go buy, and you don't receive offers near the asking price, you are overpriced. Offers came in below $400K, but the sellers, having taken a bridge loan to buy their other property, simply can't take anything that low. I requested that the sellers drop the price to $417K, which was the lowest they were willing to go. Essentially, unless they get a certain price for the apartment, they are going to be in debt.

    For every open house, I wash the windows, I put out flowers, I light scented candles. The apartment is as "staged" and as "renovated" as the seller's are willing / able to do, and really, it looks quite lovely. I've communicated the number of showings, feedback from brokers and buyers, sent them comparable listings, and educated them on the current market conditions.

    Buyers are VERY savvy these days and they simply will not buy an apartment for more than what they think it is worth. So at this point, I am at a loss of what else I can do and I'm open to your suggestions!

    TOES says
    : Make sure you and your broker know what will and will not fly with your building's board. If a candidate is borderline, run the info by the management company and see if they will give you a preliminary yea or nay.

    TOES says: Don't buy something new before you know that your buyer has passed the co-op board. You can always try to negotiate terms in the contract allowing you to "rent back" from the buyers for a certain period of time so that you can close on a new home.

    TOES says: If you must buy something new before knowing whether your buyer has passed the co-op board, be extremely conservative with what you think you are going to net on your sale. Have a contingency plan in case your buyer doesn't pass the board and you have to sell the apt at 20% below what it is in contract for. Investigate taking out a home equity line of credit on the apt and renting it out.

    TOES says: Sellers: If 30 people have seen your apartment in 30 days on the market and you are not getting offers near the asking price - your apartment is overpriced for the current market conditions.

    Tuesday Links

    Posted by urbandigs

    Tue Feb 6th, 2007 08:41 AM

    A: Extremely busy right now and I have an office meeting this morning so no live chat until later. I don't think I will be able to post anything new today, but Ill try. For now, here are some good reads from around the blogosphere.

    A Typical Day In a Bizarre Real Estate Market
    (True Gotham)

    WSJ on Vacant Homes
    (Calculated Risk)

    Lending Standards Tightening Up
    (Calculated Risk)

    Should I Put In A Backup Offer (NYHouses4Sale)

    Opn Hse! (NYMag)

    Mortgage Rate Trend Index (

    My-Currency Wants to Use the Wisest of the Crowds
    (Future of RE Marketing)

    Pricing Your Way To A Sale

    Posted by urbandigs

    Mon Feb 5th, 2007 11:20 AM

    A: This post is for those who are thinking about or currently in the midst of selling their apartment. As you interview real estate agents and seek representation, be careful NOT to fall prey to those seasoned agents whose current 10 exclusives must mean they are 'the best' and who promise you a higher purchase price than everyone else because they are a Senior VP! This is a fools paradise that you must overcome by realizing that agents do not determine the value of your apartment, the market does that!


    With that said, you should at least find out what the last 2 comparable sales were in your building and similar nearby buildings (as well as current ACTIVES) when deciding an initial asking price for your property. Then, ask your real estate agent for hopefully an honest assessment of what premium or lack thereof your apartment demands due to sunlight, views and renovations.

    For sake of ease, lets make up a situation that is similar to the real world so that I can put my thoughts into numbers.

    Christine Condo owns a 750 sft 1BR condo (naturally) in a luxury doorman building in Gramercy, close to subways and restaurants. Christine owns apt. 8B in a building with 20 floors and enjoys southwest views and tons of sun. Here is the deal:

    First, analyze building comps that sold and closed to get an idea of what a past buyer paid for your unit type.


    Apt. 5B: 750 sft 1BR sold for $699K 5 months ago ($932 PPSF)
    Apt. 16B: 750 sft 1BR sold for $710K 7 months ago ($946 PPSF)

    AVG PPSF = $939

    Second, anaylze nearby building comps that sold and closed to get an idea of what a past buyer paid for your unit type.


    Apt. 3F: 800 sft 1BR sold for $725K 3 months ago ($906 PPSF)
    Apt. 12G: 825 sft 1BR sold for $699K 2 months ago ($847 PPSF)

    AVG PPSF = $877

    Third, anaylze what similar apartments are currently asking for in your building.


    Apt. 6B: 750 sft 1BR asking $700K ($933 PPSF)
    Apt. 17B: 750 sft 1BR asking $725K ($966 PPSF)


    Finally, price in your specific apartment details to either ADD ON or DEDUCT from these averages + taking into account CURRENT market conditions


    Views - Excellent
    Sun - Excellent
    Renovations - None. Entire apartment needs TLC
    Current Market Conditions - Slow. Buyers Have Control

    With that said, here is how I would break it down for the client given the building comps, nearby building comps, apartment condition and features, and current market conditions.


    $725,000 ---> If you want to test the waters and price higher than the past 2 building comps than expect 4-7 MONTHS time on the market with the possibility you will have to reduce your price at some point.

    $675,000 ---> Most accurate price reflects current market and should result in a 2-4 MONTHS time on market.

    $650,000 ---> Aggressive price offers a PPSF of $866, below the last 2 comps sold in building, and should attract good activity at OH's and showings during the week. Expect a 1-2 MONTHS time on market as buyers find value compared to other listings currently on market in same building.


    KEY POINT: To move a property quickly your only option is to aggressively lower your asking price. Switching brokers or putting a slightly larger ad in the NYT Sunday Print will NOT do it! The sooner you realize this the sooner you will be able to react and move your property.

    : Look at Eileen Mintz's listings at 245 E 54th street.

    This large 1BR, listed at 862 sft, was first listed on January 22nd, 2007 at $550,000. The price per square foot at asking was $638 in a building whose last few sales were between the ranges of $623/sft - $789/sft.. So, by pricing right this seller got an OFFER ACCEPTED after only 2 weeks on the open market.

    Mortgage Rates Surge

    Posted by urbandigs

    Thu Feb 1st, 2007 01:21 PM

    A: When did I warn you about this? 7 days ago on January 25th, I wrote a post titled, "Why Rates Are Going Higher". Todays report on CNN Money released at 12:12PM today reports a 0.09% rise in mortgage rates to the highest level since October 2006.


    According to the CNN Money article:

    Moderate inflation along with a strong economic growth pushed up mortgage rates, according to a survey. The 30-year fixed rate mortgage rate averaged 6.34 percent for the week ended Feb. 1, up from 6.25 percent the previous week, according to Freddie Mac's (up $0.23 to $65.16, Charts) Primary Mortgage Market Survey released Thursday. Last year, the 30-year fixed mortgage rate stood at 6.23 percent.
    When I write these posts I am writing to you based on everything that I learned from following all these markets for the past 15 years or so. If you are involved or thinking about being involved in NYC real estate, you should be reading these posts in the hopes that you can educate yourself & understand how these fundamentals wind up affecting investing in Manhattan real estate. In this case, it was the selloff in the 10YR Treasury note that resulted in a run up in yields. That yield is a very reliable indicator of the future short term direction in mortgage rates.

    If you recall, in my post 6 days ago I stated:
    With the 10YR moving significantly higher over the past few months, it tells me that the bond market is a bit more worried about inflation and future monetary policy than the stock markets. Whatever the reason, it should cause lending rates and your credit card rates to RISE over the next month or so.
    Continue to keep an eye on the 10YR Treasury note, or just stay tuned to and I'll report on it for you, for any indication on how long this mortgage rate increase will hang around. For now, I'll reiterate what I said 7 days ago for currently active buyers & sellers of NYC real estate:
    Buyers Should - Keep a close eye on interest rates; money may be more expensive in the near future restricting your budget. If you recently signed a contract and haven't locked in your rate yet, consider doing so as long as the time on the rate lock coincides with when you expect the deal to close. If your not sure, as your mortgage broker if they would give you a 5-10 day extension on the house should the deal close after the lock period expires.

    Sellers Should - Understand that if borrowing rates do rise, that this means buyers will be able to afford less. Purchasing power will decrease. If you have a time pressure to sell, consider a price reduction sooner rather than later to stimulate activity in buyer demand. Ideally, you want to get a deal now rather than to wait a month or so when lending rates could very well be higher. We still have the fed meeting coming up so one thing I assure you, this rate environment will be volatile.

    Fed Update: Goldilocks Economy So Far

    Posted by urbandigs

    Thu Feb 1st, 2007 12:01 PM

    A: Yesterday's Fed meeting ended as expected with interest rates staying put at 5.25%. The all important statement issued with this rate decision suggests that the goldilocks economy, which means strong growth and moderating inflation pressures, seems to be in place thus far. However, the fed is still keeping an eye on future inflation risks and re-iterated that '...the extent and timing of any additional firming that may be needed to address these risks will depend on the evolution of the outlook for both inflation and economic growth, as implied by incoming information".


    Goldilocks Economy - A term used to describe the U.S. economy of the mid- and late-1990s as "not too hot, not too cold, but just right." An economy that is not so hot that it causes inflation, and not so cold that it causes a recession. Some economists consider this optimal, and in such situations the government usually decides not to undertake any policy measures to improve macroeconomic performance.

    The economy seems very strong these days which was confirmed by recent data and predicted by the runup in equity prices 3-6 months ago. Remember that equities are a leading indicator of the economy and corporate profits; so when stocks ran-up as they did from AUG-DEC of 2006 it should be expected that good economic data was soon to come. And it is coming right now. Question is, what happens next?


    Recent indicators have suggested somewhat firmer economic growth, and some tentative signs of stabilization have appeared in the housing market. Overall, the economy seems likely to expand at a moderate pace over coming quarters.


    Readings on core inflation have improved modestly in recent months, and inflation pressures seem likely to moderate over time. However, the high level of resource utilization has the potential to sustain inflation pressures.

    The Committee judges that some inflation risks remain. The extent and timing of any additional firming that may be needed to address these risks will depend on the evolution of the outlook for both inflation and economic growth, as implied by incoming information.

    Quick Tip: The fed's primary role is to combat inflation pressures and maintain pricing stability through monetary policy. Any change in monetary policy affects how expensive money is to borrow and in a rising interest rate environment (which is what we experienced over past few years) consumers will realize higher minimum payments on their credit card bills, higher mortgage rates, and higher payments on other debts.

    Here is a chart of what the fed has done with monetary policy since 2004 & what the Dow Jones Stock Index performed along the way:


    What You Need To Know: The fed has done a terrific job of battling inflation pressures and averting a recession due to the lack of a highly restrictive policy and statement on interest rates & future policy. Props to Ben Bernanke on a great first year as fed chief. However, we are NOT out of the woods yet. Expect rates to stay at this level and possibly be raised a bit more by years end if inflation pressures remain. Right now, I notice:

    1. Energy Prices Are Rising Again - Oil Prices Rise Above $58/Barrel
    2. Core PCE is Still Above Fed's Comfort Zone of 1-2% - US Core PCE Grows 2.2% on Year
    3. Housing Showing Signs of Stabilization - Treasury prices Down on Housing Report

    ...all of which lead me to believe that there is no way the fed will lower rates anytime soon. As long as the economy is strong, housing news isn't horrible, and inflation pressures remain homeowners might have to deal with short term ARM's resetting into a higher rate and future homeowners finding money a bit more expensive to borrow than the past 3-4 months. Something to keep an eye on as I will continue to report on this very crucial fundamental that ultimately affects housing's affordability on the open market.