Is There a Curse on DJ AM’s One Kenmore Square Apartment?
Manhattan Real Estate: DJ AM
For everyone who loves celeb real estate and scary stories, on a somber note, DJ AM’s (Adam Goldstein) former condo at One Kenmore Square is on the market. Its asking price is $1.795 million- Goldstein paid $1.995 million. In case you are curious, the 1,147 square-foot condo is located in an Andre Balazs property on the border of Soho/Nolita . While living there, Goldstein combined the two bedrooms (see floorplan) into a master-bedroom complete with sitting area and desk.
Goldstein died last August of an accidental drug overdose in his apartment. The only other owner of the apartment previous to Goldstein died in a motorcycle crash, also while living in the unit… Curbed is asking if there is a curse on the pad? If I was your broker, I wouldnt stick around long enough to find out. Too many issues for my clients!!!
Manhattan Real Estate: Clubbers Find A Home in Chelsea’s Ohm
“…what we have here is a well-guarded luxury stash house in an isolated and anonymous location that’s also somewhat near a very active nightlife destination. Gee, who’d be interested in that?” – Curbed.com
Ohm
Where could they be referring to, you ask? The 34-story far west side luxury redevelopment project: Ohm. While the surrounding redevelopment is slow going, Curbed sites the New York Times reported that a new sales pitch is linking Ohm to the West Chelsea club scene. Repeat: The pitch is that “this is not Midtown West — this is Chelsea.”
Apparently the Knitting Factory is booking bands to play bi-monthly, resident-exclusive concerts in addition to DJ’s, karaoke and open mic nights.
But who is going to move there? Clubbers. Lots of them. Squeezing into pricey apartments going for $3,600 per month. They even plan ahead to make sure your stuff is secure in your very own apartment safe.
“You may trust your friends and roommates, but you don’t have to. And every medicine cabinet has a keyed lockbox for pharmaceuticals. Viagra, Vioxx, Vicodin — nobody needs to know but you,” says Jeffrey E. Levine, the chairman of Douglaston Development.
One more time:
“So what we have here is a well-guarded luxury stash house in an isolated and anonymous location that’s also somewhat near a very active nightlife destination. Gee, who’d be interested in that?”
The Hamptons and North Fork, a ten year market report
The Hamptons and North Fork housing markets continue to hold their own, seeing the same trends as New York City. Though they have stabilized, just as Manhattan, the markets are seeing a year over year decline in prices. The median sales price in 2009 fell 10% to $675,000 from 2008 but more than doubled over the past decade and the market saw a surge of activity at the end of 2009. Here is a snapshot of the 10 year numbers for the Hamptons and North Fork. For the full report you can visit the Market Report Directory at Prudential Elliman.
Manhattan Real Estate: The Sweet Spot and January Sales
Brokers are all taking calls again. The discounts out there are working- not enough to raise prices, but enough to generate sales. Some of it is the bonuses and some of it is just the ripple effect of people thinking they need to buy before the people with bonuses do. Some of it is a returning sense of confidence. Some of it is that people think the market may have hit a pricing bottom and they don’t want to miss out on the best pricing.
Image from New York Magazine
New York Magazine quotes some telling Streeteasy numbers:
- 122 Manhattan properties priced between $1.5 million and $5 million went into contract between December 15 and January 15.
- That is up 171% from the same period a year ago.
- Properties between $2 and $3 million account for more than 1/3 of those contracts- the sweet spot.
Sales up year over year in January? That’s a welcome shift. There isn’t enough activity to make prices go up across the board, though, reinforcing the importance of pricing in a down market.
Manhattan Real Estate: Adapting to Change Reflected in Increased Sales
Manhattan Real Estate 4Q 2009
2009 was a new era in New York Real Estate and buyers, sellers and real estate professionals have slowly adapted to the changes. We have seen the adoption of stringent, if not irrational mortgage underwriting to combat the irrationally lenient mortgage underwriting of the years before. We have seen layoffs, elevated unemployment, lower compensation, sharp real estate price corrections and a shadow inventory of new developments. We have discovered first-time home buyers’ tax credits, rising foreclosures, expanding marketing times and a host of other challenges. Welcome to the 4th quarter of 2009 market report.
While the increased level of sales in the fourth quarter of 2009 was encouraging, longer marketing times and larger discounts shed the harsh light of reality on those encouraging statistics. What that suggests is there is a buying public signing contracts but sellers have to concede on price to reach those buyers otherwise their apartments will sit on average 204 days. A true sustainable housing recovery is still hurtles away and will be marked by a meaningful decline in unemployment and greater consumer access to credit. With that said the below report is a marked improvement from a year earlier.
4Q Market Report Highlights
- The number of sales increased over the prior year quarter as inventory fell. There were 2,473 sales in the current quarter, up 8.4% from the 2,282 sales in the prior year quarter and up 10.9% from the prior quarter.
- The median sales price of a Manhattan apartment was $810,000 in the fourth quarter, 10% below $900,000 in the prior year quarter and 4.7% below the $850,000 in the prior quarter.
- Average sales price fell to 12.7% to $1,296,156 from the prior year quarter and down 2.1% from $1,323,462 in the prior quarter.
- Price per square foot was $1,051 in the fourth quarter, down 11.2% from the prior year quarter result of $1,183 but up 5.5% from the prior quarter result of $996.
- The average days on market was 204 days in the fourth quarter, up 28.3% from the prior year quarter average of 159 days and jumped 22% from 167 days in the prior quarter. Since this metric is based on closed sales, it includes properties that entered the market in the first half of 2009 that languished until the number of sales surged in the third quarter.
- The return to more normal historical levels of sales activity was reflected in the decline in inventory levels. There were 6,851 active listings at the end of the quarter, a 24.6% decline from 9,081 listings in the same period a year ago, but down 18.3% from 8,389 listings in the prior quarter.
- Listing discount—the spread between the list price at the time of contract and the contract price—increased to 12.8% in the fourth quarter from 7.3% in the prior year quarter and from 7.6% in the prior quarter.
Manhattan Co-Op Market
- The median sales prices of a Manhattan coop was $630,000, down 8.4% from the prior year quarter median sales price of $688,000 and 2.9% below the prior quarter median sales prices of $649,000.
- The average sales price was $1,005,744, down 13.4% from the prior year quarter average sales prices of $161,302 and 5.9% below the $1,068,726 seen in the prior quarter
- Price per a square foot was $866, down 5.6% from $917 per square foot in the prior quarter.
Manhattan Condo Market
- The median sales price of a Manhattan co-op was $630,000, down 6.7% from the prior year quarter result of $675,000 and unchanged from the prior quarter.
- The average sales price was $975,049 in the fourth quarter, down 19.6% from the prior year quarter, down 19.6% from the prior year quarter average sales prices of $1,213,382 and down 3.1% from $1,005,744 in the prior quarter.
- Price per a square foot was $921, down 13% from $1,059 in the prior year quarter, but up 6.4% from $866 in the prior quarter.
Manhattan Luxury Market
- The median sales price was $3,780,000 in the fourth quarter, 8.5% below the prior year quarter result of $4,132,516 and 3.2% below $3,905,000 in the prior quarter.
- The average sales prices was $4,863,673 in the current quarter, down 12.5% from the prior year quarter average sales prices of $5,559,502 and essentially unchanged from the $4,881,561 average sales price of the prior quarter.
Manhattan Real Estate: One Beacon Court Apartment and Anna Wintour’s Preservationist Concerns
One Beacon Court
Manhattan celebrity real estate is in a constant state of change. In 2007, Johnny Damon sold his three bedroom at One Beacon Court, the one with the amazing Manhattan skyline and Central Park view, for $8 million, having bought it for just over $5.5 million. Curbed wrote this week that the 2,100-square-foot apartment is back on the market with an asking price of $8.9 million. Looks like we have some sellers doing some wishful thinking.
Anna Wintour and 178 Bleecker Street
At the same time, Vogue editor Anna Wintour is raising preservationist concerns in Greenwich Village. According to Curbed, Wintour recently wrote a letter to the Landmarks Preservation Comission about the planned eight-story development at 178 Bleecker Street. The new development will include a jazz club/cabaret, an art gallery, and six apartments. Wintour’s letter described the development as “totally out-of-scale” and “inappropriate.” While some are applauding her preservationist approach, there is talk that her motivations are more self-interested. The proposed development could block the light for a private garden she and other nearby townhouses share. The Department of Buildings has expressed concerns to developer John Wu about the height of the building in the past, so it seems that questions and pressure are mounting.
Tishman Speyer Properties and BlackRock Realty Default on Stuyvesant Town and Peter Cooper Village
It’s one of those where you can’t look away. Stuyvesant Town and Peter Cooper Village were the biggest apartment complexes in Manhattan and they attracted the biggest money- their 2006 sale was for $5.4 billion and everybody wanted in.
But that was 2006. The most recent appraisal put the value of the two complexes at $1.9 billion. On January 8, Tishman Speyer Properties and BlackRock Realty defaulted on $4.4 billion in loans, walking away and handing over the keys. They aren’t the biggest losers, though- while they each stand to lose initial investments of $112 million, there is a laundry list of high profile investors who are being hung out to dry as the deal falls apart, according to yesterday’s New York Times article.
Tishman Speyer and BlackRock have defaulted on Stuyvesant Town and Peter Cooper Village
Tishman Speyer Properties and BlackRock Realty
The plan was that Tishman Speyer and BlackRock would replace rent-regulated residents with new tenants who could pay higher market-rate rents. First, apartment tenants didn’t convert as quickly as planned, and then in 2008 rents began to drop all over New York. Their rental income did not cover the monthly debt service.
The Times says that Calpers and Calsters (two California pension funds) are losing hundreds of millions, the government of Singapore looks to lose a $575 million secondary loan and $200 million in equity, and the Church of England, SL Green of Manhattan, and Fortress Investment Groups are among other companies, banks, countries and pension funds who stand to lose large investments.
Analysts have been predicting these defaults since last year, and in the end Tishman and BlackRock defaulted on $3 billion in senior mortgages and $1.4 billion in secondary loans. Their problems don’t stop there, though- the highest New York State court ruled last fall that they had improperly deregulated and raised rent on 4,400 apartments. They had to roll back those rents, and the next owner(s) will inherit more than $200 million in rent rebates owed to tenants.
What now for Stuyvesant Town and Peter Cooper Village?
The fallout from this is already messy. Earlier this month several of the secondary lenders sent a letter threatening foreclosure because of the default, but may end up with nothing now that Tishman Speyer and BlackRock are walking away rather than moving into bankruptcy. It may fall to Fannie Mae and Freddie Mac to pick up the pieces. They recently acquired over $2 billion in securities backed in part by $3 billion in Stuyvesant Town mortgages. Fannie and Freddi Mac need to be paid first, but they are not parties to property negotiations.
One recent report from Deutsche Bank suggested that CWCapital will likely wipe out the existing mortgage and attempt to sell Stuyvesant Town and Peter Cooper Village. While the 1940’s Metropolitan Life buildings were built to keep rents low for returning WWII veterans and have long been a haven for the middle class, it is the investors who are stumbling away this time, shell-shocked with nowhere to lay their heads.
Manhattan Real Estate Amenities and Fees Are Rising
That movie screening room, roof deck and pet spa you thought were included in your rental or condo? Check twice, as Manhattan is seeing a new wave of fees and charges for amenities-all those wonderful things that were included just a few years ago are proving a little harder to pay for.
“These days, with the economy being what it is, everybody is trying to be a little creative at trying to generate additional revenue,” says John Janangelo, president of Bellmarc Realty’s property management division, in the Real Deal. That says a lot about where the Manhattan market is right now.
Amenities and Rentals
Fees for amenities at rental buildings have always existed but are now being expanded to include some typically free features. While things like roof decks, pools, fitness centers, party spaces or playrooms were usually included just 5 years ago, many places are starting to charge fees out of necessity.
Some rental buildings appear to be in transition, offering amenities for free for a limited time and planning to start charging for them in the coming year.
The Real Deal notes that 808 Columbus in the Columbus Square complex has an 80,000-square-foot roof deck, saltwater pool, playroom and fitness center. It will begin with a small fee for residents that they plan to increase yearly. Truffles Tribeca has a gym, theater and the Trufflesprivé lounge. 454 Manhattan Avenue in Harlem includes a roof deck, bike storage and other amenities free for one year, rising to an annual fee of $175.
In a down market like this where people are staying sharp for the best deal they can find, raising or creating fees may be necessary when buildings need the money, but they can also make renting or selling a property even harder.
Amenities and Condos
It’s normally assumed that monthly common charges cover day-to-day expenses and include amenities- that is becoming less common as buildings find they can’t cover their operating costs. There are a myriad of reasons, none new but all more acute: units are going unoccupied, tenants are unable to pay, inexperienced developers inaccurately estimated costs, sloppy construction during the good times is up for repair. Josh Guberman of Core Development Group is quoted as saying, “What we’re seeing a lot of is new developments starting out years one or two at 20 to 50 percent above the [cost] projections.” Wow.
Condos without enough money need to raise amenity fees, raise common charges, or mimic the co-op “flip tax.” Any of these essentially raises the cost of living in the building and makes the apartments tougher to sell, so some condos are moving toward a transfer fee, usually somewhere between 1 and 2%. Some are raising fees for storage units, move-in and move-out fees, or creating appliance fees- certainly the less enjoyable side of being creative.
What effect amenity fees and others will have on specific buildings remains to be seen, but it is certainly a new reality of the market.
Manhattan Real Estate: The Plaza Hotel Sees Dropping Unit Costs and Rising Hope
The down market is affecting prices across the board and even classic historical landmarks like the Plaza Hotel are not immune to dropping prices. They may even be feeling the recession more acutely than other properties, as their value rose after Isaac Tshuva’s $675 million purchase of the hotel and subsequent revitalizing of the property to the tune of $450 million more. After selling out all units sight-unseen, the resale values have been dropping drastically over the past two years. Rebecca McAlpin wrote a timely article for The New York Times about New York’s storied Plaza Hotel that digs into the dropping property values and reasons for hope.
Manhattan Real Estate: Spotlight on the Plaza Hotel
In 2004, all 181 units sold sight unseen for a total of over $1.3 billion. If you remember, prices were high enough that firms were separating sales figures from the Plaza because they skewed the market. The idea was to create a luxury condo tower for the world’s wealthiest tenants with a collection of high-end stores and restaurants below them. The market has not played nice. The emblematic Palm Court Hotel has been closed since December of 2008 and the last 11 luxury condos have sold at a loss. Unit prices are dropping dramatically, and the article lists losses on recent sales from over $700,000 up to $8.5 million. And 9 of the 28 apartments in the Plaza currently on the market have drastically cut their asking prices.
Plaza executives see reasons for hope, though, noting that both unit costs and event bookings have followed general trends and 2010 is looking good. Occupancy rose to over 90% in December of 2009, indicating that people are buying the units. The Plaza is predicting a 30% rise in wedding bookings for 2010 and they earned their first ever 5 Diamond rating from AAA.
In the end, the Plaza Hotel is a tale of what happens to a property that went big at the height of the real estate bubble. High hopes and high prices dropping in a volatile market.
Will Eloise still be proud to be at the Plaza? Only time will tell that story.
Manhattan Real Estate: Pricing in a Down Market
Manhattan Real Estate: Pricing in a Down Market
Half of what makes a successful agent is the ability to price a home effectively. According to the 4th Quarter market report, the listing discount from the final asking price of a Manhattan apartment is 12.8%. Too many properties will pad their asking price- the secret is to use listings in contract to guide your pricing. From there a good negotiator will leverage the offers to get the price you deserve, even in a down market.
Conventional wisdom says that because buyers are submitting offers that a seller could construe as a low ball, the seller should pad the price- that way the buyer can feel victorious that they successfully negotiated and the seller knows they took home their number.
Pricing in a Down Market
But that’s not how it works. Conventional wisdom is just that- conventional, average. You can make a spectacular sale in a down market- it’s all about the nuance of pricing.
The life of an overpriced listing goes something like this:
It comes onto the market and you get some traffic. There have been people waiting on the sidelines for a unit just like yours. They see your ad in the NY Times and they get excited to stop by your open house. They let you know how nice your apartment is and then you never hear from them again.
Pad the price according to average advice and you’ll have an average sale. Your listing discount will be 12.8%, the average, and your time on the market will be 204 days, the average. You will clean your house for 29.14 open houses. If you’re doing the marketing right and showing your apartment privately twice a week, that’s 58.28 private showings, all because of conventional wisdom.
In NYC there are 6,851 currently active apartments and what that means is that you don’t create the value. The three apartments in your building and the ten on your block create a relative value. The buyer that stopped by your open house may have been telling the truth- he might have really thought your apartment was nice. Not 12.8% nicer than the guy down the block, though.
Slowly over the next several weeks, traffic slows down and then you have to do a price drop. A buyer stops in and sees how long your apartment has been on the market and sees you did a price drop and he smells blood. He puts in an offer but it’s low. Perhaps you take it, perhaps you reject it- but now you are chasing the market and having an average sale.
Spectacular Sale Pricing In a Down Market
The way to have a spectacular sale is to take a leap of faith.
Using listings that are in contract as a guide (remember, a listing in contract has had real buyers recently put their name on the dotted line) price your apartment, from day one, a hair under market. The other listings will look overpriced relative to yours and multiple offers will start to come in.
A good negotiator will know how to leverage those offers against each other, without producing buyer anxiety- a dangerous by-product of a bidding war in a down market that I explained in the New York Times. That pricing will move you from a hair under market to over market. With a good negotiator who understands the market, you net far more than using the conventional, average method that leads to only slow, grueling price drops of death.
Knowing the nuances of pricing in a down market, not just repeating the same, average mistakes of conventional wisdom, will create that spectacular sale and get you the price that you want and deserve.
New York City Rentals : Free Month Incentives and Lowering Base Rents
If you’ve been in the rental market anytime recently, you’ve noticed the talk of net effective rent and the growing prevalence of a free month or two (or three) at the beginning of a lease, and perhaps other incentives like gym memberships. It’s become the reality for hundreds of buildings around the City, with landlords looking to attract renters while trying to level off rent decreases.
Landlords are increasingly offering free months at the beginning of leases, prompting lenders to consider lowering base rent prices
New York City Rentals: Why Offer Free Months?
Landlords dont want to lower base rent numbers, but by offering 1, 2 or even 3 months of “free” rent at the front end of a lease and then amoritizing the savings over the life of the lease, they are effectively doing the same thing. In this market, that is seeming less like an incentive and more like a necessity for doing business.
For landlords, the hope is that tenants will stay on at the base rent price after the first year lease is up in order to stabilize income. With lowering base rents, often not an option because bank lenders have historically not allowed it, landlords are moving toward incentivizing leases and touting the net effective rent rates.
The Real Deal notes, however, that banks may be coming around and realizing that market-rate rent numbers are dropping and that it could be in everyone’s interest to allow landlords to lower base rent rates.
Kevin Ellerton, CEO of Blackstone Properties, explains the situation this way:
“What’s started happening very recently is that the landlords who were dropping rents through lease riders have finally begun decreasing base rents. I take that as a sign that banks are starting to wake up to market reality.”
Net effective rent numbers look great for marketing, but they are a long-term risk for landlords and can get renters into a property they can’t afford in later years.
Lowering Base Rents
Lenders working with landlords to lower base rent rates is the most stable long-term solution for everyone involved, as it keeps cost consistent with market rates and attracts renters who can commit to actual rent prices, rather than incentivized lease terms.
The flood of new incentives will get people into apartments, but it remains to be seen whether those tenants will stay a year from now when that lease is up. The trend by lenders to work with landlords to lower base rent prices, however, has a stronger long-term chance of locking in stable, long-term tenants. Another adjustment to the real estate market after a year of tumultuous change.
Celebrity Real Estate : Lenny Kravitz Soho Condo In Contract After Over 7 years
Lenny Kravitz Finds A Buyer For His Penthouse
Street Easy even calls it “the most luxurious and important property in Soho and in all of downtown Manhattan” after the new renovations and lists it as currently IN CONTRACT.
What Curbed calls Soho’s prettiest albatross Lenny Kravitz’s attempt to sell his duplex penthouse at Soho’s 30 Crosby Street stretches back to the early stages of the last decade, but it appears our long national nightmare may finally be over.
The duplex penthouse boasts 6,000-square-feet of refurbished space, turning it from “a funky bordello befitting a rock star to an airy and pristine loft befitting regular rich people,” according to Curbed. Changes include lightening the previously dark interior and an adventurous new bathtub.
While the sale is hardly a market indicator, it is encouraging to see a high-end, celebrity real estate legend find a buyer. Now how do I get a tour?
Manhattan Real Estate : Ken Friedman and Ace Hotel Speakeasy Jersey Joe’s
Ken Friedman is looking to turn a long-lost space in the nether regions of the Ace Hotel into his next buzz-worthy project- a speakeasy. BlackBook has a great feature article on Friedman’s plans where they talk with him about the new project. Friedman knows a thin or two about creating buzz-worthy spots: if you’ve been to his Locanda Verde spots in both Tribeca and at the Ace or The Breslin at 29th and Broadway, you know what I’m talking about.
Ken Friedman is working on a new speakeasy project in the Ace Hotel at 29th and Broadway
Jersey Joe’s Speakeasy
Said to be looking at a spring or early summer opening, the new speakeasy is said to be pursuing a Tin Pan Alley theme after plans for a dive bar adjacent to the Ace were canceled. According to Friedman, the Ace told him to look around and figure out another place for his dive bar.
“And so I started poking around the hotel, and I discovered what looks like it must have been an old speakeasy or something. I didn’t know exactly what it was, but it was like a place where people used to gather once upon a time.” – Ken Friedman
The space, sounding well-hidden in the depths underneath the Ace Hotel proper, also has direct access from Broadway. Inside they describe “brick arches crest the walkways and industrial, exposed beams keep the whole thing standing.” Beyond that, it sounds like you will find all the corners and hidden spaces you could ever want at a speakeasy, complete with subway noise for underground ambiance.
Jersey Joe’s, as Friedman says the spot will likely be dubbed, gives nods to both James Breslin’s love of boxing and the legendary longest boxing match in history that supposedly took place in the space. Friedman explains:
“[Breslin] built a boxing ring in the basement of the hotel, and the longest boxing match in history was in the basement of the Breslin Hotel, so we may honor of that. This guy ‘Jersey’ Joe Walcott beat somebody, so I was thinking we could call it Jersey Joe’s.”
New York Real Estate Foreclosure
Foreclosure filings went up in all five boroughs for Q1 – Q3 from 2008 to 2009, a total of 14% for all of New York City. While the numbers of actual foreclosures in places like East New York, Jamaica and Ozone Park are still higher, they are rising in higher-priced neighborhoods.
Sarah Ryley of The Real Deal did a great wrap up of the numbers, and notes that foreclosure numbers are rising in more middle-class brownstone and condo neighborhoods in Brooklyn, Queens, Staten Island and the Bronx- and that Manhattan’s quarterly foreclosure rate for the first three quarters of this year are up 108% in 2009, with many happening in the co-ops. With that said, 2008 had almost zero forclosures in NYC so you have to take 108% number with a grain of salt.
The overall trend is that foreclosures are beginning to hit high-end neighborhoods- often the result of unemployment and upside-down mortgages. The Real Deal also quotes Deutsche Bank as predicting underwater loans (market value being less than book value) are threatening to rise from 11% to 77% in the New York metro area by next year. Short sales on homes with underwater loans are not looked upon kindly by banks.
New York Foreclosures and Banks
Rising foreclosure numbers pull property values down when regular home sales end up competing with short sales and discounted properties, posing problems for everyone. Further, second and third lien-holders are freezing bank accounts and garnishing wages when homeowners go into default on a first mortgage.
A new law opens an intriguing option to banks: they can choose to lower the principal owed on a mortgage if the homeowner agrees to split profits on the resale of a property. In theory, this new option, along with the new rules, will entice banks to keep people in their homes rather than foreclose. In a practical move, banks can now be charged by the city for property maintenance as well if they don’t keep the property up.
In addition, the law broadened the requirement for banks to send a 90-day pre-foreclosure notice to all homeowners, as well as requiring lenders to participate in settlement conferences with homeowners monitored by the court. For rentals, banks now need to give tenants 90 day notice for evictions.
The growing number of options and enticements for banks to keep people in their homes through altered terms should have an effect on the growing number of foreclosures, but only time will tell the extent of that effect.
Source: The Real Deal
New York Real Estate 2010
New York Real Estate 2010
Manhattan real estate in 2010 is still a question mark, but there are signs pointing toward a strong beginning of the year and no shortage of indicators and opinions about what comes next. 2009 was a year like no other, and for the end of the year that meant more activity in the market than usual. There were more showings and more closings than is typical for the holiday season, which is good news for the market. Most years the market takes a holiday break to shop for gifts, but this year folks were spending just as much time looking at properties.
Manhattan Real Esate 2010
There are several factors that could push the strong holiday season well into 2010- Wall Street bonuses and the extension of the federal homebuyer tax credit, and a rise interest from foreign buyers all mean there will be people looking to buy.
At the same time, inventory will be back up for both homes and condos. The traditional trend is for people to take a property off the market during the holiday season and list it again after the New Year. Along with returning listings, there is a growing number of unsold development condos. Both of these factors will mean a rise in inventory.
The Real Deal notes that the 2008 holiday season was slower than is typical, coming on the heels of the Lehman Brothers bankruptcy, and that the 2009 holiday season was busier than usual, taking its cues from the sense that there are deals in the market if you can find them. The article is full of quotes from brokers talking about how the viewing activity is up.
Manhattan real estate in the post-holiday market? There is a collective sense that there are still deals to be found, that the market will remain stable for at least a few more months, and that there will be an influx of new property listings, both coop’s and condos.
I look forward to another great year. Happy New Year everyone.
Manhattan’s Shake Shack Puts the Local in the Burger
If you’ve been to Shake Shack then you know- the line around the block is worth it. but did you know they are expanding? Any successful restaurant is going to expand, and in the burger world, that typically means franchising and building the same restaurant model in each new location. For David Meyer and the Shake Shack, on the other hand, the expansion, while still going global, will stay localized and community-friendly.
Shake Shack prides itself and its premium burgers on being part of the community
The New York Times did a great feature on Danny Meyer’s sidewalk gourmet brainchild, and describes going into a Shake Shack as entering “a neighborhood-centered, urban-fantasy version of a burger roadhouse.”
Great visual, and the key take-away is neighborhood-centered. Serving hamburgers to Americans is nothing new- but the way Meyer and his partners do it and their plans to gently expand is.
Shake Shack Expansion Plans
Meyer’s expansion plans are purposefully calculated- they will not franchise- and focused on community and localization. His vision is for new Shake Shacks to become members of the communities and neighborhoods they are built in.
“We hope that each new Shake Shack can become both a citizen of, and mirror of, their communities,” he says.
After 6 years at their flagship The Union Square Hospitality Group location and with a total of 3 New York City locations, they are only now are they pushing for expansion (after resisting countless expansion offers (including one for a reality TV show).
Contrast that with the 5 Guys Burgers and Fries that started franchising in 2003 and has 535 locations nationwide already- it’s obvious that Meyer wants to hold the brand and the vision close. It seems, in fact, that the slow pace is part of the vision.
David Swinghamer, Meyer’s longtime business partner who also handled the growth of Blue Smoke barbecue, says they are looking for maybe 20 non-franchised Shacks along the East coast in 5 years.
Shake Shack Customization
If you’ve been to their locations, you know they play off of their surroundings. The Shack on Columbus and 77th is customized to look like a sidewalk café as it is across from a museum, and the Flushing, Queens Shack sports the former Shea Stadium scoreboard skyline.
A Shake Shack pre-fab prototype runs around $1 million, and Manhattan will soon see new Shacks go up in at least 3 locations: Prince and Mulberry Streets this spring, another on the Upper East Side at East 86th Street near Lexington Avenue, and another in the theater district at 44th Street and Eighth Avenue.
Other locations include the ground floor of a Miami Beach building designed by the Pritzker Prize-winning Herzog & de Meuron and a Shack in Kuwait, to be managed by Alshaya, a local company that also manages Kuwait branches of brands like Starbucks, Dean & DeLuca and Le Pain Quotidien.
According to Swinghamer, “Our focus is not on how many you do. If we can’t do it right? We won’t do it.” Meyer adds that “we will grow as broadly as we can, without losing the quality, the hospitality, the community. And the sense of humor.”
They are taking pieces of the slow-food movement, the widening desire for fresh, organic food and the draw of the gourmet and wrapping them in localized, human experience. A fresh approach to the classic burger joint- now excuse me, I think it’s time for me to go get in line.
New York Real Estate Highlights: Madonna, Michael Hirtenstein, Natalie Portman and more…
New York real estate is the playground of the stars, and there is plenty going on right now. Here’s a quick look at the recent highlights in the celebrity real estate world, with thanks to Jennifer Gould Keil’s article in the New York Post where the original dish came from.
- Manhattan real estate sees its share of star power, but apartment 3K at 416 Washington St. and 92 Laight St. soundss immune to the allure of celebrity when it comes to business. Natalie Portman reportedly tried to rent a condo at The River Lofts in TriBeCa for 3 months but was turned down as the owner only wants to sell. MSNBC anchor Rachel Maddow and other prospective tenants for the $1.495 million property would also be sharing the property with actress Meryl Streep, model Karolina Kurkova, Niche Media publisher Jason Binn and actress Gwyneth Paltrow.
- Prudential Douglas Elliman brokered a deal by Miracle NY Properties LLC for an anonymous Internet/ computer superstar who bought a 10,000-square-foot unit on the 17th and 18th floors of Jean Nouvel’s 100 11th Ave. 23-story building for a high tech $22 million. The building is hot, with at least 25 units in contract.
- Michael Hirtenstein is putting his 25 Bond St. property on the market for $50,000 a month after selling his 23 Gramercy Park South townhouse this year, both plays in preparation to move into his new $13.5 million townhouse at 92 Charles St.
- And finally, Madonna is reportedly buying Kelly Klein’s horse farm in Bridgehampton for under than $10 million, possibly in conjunction with another nearby horse farm at 10 Mitchells Lane. Because no home can be built on the property, she may also be corralling a house at 549 Mitchells Lane for the hired hands, owned by Michael Minkoff and listed at $4.4 million. The broker reportedly denied the deal at first and then changed step to say no comment! Now that is the way to gallop into the new year!
Manhattan Real Estate and Swig Equities: When Giants Fall
It sounds like Swig Equities is looking for some hope under the tree this year. It’s hard to watch a successful giant of the New York real estate game fall, but it’s even harder to look away. The well-publicized slide of his real estate ventures saw his Sheffield57 condo go to foreclosure auctions and his offices recently rattled by possible eviction proceedings.
Kent Swig's problems have only grown since trying his luck on the Sheffield57 property.
Swig Equities
Other holes in Swig Equities? The payroll has been a few days late more than once this year. Diesel jeans, Swig Equities’ landlord, served a 3 day notice of pending eviction proceedings. Capital One placed Swig’s 2007 loan on the 140 Williams Street building into special servicing.
“I’m meeting with all his creditors and trying to come up with a global restructuring so he can live to fight another day, like many real estate developers have in the past and will in the future, and we’re very hopeful he’ll be one of those,” Y. David Scharf, Mr. Swig’s attorney, told the New York Observer.
While it’s refreshing to see that kind of loyalty, optimism may help in negotiations but it doesn’t pay the rent. I can only imagine both Swig and his employees are hoping Santa drops by their office this season.
Testwell Accused of Faking Concrete Tests for Major New York Real Estate and Landmarks
Last year it was the cranes- this year the concrete!? The stability of structures New York holds as sacred is now in question- not the real estate market, but the stability of the concrete used to build them.
Testwell Laboratories, in a move that smacks of irony, has apparently “adjusted” or outright faked various concrete strength tests- which makes me question their integrity on two levels! Prosecutors are bringing charges against Testwell’s president and other officials, charging that the lab made up and/ or manipulated concrete and steel test results.
According to the Manhattan District Attorney’s office, the charge is essentially that Testwell used computer models to check project specific concrete strength and then doctored the paperwork as if they had physically mixed the test-concrete and tested it on-site. Additionally, real on-site tests were frequently altered.
It’s good to know that someone is on to these guys- the problem is that over 100 buildings in the city are already built from concrete they tested. A few dozen of their structures have since been tested by the city and declared safe- we’re talking about places like: Yankee Stadium, the Freedom Tower, the Second Avenue subway line, office buildings in Times Square, and the JetBlue terminal at Kennedy. 70+ others remain untested.
Jury selection started last week in the Testwell case. Prosecutors have also charged another concrete testing company and its lab director with falsifying test results for the Sept. 11 memorial, LaGuardia Airport’s control tower and nearly 100 other projects. That company and lab director have pleaded not guilty; no trial date has been set.
Testwell officials and lawyers explain away the charges, saying that customers knew about the computer modeling and that it is proven, and that smoothing over inconsistencies in paperwork is basic error correction and common in the industry. Maybe- but I doubt that kind of argument will “stand up” in court.
“Everybody, I think, is more on edge. But we don’t have a sense, as yet, that there’s been an endangerment of safety,” Cement League lawyer Joseph S. Kaming is quoted as saying. Hopefully that’s the case.
The bottom line is that this puts every construction company in New York on notice and, in slowing down building contracts, delivers yet another sucker punch to the construction industry.
Virtual Office Web sites: The Future for Manhattan Real Estate Listings?
As with any new technology, there is jostling as the traditional adjusts to new options. In real estate, that adjustment is in how and where listings can be found on the Internet, and the impetus for change comes from a new application of anti-trust laws to emerging Virtual Office Websites (VOW’s). A Virtual Office Website allows consumers to view a brokerage’s own listings, as well as those from other firms.
The Virtual Office Website is poised change the New York real estate game.
Virtual Office Websites and the Law
In 2005 the Department of Justice filed a lawsuit against the National Association of Realtors (NAR), asserting that it was illegal for NAR to allow brokerages to withhold listings from VOW’s. Why? Because it hinders competition. Whether you agree with the DOJ or not, they won the case, and now anyone with a registered VOW can post all the listings they want.
Essentially, the agreement enables any firm to register as a Virtual Office Web sites (VOW) with the Real Estate Board of New York (REBNY), pay an access fee, and post listings from any of REBNY member on their site.
Small firms like it because it is good for web traffic and good for business- some large firms don’t like it because they think it will cut into their business and hurt their competitive edge.
I think this certainly is a victory for the consumer. They will be able to go to any web site and see every listing in Manhattan. Every real estate site will be one stop and shop and that could certainly even out the playing field- a small firm will have the same listings as a large one. With that said, customers are used to shopping on sites like Elliman.com, as Elliman already has one of the most technically advanced and consumer-friendly web sites in NYC, and I think that will continue as they develop their VOW technology. Just as people continue to watch ABC, CBS and NBC more than even the largest cable stations, they will continue to go to the largest brokerage firms for their real estate content. This will be contingent, though, on the ability of large firms to to create that content. The business model is changing and content, not listings, might be the driving force to the real estate websites of the future.
How Virtual Office Websites Work
There have been aggregator sites like StreetEasy and Trulia that gather and post information on local listings for years. The difference is that these are third-party sites that end up being comparison starting points for buyers. The new access could lead to a Multiple Listing Service (MLS) for the New York market, the kind of service that many regions around the country already use.
VOW’s, on the other hand, have an opportunity in every listing on their site.
Let’s say Hoch Group was a VOW and we listed properties from all over Manhattan, both our listings and those of other firms. If a buyer is browsing through listings and they find one they like that isn’t ours, they can inquire about it through us and we can be the buyers broker for that deal.
Eventually, acceptance and use of VOW’s could create space for expanded use of Multiple Listing Sites (MLS’s), where a variety of firms voluntarily list their properties alongside those of other firms. That’s would be an even bigger step, but it may be just around the corner.
What’s is certain is that VOW’s will take the Manhattan real estate market one step closer to both level competition and transparency.
How To Buy An Apartment in a Down Market
Manhattan’s Bidding Wars
Bidding wars are back. More than half of the properties on the Manhattan market are listed over current market value. Those you don’t want. But the rest are priced to sell. As a result, all of the serious buyers focus their bidding on the same properties- and those properties end up going for at or very close to their listed price.
How to Buy an Apartment in a Down Market
You bid, you feel good about it, someone outbids you so you bid again, and suddenly your excitement turns to anxiety or confusion over what do do and how to do it.
Here’s the deal: Know what you are willing to pay when you go in. Consider the impact of interest rates on the true cost of the property. Bidding wars do mean you have to act fast and mean it. What they don’t mean is that you have to throw caution to the wind.
Here’s how I put it to the New York Times last week:
“The way we negotiate a bidding war is different now. You want people to feel comfortable with what they’re paying and you don’t want them to put out a number that’s too big and then have them get buyer’s remorse and back out.”
Some of the buyers profiled in that article were all over the place- Just because there are bidding wars going on doesn’t mean you need to act like you’re on your third martini.
Sit back and nurse your scotch- the deals are there. Find the place you love and then bid like you mean it. Be ready to bid again and again, but start low enough that you end up where you’re comfortable. You can overbid because there’s a good chance the place is listed under market, and that means you still get the deal.
Mahattan Real Estate: Stabilizing Rents and Buyers’ Neighborhoods
In the Manhattan real estate scene, some neighborhoods are having far more success than others in selling this season. If you are contemplating buying, that can mean deals. What’s more, rental prices around Manhattan changed very little from October to November, which means the rental market is stabilizing, even if momentarily.
What Stabilizing Rents Mean
If rents are stabilizing, it means two things:
1) That good deal on the rental will still look like a good deal in a few months.
and
2) High occupancy in rentals is a leading indicator that home prices will rise. Usually rentals and sales work inverse of each other. If there are vacancies rental prices go down and it makes more sense to rent rather than buy. If occupancy goes up and rental prices go up, people stop renting and make the investment of home ownership.
In this fluctuating market, knowing that rents are steadying is valuable- and taking their level into account can help you make a good play for you and your family.
Good Manhattan Neighborhoods for Buyers
Matthew Haines, founder of PropertyShark, prepared some great numbers about Manhattan neighborhoods recently- Haines and his team dug into third-quarter numbers to help pinpoint the five areas of prime Manhattan that have been toughest on sellers. They evaluated Manhattan neighborhoods on three major criteria:
1. How long it takes a typical seller to find a buyer there (Manhattan average: 150 days)
2. What is the median-price drop over the past two years (Manhattan overall: 10%),
3. What is the number of closed sales relative to the total number of properties on the market (23%)
Then they went on to evaluate the five neighborhoods where sellers may be most ready to make a deal. Here they are:
1. Chelsea/Flatiron/ Union Square/ Hudson Yards
2. Midtown/Midtown South
3. Soho/Tribeca/Little Italy
4. Upper East Side/Carnegie Hill
5. Battery Park City/Financial District/South Street Seaport
In each of these neighborhoods, properties spend well over 140 days on market, several have seen a 10%+ price drop from 2007 rates, and less than a quarter of the properties on the market in each neighborhood have been closed. (For more details, look at the NY Mag article).
With that said those hot downtown neighborhoods are hurting but primarily in the luxury market. I don’t want you getting too excited and thinking you will get the 2000 sq foot Soho loft you dreamed about for 500K. Most of the pain has to do with properties in the luxury market.
If you are looking to buy in any of these neighborhoods, now is a good time. Bottom line: When the market is weak, prices become more flexible. In those neighborhoods the numbers don’t lie.
First Time Home Buyers Tax Credit in NYC
On November 9th President Barack Obama extended and expanded the first-time homebuyer tax credit . The extension is part of a $24 billion economic stimulus bill that will extend the $8,000 tax credit for homebuyers who are purchasing their first home from the current November 30 deadline to April 30th 2010. It also expands the program to offer a credit of $6,500 to homeowners who have lived in their current home for at least five years and are seeking to relocate.
Who is Eligible
-First-time homebuyers, who are defined by the law as buyers who have not owned a principal residence during the three-year period prior to the purchase, may be eligible for up to an $8,000 tax credit.
-Existing homeowners who have been residing in their principal residence for five consecutive years out of the last eight and are purchasing a home to be their principal residence (“repeat buyer”), may be eligible for up to a $6,500 tax credit.
-All U.S. citizens who file taxes are eligible to participate in the program.
Income Limits
Homebuyers who file as single or head-of-household taxpayers can claim the full credit ($8,000 for first-time buyers and $6,500 for repeat buyers) if their modified adjusted gross income (MAGI) is less than $125,000.
-For married couples filing a joint return, the combined income limit is $225,000.
-Single or head-of-household taxpayers who earn between $125,000 and $145,000, and married couples who earn between $225,000 and $245,000 are eligible to receive a partial credit.
-The credit is not available for single taxpayers whose MAGI is greater than $145,000 and married couples with a MAGI that exceeds $245,000.
Effective Dates
-The eligibility period for the tax credit is for homes purchased after Nov. 6, 2009, and before May 1, 2010. However, home purchases subject to a binding sales contract signed by April 30, 2010, will qualify for the tax credit provided closing occurs prior to July 1, 2010.
Types of Homes that Qualify
-All homes with a purchase price of less than $800,000 qualify, including newly-constructed or resale, and single-family detached, townhomes or condominiums, provided that the home will be used as their principal residence. Vacation home and rental property purchases do NOT qualify.
Tax Credit is Refundable
-A refundable credit means that if the amount of income taxes you owe is less than the credit amount you qualify for, the government will send you a check for the difference.
-For example:
-A first-time buyer who qualifies for the full $8,000 credit who owes $5,000 in federal income taxes would pay nothing to the IRS and receive a $3,000 payment from the government. If you are due to receive a $1,000 refund, you would receive $9,000 ($1,000 plus the $8,000 first-time homebuyer tax credit).
-A repeat buyer who owes $5,000 would pay nothing to the IRS and receive $1,500 back from the government. If you are due to get a $1,000 refund, you would get $7,500 ($1,000 plus the $6,500 repeat buyer tax credit).
-All qualified homebuyers can take the tax credit on their 2009 or 2010 income tax return.
Payback Provisions
The tax credit is a true credit. It does not have to be repaid unless the home owner sells or stops using the home as their principal residence within three years after the purchase.
The www.federalhousingtaxcredit.com site is being updated. Check the site next week for more detailed information on the new tax credit.
Read more: http://rismedia.com/2009-11-08/obama-signs-homebuyer-tax-credit-extension/#ixzz0X7jA9gTl
What to Look For in a New NYC Agent
I regret to announce that next week Kara Barney, one of the Hoch Groups prized agents, will be leaving us and moving to Arizona. Suddenly I am looking for a new agent. This process has started me thinking about what’s important to look for when hiring someone to market a home. I will be looking for someone with experience; my clients are too important to have an agent learning on the fly. New agents are surprised by all the nuances that exist when dealing with buyers, lawyers and the sellers themselves.
Follow up is also key; unfortunately for some unlucky sellers it is the element hardest to measure that most agents lack. In an office meeting last week my teams manager handed out a sheet of statistics it stated, “48% of sales people never follow up with a prospect. 25% of sales people make a second contact and stop. 12% of sales people only make three contacts and stop. Only 10% of sales people make more than three contacts. 2% of sales are made on the first contact. 3% of sales are made on the second contact. 5% of sales are made on the third contact. 10% of sales are made on the fourth contact. 80% of sales are made on the fifth to twelfth contact.” I’m not sure how they came up with those statistics and if a buyer came to visit one of my properties twelve times before they made an offer I would need to debate whether I wanted to do business with them at all. With that said, the chutzpah and organizational skills necessary to follow up with buyers and brokers alike makes all the difference in the world. If I was hiring a broker to sell my home I’d ask, “Do you use a CRM (Client Relationship Management) program? How often do you reach out to the customers and brokers who may be interested in my property?” A great broker will straddle the line between consistent and annoying. Someone who is not interested at all might get irritated but they don’t matter anyway. They were never going to buy the property. The person who has some interest may be reminded of a unit they saw early in their search and may come around for a second showing because that broker was on their game. Of course this only works if the agent is a good talker, friendly and people enjoy working with them. This is another set of qualities that I’m looking for in a new hire. A great agent has the ability to tell the truth to their clients even when it is not easy to present or hear. Part of our job as brokers is to give an objective analysis to the best of our abilities. In this market often there is news that a seller needs to digest but clearly do not want to hear. The ability to couch that conversation and present it gently is one of our greatest services.
Financing A Co-Op or Condo in NYC
There has been a lot of talk in recent months about the evolution of the mortgage markets and the new obstacles buyers and sellers must confront. On the street everything from mortgage contingencies to appraisals have become more complicated. Since we can’t control the banks today we are going to take a look at what we can control, the language of the contract of sale and how it relates to your financing.
Traditional Financing Contingency
The traditional contingency allowed the purchaser to cancel the contract and recover the contract deposit only if they were unable to obtain a commitment letter within a certain amount of time. Once upon a time a buyer applied for a loan, got a commitment letter within a week, the appraisal came in right at the contract price and then a few weeks later the deal closed. This is no longer the case. It is now harder to obtain loans, lenders are less likely to grant loans and therefore more has to be done to protect your interests on both the buy and sell side. Just last week we had a great talk at PDE on the Upper West Side from Friedberg, Cohen, Coleman and Pinkas. They came up the tips below on how to protect your money.
What is a funding contingency?
This eliminates all risks associated with financing and protects a purchaser in the event the lender becomes insolvent, is put into receivership by the federal government and is effectively no longer conducting business.
Sample Funding Contingency: “If the purchasers institutional lender or licensed mortgage broker, through no fault of purchaser, fails or refuses to fund the loan it has committed to make pursuant to the loan commitment letter than purchaser shall:
i. Have the right to cancel the contract and receive the deposit back; or
ii. The original contingency period shall commence again and purchaser agrees to reapply with a second loan application with another lender or a lender of sellers choosing based on the same terms and conditions of the original contract.
How do you protect a qualified buyer who is pre-approved?
Add the Following Conditions to the Traditional Financing Contingency:
i. Subject to project/ building approval
1. Insurance
2. Fidelity Bond Coverage
3. Sublets
4. Sponsor owned units
5. If new construction- percentage of units closed
6. Third party investor approval
7. Interest rate expiration resulting in and excessive rate which disqualifies borrower
Helpful Tips for Everyone
- Thorough review of commitment letters
- Review all conditions listed by the lender
- Satisfactory appraisal
- Satisfactory building project review
- New construction
- Review expiration date of the commitment letter and lock in date of loan
- Purchaser should agree to apply to a second lender if declined by intial lender
- Purchasers should agree to post an amount equal to one years maintenance charges in am escrow account with the co-op
Manhattan Market Reports
3RD Quarter Market Reports
The third quarter market reports were released this week.
In the Manhattan Market the median sales price of an apartment fell 8% from the prior years quarter
The overall median sales price fell %8.4 from the prior years median sales price.
With this drop in price came an uptake in transactions. We saw the market repairing itself ; with a 45.6% increase in sales from the prior quarter. With this jump in sales (it is not typical for the market to jump like that from the second to third quarter) there was a resulting decline in listing inventory. Historically the number of transactions peaks in the second quarter when Wall St receives their bonuses. Due to the current economic climate we are now seeing a peak in transactions in the third quarter and not the second. Elliman explains this as “the unsually low level of sales activity in the first quarter of 2009 appeared to set the stage for a release of pent up demand later in the year.”
Even though we saw a surge in sales transactions this quarter the number of days on market continue to increase. What this translates to is that the apartments that have been sitting on the market for an extended period of time were snatched up this quarter. With this comes a listing discount that is up to 7.6% from the prior years listing discount of 2.6%. We actually have seen the discount in price begin to stabilize as it went from 7.8% in the prior quarter to 7.6% in the 3rd quarter. The days on market is still up from a year ago but we are selling an increase in what is actually selling. This increase in sales with the increase in the listing discount shows that sellers are “meeting the market.” Sellers are more willing to price an apartment to sell.
Gifting Apartments in NYC
The largest single group purchasing apartments in today’s market is the first time home buyer. Often many of these clients are gifted money from family members raising the question “If I gift down payment money to my child; what are the tax ramifications for me?” The Hoch Group set out this week to answer this question and provide you with the answers. Please note that I am not an accountant or a lawyer and you should consult with your accountant or your lawyer before you make any financial decisions.
With gifting, to be clear we first must understand according to federal law what is defined as a gift. According to About.com if you “give jewelry, stocks, real estate or any other type of property to a family member other than a spouse or to a friend and they don’t pay you the full market value and you have no expectations of getting the property back in the future than you’ve made a completed gift that may be subject to federal gift tax.”
Who pays this gift tax?
The giftor; the one giving the gift is responsible for paying this tax. The person who receives the gift does not have to report the gift as part of their annual income.
How much can I give away during my lifetime without being taxed?
Currently you can give away gifts in value up to $1,000,000 during your lifetime without owing any federal gift tax. When you give gifts valued at more than $13,000 annually you have to file a federal tax gift form- Form 709 with the IRS. This $1,000,000 lifetime amount is in addition to the $13,000 a year you are allowed to gift.
If you give more than the annual amount during the year and you file for a gift tax form the remaining amount that is gifted can be taken out of your lifetime gift amount.
For example if you give $15,000 one year and you filled out a 709 for a Lifetime Gift as well only $2,000 that year will come out of your $1,000,000 lifetime gift exemption.
Does that $1,000,000 lifetime amount have to go to the same person?
No that $1,000,000 lifetime amount can be gifted among multiple parties.
How much of a gift can be excluded from taxes?
According to About.com federal law also exempts the first $13,000 of gifts made annually to anyone other than a spouse from the federal gift tax law. $13,000 is an increase from the $12,000 exemption that was available in 2008.This dollar amount is referred to as the annual exclusion from gift tax.
For example if a father gifts his son $12,000 in January and then $110,000 in June; $109,000 of that gift will be taxable and the other $13,000 will be free of tax.
Always consult with your financial advisors and accountants before making any final decisions.
Altruistic Brokers
It is so easy while working in real estate in New York City to lose perspective on the world as a whole. On Wednesday my perspective was put into sharp focus when I was lucky enough to attend an inspiring fundraiser at Pier 40 for Mapendo International . Mapendo is a non-profit organization that works to aid forgotten refugees, cutting though red tape and helping these refugees build a life in America. The highlight of the evening was Rose Mapendo, the namesake of the organization speaking of her journey out of the Congo. She recalled being separated from her husband on her way into internment camps and then later learning of his execution. Rose spoke of giving birth to premature twin boys on her prison floor and having to beg for a piece of Bamboo to break the umbilical cord. Her story was not so different than the stories my grandmother used share about surviving the concentration camps in Europe during world war two. Rose, my grandmother and thousands of others continue to be survivors of genocide.
As I continue to negotiate several deals this week for my listings I am less restless knowing how blessed we are and how much we should be grateful for. I have also made a commitment this week that the Hoch Group instead of giving frivolous closing gifts will now donate money on behalf of our clients to the charity of their choice. Every transaction we do is testament to how lucky we are to live in America and have the freedoms that we take for granted. So instead of a bottle of Champagne or a monogrammed steak knife we all can agree helping feed a family or saving a life is a far more generous gift. The Hoch group is now committed to giving to those kinds of gifts for every deal we close.
NYC Real Estate and Inflation
One year ago this month my phone stopped ringing, today the real estate market in NYC has shown a pulse. In the last month we have seen increased web traffic and a flurry of signings of sales contracts in the normally slow summer months. Overall, according to Street Easy.com there were 838 contacts signed in August, up 27.2% from the same month a year ago. The big question preoccupying everyones minds is whether this upturn is here to stay or only a pause in a bear market that will last for years. David Dreman from Forbes magazine put it better than I could he said, “In the end you can’t obsess over figuring out the answer. Markets are unpredictable. Instead of trying to time the market, think about what is going to happen over the next decade and how you will cope with it. You should be thinking about the purchasing value of the dollar. Central banks, including our not-so-omniscient Federal Reserve, will again fail to take the punch bowl away from the party soon enough, keeping stimulative polices going far past the point when unemployment has turned a corner and the financial debacle is behind us. Treasury Secretary Geithner and Fed boss Bernanke are trapped by politics and events. They make pronouncements downplaying the inflation threat, but inflation will hit like a tsunami within three years, maybe sooner. What do you do to defend yourself? Buy stocks, buy real estate and sell bonds…. If inflation hits hard, the chief culprit of the bear market–real estate–is likely to be one of the best investments in the years ahead. Buy a home if you don’t already have one or a second home if you can afford one.”
I don’t know if he is right or wrong but I will say that interest rates are at an all time low, prices are down 20% and though this recent flurry of residential activity has decreased inventory there are a lot of good apartments to choose from. Obviously I am a broker and I want you to buy but David Dreman is right, inflation will play a part in all of our financial futures and if inflation rises buying a home at a 10 year low with a mortgage rate of 5% is a great financial play.