The Real Deal (03/01/2017) - Mini slowdown in mid-market
Mini slowdown in mid-market
Is NYC’s $2 million-to-$5 million sweet spot starting to sour?
March 01, 2017
By E.B. Solomont
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Caroline Bass and Jeremy Swillinger
On paper, Jeremy Swillinger’s Upper East Side listing sounds like a slam dunk. The nearly 3,000-square-foot condo on East 72nd Street is in pristine condition and located in a prime neighborhood just blocks from the new Second Avenue subway. Asking $4.85 million, it’s priced competitively at just $1,644 per square foot.
But the Level Group agent said he’s getting lowball offers as buyers take their time to see what else is on the market. “Buyers are making offers based on where they think the market will be in six months,” he said.
And it’s not just Swillinger who’s having a tougher time brokering deals in this mid-market sector — which is generally defined as anywhere between $2 million and $5 million.
While the price range has been touted as a “sweet spot” by developers and brokers in the last few years, it’s beginning to see a mini slowdown thanks to a plethora of inventory and lingering uncertainty among buyers about where the market is headed.
Late last year, Citi Habitats’ Caroline Bass listed a Tribeca apartment for just under $5 million and saw it sit for five months. The $2 million-to-$5 million market is “caught in limbo,” she said. The product is “not cheap enough to be affordable and not high-end enough or with the ‘wow factor’ to draw the superwealthy.”
“There is a lot of pent-up demand for more ‘affordable’ homes,” she added, noting that studios and one-bedrooms priced under $1.5 million have seen heavy traffic.
While luxury real estate commands most of the headlines, those properties represent just a fraction of actual sales. Between 2014 and 2016, only 8 percent of the city’s 156,324 residential sales topped $2 million, according to a recent report by the city’s Independent Budget Office. Nearly 47 percent of sales, meanwhile, went for $500,000 or less.
As for the mid-market range, the supply-demand equation is tilting in favor of buyers.
There are nearly 1,400 properties listed for between $2 million and $5 million, a 14.5 percent year-over-year jump, according to analytics site UrbanDigs.com. But properties in that price range are sitting on the market for an average of 131 days — more than 28 percent longer than last year.
UrbanDigs.com founder Noah Rosenblatt said the sector is experiencing the same softness that started in the ultraluxury sector back in early 2015.
“This cycle has had a price-specific softening,” he said. “It kind of started at the very high end and started creeping into the lower price points.”
The mid-market range hit a low point last winter and then actually rebounded slightly in early 2017, Rosenblatt said. In addition, contract activity in January for apartments asking between $2 million and $5 million jumped 47 percent year over year.
But despite that bounce, Rosenblatt characterized 2016 as sluggish and said that when all of the data is tallied for 2017’s first and second quarters it’s likely to be weak as well.
“It was a very soft, anemic year, and how soft you were depends on the price point,” he said.
Level’s Swillinger said many buyers looking in this range are hesitating because they think the market will drop further.
“[They] are very conscious of where the economy is going … and there’s still uncertainty in the market and political arena,” he said.
Brokers say there are plenty of discounts to be found in the segment. “We’re not where the market is crashing, but if there are discounts that can be achieved on a transaction, why not?” said Geovanna Lim, principal at Park Avenue International Partners, who works with Chinese and other foreign buyers. “There’s a natural cycle. We’ve been going up and up and up, and now it’s correcting itself.”
Lim and others said the sub-$3 million market is still going strong, particularly units in the $1 million range that appeal to first-time buyers.
Danny Fishman, managing principal of Gaia Real Estate, said that although the segment has slowed like the rest of the market, buyers wrongly assume that developers focused on the sub-$3 million market are throwing around concessions in a desperate bid to move units.
He noted that his “affordable luxury” units are moving much faster than the high-end market. “Even if you have a lot of money and you’re buying a $20, $30, $40 million apartment, there’s no yield,” he said.
Others also argued that despite the slowdown, the mid-market sector cannot be counted out.
Douglas Elliman’s Vickey Barron said the buyer pool for properties under $4 million is still bigger than it is for the ultraluxury end of the market.
“Those are people that not only need a place to live, but investors can come and it’s a safe spot for them to invest,” she said.
U.S. News (01/14/2017) - How to Define Luxury Real Estate in Today's Market
How to Define Luxury Real Estate in Today's Market
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The Street (02/05/2016) - Houses Near Trader Joe’s or Whole Foods Reap Better Property Value Returns
Houses Near Trader Joe’s or Whole Foods Reap Better Property Value Returns
The internal debate for people who are shopping for a home is never an easy one, as the location and potential for the property value to rise might outrank the appearance of the brick and mortar edifice. But new research from Zillow has reiterated beliefs that resale value should remain the higher priority.
Even first-time home buyers are aware of the importance and value of determining the resale value of a condo or house.
After examining 17 years of housing data from 1997 to 2014, Zillow, the Seattle-based real estate website, determined that homeowners realized greater gains when they were in close proximity to Trader Joe’s and Whole Foods, the national grocery store chains. The analysis included examining the values of condos, co-ops and houses within a mile of 451 Trader Joe and 375 Whole Foods locations, totaling nearly 3 million homes. The median value of these homes was compared to the median values of all homes during the same time period.
“These grocery stores are doing a great job of identifying places ready for quick home value appreciation,” said Svenja Gudell, chief economist of Zillow. “A Whole Foods or Trader Joe's opening is a signal for home shoppers or homeowners that this is likely to be an up-and-coming location.”
One emerging trend is the desire of homebuyers to live in neighborhoods where walking to local stores and restaurants remain a feasible option.
“As more people are priced out of city centers and head to the suburbs, homebuyers still want amenity-rich neighborhoods and a more urban feel,” she said. “These stores are definitely among those amenities that are attractive to buyers.”
Other Amenities Sought
These two grocery stores resonate highly with consumers, and their preference has increased to the point where they have asked specifically if either one is within walking distance at showings of homes, said Samantha DeBianchi, CEO of DeBianchi Real Estate, a Fort Lauderdale, Fla. real estate firm.
“The old adage ‘location, location, location’ is really true,” she said.
The research conducted by Zillow revealed that through 2014, the homes located a mile of either Whole Foods or Trader Joe’s were valued at more than twice as much as the median home throughout the U.S.
Since these two grocery stores are always constructed in neighborhoods where the gross income is higher than the average salary, whether this phenomenon is simply a self-fulling prophecy is anybody’s guess.
Zillow contends that the stores provide the inertia to push up home prices, even in neighborhoods where the prices were falling behind those in the city itself. They also examined the effect of the construction of the stores on the property value three years before and after the opening of 40 Trader Joe's locations and 40 Whole Foods stores. After a store opens, the prices of homes start to exceed those in the city overall.
“I am still skeptical of the claim when it comes to those two stores, but I would say that when you buy near a major amenity when it is under construction, you often see a bump when it is complete,” said David Reiss, a law professor at Brooklyn Law School.
Since both of those stores conduct intensive market research before they decide where to build, the companies “clearly had market research suggesting that the values would be coming up,” said Bill Golden, an independent real estate agent with RE/Max Metro Atlanta Cityside. “But which came first, the organic chicken or the egg?”
The majority of these stores are only constructed in areas where there are currently other “real estate hot spots,” he said.
"Buying a home with good nearby amenities, which these stores certainly qualify as, is always a good thing," Golden said. "Buyers are usually excited by the proximity of such stores.”
Some consumers view Whole Foods and Trader Joe's as being trendy, which produces “astonishing effects,” said Jeremy Swillinger, a real estate advisor at Level Group, a New York City real estate brokerage firm. With low supply and increasing demand, values will rise naturally.
“The fact that nearby residential properties appreciate faster when a premium grocery store is opened is not a surprise,” he said. “This type of grocery store attracts and caters to a large portion of clientele with an interest of wanting a high quality shopping experience, including locally sourced foods."
When renters become buyers, many are seeking to “upgrade their lifestyle,” said Swillinger. Whether that is closer proximity and less of a walk to the subway or pharmacy, the demand will increase property values. In Manhattan, the Second Avenue Subway has influenced valuations.
“Property values along the Second Avenue corridor haven’t drastically increased much since the beginning of phase 1 of the Second Avenue subway, but as the opening slowly approaches, the attractiveness of living in this area has increased, along with property values,” he said.
Recreational activities, community events and walkability play a large factor with Generation X buyers on choosing the right neighborhood for them, said Barry Jenkins II, a realtor at Better Homes and Gardens Real Estate Native American Group in Virginia Beach, Va. The area must represent a lifestyle and community to them, which ranks higher than the traditional “sterile and standard search criteria of square footage and bedrooms,” he said.
Many homeowners are connected to the emotional factors surrounding ownership rather than what the actual house represents, generating more loyalty for the area.
“Trader Joe’s and Whole Foods fit well with the above lifestyle criteria, because they are also brands synonymous with a healthy lifestyle,” he said. “This emotional connection that buyers and sellers have for their community cause homeowners to not want to sell and home prices in that particular area appreciate.”
Millennial homebuyers are searching for a suburbia lifestyle without having to “necessarily live in the suburbs,” said DeBianchi. When either grocery store is located close by and combined with parks, gyms, and entertainment, these aspects together “help create a stronger demand for the area and overall help them appreciate faster,” she said.
The walkability factor has risen to be on the top of many buyers’ criteria as mindsets have transformed into demanding immediacy.
“People want everything now, faster and easier,” DeBianchi said. “When you think of these two stores, you know what you're going there for and you don't necessarily need to be spending your day strolling down the isles like other supermarkets.”
The opening of a Trader Joe's increases values across the board, said Erik Serras, a principal broker for Ideal Properties Group, a New York brokerage firm. A building his firm is representing at 145 Court Street has an asking price of $50 million and this location is more “desirable” with Trader Joe’s being located right across the street, he said. The same could be said for a new Whole Foods which recently opened in the community of Park Slope in Brooklyn.
These two stores also instill a sense of confidence of the marketplace with potential homebuyers, said David Smith, Florida division president for AV Homes, the Scottsdale, Ariz.-based home builder.
“The stores tend to target areas that are more established and desirable, where people can afford their premium products,” he said. “There’s a large portion of the market who don’t want to be more than five to ten minutes away from the grocery store, employment and shopping and who are willing to pay a premium for this convenience.”
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DNA Info (12/29/2015) - 16 Predictions for New York City's Housing Market in 2016
16 Predictions for New York City's Housing Market in 2016
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MANHATTAN — The year 2015 was all about records: new heights forsales prices, rentals … and thenumber of applications to affordable housing lotteries.
But the market began to shift late in the year: sales price growth cooled, and landlords offered more concessions amid rising vacancies for rentals. Both are trends some brokers predict will continue.
Affordability will also remain a big issue as the de Blasio administration’s controversial zoning rules, intended to spur affordable housing, wind their way through the public approval process.
Here’s what else experts are talking about for 2016:
1. Sellers will no longer have an extreme advantage.
Sellers will need to be more prudent about pricing as many buyers have reached their limit, many brokers said.
“By no means will buyers have critical advantage, but they will have more leverage than in 2015,” said Noah Rosenblatt, founder of UrbanDigs, a site that analyzes the Manhattan market.
2. Ultra-luxury condos will see price cuts.
There may be more condos breaking the $100 million mark, but as inventory of the high-end market — above $20 million — has expanded, its sales will become “sluggish,” said Daniel Hedaya, of Platinum Properties, predicting that new developments with unsold units will start seeing price cuts.
It’s already started at buildings like Zeckendorf Development’s 50 U.N. Plaza and theToll Brothers’ 400 Park Avenue South and 1110 Park Ave. When Zeckendorf dropped prices, sales immediately increased, noted real estate expert Jonathan Miller.
“It’s not as if these prices are far off, it’s just that they’re priced based on the market two or three years ago, without the competition,” he said.
3. One developers’ woes might be another’s opportunity.
High land costs are putting a damper on development, said Robert Dankner, of Prime Manhattan Residential, noting that the “furious pace of buying dirt $700 to $1,000 a foot” has since “grinded to a halt” since developers can’t charge $3,200 a foot.
“There are some signs of people overpaying,” said Roberta Axelrod, of Time Equities. “That may wind up in opportunities later” — for other developers.
4. Developers, in general, become more “cautious.”
With some big regulatory unknowns, like what’s happening with 421-a tax breaks and details of the city’s affordable housing plans still in flux, many developers feel unsettled about starting new projects.
“Over the course of last six months, we’ve become a lot more cautious,” said Matt Baron, of Simon Baron Development, which recently opened Upper East and Upper West Side condos geared toward the “mid-market” — $2 million to $10 million range — and also launched Ollie at select buildings to provide renters with “lifestyle-relevant services” like housekeeping and a social concierge.
Jody Kriss, of East River Partners, which is developing a group of properties in Fort Greene and the Upper West Side, plans to take on smaller projects in 2016, focusing on four to 20 units in Brownstone Brooklyn, noting that smaller projects take roughly 2 years to buy and complete, which is less time than large scale developments.
5. High-end rentals in Manhattan will steal thunder from pricey condos.
The luxury rental market “will go through the roof,” especially as “hedge fund guys” have had a down year and might want to rent rather than buy, predicts Darren Sukenik, a broker with Douglas Elliman.
“A lot of these finance guys don’t want to be the one to buy at the top of the market,” he said.
One rental that will likely get much attention is the Moinian Group’s Sky at 605 W. 42nd St., which, at 1.2 million square feet, will be the city’s largest residential building.
Mitchell Moinian, of the Moinian Group, believes the building will raise the bar for rentals.
“We’ve programmed the building to the nines, with everything under the sun: three swimming pools, indoor and outdoor; hair and nail salon, one of the largest health clubs; pilates, yoga, basketball court,” he said.
6. Hello Kingsbridge, Elmhurst and Sheepshead Bay?
As buyers have become more price conscious, expect them to look to neighborhoods like Kingsbridge and Grand Concourse in The Bronx and some “less loved ones in Queens and Brooklyn,” like Elmhurst and Jackson Heights or Sheepshead Bay and Brighton Beach, said Doug Perlson, of online brokerage Real Direct.
“These are places that are commutable," he said. "They may take longer to get to Midtown, for sure, but they have a lot of new development or tight-knit communities that [buyers] find appealing.”
7. Affordable housing will get more creative.
If the de Blasio administration’s mandatory inclusionary housing and zoning for quality and affordability plans pass, expect an uptick of creative designs for affordable housing, predicts Claire Weisz, founding principal of WXY Architecture + Urban Design.
“With designers having more leeway on the details of the form and affordable housing units being required on site, that should mean that both architects and developers will adapt their ideas to a greater variety of sites in more neighborhoods than before,” said Weisz.
She also envisions better uses of ground floor spaces including more opportunities for live/work set ups.
8. And more developers will try to build affordable housing.
Affordable housing will be where a lot of the work is, believes Paul Travis, managing partner at Washington Square Partners, a real estate development and advisory firm that is working on City Point, a large scale mixed-use development rising in Downtown Brooklyn.
“Probably every developer in New York is trying to be more competitive in the affordable housing world because it’s going to be a lot of the work going forward,” Travis said.
9. Baby boomers flock to the city.
Dottie Herman, CEO of Douglas Elliman, has seen an increasing number of boomers deciding not to keep their “big house my kids grew up in” and instead follow their kids to the city.
“They are not retiring, and if they do go to Florida or some warm place, they don’t go full time,” Herman said.
Jeremy Swillinger, of the Level Group, is working with at least four clients right now who live in the tri-state area and want be near their children just out of college moving to the city for work.
“Once that last year of college tuition is paid off they ask, 'What are we going to do with that money?'" Swillinger said, noting they are renting here to test the waters.
10. But the suburbs also have their day.
As affordability issues continue to plague the city, families will continue leaving for the suburbs, which have already seen an uptick in activity, Miller noted.
“I think we’ll see more condo development and sales activity in the suburbs as people want to be in the New York City area,” he said.
11. Next best thing to the ‘burbs?: Long Island City
Swillinger, who lives in LIC, said that a lot of renters want to stay there and the area is only getting more appealing with additions like Silvercup Studios $1 billion expansion, the Cornell Tech project going up on Roosevelt Island and an additional ferry stopplanned for Hunters Point.
12. Ferry transit provides boost to waterfront neighborhoods.
Even though the city’s expanded ferry service isn’t expected to start until 2017, targeted neighborhoods, including Astoria and South Brooklyn, may already seize on the promise of new transit.
The Rockaways could be in for a new lease on life underneath its aging abandoned Rockaway Rail, Weisz said, "making it better for walking and biking."
Her firm is also working on the “Brooklyn Strand” plan to knit together the area from the existing Fulton Ferry landing, with the spaces under the two bridges through Downtown Brooklyn’s Borough Hall.
13. Everybody wants some outdoor space.
Architects like Jorge Mastropietro are figuring out how to give a slice of the outdoors to as many tenants as possible, whether through private terraces, shared roof decks or communal backyard herb gardens.
“Everyone has green,” he said a recent four-story, four-unit building he’s doing in Gowanus.
Developers are also expressing more interest in an open approach to their lobbies, roofs and outdoor space they can find, Weisz said.
14. Energy efficient homes are all the rage.
As new technology, materials and products bring the costs down for energy efficient buildings, a growing number of architects and developers are creating buildings that use less energy, including those that follow “passive house” standards — when buildings are super-insulated to lower heating and cooling costs while pumping in fresh air.
“The passive house movement is becoming more accepted,” said Gita Nandan, an architect with thread collective, who has been working on many such projects.
15. Hot amenity: private dining and living rooms.
The most important amenities are those that help residents extend their living space, Sukenik said.
TriBeCa’s luxury tower at 111 Murray St. may have gotten attention for its private jet concierge services and a spa with a hammam-like Turkish bath, but the real selling points are the building’s spaces that residents can reserve for private parties: its dining with a full catering kitchen and living room with fireplace, said Sukenik, the listing agent for the building.
“People really want to have their lifestyle respected and catered to,” he said.
16. The home takes on a new focus amid chaotic world events.
When the world seems more unstable and dangerous, in the face of recent events like the shootings Paris and San Bernadino, “someone’s home becomes much more important to them because it’s safe,” Herman said.
People focus more on their homes during these times, she believes.
Expect to see more home improvement apps geared toward interior design andrenovations.
New Yorkers may want to do less traveling, so the local second home market may get a boost, Herman said.
WOR Radio (12/21/2015) - Tipping During The Holidays
Level Group Agent, Jeremy Swillinger shares holiday tips on WOR Radio.
Listen Here : https://clyp.it/cuxs11kb
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The Real Deal (10/01/2015) - Buyers 'falling' all over each other
The residential market is back from its summer break, and buyers and sellers who linger too long — or at all — could be left behind.
Just how quickly are units going?
The average Manhattan pad spent just 73 days on the market during the quarter that ended Sept. 30, according to new data from real estate appraisal firm Miller Samuel. That’s down more than 20 percent from both the prior quarter and the same quarter in 2014.
“If a property is priced well, it sells pretty quickly,” said Brown Harris Stevens’ Lisa Lippman. “I am still seeing bidding wars, up to 10 percent over [the] asking price.”
Sales picked up after Labor Day. In fact, listings shot up 20 percent as of Sept. 22, compared with the beginning of the month, according to real estate analytics firm UrbanDigs.com.
Warburg Realty President Frederick Peters confirmed he saw a spike in inventory last month, as sellers who were waiting for the fall market decided to list their properties.
“One of the benefits of the stock market thing,” he said, referring to the turbulence of late August, “has been that sellers are, by and large, more realistic. A certain number of [properties] are getting listed at prices where they are getting absorbed quickly,” he added. That’s a contrast to overpriced units that were hitting the market over the past few years.
On the buyer side, demand hasn’t waned, said Jeremy Swillinger of Level Group. “There are still so many folks who’ve been looking to buy an apartment over the last eight to 12 months.”
But to do so, Swillinger said, buyers will have to pull out all the stops.
Nearly 54 percent of sales during the third quarter, for example, sold at or above the listed price, Miller Samuel data show. And, 51 percent of sales were cash purchases, up from 43 percent a year ago. Overall, the median sales price jumpednearly 10 percent to $998,000, the second highest since 2008.
With sky-high asking prices, the $3 million-and-under segment is moving the quickest.
According to research from Compass, more than one-third of units priced $1 million to $3 million were sold within 30 days during the third quarter. On the Upper West Side, 42 percent of all listings also sold within a month of hitting the market, and 36 percent of two-bedrooms citywide likewise flew off the shelves.
BHS’ Lippman said the market for properties $5 million and under is moving quickly, because buyers are well educated and know what they can get for their money. “They’re not going to wait. They don’t want to miss it,” she said. “If it’s the best they’ve seen in their price range, they pay the asking price or more to get it.”
Since Labor Day, Lippman has done six deals and all went over the asking price, she said, including four properties under $5 million. For example, she recently represented the seller of a two-bedroom unit on Fifth Avenue asking $3 million. Her client got multiple offers, and within two weeks signed a contract with a cash buyer offering $3.4 million.
Not surprisingly, the competition is even tougher on the lower end of the market. Bond New York’s Carlos Santos said he had a client lose a bidding war recently after offering $1.29 million in cash for a Park Slope unit asking $1.085 million. “With interest rates unchanged, I expect more of the same in the under-$3 million market,” he said.
So far, uncertainty in the stock market hasn’t diminished buyers’ interest in New York real estate. But several agents said high prices are discouraging some sellers, because they are worried about being able to afford an upgrade. “Sellers are happy about what they can get for their property, said Platinum Properties agent Teresa Stephenson, “but only if they don’t have to turn around and buy in the same market.”
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The Street (09/10/2015) - How Consumers Can Buy Houses in a Booming Market
NEW YORK (MainStreet) —The housing market has been rebounding and the increased competition is leaving the number of available homes scarce in many cities.
Home prices have also risen compared to last year as the number of homes sold rose in all parts of the country except for the Midwest, according to a recent report from PNC, the Pittsburgh-based financial institution. The median sale price for an existing single-family home was $288,300 in July, up from $279,700 in June.
“The housing market continues to gradually recover from the Great Recession, supporting economic growth,” Stuart Hoffman, chief economist for PNC. “Stronger demand and good affordability are supporting home sales and pushing up house prices.”
Many economists are predicting that home prices will continue to increase this year. PNC said prices will rise by 3.7% in 2015 and 2.7% in 2016, down from 6.6% in 2014.
“This year we [saw] inventory continue to grow in August and while overall demand is strong, the trend in median days on market is suggesting that the market is finding more of a balance,” said Jonathan Smoke, chief economist of Realtor.com, the San Jose, Calif. real estate service company. “This bodes well for would-be buyers who have been discouraged by the inability to find a home to buy this spring and summer.”
Consumers who are still eager to purchase a home still have many opportunities left to negotiate a deal within their price range. While it is tougher to buy a house in a tight market, here are some tips to give homebuyers a head start.
Looking for a house in the fall is generally a better bet. Even though there are fewer homes on the market right now, there are “definitely less buyers, so there’s less competition,” said Mark Lesses, a broker with Coldwell Banker in Lexington, Mass.
Buying a Townhouse
Opting to buy smaller houses such as a townhouse might give you more possibilities. Townhomes tend to be more affordable than single family houses, he said.
“There will be people living on one or both sides of you, leading to a more congested living experience,” Lesses said. “In addition, you don't have control over what you can do to the exterior of your home. For example, you usually can't garden or landscape. If you can, it's very limited and restrictive.”
Moving to the Suburbs
If commuting to work daily does not pose itself as a stressful issue, then buying a house in the suburbs could make sense.
“There are quality of life issues on both sides of this conversation,” he said. “It’s more about lifestyle. If you work downtown and live in the city, you're going to have a shorter commute, but your experience of living in the city can be more stimulating to you.”
Having a larger yard is more appealing to many people, so living in the suburbs is not only more affordable, it is also practical, said Lesses.
Look for pockets in various neighborhoods that are starting to gentrify because fewer people will be putting in offers.
“I always recommend buyers look in fringe or up and coming areas of a town because common sense would say that if they are on the verge of becoming more popular and in demand, prices will strengthen and increase down the road,” said Monica Webster, a licensed real estate salesperson at William Raveis in New York City and Greenwich, Conn.
Or look for the least expensive property in a more expensive neighborhood, said James Simpson, CEO of SQFT, a Boulder, Colo.-based company whose app allows sellers to create home listings on hundreds of real estate sites.
“Buy a place you can afford, so that if the market does correct, you can ride it out,” he said. “It always comes back.”
Being able to afford a higher down payment for a house that is on the top of your list means you might beat out offers from potential buyers who have less savings.
Having all of your savings tied up on your house can prove to be an issue if the market hits a downturn or you lose your job, Lesses said.
That's why it's important to get your finances in order.
Obtain a pre-certified or pre-approved mortgage and not just a pre-qualification, because it shortens the approval process, said Webster. A pre-certified mortgage means there is a written commitment from a lender who has verified your income and creditworthiness.
“Most lenders now offer a full pre-approval in which you go through the whole underwriting process ahead of time,” said Bill Golden, a real estate agent with RE/Max Metro Atlanta Cityside. “When you find the right house, the only thing that will need to be done is the appraisal. That will also give you a leg up in the eyes of a seller.”
While a pre-qualification is helpful, it is just an estimate on whether a consumer would likely be able to obtain credit.
If you are sure this is the right home for you, aim to put the first offer in, because “time delays allow other buyers to enter the process,” she said.
Potential homebuyers also need to determine what they can afford to pay monthly, because the tax savings from a mortgage means they could increase their current offer.
“When homes are selling over the asking price, many people are afraid to come in with a stronger offer because they haven’t done the actual math of what owning a particular home will cost,” said Sean Nagy, executive vice president of operations for The Money Source, Melville, New York mortgage loan servicer. “Taking the extra 30 minutes to lookup the property tax rate can mean the difference between putting an offer in at the asking price or actually getting the house by putting in an offer $10,000 over the asking price.”
Renters Who Wait Can Benefit
Buying a house during a tight market could prove to be an expensive endeavor. Staying out of the market might be a good option, because housing prices could level off and decline, said David Reiss, a law professor at Brooklyn Law School in N.Y.
“Sometimes it is cheaper to rent,” he said. “Don’t try to time the real estate market. Look at your needs and what you could afford, and consider if it is a good choice.”
The pent-up demand has made buying a home to be a challenging process, lengthening the “selling season.”
“With such low inventory, homes are being snatched up the day they come on the market or before, and most have multiple offers,” said Golden. “During the winter holidays, you may have less competition, as people tend to be distracted with other things.”
A competitive real estate market dictates that buyers must “get out of their comfort zone” such as being flexible with the closing date, said Jeremy Swillinger, an agent with Level Group, a New York City-based brokerage firm.
“I believe that purchasing a home in a tight market is part art and part science and is really about doing whatever possible to find the right balance that makes the sale terms attractive on both sides,” he said.
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The Cooperative Model (04/13/2015) - Discussing the History of Residential Co-ops and Condos
The idea of cooperative living began in the 19th century in central and northern European countries, and came to America late in that century, sprouting in various forms in parts of New York City. For some residents here, it was a way that building tenants could band together and gain control over their quality of life, such as with the Finnish immigrants who created affordable housing for themselves through numerous buildings in Brooklyn in the first part of the 20th century.
Early on, the cooperative notion also had another, more exclusive side. Co-ops were a way for people to say who their neighbors would be, and a means by which they could keep out those they did not like, for whatever reason. Of course, one could also view such a system as just a way for people to live near those of the same ilk as themselves; to be close to those with whom they have the most in common.
Whether co-ops are seen as empowering and progressive or—as elitist and exclusionary— cooperative living helped build New York and America. Even so, the right to live around who you’d like to live around (while not guaranteed in the Constitution) seems to be a privilege enjoyed by the wealthy. Naturally, they exercise that right as anyone would, if given the chance. This is evidenced by the fact that the wealthiest people in the world are flocking to buy real estate here, especially luxury residences, a recent New York Times story reported.
“If you’re considering buying a residence in New York, you have to consider co-ops and condos,” says Carter B. Horsley, editorial director of CityRealty.com. “If you’re willing to accept a condo, you’ll have to accept an inferior location.”
Still, a co-op is the type of community favored by folks in the city’s most prestigious addresses, and it appears this will be true for some time. The co-ops along Fifth and Park Avenues and Central Park West—those grand residential buildings have elegance and historical and architectural significance but they represent a lifestyle that is unique to New York, too. That style of living is so sought after that, even when the current real estate bubble bursts, those grand dame properties will remain unfazed and their high values intact. Not that it would matter since no one moves from those places, anyway. Or so it seems, to the uninitiated.
The tradition of co-ops here is long and varied. The Gramercy, at 34 Gramercy Park, was built in 1883. The Queen Anne-style, 9-story red brick building is said to be the first co-op in New York City, and was home to stars including James Cagney. It is the oldest continuously operating co-op in New York.
One of the best known of this group of elite multi-family residential co-ops is The Dakota. Almost as soon as it opened in 1884, the turreted building became impossible to live in because everyone wanted to be there. Word had caught on about the building in what was then a far-flung area of the city, and its 65 apartments quickly sold out.
While it might seem that such a prestigious address—it was home to John Lennon and where he was shot and killed, and is still home to many famous people—might be impossible to get an apartment in, that’s not quite right. There are a few apartments at The Dakota currently for sale, if you can afford them.
Similarly, 740 Park Avenue had two apartments available at the time of this story’s writing, but you will need either $29 million or $44 million to dwell in them. Built in 1929 by James T. Lee, grandfather of Jacqueline Kennedy Onassis, the building opened in 1930. The 19-story building’s values have skyrocketed over the years, and in recent years, an 18-room duplex there sold for $71 million.
Like 740 Park Avenue, 834 Fifth Avenue was designed by famed Sicilian-American architect Rosario Candela. It has a limestone façade and Art Deco details. Laurance Rockefeller bought the building in 1946 and converted it to co-ops. Several years ago, Rupert Murdoch paid $44 million for the apartment formerly owned by Rockefeller. In 2010, Charles Schwab bought his apartment there for $27 million.
The Beresford at 211 Central Park West is a luxury 23-story prewar apartment building that was one of the famous structures designed by architect Emery Roth, who designed The El Dorado, The San Remo, and The Ardsley, also. The El Dorado, at 300 Central Park West, is an Art Deco–style building that opened in 1931
The Century at 25 Central Park West, is a circa-1931 Art Deco building. The 29-story building was bought in 1982 by an investment group that wanted to turn it into a co-op and sell it back to the occupants. A legal battle ensued between the two sides, ultimately leading to an agreement in which 229 units of the 410 units were sold to the renters, at less than market prices. Some apartments there now are valued at more than $20 million.
While the group of aforementioned buildings is comprised of prewar structures, 740 Park Avenue was among the older structures (including 960 Fifth Avenue and 998 Fifth Avenue and others) that were converted from rental to co-ops in the 1950s and 1960s. The conversion really made sense for these residences, since they were originally laid out for the wealthy.
“Ninety-five percent of the prominent buildings have a layout that includes maid’s quarters,” says Jeremy Swillinger, a licensed real estate salesperson for Manhattan brokerage firm, Level Group.
Middle-class and lower income co-ops sprung up in the outer boroughs too. Sunset Park in Brooklyn is where Finns built about 25 cooperative housing complexes. The first Finnish-built co-ops in Sunset Park, named Alku I (Beginning I) and Alku Toinen (Beginning II), date back to 1916 and are the oldest nonprofit co-ops in New York City.
There are also many labor cooperatives established that provided housing for their workers. A union leader in the early 1900s, Abraham Kazan is known as the father of cooperative housing in New York City. The Amalgamated Housing Cooperative, an apartment building in the Bronx, was built between 1927 and 1930. He founded the development, presided over it for 40 years, managed it for 30 years, and lived there until he died. Other co-op developments sponsored by trade union organizations also sprung up, namely the Hillman Houses, the East River Houses and Seward Park Housing.
The Other Half’s Lives
The most exclusive co-ops, with gloved doormen, spacious public dining-rooms and other amenities, are hard to elevate yourself to, unless you’ve done extremely well. Even then, these buildings’ boards know if you are one of them or not.
“In a co-op, the board has to know who you are… For some of them, you have to be worth at least $100 million,” Horsley says. “The best buildings in the city are co-ops.”
You may be rich and you may be famous but even so, you may not be for the boards of such residences. The “Material Girl” learned this real estate lesson the hard way. In 1985, 26-year-old pop star Madonna was rejected by the San Remo Tenants Corp. from buying a $1.2 million, 12-room apartment at the San Remo. The board gave no reason for the decision, but a newspaper article mentioned one: “The woman selling the apartment, and the agent hoping to engineer the sale, hinted Thursday that Madonna’s image may have put off board members.”
Be it 740 Park Avenue or 998 Fifth Avenue, or one of the other, rarefied properties so sought after, people want in not just because of their architectural style and significance, or because of their spacious apartments and amenities, or their location (all of which are, of course, important), but most of all, because of their exclusivity.
“It’s like joining a private country club—from the financial aspect to the social aspect; the board wants to know who you are. [Prospective buyers] have to give references, personal and business contacts, tax records, and [reveal] their portfolio,” Swillinger says. “Those who live there are the 1 percent of the 1 percent.”
In addition to personal and business references from friends in the neighborhood, boards of such exclusive residences expect a buyer to disclose tax returns and other assets, including real estate assets they own. Some boards require that the would-be buyer have two times or three times the apartment purchase price (or more) in liquid assets.
Additionally, there is a personal interview any buyer must perform with the board. Even with all of the other requirements nailed down and with a stellar interview, however, a buyer might not be approved. Sometimes, there are kinfolk to be considered by the board, too. We are talking about the four-legged kin.
It is not unheard of for some boards to actually interview the prospective owner’s dog or cat before allowing the buyer to own the apartment (or before rejecting them).
But who can predict how his cat, or his dog will act on the day he has to behave for the co-op board? The prospective owner had better be able to predict that the canine or feline will be well-mannered, or they both could lose their chance to live in one of America’s most prestigious addresses.
Some breeds, however refined and urbane the individual dog, may just be seen by some boards as poochie non grata. Rottweilers are one breed that is said to not be wanted in certain residences.
Other requirements to be a shareholder might appear excessive to an outsider, rather than being the person on pins and needles hoping to be OK’d by the board. The requirements might even seem intrusive.
“There are some boards that ask for a criminal background check; some ask for a specific outside agency to check out who you are, going 10 to 15 years back,” says Jacky Teplitzky, a top broker with Douglas Elliman Real Estate. “In recent years, we have had a huge problem with trusts. Most of these boards will not allow you to buy the apartment as a trust. They do not want anybody automatically getting the apartment because someone passed away.”
And they don’t want anyone automatically getting an apartment because of some sort of artistic kismet that would make a good headline, like: “Diva sells apartment to younger diva.”
So when Barbara Streisand’s penthouse at The Ardsley went up for sale in 1999, Mariah Carey wanted to buy the apartment. But despite her fame (or because of it), Carey was rejected by the building’s board. Since each prospective buyer in a co-op is vying to become a shareholder, the board can accept or reject them and not give a reason why.
It is a seemingly ironic process, since these apartments are publicly offered and even offered for sale internationally, and after all, must be sold to someone. Yet the decision on whether or not to accept a prospective owner, and why the decision was made, is closely guarded and private.
These boards are reluctant to let just anyone in, even for a showing of the apartment. In many of these buildings, showing an apartment must occur during business hours; often, escorts are needed to accompany guests to and from the apartment. Some building boards require showings to be by appointment only.
There is actually a lot at stake, including the reputation of the landmark, the value of the property, and the peace and comfort of the residents. With astronomical monthly maintenance payments in these buildings, the shareholders can afford to be picky about who they choose to have as a neighbor, as well as how they want to run their building. A 2-bedroom, 1,800-square-foot apartment in one of these landmarks (such as The Dakota) could have a monthly maintenance fee of $6,700. Or at 740 Park Avenue, a 5-bedroom apartment might have a monthly fee of $10,000, Swillinger says.
While ownership preferences and new development are shifting to condos, partly because using such a property as an asset on which to speculate and sell later for a profit is smart, and also since all of the new state-of-the-art condos available make it easy to do so. Still, the types of buyers who are looking for the old school, upper crust co-ops are the ones who’ve always wanted them; folks from the same set as those who live in the venerable old buildings.
“There is a niche of younger folks that want to be in the prestigious Upper East Side buildings. A lot of them want to move to where their families still live,” Swillinger says, adding that very high net worth individuals always want to live in such residences.
Teplitzky distinguished between the buildings that are more social and whose boards put a lot of emphasis on a buyer’s pedigree and who the buyer knows, versus other buildings, where the transaction is about the money. Clearly, both forces are moving the market.
“These buildings are extremely difficult to get in. They are like a private country club. The problem is, you can be a billionaire and not necessarily be accepted by a board,” Teplitzky says.
With admission to that club, comes adherence to its rules. Many of these buildings have summer work rules, whereby renovations that are not emergencies must be done only in the summer. Many of these buildings also require that 80 percent of the apartment must be carpeted. Others have limitations on the number of pets a resident can have, and restrictions on the weight of the pet, as well as requirements that pets must enter and exit the building via the freight elevator.
While the residents (and therefore the boards) of such buildings would seem to be naturally conservative types, the financial crisis of 2008-2009 made many of them even more conservative. Cases like Madonna and Mariah Carey are the reactions of conservativism, since the people who live in these buildings don’t want the added attention that such celebrities invariably bring to their neighbors’ lifestyles. Change may be coming, though, wrought by market forces beyond the control of any board.
“The new generation of buyers, in their 40s, is looking for other amenities, like gyms and children’s rooms. Some of these traditional co-op buildings are still old buildings—they are trying to convert some basement spaces into gyms,” Teplitzky says. “I think that eventually they will need to be a little looser on their rules, because all the new pricier buildings are condos. People want to have the ability to sell a saleable asset.”
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