REAL ESTATE BLOG SAPO

Things are looking up Uptown.

2013-02-12T11:44:00.004-05:00

Its common knowledge that New York City real estate is reawakening. But during this first month of the lucky 13^th year of the 21^st century, several unlikely geographies - the neighborhoods above 96^th street – are apparently leading the march to prosperity. And multi-family investment properties are providing the lions share of the momentum.

The reason? It’s getting way too hot in Midtown.

With Manhattan rents skyrocketing and capital gains taxes poised to rise, established neighborhoods are short on inventory, and long on price. Many so-called ‘ordinary’ New Yorkers can’t even consider Midtown, Chelsea, Gramercy, the Village – or any well-heeled areas.

But with affordable (at least by New York City standards) dwellings in short supply, the gentrifying areas of East Harlem, Washington Heights, and Harlem are looking better than ever. They offer something unique and increasingly valuable: Manhattan without the price tag. And the trend will only accelerate. Northern Manhattan investment property sales soared by 58 per cent year-over-year during 2012, easily exceeding the $1 billion dollar mark. The previous year’s sales didn’t hit $700 million.

Uptown is unique in another respect – there’s room for development. The vacant lots and tumble-down properties that were considered eyesores just a few years ago have become the apple of many an investor’s eyes. Just a few of many recent examples: since New Year’s alone, an undeveloped on Third Avenue in East Harlem has fetched close to four million dollars, and two undeveloped Washington Heights parcels on 163^rd street have been bundled into a $2.5 million dollar deal.

We mentioned in an earlier blog that multi-family real estate now ranks is one of the wisest investment options around. Add in this important update: Trading up – Uptown, that is – may well be the best strategy of all.

Thirteen – and counting on renewed good luck

2013-01-09T15:55:00.000-05:00

Happy 2013. It promises to be a lucky year for the New York City real estate industry.

With the threatened 2012 Armageddon safety behind us, the metro area market is reawakening in a quadruplet of sectors - commercial sales, commercial leases, residential sales, and residential rentals.

Credit the pent-up demand; the growing housing shortage; a small – but appreciable – rise in employment; and some exciting new local projects. Whatever the reasons, there’s an altogether new buzz noted in a spate of recent publications.

To get specific:

· Commercial sales are so solid that a recent study by Pricewaterhouse Cooper US and the Urban Land Institute report ranked New York City as the second most exciting real estate market in the country for this year (after San Francisco). The combined lure of the city’s technology hub, two new subway lines, and many desirable neighborhoods are sparking interest – and spurring development in both the city and the boroughs.

· Commercial leases benefit from the same factors, with the PWC and ULI study predicting that NYC and the country will enjoy “noticeably better prospects as compared with last year.”

In a dramatic example, just days ago 11 Madison Ave., which had been offered for $1.5 billion, was taken off the market by developers who realized that had more to gain by maintaining their lease with Credit Suisse than by selling the structure. As described in the current issue of Crains, the deal show just how valuable prime commercial space has become.

· Residential sales are on the upswing, according to Forbes magazine. The reluctant buyers and sellers of recent years are re-emerging, to find mortgages that remain at historically low interest rates. Yes, financing is still tougher to get than before the bust, but banks are loosening up.

Meanwhile, the pent-up demand for housing is spurring new construction, certain to create a bounty of new jobs – further enhancing the economy.

In this transitional real estate marketplace, cash deals fare the best. But these shoppers, many of them foreign buyers lured by the relative stability of US investments, will further ignite the market. Meanwhile, areas impacted by Sandy now offer uncommon value to buyers brave enough to venture downtown.

· Residential rentals may well be the pot of gold at the end of this rainbow. As Manhattan rents, fueled by the many New York City residents still avoiding property ownership, may well increase by five to 10 per cent. That’s high enough to convince many condo and coop developers to convert back to rentals. Hot neighborhoods from Greenpoint in Brooklyn to downtown Manhattan will benefit from the new crop of apartments.

Every silver lining has a dark cloud.

This one has to do with those rapidly rising rents, which are threatening the affordability of literally all of Manhattan and many of the boroughs.

But the flipside is that owning rental property is more attractive than it’s ever been. Starter apartment are in such short supply that they’re snapped up quickly, making this perhaps the most auspicious time ever to acquire a multifamily or mixed-use building. What could be better than combining home ownership with a healthy investment return.

Thirteen never looked so good!

Taking the multifamily plunge: the water’s fine!

2012-12-10T17:47:00.000-05:00

With all the talk of a fiscal cliff it’s easy to forget another precarious situation that wrecked havoc in recent years: the investment gap. Financial markets rocked, the stock market roiled, and even ‘safe’ instruments became dangerously unpredictable, while more ‘creative’ funds proved to be totally worthless.

Interestingly, there is one time-worn investment that has remained stolid and strong. It’s multifamily property.

Even in troubled times, everybody needs a place to live. And with the uncertain housing market convincing more families to rent, multifamily property is proving to be a powerful renewable investment.

Here’s why:

Those who sat out the housing market have now accumulated cash. They have the means to acquire property and no end of reasonably-priced inventory available. Early movers can avoid the rush, and still negotiate great deals. But this could be a limited time offer.
Having weathered the financial storm, NYC multifamily real estate offers an unusually desirable proposition; an ongoing and increasing rate of return. Not only does an apartment ownership bring in a reliable monthly income but it is one of the few investments that can actually increase in value, given even the smallest improvements. Stocks and bonds can’t be enhanced, they don’t amortize, and the investment has no control over their growth potential.

Having been ultra-conservative in their lending policies to date, financial institutions are itching to reenter the mortgage market. Banks are becoming more confident about the economy, and are eager to serve qualified real estate buyers.

Multifamily building ownership allows an investor to enter the real-estate field while getting paid; it’s the ultimate ‘on-the-job training’.

Over the sweep of time, property value has climbed an average six per cent a year, while many stocks – and the companies they belong to – have lost value or vanished entirely. Long story short, buildings endure.

These arguments represent the very tip of a large iceberg; the many reasons multifamily property is a wise investment. My advice is to take the plunge now. Icebergs aside, the water is amazingly warm and clear!

Houston, TX is coolest according to Forbes. What???

2012-09-13T18:06:00.000-04:00

For most of the eight million people in the New York City metropolitan area, the Big Apple is, always will be the coolest city around. Sadly, Forbes Magazine and Sperlings Best places didn’t get that message.

In a recent survey of cool cities, they actually designated Houston the coolest city in the USA.

The Texas city ranked far, far ahead of New York City, which only nabbed number ten, and outperformed Chicago, San Francisco, Washington, DC, and all the happening places in the Pacific Northwest. They just barely bested several other Texas cities.

When the number-crunchers of Sperlings, a livability rankings organization based in Portland, Oregon, were done, Houston had outperformed every other place in a weighted average that considered job growth, entertainment options, number of recreation and food venues, and green spaces.

Hey. Hold on just a Texas minute.

First of all, NYC and Houston are quite similar in some ways. The Texas city’s median age is 33 (drawing from the same Sperlings statistics), while ours is 37 – hardly geriatric. True, our largest single population group has a few years’ jump on theirs. Our biggest demographic includes people from 35 to 44 years old, while their largest slice of the population pie is made up of individuals between 25 and 34. But that’s hardly revolutionary.

Houston is unquestionably getting fatter, happier, and more prosperous every year. The job growth, a booming oil and gas industry, and a wave of eager young professionals are injecting new life into the city. But nothing can touch the sheer opportunity, entertainment potential, cultural significance, and intellectual stimulation of a New York City. With four times as many people as Houston, and the virtue of a long and storied history, we have a uniquely inexhaustible supply of things to do, see, and talk about. And the best may be yet to come.

Thanks to some amazing recent developments, New York City is poised to take imagination and entrepreneurship to an entirely new level. Our very own Silicon Alley, located between Broadway and Fifth Avenue between Union Square and Madison Square Park, is catapulting the city right into the new century – and sprouting new ‘mini’ Silicon Alleys in Queens and Brooklyn. New public-private partnerships are giving web start-ups and genuinely running start. And those exciting new businesses are attracting new professionals, new funding, new opportunity, and the new housing that’ll keep our innovators comfy, cosy, and close at hand.

Houston may have its 2.6 job market growth rate, but New York posted a 28.7 per cent increase in information technology jobs over the last five years; the stuff that cool is built on. From Shelby.tv, to Tumblr, ETSY, Bit.ly, Foursquare, Socialflow, Food52, and Reddit these places are not only more sustainable than old-and-gas related multinationals, they are downright chill.

So let’s be gracious and congratulate the Bayou City for topping the Forbes list knowing that New York City, the place that gave cool its cache, won’t be cooling its own heels for too long.

What makes world's ugliest buildings ugly

2012-06-04T19:16:00.000-04:00

The eye of the beholder

The Guggenheim, the Chrysler building, the Empire State buildings are among countless New York City structures celebrated for their grace, style, and distinction.

But for every iconic structure there are just as many duds.

Ten of the most unfortunate constructions were recently listed in a Reuter’s news ranking of the world’s ugliest buildings. Among them are several iconic American buildings (including, notably, the Rock and Roll Hall of Fame),

a smattering of Asian sites, and a single location each in Australia and the UK. They range from the downright outrageous (Australia’s crazy-quilt Pixel building)

to the terrifyingly cold (The Royal National Theatre in London). With a thin line dividing the campy from the simply catastrophic, architecture often blame a combination of unfortunate factors for the worst eyesores: excess, ego, and exceedingly bad judgment.

Reuters proclaims the J. Edgar Hoover Building (FBI HQ) in Washington, D.C. as the worst among them.

The poured-concrete stalwart was imagined as a powerful structure, meant to appear as solid as the organization it housed. Since then, most of DC – including the majority of its own occupants- has deemed it destruction-worthy. In fact, the building’s demise is likely if and when the FBI relocates to another headquarters.

Function, structure, and beauty

While ugly comes in many and interesting varieties, though, truly exemplary architecture incorporates three essential qualities: function, structure, and beauty.

Function describes the building’s ability to meet its original purpose (if it’s an airport terminal, for example, does it truly accommodate the planes and passengers well?) Structure is a matter of sheer physical soundness and durability. Beauty, clearly dependent on the beholder’s eye, is harder to pin down.

I’ve always loved buildings that endure and delight – like the Chrysler Building. The pre-war skyscraper tastefully incorporates elements from the 1929 Chrysler (the hubcaps and hood ornaments), without veering into the realm of excess. Even today, almost 80 years after its debut, the Chrysler’s shiny Art Deco ornamentation is graceful and inviting rather than gaudy or garish.

Interestingly, the Reuters list included only one New York City site: Trump Tower at 725 Fifth Avenue.

Once considered the signature building of its time (circa 1983), the Trump is, according to Reuters, “downright dull on the outside, dizzyingly gaudy on the inside,” and “generally only visited by tourists - as it is almost universally avoided by actual New Yorkers”.

Do tell

So if we hate the Trump, who do we love? What constitutes well-executed design – and why? And where, among out many streets and avenues, are the real architectural gems lurking?

Leave us a comment below, and I’ll share some of our discoveries in the weeks ahead. Happy hunting!

Is it good, bad or ....?

2012-05-15T13:30:00.001-04:00

It’s still a fragile real estate world, but the trend is up – in a shaky, unpredictable way.

What that means is that not every segment of the market is experiencing the same return to health in the same way, at the same time, or for the same segments. Those of us in the industry are so busy trying to figure out what it means that we don’t know how it looks to the ‘real’ New Yorkers. That is, once we leave the ‘experts’ behind, do most people sense a boom is coming? Are they still hanging back, waiting on the sidelines – or at their poised to jump back in?

I’m hoping you can help me answer those questions.

Frankly, to me the current situation looks positive - mostly. Sellers are now pricing their residences appropriately, buyers are energized by rock-bottom interest rates, and real estate hiring is on the upswing; all signs of a more robust, raring-to-go climate. But how do we explain some strange inconsistencies?

Take the top tier of the market. Listing prices for super-chic residences seem to set – and break - new records every day. The latest offering is being listed for an eye-popping $52 million. The East Side duplex of the late Time Warner chairman Steve Ross, being sold by his widow , features eight bedrooms, 10 baths, six terraces, and two libraries. If it fetches the sought-after price tag, it will set a new high-water mark for NYC coops.

Still, amidst the chart-topping listings, inventory remains painfully thin. The number of available dwellings is down by 12 per cent from the same period last year. The resulting dearth of options is leaving apartment-seekers – many of whom are just now warily re-entering the market - vying for almost a thousand fewer places than last year. Well-priced apartments sell quickly, but there just aren’t enough around of them around to get the market sizzling.

Still, the real estate industry is apparently quite bullish on itself. The ‘Real Deal’ website recently reported that industry employers are ramping up their hiring efforts. The Director of the Center for Urban Real Estate at Columbia University, Vishaan Chakrabarti, characterized the real estate jobs situation as having “improved substantially from the last couple of years”.

The U.S. Bureau of Labor Statistics apparently agrees. Their statistics auger a 23 percent climb in real estate industry jobs through 2020.

All this brings me back to the future. Clearly there’s growth, but does it indicate a gradual return to pre-recession health or a different kind of market entirely? Is this going to be a spotty – good here and bad there – kind of recovery? Or a readjustment, rather than a full-blown boom? Or is prosperity right around the corner?

What say you? How things look from your vantage point?

Feel free to post below.

Paying premium to live in a green building

2012-04-18T19:21:00.000-04:00

When the Javits Center goes green on April 21 - 22, it’ll come at a perfect time for the New York State real estate industry.

For one thing, the annual Green Festival coincides with the highest gas prices ever recorded for this time of year. That makes Manhattan, which has already nicely weathered the economic storm, even more attractive to people who want to skip the commute.

For another, sustainability is showing up as an attention-worthy amenity - alongside river views and exercise rooms – in New York apartments, condos and coop marketing pitches.

PlaNYC

And, finally, the yearly eco-fest jibes with the findings of the NYC master plan, which suggests that developers, builders and retrofitters should paint the town even greener. The PlaNYC document outlines the ways the city can accommodate a projected one million new residents. It reveals that residential and commercial structures currently generate 75 per cent of the city’s greenhouse-gas emissions. Considering that most of these buildings will still dominate the skyline in 2030, it argues that efforts to cut the city’s carbon footprint should begin soon.

That said, retrofitting an existing building is tough, expensive, and can run afoul of NYC’s 50-year-old zoning codes. Try to add insulation, and you could violate guidelines for floor space. Add a roof garden, and you might exceed the building’s allowable height. Or tack on awnings for shade, and you could broach the building’s geographical footprint.

The old and the new

Some existing structures take the plunge anyway. The 16 story Citizen on West 23rd Street is being renovated by the same folks who upgraded Harsen House on West 72nd Street in 2008. There, they added hot water radiant heat, FSC-certified oak floors, ducted kitchen hoods, and energy-efficient, floor-to-ceiling windows, all according to code.

It’s easier, albeit still pricey, for new construction. Not surprisingly, many new glass-and-steel towers are seeking a LEEDS certification, literally the gold standard for sustainability. One such building is the Helena - 39-sparking stories hugging the Hudson on 57^th street. It ranked among GreenHomeNYC.org’s most energy-efficient structures, alongside the enormous Via Verde project in the Bronx.

GreenHomeNYC, an all-volunteer nonprofit, will field a team at the Javits Center eco-fest, and at the many meetings, seminars and green networking events occurring all over the area. Their mission – to create genuine momentum for sustainability in real estate – is clearly gaining ground.

DO tell!

But the question remains: are buyers and sellers as willing to part with some of their greenbacks as advocates suggest? Would you pay a premium to live in a green building? And, if so, how much more? Five per cent above its plain vanilla counterpart? More?

As a seller, do you find it worthwhile to add – or advertise – green gadgets to would-be buyers?

And which amenities matter the most? Sustainably-sourced building materials or rooftop solar panels? Energy saving appliances or low-water commodes?

Please post your comments or drop me an email, and I’ll follow-up in the weeks ahead with a summary of your comments.

What say you?

The thriving ultra-chic New York City real estate segment

2012-02-21T20:46:00.000-05:00

What does seven million dollars get you? Access to the hottest New York City real estate segment; the ultra-high end market.

This stratospheric sector is on a rockin’ roll with properties “selling for prices not seen since the headiest days of the boom”, The New York Times recently observed. No flash-in-the-pan, this top-tier phenomenon has endured throughout the global financial downturn.

The latest example is the penthouse apartment at the super-chic One57 skyscraper. Initially listed at $90 million, the sprawling abode recently hiked its asking price to $115 million, as I noted in my last blog. The cheapest units in the luxe structure list for around seven million dollars, the figure at which an apartment graduates from there mere ‘lux’ designation to become ultra-luxury.

True to the age-old aphorism - “a rising tide lifts all boats” – top-of-the-line urban palaces have helped establish New York City as a strong and stable real estate haven in a global economy roiled by uncertainty. The promise of a solid return on a livable (and re-sellable and rentable) investment has lured scores of well-heeled foreign investors to the island. It’s also contributed to a general propping up of mid-priced condos which, at $3 to $5 million each, are also increasing their offering prices. In addition, several current reports point an increase in the number of new mortgage applications, accompanied by a decline in mortgage delinquencies.

In the midst of this scenario, Manhattan’s sky-high prices are fetching record-breaking sums, they’re also solidifying New York City’s reputation (at least, among the wealthiest New Yorkers) as a stable and solid investment site. As one real estate executive understated in the February 10^th Times article, “Most people would say that the top end of the market is bulletproof”.

But that still just the tip of the iceberg, in my opinion. The real benefit from all these new developments is reducible to a single word: confidence. People are beginning to believe the real estate market is headed for recovery.

With conviction comes power. Sheer faith in a real estate resurgence wields a strong-enough force to bring at least some laggard buyers back into the marketplace. They also lure reluctant sellers back. More people take action, prompting a virtuous cycle of sales of increased activity. And that, in turn, generates additional optimism. If we are convinced that feel good times are coming, our ‘as if’ behavior helps generate them.

So while we can’t really predict what will happen, we can look at some basic facts and take heart. And they go like this: Manhattan is among the most desirable places on earth. And its still a small, fully occupied space. With about 22 square miles of land (13.4 miles long and 2.3 miles across at its widest point), real estate on the island really represents a limited time offer, and a rare coveted gem – whether you’re buying thousands of square feet of penthouse views, or a cute little pied a terre.

Who needs gold when you’ve got Manhattan?

10-year assessment of New York City’s property market

2012-02-06T19:35:00.000-05:00

Manhattan real estate: Still reaching for the sky

Consider it a towering vote of confidence.

Buyers are snapping up the pricey dwellings at One57, the 90-story apartment building (and hotel) rising above west 57^th street.

Almost a third of these ‘trophy apartments’ have already been sold or are under contract, despite the fact that it’s still 18 months from completion. If the nearly structure’s 11,000-square foot, six bedroom penthouse fetches anywhere near its $115 million dollar asking price, it will be the most expensive New York City apartment sale ever.

Most expensive apartment sale

Nearby, at 15 Central Park West, another recent sale holds the current record. After a mere three weeks on the market, the tower’s $88 million dollar penthouse went to a Russian billionaire seeking a landing pad for daughter, a 22-year old student in Manhattan.

Those are just two of the many recent – and dramatic - signs of New York City’s robust real estate health. Another comes in "The Elliman Report: Manhattan Decade 2002-2011," a 10-year assessment of the city’s property market.

The probe reveals that New York apartment prices increased almost 89 per cent since 2002. Last year, 10,161 properties changed hands, establishing 2011 as the third busiest year real estate sales year of the decade. The 2011 sales represented the most transactions since the 2008 credit crunch. In addition, the listing discount – the difference between the asking and the final sales price - was down to 4.3%, well under the 7.1% of 2010.

True, the average Manhattan apartment remained on the market 127 days in 2011, eight days longer than during the previous year. But that’s just one day beyond the average market days for 2002.

A solid market

It’s no surprise, then, that the report finds Manhattan real estate remarkably stable “even in the wake of the worst financial period”.

New York City property holds its value, recession or not.

Foreign buyers don’t need to be convinced of that. Roughly 20 per cent of the property deals tracked by Elliman during the first decade of the 21^st Century involved purchasers from outside the United States. These savvy shoppers already knew what their American counterparts are now rediscovering; that few investments can offer both a solid nine per cent return, and a great place to hang your hat.

All this has would-be buyer wondering: Will $115 million for a penthouse apartment with double-height windows and a sweeping Central Park vista look like a bargain in a few years?

Q4 2011 Manhattan RE Market Report. Welcome to 2012

2012-01-17T18:23:00.000-05:00

Remember when ‘not so bad’ didn’t seem like a positive? Welcome to 2012.

The New Year brings some pretty good New York City real estate news, and some same old not-so-great stuff. Long story short: while things are generally picking up, the recovery’s pace is maddeningly slow.

That’s the take-away from the Fourth Quarter Manhattan Real Estate Sales summary from Prudential Douglas Elliman. The report documents a modest increase in offering prices for properties in NYC when, as compared to the same period during 2010. Even better, sellers only had to shave 4.9 per cent off the original listing during the final days of 2011, an impressive change from the 8 percent drop they faced during the previous year. Overall, properties remained on the selling block for a mere five more days than in 2010.

At the same time, the number of New York City properties available for purchase is fairly steady, while apartments are becoming scarcer and pricier. Last year, Manhattan rents rose a staggering 9.5 per cent, driven by would-be homeowners who opted to sit out the uncertain economy. The current numbers point to an equation that’s beginning to tip the argument back towards buying, rather than leasing.

Home orders up

Just last week, major national home builder Lennar Corp reported an astonishing 20 percent hike in orders for new houses 2010’s final months, an upturn nobody would have dared to forecast a year earlier. On Bloomberg.com, a company spokesman credited soaring rents for the climb. At the same time, the number of National Association of Home Builders Improving Markets nearly doubled from 41 to 76.

To be sure, problems are still aplenty. Chief among them – on the national level - is an inventory of well over a million homes in foreclosure with several million more bound for the auction block. Although a relative few are in Manhattan, it’s definitely not time to do a victory lap.

But for the discerning and dedicated New York City condo or coop buyer or seller, 2012 is starting to look downright viable. With the market quietly reawakening, plenty of bargains remain. Sellers, meanwhile, can expect to take a less painful hit while standing out amongst a diminished inventory of properties.

The key for those on both sides of a purchase is to proceed with care – and knowledge. Choose a capable broker, price the property well, offer a reasonable bid and be clear about your must-haves. Something is out there for everyone.

New York City Real Estate forecast for 2012

2011-12-22T00:00:00.000-05:00

Ah, 2012. Mayan scholars predicted the world would end in December. Nostradamus pinpointed it as the year when a comet would collide with earth, causing Armageddon.

I’m far less pessimistic.

The upcoming year won’t end life as we know it, nor will it crush New York City’s real estate market. Rather, the recession-depression-downturn-stagnation-retrenchment of the American economy will, I believe, leave things looking a lot like they do today.

Interest rates: Bizarrely low for the last few years, interest rates are likely to remain at rock bottom levels through 2012. The only possible change would be a slight increase.

Unemployment levels: New York City seems poised to hold on to its unfortunate place in the national unemployment picture. At present, the jobless rate hovers around 8.9 per cent in the five boroughs, well above the statewide average of 8.0 per cent. (The full statistical details are at: http://www.labor.ny.gov/stats/pressreleases/pruistat.shtm.)

Bonuses: With employers reluctant to add new positions in an unpredictable economy, bonuses won’t increase. Plus, the European Crisis and other global economic uncertainties keep wages at current levels. Read that: less money to spend on housing.

Inventory: With sellers hesitant to enter a market that may be near its absolute bottom, inventory is tight. I wouldn’t be surprised to see prices climb in 2012 as demand inevitably rises.

It may all sound dismal, but I see a silver lining.

New York City boasts a thriving rental market. With a vacancy rate of less than one per cent, sellers willing to lease their abodes while they wait for the rebound could do quite well.

Plus, high-end properties – listed for $5 million and above – are strong and healthy. After all, housing looks like a great investment when measured against other financial instruments.

And, at some point, fence-sitting buyers will likely act on a hard, cold fact, that in 78 cities it is now cheaper to buy a house than to rent.

So 2012 doesn’t sound too horrible. Definitely not Armageddon.

Happy New Year.

RENTING the future, at Stuyvesant town

2011-12-06T20:32:00.001-05:00

What’s the best way to own reasonably priced Manhattan property? Rent.

It’s not a riddle, it’s a reality -- or it could be, if a current downtown effort succeeds.

Just last weekend, the tenants of Stuyvesant Town/Peter Cooper Village – the biggest apartment complex in Manhattan – took another step towards ownership of the mammoth lower east side complex. If their proposal succeeds (as tenants are determined it will) the 56 buildings from 14th to 23rd streets could bring thousands of affordable condo or coops to the New York City real estate market, And with renters expected to qualify for attractive insider prices, the ‘village’ could become a good place to rent

But before all that, there are many – and big - hurdles to jump.

Public support

Public sentiment, potentially a big hurdle, is already on the side of the residents. Such prominent leaders as U.S. senators, Charles Schumer and Kirsten Gillibrand are firmly behind the proposal. But the proposal faces numerous obstacles involving many stakeholders, as tenants determine how to structure the deal, set the prices, handle current renters, and, basically, make everyone involved reasonably happy. Brookfield Asset Management, the development’s financial backer, and CW Capital, which assumed control after the former owners defaulted in 2009, are the most important players.

To understand the significance of this 80-acre slice of Manhattan real estate, you have to travel back in time, to the days when the blighted blocks of New York’s ‘gas house gang’ were an urban no-mans-land.

The beginnings

With WWII returning soldiers clamoring for housing, Robert Moses undertook a private-public partnership to the gas storage towers that gave the area its name. The construction of brand-new, multistory buildings immediately transformed the rough-and-tumble neighbor into a booming residential enclave dotted with parks and playgrounds. Coveted from the start, the property established long waiting lists, popularity that would endure for the next 50 years.

By the late 1990s, skyrocketing New York City housing values made the entire S/TC complex resemble low-hanging fruit for hungry developers. It took Tishman Speyer Properties LP and BlockRock Inc. to pluck it, acquiring the complex for $5.4 billion.

As it turned out, their timing couldn’t have been worse. Having bought at the very peak of the real estate market, sponsors found themselves unable to go thru with conversion. Many were offered for rent, prompting resident complaints about the ‘transients’ with no stake in the community. Owners were soon accused of improperly raising rents on long-term tenants.

Defeated, the owners finally defaulted putting Stuyvesant Town on the top of the CNNMoney’s list of biggest commercial real estate busts in the nation. They left billions in debts that nearly decimated such investors as the California Public Employees’ Retirement System and the Church of England.

Tenants attempted to organize as buyers, but again the situation - a national economic disaster - made the timing wrong.

This time, the stalwarts among the residents say they won’t let the plan fail. If they make good on their word, it will represent a very fitting milestone for a particularly historic slice of the Big Apple, Stuyvesant Town and Peter Cooper Village occupy the area where the last Dutch Director-General of the colony of New Netherland, Peter Stuyvesant, built his home – and started the whole New York City real estate thing.

A mortgage boon for New York real estate

2011-11-29T14:35:00.001-05:00

Consider it an early Christmas present for New York real estate buyers (and those elsewhere, too).

A newly passed law raises the so-called ‘conforming loan limit’ for borrowers seeking Federal Housing Administration (FHA) insurance for their mortgages. That means that more condo, coop and home buyers will be able to quality for conventional mortgages, which traditionally have lower interest rates than the jumbo mortgages. Specifically, the new law increases the ceiling from for FHA-insurable loans from the current $625,500 to $729,950 and keeps it at that level through 2013.

The FHA, of course, does not originate loans itself. It provides the mortgage insurance that’s essential for anyone who doesn’t have an adequate down payment to quality for a prime loan. But in the current economy, the FHA is proving to be a real lifesaver, backing fully one-third of all mortgages used to finance homes purchased last year – a dramatic increase from the five per cent it guaranteed back in 2006.

What’s even better: the new provision targets such high-ticket areas as New York City, Los Angeles and San Francisco – also the most desirable places around. Although Manhattan remains healthier than the rest of the real estate world, this new provision could introduce even more zig into a marketplace that’s been threatening to zag.

Kudos and complaints

Predictably, the National Association of Home Builders (NAHB) were quick to praise the change. As NAHB Chairman Bob Nielsen, a home builder from Reno, NV, said, “Restoring the higher FHA loan limits will help to stabilize home values, provide constancy while private investors re-enter the market, and enable millions of creditworthy consumers to get home loans with the best mortgage rates and lowest fees and down payment requirements,”

There are naysayers, too, particularly among those who oppose government spending. But, since the bill President Obama last week was far less dramatic than the original version, the complaints aren’t terribly loud. The previous proposal would have raised loan limits for the mortgage finance companies Fannie Mae and Freddie Mac, too.

So, for those of us with a genuine passion for real estate in the world’s greatest city, with the world’s most interesting housing stock (no prejudice here, again… just facts) it’s a welcome development – and just the right thing to goose the post Black Friday holiday spirit.

For sellers: Giving thanks means getting ready

2011-11-21T20:12:00.001-05:00

There’s another reason to be grateful this holiday weekend: Thanksgiving offers a much-needed real estate respite.

As families experience the joy of togetherness (and massive overeating), few plan to traipse through New York condos or coops - nor do they want strangers witnessing their own (messy) merrymaking.

But down time doesn’t require opting out of the game. Smart sellers can leverage the holiday lull – and the abundance of extra bodies available – to complete chores that make a coop, condo or home even more appealing.

You can still ply the eggnog, but also be proactive about:

n Paint: With the dark winter months upon us, a coat of light colored paint helps brighten up a dingy area. Consider a glossy finish to impart a sense of airiness, and go for bright neutrals to give your rooms a finished look.

n Polish: Most people don’t appreciate the power of sparklingly clean windows. Arm yourself with rags and glass cleaner or, even better; invest in a window-washing service. The months ahead will literally gleam.

n Pare down: Taking stock is a Thanksgiving tradition, and it applies to possessions as well as life plans. Size up your living space and clear the excess. Sparsely furnished apartments and homes look bigger and brighter to prospective buyers. Clear the walls, and eliminate bulky or unnecessary furniture. The clean-up will uncover forgotten articles of clothing, unpaired shoes and countless odds and ends that may benefit someone else – just in time for the Christmas season.

n de-Personalize: You’ve heard it before but it bears repeating: buyers prefer to imagine themselves living in your space. So may the dwelling less personal by taking down as many family pictures as you can, and eliminating all those awards and trophies. Don’t worry; they can festoon every wall in your new place.

n Prune: If you live in a house, denuded trees and scraggly bushes can curb curb appeal, so use this brief period – well before (we hope) another snow storm – to trim bushes, move fallen leaves to plant beds, and/ or add nice holiday touches to your entryway.

n Plumb: Track down your leaks and/or invite your friendly neighborhood plumber to do a once-over before the truly cold weather sets in. Neglected pipes have a way of bursting at the most inconvenient times - like when an eager buyer comes calling. A check up before the dog days can keep winter’s bite at bay.

n Prep: Once you’ve polished, plumbed and pared down, prepare to ‘stage’ your house. The holiday season provides the perfect excuse to add tasteful touches, yummy fragrances and even soft holiday music. The operative word is ‘festive’ and the operative philosophy is ‘underdo’ rather than overdo it.

n Pick: If you haven’t already done so, use the post-turkey-day period to select the perfect realtor. Set your sights on someone associated with an established and reputable organization. Manhattan buyers are well-advised to seek an agent capable of reaching out to an international audience (the source of many NYC sales). Be sure to check the broker’s collateral to determine if he or she produces high-quality brochures and professional images. Ask if he or she has enough resources and budget to arrange for things like virtual staging, if necessary.

Do all these things – and next year you’ll have something worthy of a major Thanksgiving fete.

The Second Avenue Subway Story: why is it a real estate opportunity

2011-11-15T14:26:00.001-05:00

Some people look at Manhattan’s Second Avenue Subway construction project and see grit, grime and galling inconvenience.

Benjamin Kabak sees gold.

“In six years,” the author of the popular Secondavenuesagas.com blog predicts, “business owners will be clamoring for Second Avenue space and property values will climb precipitously.”

Just about everyone agrees. New York City’s Second Avenue Subway (SAS) will bring greater prosperity to anyone with the patience and the perseverance to wait around until 2016. That’s when the first of four phases will bring three new stations to the transit-challenged Upper East Side.

Last week, as residents once again complained about the mayhem stretching from 63^rd to 96^th, they inadvertently demonstrated one reason why SAS – argued for and clearly needed for nearly a century – took so long to pick up speed.

Second Avenue Subway begins

The case for the ‘Line that Time Forgot’ was first made in a 1920 New York City transportation proposal. Calling for six new north-south lines and eightcross-town routes, the proposal led to the successful launch of West Side IND trains. But SAS went on to suffer more deaths and resuscitations than the hardiest cat.

Shortly after the East Side proposal was tentatively approved, fate intervened – in the form of the 1929 stock market crash. Dead before arrival, SAS never gathered sufficient speed (or cash) during the Great Depression. Stalled indefinitely in 1939, SAS quietly vanished altogether when World War II broke out.

When WWII ended with the promise of a revitalized city, lawmakers again freed up funds for the transit lifeline. The need was greater than ever, following the demolition of the Third Avenue elevated train. But the city quietly spent its largesse on repairs rather than construction, prompting the New York Times to declare, “It is highly improbable that the Second Avenue Subway will ever materialize.”A decade later, thanks to the federal Urban Mass Transit Act, it was back on track. Millions of dollars were earmarked for transit improvements. The long-delayed groundbreaking occurred in 1972, followed by excavation of three tunnel segments.

And then, once more, plans ground to a halt as the worst financial crisis in New York City history left the Big Apple near bankruptcy.

NYC’s tunnel to nowhere

In the ‘80s and ‘90s, the MTA tried to monetize the unfinished tunnel segments by offering them for rent. Ed Koch famously suggested the underground’s “dark interior” would be perfectly suited for mushroom farming. There were no takers.

And then, a funny thing happened on the way to the millennium. The city burst back to economic health amidst an internet bubble and a financial industry boom. People returned from suburbia, real estate became scarcer and more valuable, and the Upper East Side became a vibrant destination. The lone Lexington Avenue subway line, already stretched to its limits, was strained under the new growing demand. For what appears to be the final time, the SAS gained momentum and money.

In 2007, another ceremonial groundbreaking was held, immediately followed by logistical delays. SAS began – really and truly -- in 2010.

So did the trouble. The noise, debris and inconvenience that accompanied this mammoth public works created unending controversies. The process of excavating a tunnel seven stories below Manhattan has disrupted areas businesses, snarled local traffic, and caused headaches – literal and figurative – for local residents. Efforts to alter the construction schedule or win damages have been mostly unsuccessful. And the SAS – the little engine that could – remains on track, with the recent completion of the tunnel itself.

Transit equals transformation

Meanwhile, all the commotion has created an historic buyer’s market. Prices for East Side condos and coops have dipped, despite the fact that many buildings are only marginally impacted by the daily din.

And that brings us back to Ben’s initial point: what went down will soon come back up.

Official point to the Sixth Avenue subway, which transformed block after block of shabby residences into a booming commercial haven. And Regional Plan Association President Robert Yaco believes SAS will also spawn a lively ‘hospital corridor’ linking medical institutions from downtown up. That, he adds, will spark even greater demand for luxury housing along the SAS line.

As for Ben Kabak, he knows that construction woes will “fade like a bad dream” in a few years.

And then? The adventurous buyers who got in early will leave everyone else ….well… in the dust.

7 things you need to know before buying new condo in NYC

2011-11-09T19:56:00.000-05:00

You’ve found the perfect slice of New York City real estate; NEW condominium.

Sure, the asking price is a bit steeper than for that coop nearby. But the condo offers the complete package: pool, fitness center, movie screening room and playroom – with a few strings attached.

Never fear. The strings can be untied with the help of a savvy real estate lawyer and some good, old-fashioned education. Without proper knowledge, though, a string can easily trip you up.

The condo difference

Condos are among the fasting growing real estate offerings today. Unlike their New York City cousins -- cooperative apartments or coops -- condos are fully owned by the buyer. That is, they belong to the purchaser from the walls inward . With full ownership comes greater freedom to buy, sell and often (but not always) rent your unit, whereas coops – which give each owner a pro-rated share of the entire building – are administrated almost entirely by a group made up of the shareholders themselves.

The grounds, common areas, and the maintenance of condominium extras falls to the Homeowners Association (HOA) or the Condominium Association, a democratic institution made up of all the condo owners. The fate of each individual abode, and, therefore, every bank account, is tied to the health of the entire structure. So some common knowledge is uncommonly helpful, beginning with:

The offering plan

State law mandates that every building file a full description of the property. Apartments, whether coops or condos, cannot be offered or advertised until the Attorney General approves this massive document, averaging 300 and 500 pages. Densely worded, the offering plan is best deciphered by a real estate attorney–particularly one familiar with new condominium construction.

The plan helps owners estimate the common charges and it also details the developer’s promise to the new owner. That is, it guarantees that the nice reclaimed wood floors and the Viking stainless appliances you saw in the model apartment will actually be in your unit, too. It also confirms the square footage of your unit so double-check that, too. While a mistake of several inches may be acceptable, rooms that are a foot or more smaller than advertised call for a renegotiation in price.

The sponsor’s intentions:

Many banks shun condos that are filled with renters, so too many leased units can affect your ability to get financing. Ask upfront, or have your attorney determine, what happens with unsold real estate. For extra measure, ask her to check the institution that provided the construction financing. Is it solvent? On shaky ground?

Tax laws or abatements:

Particularly in up-and-coming neighborhoods, developers often get financial incentives to build. These can result in lower taxes during a specific period, occasionally stretching beyond several decades. After the abatement ends, taxes rise to match market conditions, so it critical to know the timing.

Banking basics

Mortgage lenders can be tougher on a new building because it lacks any track record, Closing costs also tend to be higher, too, as bank not only investigate the individual apartment buyer, but also the solvency of the entire building. And since new bulding may not have comparable properties available to compare values to, appraisals can be problematic. At the same time, if the developer is particularly itchy to sell, he may more willing to bargain the price down or share the closing costs.

Occupancy status:

A building needs an official Certificate of Occupancy before anyone can move in, so be sure to ask about the C of O status, any potential impediments, and projected completion and move-in dates.

Inspection

Hire an inspector, particularly someone familiar with new construction, to check out your dwelling before you take possession. An antsy developer may cut corners or substitute inferior materials to rush things along. You need to know if those floors are really made of reclaimed wood or unclaimed lumber.

This isn’t the whole list, but it’s a good start. Read it carefully, because you’ll face the ultimate test soon– your closing.

Foreign invasion or savvy investment?

2011-10-28T12:10:00.000-04:00

Buy the buyers.

It’s a novel way to jump-start the housing market and an idea, originally credited to investor Warren Buffett, that seems to make sense.

A Senate proposal from the bipartisan duo of NYC Democrat Chuck Schumer and Utah Republican Mike Lee would grant three-year nonimmigrant visas to qualified foreign real estate buyers.

Little more than a week after it’s unveiling, the new concept – which could lure new buyers to the New York City real estate market - is generating more heat than light.

The suggested law includes caveats aplenty. Buyers must spend at least half million dollars in cash for their US property, and must actually live in one of their co-op, condo or homes for at least six months – triggering the need to pay taxes to the IRS.

The visa term can be extended in three-year increments, but only pending a reapplication and approval procedure. Permission to work in the US, on the other hand, is not part of the deal.

In addition, buyers must satisfy all US Immigration requirements and pass a security check. Unsavory characters, terrorists, disgraced dictators and deadbeats are, let’s hope, not able to make the cut.

New overseas investors must be adequately wealthy to complete an all-cash real estate transaction, and sufficiently comfortable to do so without having to work. Forced to spend six idle months in their American domiciles, the theory goes, these investors would spend their long American sojourn enriching the economy in countless ways. They’d buy food, clothing, gas, cars – and entertain themselves with expensive concerts, museums, theaters and sporting events. Given the restrictions, it seems likely for buyers to gravitate to New York City . Where better to lay for six months than the capital of all things exciting?

Still, nay-sayers blast the proposed legislation as an assault on the American Dream; one that, they say, could undermine US Immigration policy.

Meanwhile, advocates point out that the same legal provisions work just fine in Canada, with a healthier economy – and without a terrorist attack.

In the United States, foreign buyers already account for more than $80 million dollars in annual real estate sales, a 24 per cent increase over the previous year (according to the National Association of Realtors). And that’s without any kind of visa thrown in as an incentive and, without any National Security incidents.

So to those who fear an alien invasion, we point northward, to the alien land that generates the greatest number of foreign investment invaders.

Too many immigrants?

Blame Canada!

The NYC real estate challenge: getting approved by a Manhattan co-op board

2011-10-25T17:10:00.002-04:00

BOO! Did it scare you? Probably not.

On Halloween, all those ghosts, goblins, witches and warlocks (pint-sized and bigger) can look terrifying. But they’re not. You know the ritual, and, along with the rest of society, you agree to view the holiday as an occasion for delight rather than dread.

Turns out, a similar dose of understanding and acceptance can sustain you through the New York City home buyer’s scariest encounter: the much-feared coop board interview.

This face-to-face meeting can feel like a test of personal worth, rather than an objective assessment of your financial health, but in the vast majority of cases, the conversation turns out just fine. Just another of life’s little tests, it can be aced with the proper preparation, and study, along with some capable coaching from your broker. Truth is, boards are happier than ever before to accept solid newcomers to their communities.

The good news

As for all those news stories about celebrities who were rejected by their buildings? Those are exceptions to the rule.

Former president Richard Nixon, singers Barbara Streisand, Madonna, Mariah Carey, Billy Joel and Cher, and actor Antonio Banderas, newsman Mike Wallace, and Designer Calvin Klein; all discovered that fame and wealth weren’t enough to guarantee admission to, or a peaceful relationship with, an upscale New York City coop board. But unless your presence is likely to generate round-the-clock crowds of paparazzi, you probably won’t face the same kind of grilling these folks did.

Protected areas

Legally, real estate buyers are protected in 14 separate areas. The Federal Fair Housing act, the Civil Rights Act, and the New York State and New York City Human Rights laws, prohibit discrimination on the basis of:

-age

-alien status

-children (or childless state)

-country of national origin

-creed

-disability

-gender (including gender identity)

-lawful occupation

-marital status

-military status

-partnership status

-race

-religion

-sexual orientation

Once your rights are assured in those areas, though, you basically enter what one NYC real estate attorney describes as the ‘land of anything goes.’

The Real Estate Board of New York (REBNY) and the Council of NY Cooperatives and Condominiums (CNYCC), among others, guarantee the rights of the boards themselves. Made up of shareholders, these governing groups can refuse any applicant, no questions asked, as long as they stay clear of open discrimination.

Singer Mariah Carey was turned down flat by a Manhattan luxury building years ago, most likely because the then-single young women was viewed as a bad credit risk who toiled in a fickle business. Former President Nixon was nixed for sheer notoriety while, more recently, Dominique Strauss-Kahn had a devil of a time finding a place to await his hearing. None of these decisions were completely unexpected, nor were they enormously surprising.

Bank on your broker

With some cooperative boards of directors noted for prickly decision-making, the key to helping a new buyer pass the test on the first try often falls to the real estate broker.. A good realtor will know the peccadilloes of each individual board, and be completely up-to-date on the rules of the building itself.

I always remind my new buyers set aside some prep time, so we can rehearse the upcoming interview process. Together, we explore the ‘what ifs’ and the ‘must-haves’. If I anticipate a particularly tricky situation, we conduct a mock interview. Because each board – and each board member – has a distinct personality, there’s no one-size-fits-all way strategy.

A good broker will also fully brief the buyer on the building’s guidelines, the ways they have been enforced in the past, and the general rules drawn up by the REDNT and CYNCC for coops. Many building have specific restrictions on pets, noise, and carpeting and renovation guidelines. Again, provided these regulations don’t violate any civil rights guaranteed under state or federal law, they’re completely permissible.

On the other hand, boards should be open about sharing their meeting schedules, their interview process, and their approval schedule. If they ask for some time-consuming records (for instance, credit checks from out of state) they can and should understand that it adds time to the approval process.

Thankfully, most buyers pass their test with nary a problem. In fact, 95 per cent of my buyers have survived the initial interview completely unscathed and the few who haven’t gotten the nod the first time out, have been approved soon afterwards. Some people even enjoy the interview process.

Yes, it’s a test. But unlike a driver’s license, a professional certification or an eye exam, it’s a once-in-a-lifetime challenge.

Pass it, and you’re done.

Buyer, be aware

2011-10-18T16:59:00.001-04:00

Two coops are for sale: one for $500,000 and the other for $750,000.

Which one is cheaper?

Seems like a simple question, but it’s not.

In the wild and wacky Manhattan real estate world, circa 2011, price isn’t absolute nor is it predictive of real cost. There are all kinds of other factors that play into affordability.

You already know that rock-bottom common charges can accompany the costliest coop, while what that ‘bargain buy’ may harbor costly structural problems. And you’re only too aware that the bust after the boom shattered the old ‘property always appreciates in value’ assertion. But there’s one timeworn caution that is truer today than ever: Stay within your means and – for gosh sakes – know what those means are.

In this economic climate, no responsible broker advises a buyer to stretch beyond affordability. We advise would-be property owners to first take an unflinchingly honest look at their own finances.

My suggestion: assess your expected income and expenses and then play an aggressive game of devil’s advocate with yourself. What if the job went away? What if those investments dried up? What if that comfortable ‘contingency fund’ had to be tapped for an emergency? Could you still pay the mortgage? Do you have adequate reserves to stay afloat for at least six months or, even better, a year?

While we’re at it, take off those rose-colored blinders and examine:

· What your current job pays – and how likely the position and the pay are to remain unchanged.

· What extra income you can count on (interest payments, freelance work, rental property income), and which are precarious or market-dependent.

· What expenses figure in to your monthly obligations (utilities, taxes, insurances, tuition, entertainment costs, second homes, memberships, you name it) and which are sheer discretionary stuff

· How much you need to save each month to meet your financial goals, whether for college, retirement, loan repayment or other needs?

· How likely your taxes to rise?

· What big bills are looming? For example, is the car in its golden years? Are the kids embarking on an educational journey? Is your roof leaking, or your deck about to crumble?

Be as brutal as your bank would be. Remember: mortgage lenders cap your monthly housing costs at about 28 per percent of your gross income. They also set the maximum debt (including your mortgage payment) at 36 percent of your gross income.

Online calculators at Kiplingers, The Center for Economic and Policy Research and Decision aide can provide a rough estimate of affordability. But these offer broad general guidelines. Adjust for your individual situation.

Once you know your ideal price range, be prepared to adjust for variations. Those common charge and repair costs we talked about earlier make a big difference.

Once you’re well armed with the info, don’t let too much grass grow under your feet. Mortgage rates are likely to rise soon, and each additional one per cent hike can reduce a buyer’s maximum purchase price by nearly 11 per cent.

Screw up your courage. But first, fire up that calculator. You’ll need it.

Q3'11 NYC RE Market Report: safe haven in an economic storm

2011-10-13T11:54:00.000-04:00

Amidst roiling financial seas, there are still some safe harbors. And one of the best is right here, right now.

Manhattan real estate – particularly high-end, luxury co-ops and condos – remains strong and steady in a shaky and uncertain economy.

In fact, New York City property is seven per cent more valuable today than it was during the same quarter just last year. According to this quarter’s edition of the Prudential Douglas Elliman Report on Manhattan coop and condo sales, condos alone gained 16.7 per cent year in year over year value since 2010. Today’s average square foot in a Manhattan dwelling goes for $1,130, as compared to $1,095 just last year.

Not a bad return on a Great Recession investment.

True, foreign buyers lured by the cheap dollar drove some of the price gains. But locals are just as savvy when it comes to their real estate. And let’s face it, what other investment promises a solid return while also providing a very nice roof (often with a garden and a view) over your head?

As housing heals, it promises to rebalance the larger marketplace. Stubborn would-be buyers - many of whom are still sitting out the downturn hoping for even lower prices - may accelerate shortages that further increase the cost of real estate. I predict that these housing ‘wallflowers’ could hasten the onset of four to five per cent rent hikes in the near future. And it’s no secret that climbing rents make condos and coops even more attractive – and correspondingly pricier.

Our third-quarter report also reveals that the average Manhattan property now spends 119 days on the market, down from 125 days last year. At the same time, the discount from the original listing price at sale slipped from last year’s 5.8 per cent third-quarter discount to 4.4 per cent during the third quarter of 2011. Nor is this exclusive to the Big Apple. The Business Insider checked 14 top global destinations and discovered that 11 of them, including New York City, saw real estate prices rise this year.

At the same time, Seeking Alpha predicts a combination of demographic trends, household formation rates and housing stock depletion will create a need for roughly a million new homes each year for the next decade.

More people and fewer options lead to – well, you know.

And so, my advice to my clients is pretty much the same today as it was before the downturn; find a place you love, at a price you can manage, in an area that’s appealing, vibrant and thriving - and take the plunge.

And if that place is the capital of excitement, convenience and solid value - Manhattan, New York City – you’re bound to win.

2011-10-10T15:18:00.000-04:00

New York City rents are higher and apartments are smaller and bleaker, a New York Times real estate article complains.

People seeking NYC housing have to “settle in neighborhoods they would have shunned a few years back. They watch their savings accounts shrivel as they cut into them to meet monthly rents…..creating a bleak vision of tomorrow,” the writer continues.

Sound familiar? It should. It was written almost 32 years ago, and quotes one women who was so galled by the $345 monthly rent for a Manhattan studio apartment that she bought a $40,000 coop in Brooklyn instead.

Today, that Boerum Hill loft is worth more than 100 times its original value.

Buying New York real estate made sense then, and it makes even more sense now. In fact, I believe it’s the only meaningful investment in this non-recovery economy.

Cash, stocks, retirement accounts, money markets, and CDs are all stumbling or losing value. Interest rate returns on most investments are rock-bottom low. And precious metals like gold and silver are cripplingly expensive. Never mind the fact that precious metals are entirely different than housing. You can’t live in gold bars and silver coins, but even if the dollar crashes, a coop, condo or house will still stand. Housing is real, tangible and, as distinct from gold and silver, everyday practical.

So the conclusion now is the same as it was in 1980. It’s still wiser to buy property rather than rent it. Use your money to build equity and pay down principal, particularly in such a consistently ‘hot’ market as New York City. Take advantage of what may turn out to be a ‘perfect storm’; a combination of low mortgage interest rates (under 4 per cent, in some instances), abundant NYC property, and a willingness – in most cases – to negotiate price.

There’s only so much further prices can dip, only so many more housing options. Since everyone has to live somewhere, you may as use those monthly payments to build equity, pay down interest, and otherwise benefit you, not a landlord.

To the author who wrote, in the Times piece of Jan. 22, 1980, “there are no rules of thumb anymore,” I offer this counter-argument; property is forever. Over time, it appreciates – and rents rise, sometimes faster and higher when there are too few buying options available.

Remember that overpriced $345 studio from three decades ago? It’s going for about $2,500 a month today.

2011-10-06T18:19:00.000-04:00

T H E N & N O W :
Park Avenue

Once upon a time, a NYC buyer acquired15 floors, 131 apartments and a prime New York City address – for $100,000.

The property was the ‘white glove’ Beekman Hotel at 63rd and Park, the setting was a New York City real estate foreclosure and the year was 1935. Offered at auction, 575 Park Avenue attracted a handful of would-be buyers; those who could muster such an enormous sum during the Great Depression.

Original article published on January 10, 1935

The winner was Charles Buhl, whose $100,000 investment secured an eight-year-old terra cotta gem replete with original brass touches, a marquee entranceway, and a posh lobby. The Beekman’s lush interiors and fine design elements would later attract politicians and name entertainers. But on that day in 1935 – the year FDR created the Works Progress Administration - it was just another distressed New York City building seeking a buyer. Among the other offerings in the New York Times real estate page were a three-story 97^th street dwelling listed for $10,000 and a Central Park West building available for a mere $1,000.

Today, there are no such Manhattan fairy tales.

Despite the troubled economy and an uncertain future jobs outlook, prime NYC real estate almost never reaches the foreclosure stage, and rarely hits a rock-bottom price. Manhattan property is too valuable, too scarce and too coveted to reach the open market. Instead, I routinely see ‘distressed’ coops and condos hungrily snapped up by friends, family or through word of mouth, despite its current condition. You can always repair a structure, but you can’t add more land.

In this Great Recession (or whatever we call it these days) NYC housing prices are “holding steady” and their volume is increasing, according to the Times. A single Beekman room is now worth more than the $100,000 Buhl paid for the entire building in 1935, and a one-bedroom coop starts at five times the original purchase price.

Such ‘extras’ as daily maid service, a concierge, a valet, a state of the art fitness center, abundant storage space, a roof deck, and a chic address – all of which describe the Beekman – differentiate the best buildings from the merely ordinary.

If Charles Buhl had had a crystal ball on that January day in 1935 – along with an ability to hang around for a few more decades – he would have been mightily pleased by the brilliance of his buy. Ten years after his purchase, American was poised for prosperity, and a decade after that, the Baby Boom was in full swing. Had he been able to foresee that, he may well have those two Upper West Side properties to his portfolio that day.