Dominos in Real Estate

 

Believe it or not,  I have not had a buyer purchase with a mortgage since 2006. This being stated, prior to that magical year I have been involved with hundreds of transactions that involved financing for properties – even those that were foreclosures and short sales. The later being the most difficult of experiences (on the agent side and the appraiser side).

I am embarrassed to write that I missed a very, VERY important ruling (in red below) that was put in motion by Fannie Mae on March 1:

“The government-backed mortgage-finance company stopped guaranteeing mortgages in condo buildings where fewer than 70% of the units have been sold, up from 51%. In addition, the company won’t back loans for sales in buildings where 15% of current owners are delinquent on association fees or where more than 10% of units are owned by a single-entity.”

 

Those words in red affect every condo buyer I have ever represented –even the cash buyers. 

Three days and 2 sleep deprived nights ago, I received a call from an owner I sold to in 2007 (cash purchase)…. 

 

Because of the current low interest rates, the owners thought they would take a mortgage on the 2007 unit and purchase another unit in NYC because the prices are pretty good right now.

 

Their phone call was to inform me that the lender would not lend on their unit because “one entity” owned 18.14% of the units in the building and there are too many rentals in the building. The subject building had been put on the “list” of buildings not to lend to —- the owners were not happy and wanted to back out of the other deal because of the “principle” of it all –NOT because they did not necessarily have the cash to follow-through on the new apartment.

I have to say, I understood their perspective. Most of us feel that if you dump cash into real estate you are going to be able to draw on it in the future – right? Not the case anymore…it is a new time in the United States with a lot of change that concerns all of us on some level.

 

I was told by executive leaders in the NYC real estate community, multiple loan officers and other highly experienced brokers: “it is what it is-nothing can be done.”

 

Guess what? I said, No, it cannot be and I started getting to work. I am not going to get into all of the tedious things I had to do or all of the individuals I had to “push” to help me retrieve the info I needed; but, I got the building off the “list”.  

 

My entire life I have had (some) issues with simply not accepting: “it is just the way it is – let is rest.” At times it has been my demise…

I do not know why I am so compelled to say “No, there must be a way.” I guess if I have not had some success with converting the “nothing can be done” to something has been done (but, differently), I would not be the fighter that I am. The “believer” that everything IS possible…

Maybe, we are so accepting of the “nothing can be done” mentality because we are not ready to see that it CAN be done.

 

 

Dominos may fall; but, the real game does get started until they are down.

War & Peace: NYC 1Q09 Market Reports

The 1Q09 Market Reports were released last week. Of course each one of them varied:

 

Halstead -The Report

Prudential Douglas Elliman-The Report

Corcoran-The Report 

 

As well as the Media’s interpretation of them.

A recent example:

Housing bust hits Manhattan(with a sub-title: Prices still rising in Manhattan real estate) CNN/MONEY

Honestly, no wonder buyers and sellers are in a state of confusion!

The one thing that really disturbs me is the % basis experts, brokers, and the media throw out there…20% below prime; 40% current list price; etc.

 

 

The fact of the matter is that all apartments; each neighborhood; and every seller has a different story and price-point.  There is no secret percentage.  Some apartments are priced well from the beginning-some are not; some neighborhoods have a greater demand; some sellers are desperate-some are not….To say units should be trading at 40% below list price is just out right foolish methodology for me to communicate to my clients. Mainly, because there is not enough data that has been specifically scrubbed and brokers really need to dig deep for the actual pricing. How can one truly take heed to media reports of condos that include those on East 87th (a walk-up building) all the way down to Walker Street (a full service building)? To me, that is like comparing General Motors with General Mills.

 

 

I have stated many times to my buyers (and sellers): 

“Every apartment has a different story.”  Throwing an average percentage out there is just a lazy broker to me —One that reads the media head-lines as if they are Cliff Notes. One thing that all those years working in a depressed market (such as Cleveland) taught me was to do my homework as if I was tackling a novel by Tolstoy.

When a buyer is serious: I pull the original deed, I pull the recorded mortgages, I pull the closed comps and in this 2009 market those comps also need to be blended with the current list prices…and, yes, I ask a lot of questions.

 

 

Pricing real estate is an element of  history, a measurement of now, a fraction of need and component of balanced consideration…Not an average overall %.

 

 

“What is Your Personal Stimulus Plan?”

This late afternoon I took acute notice to a proposed question:

“What is your personal Stimulus Plan*?”.

I smiled as a response.

For the simple reason, that I have always believed that I am the mastermind behind all of my success and malfunctions on this journey called, life. I did not have to wait for a recession to re-evaluate my circumstances; I do not cast blame on others or even desire the government to offer Kensyian-like means to bail me out.

I indeed have a personal Stimulus Plan: written in the form of goals with deadlines. I simply call it, my Life Plan. It is by no means a masterful entrepreneurial manual wrapped with the fiscal prophecy of quick success; but one swathed with small goals quilted with even larger goals that will take many, many years to achieve. With the thread being all of my personal values.

Peculiar it is to me that individuals wait for others to determine their fate. Currently, I am surrounded by a chorus of citizens singing the parts of real estate buyers that are waiting for the market to fall further. I must say, it is time for this Requiem to fade…it is time to step up to the stage and be a soloist.

Housing prices will fall further; but, at the bottom there will be a new found fear…panic to buy. Once the economists with the media announce the “bottom is here” or even the real estate market is picking up the beat: all of self professed “bottom feeders” are going to rise to the surface and the bidding wars will begin (again). Many of the choristers will miss the opportunity of that “great deal”. The time to find that deal is now; in the art form of diva-like negotiation; but, with reasoning– by that soloist buyer. That buyer that knows the real fiscal return in the purchase arrives at their doorstep in many years.

One of my goals in my Life Plan: I will have a MIT and Harvard education saved for each of my children by the time I am 44 (the age they will be in college). Many of my friends ask, “How are you going to accomplish this as a single mother in less than a decade and as a broker??!”.

I always answer: “I am buying a studio apartment in Manhattan in 2009; two in 2010; etc. Then I will sell the first after owning 8 years (and so on), pay for their education (in full) and finally, buy my own personal residence that also will be large enough to fill all of my cherished books!”

As a first generation American (maternal side), I am a witness that owning real estate builds wealth. My grandparents’ case: owning 38 pieces of real estate…slowly, as if sewing a beautiful quilt full of will and prosperity..

Maybe, it is one reason I am drawn to downtown Manhattan…the view of Ellis Island is a remembrance of the near penniless arrival of my grandmother holding my mother as they entered America…

I am not writing this night as a helpless artist painting with words; but, as a real estate advisor with a conviction that this time of fear shall pass, bringing a resurrection of affluence to those that choose to act now. 

 

 

 

 

“A pessimist sees the difficulty in every opportunity. An optimist sees the opportunity in every difficulty” - Winston Churchill 

*Question from Wells Fargo’s Seminar: Meeting The Market Challenge in 2009

A Contemplation of a Serious Matter

To further understand the Wagnerian complexities encircling the economy which currently augments the score of real estate here in Manhattan; I attended a few “round-table” discussions performed by the executive leadership team of Halstead at REBNY.

 

The archives of data shared with the most experienced vocal insight of leaders within the industry were heartening for me; but, also brought a dissonance: For nearly a week, I have been trying to find some sort of counterpoint with real estate trades over the last years combined with this new century.

 

So, I decided to compose the data in a form that I could actually understand this NYC Ring Cycle:

 

	STUDIO	1BDRM	2BDRM	3BDRM
2007	$379,182.00	$631,648.00	$1,411,088.00	$3,482,993.00
2006	$389,430.00	$614,770.00	$1,325,048.00	$3,230,631.00
2005	$346,231.00	$570,974.00	$1,228,087.00	$3,091,631.00
2004	$275,791.00	$451,716.00	$1,015,680.00	$2,491,606.00
2003	$243,252.00	$412,181.00	$869,522.00	$2,262,754.00
2002	$248,305.00	$342,451.00	$768,653.00	$2,447,632.00
2001	$226,283.00	$344,250.00	$760,030.00	$2,285,924.00
2000	$152,971.00	$297,696.00	$767,508.00	$1,972,794.00
1999	$103,600.00	$218,061.00	$555,907.00	$1,510,412.00
1998	$123,070.00	$248,632.00	$504,317.00	$1,197,376.00
1997	$91,744.00	$171,731.00	$428,505.00	$1,205,836.00
1996	$79,130.00	$152,380.00	$383,234.00	$998,797.00
1995	$72,176.00	$142,685.00	$355,278.00	$1,000,486.00
1994	$70,985.00	$142,739.00	$369,060.00	$974,718.00
1993	$71,238.00	$136,471.00	$349,552.00	$921,855.00
1992	$83,131.00	$149,677.00	$368,031.00	$930,805.00
1991	$91,698.00	$162,423.00	$371,580.00	$871,036.00
1990	$116,523.00	$174,128.00	$438,077.00	$1,085,296.00
1989	$121,863.00	$184,042.00	$464,629.00	$1,171,664.00

 

Post analyzing the above composition (focusing on the 1990s), I have been haunted by an Unanswered Question:

 

Are we in for another dark dive that lasted nearly a decade?

 

As if I was forced to only see Central Park in the Dark while listening to the music of Charles Ives, I desperately needed to find a dissimilarity within this cycle…this simply cannot be the destiny of our Manhattan market!

 

What is the key difference between the 1990s and this second day of March within the year of 2009: population!

 

According to the Department of City Planning, the population of NYC in the 1990s was 7,322,564…this day it is over 8,310,212.

 

It is for such growth in our city’s population that I do not foresee such a “dark decade” in our future…Simply, we have a NEED to house the growing population in NYC…

 

For the record: I am a REALIST that processes information like an appraiser; communicates as a broker that is a BELIEVER that all things can change for the betterment with thought, knowledge and perseverance…a counterpoint in real estate? Maybe…

 

  

Printable version of the above data

*In music, counterpoint is the relationship between two or more voices that are independent in contour and rhythm, and interdependent in harmony. It has been most commonly identified in Western music, developing strongly in the Renaissance, and also dominant in much of the common practice period, especially in Baroque music. The term comes from the Latin punctus contra punctum (“point against point”).

Perspective in Balance

With effort to heal the disappointments of this week, I poured a glass of wine and filled my apartment with notes of the Bach Cello Suites this night. As Yo-Yo Ma’s interpretation soared through my apartment, I savored the perfect balance of Bach while reflecting on the potpourri of clients in my pipeline: their own personal “story” to purchase in Manhattan and a conversation with one client in particular, “The Artist.”

 

Everyone in NYC real estate talks and writes about the big dollar apartments (and buyers). I have too on occasion.  I guess it is sexier to talk about. It sells newspapers. It gives some a “hope” of what they may one day own and offers bitter fuel for those souls that find envy in others’ prosperity.

 

My client, “The Artist” is not going to sell newspapers with her purchase nor will she be the talk of Manhattan cocktail conversation. But, she does put a real crescendo on PERSPECTIVE.

 

The tête-à-tête on the corner of 69^th & Amsterdam

 

Setting the stage: The Artist is going into contract on an apartment and before she signed the contract, she wanted to look at one more apartment to validate her decision to move forward.

 

The Artist: Heather, I am sorry you had to show this apartment to me.

Heather: Are you kidding me? $240,000.00 is a lot of money. I get it – you need comfort of mind in your purchase. I find it odd that people here still think it is an insignificant amount of money. In most cities, a family of four could live on that amount comfortably for 5 years.

The Artist: Yes, I guess so; (she laughs) or buy a really great house in Poughkeepsie!

 

Perspective:

When you get right down to the matter of it, $240,000.00 is a lot of money for 450 square feet of space wrapped with northern light in America…

Balance:

Not too many buyers are finding apartments in Manhattan (with a fulltime doorman) for $240,000.00…

Manhattan 4QFY08 Sales

*To view reports: Move mouse over brokerage name. Each “Report” will open in new window.

 

 

 

 

Yesterday, as I worked from my office I had CNBC on the television. The segment of interest dealt with the “Luxury Market”* in Manhattan.  Dolly Lenz (PDE) and Pam Lieberman (CORCORAN) really did not have anything that was “new” to say. However, Dolly did admit to having 5-6 deals that basically fell apart after contracts were signed and her high end clients walked from their significant deposits. 

Looking at the three reports from the BIG 3 in town the summaries are similar but the numbers are not…

As I have mentioned before: I wish the Department of Finance would restructure their process and methodology here in Manhattan. There should not be a discrepancy…

Prudential Douglas Elliman and Miller Samuel*

The Numbers:

Average apartment sales price: $1,485,102

Median sales price: $900,000

Average sales price per square foot: $1,183

 

Summary

 Report author Jonathan Miller, president of CEO of Miller Samuel:

 

“There was a decline in price levels and the number of sales of re-sale apartments. Due to a surge in new-development closing activity in the current quarter and a lull in activity in the prior year quarter, the number of new-development closings and price levels rose over the period; however, these sales reflect the market 12 to 18 months ago.

In contrast to the more modest trends of closed sales, contract activity in the current quarter was marked by a sharp decline in sales activity and price levels. A periodic sampling of sales contracts showed a decline of 35% to 75% compared to the same period last year. Current contract price levels show an average decline of 20% from August 2008.”

 

The Corcoran Group and PropertyShark*

The Numbers:

Average sales price for existing apartments: $1,275,000

Median sales price for existing apartments: $759,000

Average price per square foot for existing apartments: $1,073

Summary

Corcoran CEO Pam Liebman in the report’s intro:

 

“The Fourth Quarter is usually not the busiest one for property closings, since its resale contracts are signed in the always-slow Third Quarter (when people are off for summer vacation or starting the new school year they don’t think much about moving house). But with so few transactions in the pipeline, downward pressure on prices will continue until a sense of urgency is restored for buyers.

For this reason, it is important to consider new developments in the proper context, because most of their contracts were signed in 2006 and 2007 before the current economic slowdown was upon the market in such force. Prices of new development properties were strongly higher as several significant buildings – such as 995 Fifth Avenue and 170 East End Avenue – reached the finish line this quarter after several years of work.”

 

 

 

Brown Harris Stevens and Halstead Property*

The Numbers:

Average co-op sales price: $1,103,952

Average condo sales price: $1,713,124

Average sales price per square foot for townhouses: $1,550

Summary

Report author Gregory Heym, chief economist for Terra Holdings, the brokerages’ parent company, in the report’s intro:

 

“Closing prices for Manhattan apartments averaged $1,449,621 during the fourth quarter, up slightly from a year ago but down 2% from the third quarter. While closings at 15 Central Park West and The Plaza had inflated prices over the past few quarters, this was not the case during the fourth quarter. Removing these two buildings brings the average price down just $24,230 to $1,425,391, which would be up 2% from the comparable third quarter figure and the second highest figure on record. …

New developments continued to account for a higher percentage of closings during the fourth quarter. Comprising 42% of all sales, and 72% of condominium sales, they sold for an average price of $1,717,115, 3% higher than the prior quarter. As we have pointed out in previous reports, these deals are typically negotiated far in advance of when they close. On average, new developments that closed during the fourth quarter had their contract signed on Nov. 16, 2007.”

 

 

Closed Condos in TriBeCa

In an effort of being even more of an advocate for my clients, I drafted a report of the closed sales in TriBeCa from Oct 1-Nov 18, 2008. The majority of the units traded under $1400 per SF.

 

Click on the link below for report and supporting data.

 

TRIBECA REPORT

 

 

 

 

 

 

______________________________

NYC Market Repartee

The below is part of an email response from a friend regarding my previous post:

“Who’s to say what’s realistic in this economy?  Actual

sales in the next few months is the answer.  However, it is a whole new

ballgame, and cash is king.

The problem with appraisals of residential real estate properties is

they it look backward when determining value.  For example, all of the

appraisals at ***** (a certain mid-town development)are coming in on target because they are just

looking at the deals which have closed within the last two months–the

prices for those deals were set months ago.  If they had the ability to

look into the future, it is my firm belief that they would be much

lower.”

My partial response today to my friend:

When a seller drops a price that is under what he paid for the unit – this is realistic & aggressive pricing.  Yes, the buyer determines value for a subject property; but, only if the two parties have a meeting of the minds and a transfer of title/shares result.

Determining value right now:

According to the Appraisal Institute, one must always use 3 comparables that have closed within the last 6 months when determining value on a report. I have been using 3 months. We will have an issue 2^nd/3^rd quarter 2009 and even more so in 2010.  This being said, the market cannot stop and we (brokers/buyers/sellers) need to push forward. There are plenty of “deals & steals” in Manhattan right now — but in general the majority of “newly listed” properties do not validate offers below 25% or more of the asking price.

Please know that this is not a self-serving philosophy.  Even though I am in a capitalist profession fueled by commission -it is not about the money.  It is about doing what is right for my clients while setting in motion a continual stream of fiscal measurement for the future.  I have stated many times: Real estate is not a short-term investment. Yes, a few of us have been lucky with quick appreciation in Manhattan and other parts of the world; but, this method is not a durable approach to build one’s portfolio of assets–it should be a small part of the equation. 

The current blight of desperation in Manhattan real estate is part economy and the other part is being stirred by the masses of buyers that are being influenced by the stories of distressed real estate in the United States. Unlike metro-areas that have the ability to build out into suburbia which significantly devalues real estate in a down economy: Manhattan is an island and there always has been a lack of land. I can write and advise with extreme conviction that Manhattan will rebound quicker than any other area and investing now is going to prove to be a very high return in five years. Additionally, looking forward to 2013, I believe Manhattan is going to experience a housing shortage and prices are going to soar within both the rental and sales arena (the current halt of new development projects is partially fueling this prediction).

CHANGE:Brokerage/Buyers/Practical Pricing

I have joined a new firm. After entertaining many companies, I without hesitation selected Halstead Property, LLC. It is not the largest brokerage in Manhattan, yet, they are the best positioned for my clients (and my personal long-term goals) during this economic position of unbalance we find ourselves enveloped. Additionally, they are a company that is currently debt free while being progressive in execution and their values strike a chord beautifully with mine.

As I witnessed my first office meeting with Halstead this past week, many agents were discussing how many of their buyers were offering such low offers on properties. I must admit, I do see this as a trend. Personally, my buyers are offering around 25% under ask with no reasoning. I am not quite sure where this methodology is coming from…it appears not to be in one price point–but all over the board: from $280,000.00 to $3M units.

 

For the reason that I am a huge data driven individual when it comes to real estate trades, I do not see the validation of 25% reduction of ask at this time. These buyers are REAL; but, their “want” has not turned into a “need”. It is almost as if they are throwing paint all over the city with these low offers hoping to find a real masterpiece of a unit without having a true passion for a specific property.

On the inventory side, I have seen more realistic pricing. Not everything but, I feel we are about two-thirds of the way there with the majority of the newly listed units. I do have a method to pricing regardless of the market: I ALWAYS pitch to price a unit 5% above what the unit will actually trade for. The trade is based on a minimum of what has correspondingly closed within the last 3 months blended with similar active units – with more weight on the closed units.

Why is this my method? Partly, because I cannot seem to lose the foundation I gained years ago as a national real estate analyst and residential property appraiser. Secondly, because I hate to play the game of what brokers call “buying a listing” with an outrageously inflated list price. Thirdly, I know this is the only way to sell a property –in any market. Most importantly, it is best for the seller, adds to my creditability as a professional and integrity as an individual.

I do believe, I am going to see my buyers’ “wants” turn into a real “need” in mid-February 2009. We all need to keep in mind that real estate is a commodity and even though the price per square foot may take more of a dip throughout 2009 – the real return on the investment will be appreciated by all within the next five years…

 

 

3QFY08 Sales Released

The reports have been released for 3QFY08. The numbers are down. As you know, I do not necessarily focus on PSF when a market is in a transition — I focus the number of closed transactions. The closed transactions will foretell where we stand in 2009 and even 2010…it is not looking buoyant.

Summary of the Miller Samuel Report and the REBNY Report(condos/co-ops):

Average sale price in Manhattan: $1,480,363

Down 11.3% from prior quarter

Up 8.1% over prior year

Average price per square foot: $1,193

Down 5.5% from prior quarter

Up 4.3% over prior year

Number of sales: 2,654

 

Down 13.9% from prior quarter

Down 24.1% from prior year

 

In closing: “A refusal to believe that the future is knowable guarantees the increase of risk.”

Time will tell whom in this business will survive.

I am looking forward to the challenge of being a part of this real estate shift and guiding my clients onward…

 

A Detour: TRUMP & ELIZABETH I

 

 

I sat at my laptop this evening with the intention of writing about the how the current economy and housing market influence corporate relocation this 2008.

However, my mind took a detour to the root of our pecuniary difficulties: MAN (and leadership).

This afternoon, I was with a client that relocated to New York via London with his firm. After, we looked at eight buildings during the London-like weather, I needed to stop for a quick pick me up at Starbucks. As I entered Starbucks, I noticed a building that was not on my itinerary – actually, I have never even been in the building before. So, I asked my client if he wanted to pop inside – he did. I must say the building was glorious; but, the unit was above his initial price-point and of course, he LOVED it. Post our viewing we stood in the misty light rain near City Hall to discuss all of the apartments we viewed and he was stuck on the last unit. As I drank the last bit of coffee, I voiced my sincere concern that if he chose the last unit he would not truly enjoy his New York experience because he would be taking funds from his daily “social” budget to enhance his monthly housing budget. This being said, he told me he “should” be ok…we got on the “R” train bound for uptown.

As I got off the train at 14th street, I thought about him; the “glorious” apartment and then had a quick flash to a conversation I had a month ago with a loan officer over a few Coronas.

The loan officer told me I was a bit “green” when it came to my clients and I offer too many favors. He told me that I go out of my way with them and should not worry about certain things like personal affordability, etc. Additionally, he was shocked that I have helped some individuals without a fee. Maybe, he was shocked because I am a single mother raising two children alone while working in the most expensive city in the US and could not comprehend my reasoning…He told me I was never going to be Trump. I responded by saying: “Actually, I am more impressed with the leadership and successes of Elizabeth I, Winston Churchill and Sydney Weinberg .” He was puzzled by why I did not strive to be like Trump and shook his head and said, “naive“…

Regardless of his reactions, I did not like the way he was advising me on how to perform my business or for that matter, how to make money. I explained to this loan officer that I am in this business for long-term relationships -not the quick return. So what, if I help someone and do not make a couple thousand dollars – I do the right thing and people trust me. Most importantly, I go home to my children at night with a smile that symbolizes that I am proud of my day with the comfort of knowing that I made a “small” difference in someone’s life.

As my mind was balancing these two events while briskly walking down 14th, I glanced over at a news stand. Headlines of Lehman’s fall; Hank Paulson wants your money; McCain has no plan to save us; America has poor leadership and so much more washed the front of the stand.

Quite honestly, I am tired and disappointed in it all. So many have self-indulged in their authority of leadership while not making the smallest investment of thought to the forthcoming outcome. I am tired of real estate professionals blaming bankers because their clients cannot get financing. Yet, the real estate agents are the same individuals that put their clients in over-priced homes with “creative” financing—Spinning this viscous circle everyone of us is enclosed by. As a public, we all aided in this state of economic chaos; as individuals we need to stop acting helpless.

Leadership is not just reserved for those that are in high levels within a business organization or in politics. Leadership starts at the bottom. As a real estate broker with no actual authority within an organization, I am at the bottom.

I choose to not make a quick profit for the sacrifice of another, I choose to stay true to my principles, I choose to take responsibility…

In closing, each summer, I work with many recent college graduates that are going into the finance industry. I always walk by Delmonicos with them and mention that it is the setting for the “power lunch” scene in the movie Wall Street. Believe it or not, they all say “great movie!” I love to ask them: “Are you more like Gordon Gekko or Bud Fox?” The few that respond: “Bud Fox” always put a smile on my face…

 

 

 

 

 

 

 

 

 

 

 

 

 

GREATNESS IS NOT RESERVED FOR THE GREAT. THE GREAT ARE SIMPLY THOSE WHO HAVE RISEN TO MEET THEIR DESTINY…Michael Berg

BON JOVI in Central Park Framed with Great Buildings

 

Not being a native New Yorker, not a day goes by that I do not appreciate everything that this city offers and everyone that touches my life here.  Whether it is seeing Carmen at the Met, to having great conversation with a stranger while waiting for a cup of coffee at Starbuck’s, or helping a foreigner find their way in this city — I appreciate each minute here with enthusiasm.

 

I found myself on the great lawn of Central Park this evening (that has past) witnessing the Bon Jovi feast of energy with music.

 

On that great green, I stood with my dearest colleague (and true friend),

Gene Simonetti while the band played

“It’s My Life”

and thought…

 

Thoughts about how everything comes full circle: about all of the buildings that surrounded our evening – particularly Time Warner;  the book I was reading that morning about Brooke Astor and her contributions through The Astor Foundation to rehabilitate Central Park in the 1970’s (the decade I was born);  and so much more…

 

Recently, I was asked to provide comps for condo units near Central Park (at a certain price point). As I scrubbed the data provided by the New York Department of Finance I was amazed with the numbers a few weeks ago (particularly the SF prices)…

 

Building	SF	Sales Price	PSF	Transfer
80 COLUMBUS CIRCLE, PH76B	4,825	$27,000,000.00	$5,595.85	2/15/2007
80 COLUMBUS CIRCLE, NT70B	2,912	$13,000,000.00	$4,464.29	5/29/2007
80 COLUMBUS CIRCLE, NT71AB	2,413	$17,500,000.00	$7,252.38	2/28/2007
80 COLUMBUS CIRCLE, PH76A	6,511	$19,533,000.00	$3,000.00	5/14/2007
80 COLUMBUS CIRCLE, PH76B	4,825	$27,000,000.00	$5,595.85	2/15/2007
80 COLUMBUS CIRCLE, NT67E	1,490	$4,600,000.00	$3,87.25	4/29/2008
80 COLUMBUS CIRCLE, NT74A	2,413	$11,000,000.00	$4,558.64	5/14/2008
80 COLUMBUS CIRCLE, PH76A	6,511	$19,533,000.00	$3,000.00	5/14/2007
25 COLUMBUS CIRCLE, S75CE	4,454	$24,480,000.00	$5,496.18	1/28/2008
25 COLUMBUS CIRCLE, ST72A	3,920	$18,500,000.00	$4,719.39	3/31/2008
25 COLUMBUS CIRCLE, ST65C	2,942	$15,850,000.00	$5,387.49	1/28/2008
25 COLUMBUS CIRCLE, ST69B	2,317	$12,250,000.00	$5,287.00	2/7/2008
25 COLUMBUS CIRCLE, ST72A	3,920	$18,500,000.00	$4,719.38	3/31/2008
15 CENTRAL PARK WEST, 1617D	6,131	$29,529,250.00	$4,816.38	8/8/2007
15 CENTRAL PARK WEST, 1819A	5,870	$30,547,500.00	$5,204.00	4/9/2008
15 CENTRAL PARK WEST, 1819B	5,602	$23,928,875.00	$4,271.48	3/26/2008
15 CENTRAL PARK WEST, 1819C	6,307	$25,838,093.00	$4,096.73	2/4/2008
15 CENTRAL PARK WEST, PH20	6,744	$43,687,751.00	$6,478.01	8/31/2007
15 CENTRAL PARK WEST,  PH39	NA	$45,821,250.00	NA	2/6/2008
THE PLAZA RESIDENCES, 1109	11,861	$45,924,048.00	$3,871.85	4/7/2008
THE PLAZA RESIDENCES, 509	4,284	$25,493,379.00	$5,950.84	11/5/2007
THE PLAZA RESIDENCES, 709	13,063	$51,539,180.00	$3,945.43	6/15/2007

 

 

After Saturday evening, I must say, there is no more “amazement” with the prices – this city is about lifestyle and opportunity —-which is truly priceless.

There is a reason that people pay a premium to live here – for the moments!

 

Thank you to Bank of America for sponsoring this event and more importantly to Carola Mack for being so generous when thinking of others — your gift of this night meant the world to me.

Foreclosures in NYC

Even though the consensuses amongst real estate brokers in Manhattan feel that property owners will not be affected by the national housing crises…By the numbers, it is time to get realistic.

 Not too mention I have seen a huge amount of “expired” listings in the listing systems. It should not take more than six months to sell an apartment in NYC – if it is priced accordingly.  It is time for brokers to step it up and start walking the talk with more realistic pricing. What is the point of having an exclusive listing if you cannot sell it?

 

BY THE NUMBERS

For New York City:

74% Increase in mortgage payments late by 60 days in the first quarter from a year earlier

66% Increase in foreclosures in the first quarter from a year earlier

 

 

 

 

Foreclosure fight moves to NY Senate

From CRAIN’S NY BusinessBY Daniel Massey
Published: May 11, 2008 – 5:59 am

A showdown looms in the state Senate over a bill that would impose a one-year moratorium on foreclosures.

The legislation, which the Assembly passed by an overwhelming majority last week, has drawn the ire of the banking industry and some Republicans, who seem prepared instead to support a bill proposed by Gov. David Paterson.

Foreclosure filings in the state rose 40% in the first quarter from the year-earlier period, to about 14,000, according to RealtyTrac, and more New Yorkers are falling behind on their mortgage payments. With federal legislation stalled, state Democrats and Republicans and their allies say that something needs to be done, but that’s where the agreement ends.

“The industry’s answer is ‘We don’t need regulation,’ but that’s what they were saying 10 years ago, and you see the mess we’ve gotten into,” says Josh Zinner, co-director of the Neighborhood Economic Development Advocacy Project.

Democrats and housing activists say that a one-year moratorium combined with a strengthening of the governor’s plan—which focuses on assisting those facing foreclosure and avoiding another crisis—would help address the issue.

But the idea of stopping the clock for subprime borrowers who make minimum monthly payments determined by a judge is anathema to lenders, who say it would make it harder for creditworthy New Yorkers to get mortgages.

Senate Republicans appear to be getting behind the Paterson bill.

Emphasis on governor’s bill

“If something is going to happen in this area, it’s going to involve the governor’s program bill,” says Hugh Farley, R-Schenectady, chairman of the Senate Banking Committee.

But housing advocates are gearing up for a fight in the chamber, where, spearheaded by Acorn, they have persuaded Republican Sen. Frank Padavan of Queens to sponsor the moratorium measure.

“If Sen. Padavan and his colleagues are serious, they will follow the Assembly’s lead and pass this legislation without delay,” says Acorn Executive Director Bertha Lewis.

The Paterson legislation, which came out of the Banking Department, steers clear of the tricky moratorium question. It would require lenders to send a notice to borrowers at least 60 days before beginning a residential foreclosure action and would mandate that the parties meet with a judge to work out a settlement. It also expands the state’s anti-predatory lending laws and rules governing borrowers’ ability to repay loans.

Advocates say that bill needs even more protection for borrowers, but mortgage industry experts say it goes too far and would inhibit lenders’ ability to provide credit.

Hearing today

The debate will continue before the Senate Banking Committee today as mortgage and housing groups testify on the governor’s proposal. It’s unclear how the Assembly would react if a watered-down Paterson bill is approved by the Senate.

Banking and financial services companies spent $7.3 million on lobbying statewide in 2007, according to the state Commission on Public Integrity. Banking industry political action committees donated a total of at least $426,000 to Senate and Assembly members—a significant amount in a nonelection year—according to the New York Public Interest Research Group.

At least $168,000 of that amount went to Senate Republicans, and at least $107,000 was donated to Assembly Democrats.

Observers of state politics say that the moratorium might have served a purpose, even if it doesn’t become law.

“What it does is provide an impetus and momentum to bring attention to the issue,” says Patricia Salkin, director of the Government Law Center of Albany Law School. “Somehow, you always wind up with a new law where all the different perspectives have had a chance to weigh in.”

 

 

 

 

TriBeCa and Kids!

I have been working a great deal in TriBeCa over the past weeks with a couple of families that really want to call it their new home. 

 

I love working with clients that have children – especially in TriBeCa! 

TriBeCa is definitely an enclave of NYC that is centric to the needs of children. I enjoy getting the kids of my clients excited by showing them the great stores, bakeries, The Art Center and the park. 

 

Also, my children’s pediatrician is in the neighborhood and he is the BEST!

 

So instead of gearing this post towards real estate, I decided to post a couple favorite spots in the neighborhood that my own children recommend:

 

 

BOOMERANG TOYS

173 W Broadway, 212-226-7650

 

COLOR ME MINE

116 Franklin St., 212-941-0120

www.tribeca.colormemine.com

 

 

TRIBECA TREATS

94 Reade St., 212- 571-0500

www.tribecatreats.com

 

TRIBECA GREENMARKET

Greenwich Street between Chambers & Duane

Wed & Sat 8am-3pm

 

TRIBECA WASHINGTON MARKET PARK

The main entrance is on Greenwich Street at Duane

www.washingtonmarketpark.org

 

TRIBECA PERFORMING ARTS CENTER

199 Chambers St., 212-220-1459

www.tribecapac.org

 

MANHATTAN CHILDREN’S THEATER

52 White St., 212-352-3101

www.mctny.org

 

BABYLICIOUS

51 Hudson St., 212-406-7440

www.babyliciousnyc.com

 

BARNES & NOBLE

97 Warren St., 212-587-5389

 

CHURCH STREET SCHOOL FOR MUSIC AND ART

74 Warren St., 212-571-7290

www.churchstreetschool.org

 

 

And a little something for everyone in the family:

The 2008 TriBeCa Film Festival runs between April 23 and May 4

 

 

 

 

New Developments in Manhattan

I recently attended the Luxury Living Exhibit: New York Condo Showcase at The Puck Building. It was great to see so many projects in one viewing!  Below are my top picks at the event. Just click on the address for the details.

Enjoy!  

DOWNTOWN

99 John Street

55 Battery Place: The Visionaire

60 Beach Street

45 John Street

15 Madison Square North

34 Leonard Street

MIDTOWN

211 Madison Avenue: Morgan Court

11 East 29th Street: The Sky House

505 West 47th Street: The 505 HK

247 West 46th Street: The Platinum

UPPER EASTSIDE

400 East 67th Street: The Laurel

205 East 85th Street: The Brompton

255 East 74th Street

995 Fifth Avenue

151 East 85th Street: The Lucinda

UPPER WEST SIDE

205 West 76th Street: The Harrison

101 West 87th Street: Park Columbus

219 West 81st Street: Avonova

80 Riverside Boulevard: The Rushmore

Big Brokerage Companies and the Small Giant

Many people question why I am with my current Firm.  I usually smile, and say “it’s a good fit for me”. However, a few (recently) do not think that is a good enough answer and want to know more than that quick answer.  And this week, a potential seller mentioned: “I am also looking at the larger companies in town”. 

So, here is the real story:I have been obsessed with Manhattan real estate long before I moved here from Cleveland. For fun, I used to read the NY Times real estate section daily, look at was on the market for rentals and sales, read every book I could get my hands on regarding architecture ….and of course the juicy ones that my ex-husband would pick-up for me such as “The Sky’s the Limit”.    

One day, I decided enough is enough, I am moving to NYC to be a real estate agent.  Even though I did not have the savings to do it right away, I was given an opportunity at the largest Firm in NYC as the Broker Referral Manager.  Before this position was offered to me (during the informal interview), I was very upfront with them and said I was going to be an agent in NYC and my long-term goal was not to be a staff member.   All understood and I accepted the position. I was so appreciative to all of them (and I still am today).  

When I arrived that 7^th day of August of that exciting year to start my life in NYC – I was thrilled. I was actually, making a step closer to my goal!  I was here and now I needed to make a difference.  I loved my duties at this Firm and truly enjoyed mentoring the agents on my team. So many of them used to say to me “well, it doesn’t matter Heather I will get the exclusive because I am with XYZ (Firm) and they will pick me to list their property over everyone else”.  My response:  “ I am glad you have such a passion for XYZ, but the Firm should not define you; You should define the Firm – the ingredient that is going to set you apart is -You”.  

Where am I going with this? Well, when my tenure as a staff member came to an end, I felt that I needed to “walk the talk”. I was offered a spot as an agent with this Firm. Actually, I was offered many spots on some of the highest grossing sales teams there.  My income today would have been so much greater than where it is currently.   

I strongly believe that an individual can make a difference and be successful regardless of their orientation with a company or group. It just takes longer!

Sidebar: my previous position was under the Relocation Division. Relocation is something I am an expert at (I am one of two agents in NYC with this certification). I did not want the agents or anyone at that Firm to think I was given business because of it. 

Furthermore, I never take the easy way – but I do take the “right-way”.  Yes, I know the “right-way” takes so much longer. But, it feels so much better on your way to great things in life and in work. 

I have always believed that it is better to be “the best” instead of being the “biggest”.  The quality versus quantity  philosophy…

So, in walking the talk: I joined DJK Residential (one of the smaller brokerages in NYC). My values fit nicely with theirs. There are no politics and some really great agents (floating under the radar) resulting in a really good business practice. 

Additionally, I am given the freedom to execute creatively and market properties well beyond what a larger company could offer their individual agents. Most importantly, they truly believe in my mission, values and goals.  This was KEY for me – to this day, they have not let me down on what they promised me. 

So, I am with a “small giant” and it is a good fit. 

Finding Your Way in NYC

Ever get lost in NYC when you are in the areas that do not have numbers for streets?  Streets like: Albany, Water, Sullivan, Jane, etc?   The best tool for me when I first came to NYC was HopStop!  

I still use it today – whether it is by foot, Taxi or subway. Many of my clients are foreigners and do not know the city well.  The first thing I tell them, “Use HopStop – you will love it!”

 Check it out: 

HOPSTOP!

*

Church to Condo

The Novare: 135 West 4^th Street

  

In Latin, Novare is defined as: to change, to renew, to transform. 

Well, as you stroll down West 4th in the Village (MacDougal Street and Sixth Avenue) you will definitely see the shell of Washington Square Methodist Church. But, inside this Romanesque Revival piece of Architecture gives shelter to eight lofts.

Only one unit is left, Garden – E

List Price: $2,795,000

Original list:  $2,995,000

Common Charges:  $939

Taxes: $1,063

Rooms:  5/2/2

SQFT:  1778  T

The other units that have sold (price is actual list price – not sales price):  

  

GARDEN – W

5/2/2 1877 SQFT  $2,411,945 

2-EAST

5/2/2 1884SQFT $2,469,924 

3-EAST

5/2/2  2037SQFT  $2,495,000 

2-WEST

5/2/2  1797SQFT  $2,497,000 

3-WEST

5/2/2   2033SQFT  $3,050,000  

PH-WEST

7/3/3  3498SQFT   $5,960,000 

PH-EAST

7/3/3   3494SQFT    $5,995,000 

Another interesting condo conversion in NYC! I would say, the village has been blessed again…

The Salon and NYC Real Estate

I was at the Salon recently… as Alma was cutting away (actually, this time it was just a trim), I was thinking about the real estate market.  This past week New Yorkers have seen the articles in The New York Times, 

The Real Deal , Blogs, etc. on NYC real estate. Everyone has a different take! 

HBise short-take (no pun intended):  

I have acted via third party (tax protection) in almost every state in the US.  I witnessed Michigan and Ohio thrive for years and then…tank.  I have seen similar appreciation shapes in Florida and California. However, the sunny states are on their way back.   

How does this effect NYC? Well, I have been through trends. This being said, I do think we are in for a little bit of a healthy “trim”. Even though sale prices were high, inventory was down for the last quarter of 2007.  Inventory influences appraisal values. If you do not have recent comparables (solds), an adjustment will need to be made on the report.  Now, as of March we have seen an increase in inventory—it will be interesting to see how this shapes the stats for 3rd QTR of 2008. Interesting because the appraiser is going to blend part of ’07 and ’08 when determining the subject’s value (even though one should use 3 comps that has closed within the last 6 months);add this to stricter lending laws and things are not going to be so easy.   

Another factor to keep an eye on here in NYC – Rentals: I have never seen so many owners offer so many incentives on rentals in a market that is driven by renters.  Recently, I was able to negotiate a 2 bedroom (in a full service luxury condo building) from $3500 to $2500! I would like you to think that I am a Master Negotiator – but, honestly the market deemed the $2500… 

Finally, let’s clear- up something:  I hear so many brokers saying “Did you hear the Fed cut rates – this is great for you!” to their buyers.  And I am always thinking “What?”!!!!! So, let’s try to keep this simple and how it concerns financing in real estate.The Fed determines the fate of short-term interest rates (like credit cards, auto loans), they do not directly call the shots on long-term interest rates (what you might pay on a 30-year fixed loan). When the Fed cuts rates it really has little affect on a 30 year fixed mortgage. However, this is better news for  a 5-1 ARM and a HELOC.  

In summary, the New York Real Estate Market is in for a very healthy “trim” over the next few months with market time being lengthier and prices stabilizing.

An Exquisite “Monster” Takes Over the West Village

Vanity Fair Article

Over the years we have all heard the hoopla of the pink monster on West 11th that appeared to be a self motivating monument to fuel even a F.Scott Fitzgerald egoist. Well, I must write that nothing has taken hold of me this passionately since I started working the streets of Manhattan as a real estate agent.
How many glass towers do we need?
I want buildings that host a rich underlying substance and are a bit…different.
The highly respected neighborhood official that said:
“It’s horrible. It’s all of your worst nightmares come true,” makes me wonder if maybe he had the wrong street – like Elm Street.
In the March 2008 issue of Vanity Fair (pg 410 -above) one actually gets a glimpse of the interior as you wander the pages. A glimpse that is a real dream of exquisite wonderment – the windows, wall space and thought in design are divine! My daughter would be in heaven if we had those walls – she could cover them with her Hannah Montana collages (that, would not be so divine); I would rather have the Picasso.

So, next time you are at Dublin 6 (between Bank and West 11th) take a saunter down West 11th and have a look for yourself.

Artists and New York Real Estate

Today, I was was researching rehearsal space for a client that moved to NYC last week from Paris. Even though he relocated here as a lawyer for “The world’s largest professional services firm” – he is a classical pianist. Many of my clients and colleagues do not know that I too, am a musician. I studied at 3 conservatories from the age of twelve until twenty-two. Additionally, I was blessed with the opportunity to travel with an operatic company for two seasons as a mezzo-soprano. So, I get a bit enthusiastic when it comes to matters involving the arts – especially those that engage classical music!
As I awaited a call back from Steinway Hall (on my client’s behalf), I decided to do a little more investigating via “Google”. Funny, how the internet leads us to other places -information that we really did not intend for it to take us to…hence, the article of months past in the New York Magazine.

Bohemia in Midtown

By Wendy Goodman (December 2007)
The high-ceilinged, light-filled studios on top of Carnegie Hall have housed artists, musicians, and writers for more than a century; now, the remaining tenants are fighting to stay.

I peeled away the plasterboard until I got down to the original walls,” says the portrait photographer Josef Astor as he walks up the smooth wooden stairs of the triplex he rents in the Carnegie Hall Studio Towers. Astor, who’s been in his skylighted space since 1985, was once surrounded by hundreds of creative neighbors—painters and dancers, photographers and composers—who lived and worked in 170 studios built directly above the grand midtown concert hall. But now, there are 33 occupied apartments remaining (Astor’s is the last triplex). The studios are in the process of being gutted and remodeled by the Carnegie Hall Corporation (the building is owned by the city, but the corporation is its primary tenant). According to a CHC spokeswoman, the spaces will be converted to “educational facilities” for young musicians.

The corporation has promised to find comparable apartments for the seven rent-controlled tenants still living in the Towers, and to pay the difference in rent for the remainder of each tenant’s life, but the 26 non-rent-controlled commercial and residential tenants—including Astor—have no such guarantee, and received eviction notices last year. In December, a New York City civil court judge ruled in favor of the Carnegie Hall Corporation and the evictions. A group of tenants, with Astor as one of its main galvanizers, is appealing the decision.

When Andrew Carnegie built the Towers over the Hall—the project was completed in 1896—he intended for the studios to be occupied by working artists. It wasn’t cultural altruism—the rents were a source of revenue. But architect Henry J. Hardenbergh (who also did the Dakota and the Plaza Hotel) designed the apartments as studios, with high ceilings and north-facing skylights. The roster of names who lived and worked there is stellar: Isadora Duncan, Agnes de Mille, Garson Kanin, Marlon Brando, Leonard Bernstein.

Clive Gillinson, the executive and artistic director of Carnegie Hall, is sympathetic to the tenants’ plight. “If I were them, I would feel the same,” he says. But the CHC is intent on expanding its educational programs and rehearsal space, and, Gillinson believes, the studios are critical to meeting the organization’s needs.

Pianist Donald Shirley, 80, has lived here, rent-controlled, since 1956, so he’s entitled to the comparable apartment and rent differential the corporation is promising. Right now he has 34-foot ceilings, natural light, and a midtown location. “Comparable,” he says with understandable skepticism, “is the operative word.”

Apt. 845
Josef Astor, photographer.
Years in the Apartment: 22.
Josef Astor’s triplex studio on the eighth floor of the Carnegie Hall towers has been his living and working space since 1985. It has a second-story balcony and a northern exposure. Astor is involved with the remaining tenants’ fight to stay in the building.

Apt. 1208
Editta Sherman, photographer.
Years in the Apartment: 58.
Editta Sherman is known as the Duchess of Carnegie Hall. The sprightly 95-year-old has lived in her twelfth-floor studio since 1949. She raised five children while working as a successful photographer of the cultural elite. Dramatic black-and-white examples from her collection of 2,500 portraits are displayed against the mirrored walls and bold checkered floor: Henry Fonda, Mary Martin, Douglas Fairbanks Jr. A cast-iron circular staircase leads to a loft filled with studio props. Photographer and fellow resident Bill Cunningham enlisted Sherman as his model and muse for his 1978 book Facades, which fuses fashion and architecture photography.

Apt. 1601
Tod Williams and Billie Tsien, architects.
Years in the Apartment: 34.
Architects Tod Williams and Billie Tsien have lived, worked, and raised a family in their sixteenth-floor aerie. Their studio will house an emergency generator if the proposed plans go through. Even if Williams and Tsien have to leave, they hope the space can be used by other artists. “It’s not about us,” says Tsien. “It’s about this place as a community for artists.”

Apt. 130
Donald Shirley, classical pianist.
Years in the Apartment: 51.
Donald Shirley started on the eighth floor in 1956; he now lives, with his concert-grand piano and trove of objects, on the thirteenth floor.

Poetry in Real Estate

I recently heard a rumor that that one of the Greenwich Village residences of a great American poet is perhaps coming on the market. Albeit, this maybe just hearsay, it has me excited. The one thing that fuels my passion for NYC real estate is history. I have a private blog and thought I would share an excerpt from it with you in celebration of hoping, possibly that this narrow little town home will be actively marketed in the near future…

From My Personal Blog

Saturday, September 09, 2006

Bryant Park

Saturday mornings I have taken retreat from weekly pandemonium

and have found comfort in

Bryant Park.

With a cup of “bold & cream” and literature in hand, I have felt wonderfully isolated with noises stirring around. Bryant Park is a small slice of Paris for me.
…as I crossed 6th Avenue this morning, I was slightly panicked by the massive white tents that have hijacked the park for Fashion Week. However, I was able to find a spot away from the spectacle and finish

Savage Beauty: The Life of Edna St. Vincent Millay.

Vincent Millay is an intriguing and haunting individual. I am slightly embarrassed that I did not know that she is responsible for the famous American quatrain:

My candle burns at both ends;
It will not last the night;
But ah, my foes, and oh, my friends-
It gives a lovely light!

How profoundly bearing it would have been to know her…or to have met her during the years she spent in Greenwich Village.

Sometimes I feel that I was born too late and was meant to live my adulthood in the late 1920- mid 1940’s. The literature, art and music fill me – so unlike anything in the last twenty years…and in the spirit of Fashion Week: I adore the clothing and the mannerisms during those decades forlorned.

**********************************************************************************

I have found my soul in this city. I no longer wonder “what if” ; I no longer crave what I cannot have…never before have I felt “at home” as I do here: professionally, socially and just with, everything! In four weeks I have established a solid, unique foundation at my place of business and found a way to inspire within and with others. Creativity and humor have seen a renaissance.

I did go back to Cleveland a week ago, Thursday.
After being in the home that has given me great contentment over the past couple years I listened to Liebestod (Horowitz: The Last Recording) as I took a long, steady look around while romancing the memories within the walls: I found myself letting go of it – without all of my illustrious sentimentality.

I was ready to get back to New York…
I have become a New Yorker.

Real Estate Report 2007 By Michael Idov

A bubble’s destiny is to burst. Otherwise, it’s not a bubble. This year, however, the New York housing bubble—the ominously overinflated market that experts have been warning us about since the current run-up in housing prices began—has begun to seem more like a protective sphere. West of the Hudson, things are looking bleaker by the day: 180,000 homes fell into foreclosure nationwide in July alone, with up to eleven times that figure feared by the end of 2008. Sales of existing homes were down 17 percent in the second quarter; for the fourth quarter, Goldman Sachs forecasts a 15 percent nationwide price decline. “We’re in the worst housing recession in 40 years,” says Nouriel Roubini, professor of economics at NYU. “It’s an absolute disaster.” In our charmed city, meanwhile, the weather—for the moment, anyway—appears to be fine. In the second quarter, the price of an average New York apartment rose by 8 percent. The luxury sector went positively berserk, with four-plus-bedrooms in Manhattan going for 20 percent more than last year. And 15 Central Park West, “the new Dakota,” famously raised its prices nineteen times before finally selling every one of its 201 units for a combined, staggering $2 billion—including Sandy Weill’s $42.4 million penthouse.

The near-obscene disconnect raises the question: Is New York immune to the market forces presently shaving billions off home values in the rest of the country? Some say yes. A few years ago, economists Joseph Gyourko, Christopher Mayer, and Todd Sinai coined the phrase “superstar cities” and posited that some lucky areas—this metropolis very much included—are simply different, possessing the right combination of “inelastic supply” and near-bottomless demand to untether them from national trends. On the supply side, New York is geographically small and decidedly finite, and the red tape required to build here is staggering. (Gyourko has calculated that the inflated values created by artificial stifling of construction cost the average New York homeowner more than $7,500 a year—a de facto “preservation tax.” Others say that number may be closer to $10,000.) Even Michael Bloomberg and Dan Doctoroff’s pro-building agenda, which includes tax breaks for developers, aggressive rezoning, and a taste for neighborhood-altering megaprojects, hasn’t really done much to pump up inventory. Despite what our own eyes tell us (“I live in Tribeca and can count 40 separate construction projects in my neighborhood right now,” says Roubini), new construction is not adding nearly enough units to glut the market. Low crime, plentiful jobs, and the resurgence of big-city sex appeal, meanwhile, have led throngs of people to want to live here and, in a huge paradigm shift, stay even after they breed. To well-heeled newcomers, our enormous rents make our enormous mortgages a relatively sane proposition, and our international character, combined with the soft dollar, also make us one of the few American cities with a global buyer pool. “We have the Google effect,” says Brad Inman, the Berkeley, California–based publisher of the real-estate news service Inman News. “You got the Irish effect. They’re buying $10 million apartments!” (Inman is referring to upper-class Dubliners’ newfound longing for Manhattan pieds-à-terre, which is strong enough to have caused some developers to market whole high-rises exclusively to the Irish.) Brits, Japanese, Saudis, and other groups, of course, have all, at one time or another, developed mass crushes on New York as well.

All told, the city’s population is expected to grow by 200,000 in the next three years, and by half a million by 2020. It stands to reason that if enough “high-income superstar earners,” in Gyourko’s parlance, disproportionately file into New York and pay a premium for the privilege, home prices will continue to rise. As Gyourko’s colleague, Harvard professor Edward Glaeser, puts it, New York’s boom is “driven by the reinvention of the city as a center for idea creation in finance and a playground for the prosperous.”

But what if the prosperous stop prospering and don’t feel like playing? Though some experts believe that the current subprime-mortgage mess will be contained, it points directly to our Achilles’ heel: what Inman calls “the deadly marriage between New York City real estate and Wall Street.” Housing-wise, financial types are a dream demographic—they generate wealth for clients and snap up extravagant abodes for themselves—but it’s easy for the market to get addicted to yearly infusions of investment-bank bonus cash, and the withdrawal can be painful. After the 1987 stock-market crash, Manhattan median home prices plummeted by 26 percent. Should the current liquidity crisis spread, New York real estate could theoretically crash without a single subprime foreclosure in the five boroughs: Others’ grief could catch up to us via bad brokerage-house bets and the plummeting profits and pink slips that come with them.

There are other, wonkier, reasons to be afraid. If we look at the instruments economists use to take a market’s temperature, many point to an imminent bust. For one thing, we appear to be reaching the peak of a so-called Minsky cycle. In Hyman Minsky’s ingenious model of asset bubbles, economic stability breeds riskier and riskier investors: First come the “hedge borrowers,” who play with their own money; they are followed by “speculative borrowers,” who have enough cash flow to keep the lender at bay but not enough to cover the principal investment, and finally “Ponzi borrowers,” who are, as the name suggests, borrowing to refinance other debts they can’t meet, in the wild hope that the market will keep climbing. The Minsky model is remarkable for having been proved the way we like our economic models proved: recently, the hard way, and twice. We cycled through it in the eighties with junk bonds, and in the nineties with tech stocks. As it happens, the latter-day brownstone-flippers, financing each new property with the last one’s equity, are the dictionary definition of Ponzi borrowers. In fact, it’s almost unbelievable that the obvious junk-bond and dot-com analogies would ever pass us by. But such is the boom mentality. First you think the bust isn’t going to happen, then you think it’s not going to happen to you.

Another frightening omen: Glaeser has studied housing data from every metropolitan area in the country between 1980 and 2004. Based on his research, he has estimated that on average, for every dollar a city gains in prices over five years, it loses 32 cents over the next five years. It’s a simple and brutal equation. “New York City has had a great past five years,” he points out. “This bodes poorly for the future.” For someone who bought at the top of the market, seeing one-third of the value shaved off the purchase price is a potential disaster, especially if there’s a home-equity loan or second mortgage involved.

Scarier still, there are indications that the slump is already under way—there’s just too much of last year’s bonus cash coursing through the city, or so the theory goes, for us to notice. A closer look at the latest figures shows pockets of weakness. This summer, it was moneymaking Manhattan pulling up the stats for the rest of the city, with a few Brooklyn enclaves coming along for the ride. But Queens, the city’s leader in foreclosures (up by 92 percent this spring), and the rest of the boroughs went on a backslide that roughly mirrors the broader American slowdown. The wider the net, the worse the numbers: The S&P/Case-Shiller Home Price Index, for instance, which takes into account the entire metro area, shows a 3.4 percent year-over-year decline in New York since June 2006. The co-creator of the index, Yale professor Robert Shiller, has impeccable Cassandra credentials: He correctly predicted the tech-stock disaster in his 2000 book, Irrational Exuberance. Still, some economists argue that the index does not accurately reflect conditions in Manhattan because it includes parts of Connecticut, New Jersey, and Pennsylvania, and thus mixes co-op and condo data with single-family-home sales.

So, which is it? Irrational exuberance or irrational paranoia? Bubble or Biodome? We turned to some of the brightest minds in real-estate economics—Glaeser, Inman, Roubini, Tim Harford (author of The Undercover Economist), George Mason University’s Tyler Cowen, and Urbandigs.com founder Noah Rosenblatt—to come up with competing best-case and worst-case scenarios from now to 2010. Because economists are loath to utter concrete numerical predictions on the record, we mashed their guesses together; the results are composites of frequently divergent individual opinions and should be treated as such

WORST CASE
In this scenario, a full-fledged credit crunch rips through the system. The August employment figures, showing no growth for the first time in four years, are the beginning of a serious downward trend. The economy heads for a hard landing, and an all-out recession ensues.

2008: Consumer spending weakens nationwide, as the slackening economy, soft labor market, and progressively crunched financial markets create a vicious circle. By the beginning of the year, the economy enters a recession. The Fed has cut the federal-funds rate, but it’s too little, too late: In the wake of the bad-debt wave, there’s been a significant repricing of risk. As a result, safe government-bond yields fall while lending rates rise. About $1 trillion in adjustable-rate mortgages reset at a higher rate, including billions’ worth in New York. Subprime-related foreclosures are not a significant cause for worry—there are relatively few in New York—but those who can’t afford the new rates are beginning to sell at a loss. Meanwhile, the qualified-buyer pool is shrinking because jumbo loans are harder to get, even with good credit. Wall Street gets hit on three sides: Banks and brokerages cope with large losses, stock prices reflect the recession, and everyone sheds excess personnel. Smaller Christmas bonuses guarantee that the demand for four-plus-bedroom apartments won’t pull up the rest of the market. In addition, some of the younger banker types who bought in 2006 are now laid off and pondering selling. Inventory swells, and the price slide begins in earnest. “Pockets of distress” (former fast-flip frontiers such as Bed-Stuy and Crown Heights) lead the way down.
Correction: 5 percent.

2009: There is an insolvency crisis afoot as homeowners, mortgage lenders, home builders, financial institutions, and even some corporations go into debt distress. The economy is buckling under unserviced debt. The recession is the last nail in the coffin of the Republican majority; Democrats march into Washington, solidify control of both houses of Congress, and promptly raise taxes, which initially affects Wall Street negatively. In some pockets of the country, new homes lose up to 50 percent of their value. Here in New York, the ailing financial-sector labor market and ever-decreasing bonuses continue to chip away at the local pool of qualified buyers. Among those who can afford to live in New York, conservatism spreads. It is now common wisdom to sit tight and ride out the storm. Finally, toward the end of the year, rental prices come down, making renting, for the first time in a long while, an appealing alternative to homeownership. Subprime borrowers who are still hanging on, as well as arm recipients whose loans had reset in 2008, are seriously tempted to sell—at a loss if need be—and start renting. The city bids farewell to Bloomberg, now irrationally blamed for “too much new construction” as Greenpoint luxury condos stand half-empty or turn rental. The decline accelerates.
Correction: 18 percent.

2010: There’s a new mayor in town! Regardless of his political affiliation, Bloomberg’s tax breaks for developers remain in place, but new construction is limited by smaller developers’ reluctance to enter the fray. The 2007–8 credit crunch is still reverberating on Wall Street, depressing stocks. However, housing prices are now low enough that cautious buyers begin to think they’ve spotted the bottom of the market and start to get off the sidelines. There’s an uptick in the buy-side demand, especially from wealthy speculators, individuals thinking long term, and foreigners snapping up New York apartments at fire-sale prices. The U.S. economy recovers from the 2008–9 recession. Inventory tightens back up. We’re on our way to normalization.
Correction: 3 percent.

According to The Sun: Market Tilts to Buyers of Real Estate

I was recently asked my opinion on the recent New York Sun article titled “Market Tilts to Buyers of Real Estate” (posted below). I do not think that the national trend in Real Estate has affected NYC – yet. Do I think Manhattan is going to see a turn in this “easy life” we in sales have had – most definitely, yes. I have sold in every state in the US (via third party relocation) and know how hard it is to sell in an awful market. The Detroit area was my hardest sell. This being said, I do tend to see similar signs of a market that is about to decline. However, I really do not think that will see the evident effects until the end FY08.
The below article is more focused on developers that have taken risks in areas of NYC that are not “prime” areas to buyers and renters.

Rob Gross is a dear colleague that I immensely respect. His marketing for the Lenny Taub development was very creative. Creativity can only get you so far…in an area that many do not consider a “safe” area. Personally, I love Hell’s Kitchen. The area reminds me of the NYC that I fell in love with when I was in 6th grade on my first visit from Ohio.

I have been running around this fabulous city non-stop for days. I feel, at times, like I am in the Bill Murray film Ground Hog Day. I just got home and need to pull more properties to show tomorrow -that quite honestly, I do not have.
I have very little properties to show my buyers and renters at this time.
The areas that are most requested by my clients: Upper Westside (70’s-80’s / West End to CPW); Chelsea; Flatiron; TriBeCa; and the most popular area du jour, West Village. Then, there are the Pied-A-Terre buyers that seem to be focused on the Mid-Town area.

I feel that the below article is stretching…I right now, need inventory!

Market Tilts to Buyers of Real Estate
BY BRADLEY HOPE – Staff Reporter of the Sun
September 13, 2007

For months, experts have touted Manhattan as being immune to the residential woes that have plagued real estate markets from Miami to Texas. Now, the first concrete signs of a slowdown in the city’s residential markets are appearing, with an increasing number of developers promising to cover buyers’ closing costs, and others offering brokers higher commissions if they bring in sales.

“Owners are getting more anxious,” the president of the brokerage firm A Fine Company Inc., Andrew Fine, said. “Mortgages are a little bit more difficult to come by; it’s not clear how strong Wall Street bonuses will be.”

Incentives to lure buyers are increasing in new developments in some neighborhoods of Manhattan and Brooklyn. At a new 45-unit development in Hell’s Kitchen — which has seen price tags cut on 11 units by as much as $50,000 since March — the developer is offering to pay the closing costs that are traditionally shouldered by the buyer. Closing costs, which include state and city transfer taxes, and fees for the brokers and lawyers, add up to thousands of dollars. For example, a two-bedroom unit at the building, at 517 W. 46th St., has an asking price of $1.4 million, with closing costs of about $30,000.

“This positions us as a buyer-friendly building,” a broker for the development, Robert Gross, said. “It opens doors for buyers who don’t have the liquidity to pay the closing costs.”

At the Lenox Grand in East Harlem, the developer is advertising an even more generous deal: In addition to paying the closing costs, it will pay two months of maintenance and the first month of common charges and insurance, according to the building’s Web site.

In Williamsburg, the Maspeth, a 24-unit condominium, is offering a deal for buyers under which the developer will pick up the closing costs and also help qualified buyers secure a $10,000-down mortgage.

“When you start seeing that, it would be an indication that the particular development, for some reason, is having difficulty closing deals,” a vice president at Corcoran, Peter Comitini, said.

Brokers for the Lenox Grand and the Maspeth did not respond to calls for comment.

Another strategy developers are employing is to offer brokers higher commission checks. For example, a few months ago brokers were offered a commission payment of 3% of the unit’s price at Century Tower, a 23-floor apartment building at 90th Street and First Avenue. The building is now offering 4% commissions, Mr. Fine said.

“We employ that type of an incentive at different times at different buildings,” Jay Solinsky, the president of Classic Marketing, the marketing firm for the building, said. “I don’t think anybody is really panicking.”

Mr. Fine said another client in Long Island City raised the commission to 2.5% from 2%, and he expected it to offer an even higher rate.
“I really think we are going to see more developers do that,” Mr. Fine said.

Even while there are early indications that developers are changing their strategy, prices for real estate continues to rise, albeit only slightly. The average sales price of an apartment in Manhattan was $1.46 million during the second quarter of 2007, an increase of about $4,000 from the same period last year, according to data collected by the appraisal firm Miller Samuel.

With prices continuing on an upward trajectory, “I do not see a market-wide trend of softness,” Mr. Comitini said. Instead, he said he believes the incentives for buyers are related to problems at those specific developments.

Still, it may be that developers want to hurry up and secure buyers before prices do begin to drop.

“The credit crunch is a question mark,” the president of Miller Samuel, Jonathan Miller, said. “It shows they are shortening the marketing time in case there is a problem down the road.”

New Jersey Market

HOUSING MARKET IMPROVES SLIGHTLY, INVENTORY STOPS RISING
From OTTEAU VALUATION GROUP, Inc.

Market Trends

The decline in the housing market which began during the 2nd half of 2005 is evidenced by the rising tide of unsold homes on the market. While there are many contributing factors, the supply of competing properties is paramount as it creates a ‘mood of the market’ which determines whether home buyers feel any sense of urgency. For example, as Unsold Inventory declines and a buyer’s choices diminish they are inclined to purchase sooner rather than later driving inventory even lower and home prices higher in the process. Conversely, rising inventory extends normal marketing time causing home sellers to reduce their asking price. In this rising tide environment home buyers adopt a ‘wait & see’ stance due to concern about falling home prices, leading to further increases in Unsold Inventory and thus creating a downward spiral. Any reverse of this cycle is then predicated upon a decline in Unsold Inventory. While this is admittedly a simplistic view which does not take into account corresponding demand factors, the bottom line is that the housing market can not improve significantly until Unsold Inventory declines. And the first step toward inventory decline is for it to stop rising.

The New Jersey housing market provided a glimmer of hope in July as Unsold Inventory declined for the first time since January. That this decline accounted for less than a 1% reduction in Unsold Inventory makes it clear that the housing recession is far from over and will continue into 2008. However, should inventory hold at its present level would signal the ‘beginning of the end’ for the housing recession.

The July housing market also saw an increase in contract-sales activity on a seasonally adjusted basis. As demonstrated in the NEW JERSEY CONTRACT-SALES ACTIVITY chart, July sales were higher than one year ago confirming that while the housing market is weak it still has life. No surprise here as despite the decline in sales activity over the past 2 years the underlying demand for housing is still bubbling beneath the surface. This is because life goes on with continuing household formation, marriages, the birth of children, job promotions, divorce and retirement all leading to changing housing needs which translates into housing demand. Thus, the stage is being set for a rebound in the housing market once the current challenges sort themselves out.

From a market absorption perspective, the Unsold Inventory presently reflects a 9.0 month inventory of homes as compared to 8.9 months in June. This however compares to a 4.0 month supply in July 2005 suggesting that inventory is currently about double where it needs to be before home prices will start rising again. This is important to would-be home sellers who are considering waiting things out before selling their present homes as any rise in home prices is likely several years off.

Follow-up to a Friendly Disagreement

Recently, I was debating with a friend, whom is a real estate agent with the largest real estate firm in Manhattan about the national market and how it affects NYC. I met him when I was at that firm as the Broker Referral Manager. For years I have heard brokers and their sales associates say: “This is New York, it does not apply to us”. Well, I disagree and it does affect NY.

Yes, Manhattan has seen a great deal of appreciation. However, many agents do not realize why or take the time to understand their statement “This is New York, it does not apply to us”.

Part of the upward growth in NYC is foreign investors, lack of land to expand (unlike Dallas), and corporate relocation.

I would like to expand on the relocation point of view:

In terms of appreciation:

The average term of a transferee’s relocation assignment is two years. Currently, I have eight clients that have been told by their companies that they will be in NYC for 18-24 months.
Prior to moving to New York, I handled the relocation for an investment bank in Manhattan. In addition to this client, I (and a team) managed fifteen other corporate clients throughout the US and Puerto Rico. This experience allowed me to really take note of how relocation affects the market. During my tenure (3 yrs), I relocated 40% of my transferees twice.

One transferee always sticks in my mind: a PMD for the investment bank I relocated from NY to Houston; from Houston to San Francisco; from San Francisco to New York. I was involved with six real estate transactions for this transferee within three years. Houston at the time was a really tough market. I actually, sold and closed the San Francisco property before the Houston property…

Yes, this example is a little extreme, but hopefully, you will understand the impact of corporations moving their employees in and out of a city that builds “up” and not “out”. Of course we are going to have appreciation if you are turning the same apartment -let us say, every two years…

In terms of “The Bubble”:

I do feel that the National Market does influence Manhattan real estate. Albeit, not severely…
One example: a homeowner in Detroit that is being relocated to Manhattan may not be able to purchase in New York and may have to rent in lieu of buying. I have heard many sales/rental agents ask and complain,

“My client makes $300,000.00 a year and only wants to spend $5,000.00 a month for a two bedroom rental. How am I supposed to do that and why does he not just purchase?”

My response, is always a question, “Where is he relocating from?”

Then, my response (depending on the city):

1. He may not be able to sell the home in Detroit for a year because the over abundance of homes on the market.
2. His company may not be offering him a Guaranteed Purchase Offer.
3. He may not qualify for a mortgage in NYC because of his home in Detroit
4. His company may not be offering duplicate housing because he is not purchasing in the new location.

So yes, the National Market does affect NYC real estate…

Another thing to think about:
Companies are cutting back on their relocation policies because of the Market Conditions in the rest of the country…this too affects NYC real estate.

Gramercy Starck: A Broker’s Encounter on a Rainy Afternoon

I love my job. I truly enjoy showing off Manhattan: whether it is an expat that only has a budget of $2,100 a month for a rental; or a sales client that has a great budget (and purchases with cash) – I always display enthusiasm. I enjoy meeting other individuals in the business (broker, leasing agent, developer or sales person) with the same zest and pride in this profession. It makes my job easier and actually, a lot of fun.

Yesterday, was a day of disenchantment…

I took a sales client to the newest Philippe Starck project being marketed by The Shvo Group.

I have been to many new developments and usually enjoy the experiences with my clients. Typically, it is a wonderful production of quality involving all aspects of each unit, amenities and the specific neighborhood.

I was incredibly disappointed by the sales team. First impression: was the day before my appointment when I received a voicemail from the sales office to confirm my appointment. The VM: “ Hi, Heather this is ******, from Starck Gramercy. I am calling to confirm your 4:15pm appointment. If you do not call me back today, I will give the appointment to another person”. Even though, I was taken back by the lack of professionalism, I called back within 15 minutes to confirm.
My client and I arrived to the sales office a few minutes early. The receptionist that was not engaging; she did not even welcome us as we walked in. She just said, register at the terminal. Once, we registered, we were taken to the lounge waiting area. In the lounge area we had a lighthearted conversation with another potential buyer that had been waiting for sometime for the presentation (his appointment was for 3:30pm). Around 4:30pm myself, my client and the other buyer were rushed through the presentation. The sales person was lacking in all areas of customer service and professional presentation skills. Her vocabulary was full of “whatever, uhs,umms, this & that’s”.
I was disappointed: if it was not for the quality of finishes and sq ft price of this new building, I would never want to take another client to this sales center.
I guess the thing that resounded at such a high frequency with me was the lack of passion the team displayed. I do realize that the building has already sold 80% of its units (impressive). However, it is because of the Starck brand and not the sales team.

Recent articles regarding the project…

Philippe Starck Is So About the Outer-Boroughs
by Max Abelson

This article was published in the August 6, 2007, edition of The New York Observer.

It’s a lovely day in New York City. You’re missing out.

Mr. Starck: I’m not so bad. I am in my farm in Southwest France, close to Bordeaux. We have spent the day with the boat; we drink very, very good Bordeaux white wine, we eat some of the 200 million oysters. It’s very acceptable.

Is it still true you have 17 homes?

Oh! I think it’s 21. The last one is a new one in Venice—we now have three houses in Venice. Here where we are is almost French Venice, it’s a lagoon.

Do you have a condo at the soon-to-open Downtown by Philippe Starck near Wall Street?

You know, it’s a funny thing, because I never think to buy an apartment in the places I do—which is ridiculous, because these places are very good, very well-designed! And I think, it’s true, I can have a very good discount. It’s a fantastic value to buy, because everyone who buys can resell it and make a fortune.

Gramercy by Starck will be your second namesake building. Do you like being a brand?

I say it’s good and bad. When people come to buy what you’re doing, just because Starck is chic, I say it’s ridiculous.

When people come and … know that 20 years ago they were in a hotel by this guy, and they cleaned their teeth with the brush of this guy, and they see the Louis Ghost Armchair by this guy, they drive the motorcycle, they take the plane, they eat organic food by this guy, they say, “You know, I like so many things by this guy, perhaps we have something in common? Perhaps we are from the same tribe?” For that I feel more comfortable. In this way it is good.

Why will your name be on the Gramercy’s “Starck Lounge” and “Starck Fitness” gym?

Darling, I have no idea! I am sure my partner who built that loves me, and he did that to please me. And it is very nice.

Would someone who uses your high-design toothbrushes or high-legged juicer want to live in your real estate?

I make so many places—hotels, museums, restaurants; I think they can check by other ways than the brush. All these people can sleep in my places, or eat in my places, everywhere in the world: Tokyo, Beijing, Shanghai, London, Paris, everywhere.

When talking about designing your toothbrushes, you once said: “I have to acquaint myself with its owner. I need to know the kind of society that has given rise to this life.” How much do you know about the chaotic New York real estate universe?
I am not interested by the world of real estate, to speak frankly. I don’t want to know anything about the world of real estate. I just know that people need a roof, to be out of the rain, out of the cold. I know that if we build a building, and if I bring my vision, perhaps my friends can have a better life. And I absolutely don’t need to know more than that.

Architects speak about concrete, glass, and I don’t know what; we speak just about culture, humor, poetry, love, energy, vision.

How will this city look in 25 years?

Ha! Ha! Twenty-five years? New York? I hope it will be less rich, less clean, and I hope that the life will come back like it was 20 years ago. Because today New York is still New York, but it’s more the image of New York—now it’s a clean image, a computer image. New York is interesting now for banking, business, but money and business don’t interest me.

That’s why I prefer going to the Bronx, to Queens, to Coney Island, to Staten Island, to everywhere around—because in the suburbs life is still alive. And to see now the New York I love, to see the life, I prefer going around New York to in New York.

I love the Bronx, but I love, love, love Harlem. You know, Harlem is like the beauty of some of the most beautiful cities in East Europe, like Prague.

If you like the Bronx and Harlem so much, why build in Gramercy and Wall Street?

You know, I asked my partner to develop in Harlem and these other places, but I am not sure he’ll want that. You know, I am not the business partner. But I hope that Harlem, because it’s the most beautiful place of Manhattan, will have a strong revival.

You’ve designed a mouse for Microsoft, underwear for Puma, nightclubs in 1970’s Paris, and drawn up a New Mexico galactic spaceport for Richard Branson. Why bother getting so deep now into the fickle, big-money world of Manhattan real estate?

Because I can make both! It’s not very complicated. I have this [design and development] company called Yoo, which is a big success in the world, and it’s very interesting to reinvent everything. My job is to try to reinvent everything, and there are a lot of things to do in apartments, and that’s why I created this company. And why not? It’s not so complicated to do.

What Manhattan architecture do you admire?

You know, I am absolutely not interested in architecture or design, especially when it is done. When it is done it is done. More than that, I am interested in people. That’s why Yoo is more about bringing new solutions for my cultural tribe, my cultural community: to have a better life, to be more sexy, to be more smart, to be more in love, to be more awake, and that’s all.

The shape of the building doesn’t interest me, just what I shall do inside—how I shall manage the energy, how I shall make some interaction between people. They can become a tribe, an internal village.

New Yorkers are cynical and depressive. Can you make them have a better life?

Oh definitely yes, without question. Because New Yorkers are not all cynical, there are always New Yorkers who are from what we call the smart tribe, people who believe that they can create a better life with more humor, be more creative … There is a good cynical tribe somewhere, but it’s not my tribe.

Your apartments average around $1.5 million. Don’t you worry about excluding the non-rich?

Yes, I worry a lot about that. With Yoo, we have something like 45,000 apartments rising in the world. Sometimes it’s very expensive, like in London … sometimes it’s less expensive, like in Boston.

But to answer: Yes, I worry. And I try always to follow what I have always made in my life, called democratic design, which means the best for everybody. But, in New York, the price is so high it’s not possible to make something more affordable.

Lastly, why are you wearing red leather gloves in your real estate ads?

Oh! I have a motorcycle; I have a plane where I can put my two motorcycles, I drive only motorcycles. And when you drive motorcycles, you have to always have a motorcycle jacket, motorcycle boots, and always motorcycle gloves. And my gloves are red because I don’t know why. Because I think it’s more fun.

Starck on New Gramercy Condo: ‘Can We Talk Sex Instead?’by Gillian Reagan
Published: May 1, 2007
Tags: Real Estate
This article was published in the May 7, 2007, edition of The New York Observer.

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“A building, the architects think, is made of metal, steels, aluminum, glass,” said Philippe Starck, arguably one of the most peculiar and famous French designers in the world, speaking to The Observer on Tuesday morning. “Between the greedy money guy and the architect, where is the life? Where is the love? That’s what we are; that’s what we bring. We are flesh. We are sweat. We are human.”

Mr. Starck was on a long-winded, tangent-littered response to the question: Is his latest building, Gramercy, really in Gramercy?

The 207-unit luxury condo on 23rd Street, between First and Second avenues, officially started sales this week during a Tuesday P.R. press, powered by marketing superstar Michael Shvo. The first and only building designed from lobby to roof garden by Mr. Starck, the 21-story Gramercy aims to reinvent the low-rise, brownstone-lined neighborhood surrounding the exclusive Gramercy Park at East 21st and Lexington Avenue.

After about 10 minutes discussing how “everything is possible” and insisting that he doesn’t “design the apartment—I help you know the apartment,” Mr. Starck finally answered the query about the condo’s exact location: “I don’t know,” he shrugged, his signature red leather gloves peaking from his jacket’s pocket.

“Clearly, it will be your island into poetry; your creativity, tenderness, honesty, respect, even sophistication and elegance. That’s a value that’s not really used in real estate.”

Mr. Shvo is selling the apartments as being located “just a few blocks” from the park, but they are truly located in that gray area sandwiched between the Gramercy and Rose Hill neighborhoods that’s still scrubbing off its grime.

According to press materials, Mr. Shvo wanted to bring “a new level of luxury living to 23rd Street, in addition to bringing a global brand that was instantly associated with style, good taste and incredible wit.”

Mr. Starck described the building—which will feature yellow glass elevators and fake black deer heads draped in pearls—as “a frontier between the regular world, dark and gray” and “your home. You must have a symbol, a territory.”

“As much as he’s designing, he always comes up with a new idea,” Mr. Shvo said during a tour of a mock Gramercy unit, with buttery black leather couches and huge chandeliers made from seashells.

Mr. Starck, who arrived at the Tuesday P.R. event 15 minutes late, said he wasn’t really interested in discussing the development. “If we could speak about life or sex,” he said, “something more interesting, that’d be better.”

The FDR: Top 10 Talked About Buildings in FIDI

Every time I am out in the field or having a quick cocktail with acquaintances, the resounding question has been: “What is the cheapest per sq.ft. building in the Financial District?”
Then they ask: “Well which has the cheapest common charges?”

So, I decided to take the data from the 10 most requested units in the area, scrub it and chart it.
Please keep in mind the data is an estimated average of different sized units within each building (not specific to one layout or floor plan).
Click on graph for larger image…

Rating NYC Neighborhoods

Jonathan Miller of Miller Samuel, Inc. recently released data comparing the areas of NYC…interesting info. Additionally, Mr. Miller stated:

“The change from 2004 to 2005 (prior year) was characterized by an overall 25.8% increase in price per square foot for all of Manhattan with all but one of the markets experiencing double digit increases in price per square foot. The overall Manhattan price per square foot change would have been between the 9th and 10th ranked markets in 2005. The overall Manhattan average price per square foot change from 2005 to 2006 was 6.8% and fell between the 15th and 16th ranked positions indicating that the higher ranked locations were generally
smaller in size, carrying less weight.

In either year, none of the neighborhoods/markets saw negative price declines and judging by the early going in 2007, “more of the same” appears to be the trend. Of course, this is in distinct contrast to the national housing picture”.

Click graph to enlarge…

Buyer Demographics: William Beaver House

The Real Deal
per WSJ
May 11, 8:44 am
New condos draw old-timers…

Marketing material for the William Beaver House Firms across the country are constructing condos with amenities like on-site bars and videogame lounges meant to lure young professionals. However, many are finding they’re attracting just as many baby boomers as 20- and 30-somethings. Close to home, for example, Andre Balazs’ under- construction William Beaver House–which gained notoriety for its saucy marketing campaign–has drawn considerable interest from the over-50 set. The Financial District development, which is set to open next year, has sold about 30 percent of its units to a “mixed group” of buyers, according to Balazs. “It’s not as young as I thought,” he noted.

And Just Who Are All These Uptown Developers?

They want families as buyers and air for their towers; mostly, they want Manhattan addresses

The New York Observer
by David Foxley

Published: May 17, 2007

A considerable chunk of Manhattan’s condominium projects proposed for 2007—nearly half—will be constructed above 86th Street, and many of them will be built by first-time or little-known developers. As reported in this week’s Observer, some 30 of the 65 planned condominium projects submitted to the State Attorney General’s office, between Jan. 1 and May 7, are above 86th Street. And a vast majority of those will be above 110th Street.

But instead of having backers with names like Zeckendorf, Trump or even Padeh, these $20 million new-construction and conversion projects—like the one going up at Seventh Avenue and 127th Street—are being built by outfits like NYC Designs Inc., the Poko Partners and Mann Realty. A $27 million conversion at 1890 Adam Clayton Powell Jr. Boulevard at 114th Street, for example, is slated to be built by something called Tahl Propp Equities.

“I don’t want to call it a gold rush, but there are a lot of young, small-name firms taking cracks up there all over the place,” said Trevor Stahelski, the impossibly young and successful partner at Cardinal Investments. “The dirt is cheap, and it’s in Manhattan. It has the Manhattan neighborhood structure that you have in other parts of the city: colleges, hospitals, transportation.”

It is exactly this marriage of relatively inexpensive land prices and a Manhattan address that is bringing more real-estate savvy developers and buyers to neighborhoods above the park.

Mr. Stahelski, whose project at 245 West 115th Street is already sold-out (“We’re done!”), thinks the reason the area is attracting a slew of unseasoned developers is evident: “You can take a little more risk and be a little farther away from established areas and be a pioneer in gentrifying neighborhoods; it’s really a simple strategy.

“We look for opportunity, balance the risk by staying in Manhattan in neighborhoods that are getting safer—it’s gentrification,” Mr. Stahelski explained.

And what kinds of buyers are hoping to take advantage of lots of space, easy access to public transportation, good Manhattan schools and safer streets?

Yup, you guessed it—families.

“I think our buyers are almost exclusively coming from the Upper East and Upper West Sides,” They are comfortable up there, they have kids and they know there are good schools around,” said Gary Davis, executive vice president of development at the Athena Group. That firm’s 111 Central Park North (the marketers’ moniker for 110th Street) is already over 70 percent sold.

Mr. Davis cited a couple other factors drawing folks to the area: “Retail is following the residential. There is great light in the air, since zoning restrictions are very strong, so buildings won’t get too tall.”

The perfect height, some might say, for a new developer.

Trump SoHo Hotel

Heather Tip: Word on the street is that the opening SQ FT price is $2,600.00…

The Real Deal
By Lauren Elkies
May 16, 3:04 pm
Trump Soho hotel-condo readies to sell

A rendering of the development Now that Trump Soho Hotel Condominium New York has a permit from the city’s Department of Buildings, the sales and marketing companies associated with the project since its inception are ready to start selling.

The developers named Core Group Marketing and Florida-based Prodigy International the exclusive sales and marketing agents to draw buyers from New York and across the globe, said Jody Kriss of the Bayrock Group. The hotel-condo is being developed by Bayrock and the Sapir Organization.

“We think the buyers for this project are coming from farther away than your typical New York condo,” said Kriss.

The development, at 246 Spring Street between Varick Street and Sixth Avenue, is expected to tower over its Soho neighbors. It will rise 45 stories and is expected to have around 413 units. The tower is also one of only a few hotel-condos currently planned in New York.

The sales center is expected to open soon, and construction on the skyscraper should be completed by spring 2009.

Closing Costs for New York

CLOSING COSTS
CONDOMINIUM APARTMENTS/TOWNHOUSE

For the Seller

 Broker 6%
 Own Attorney $1,250.00 and up
 Managing Agent Fee $450.00
 Move-out Deposit $500.00
 New York City Transfer Tax 1% of price up to $500,000.00; and
1.425% of price over $500,001.00
(Paid by seller, except sale by sponsor)
 New York State Transfer Tax 0.4%
(Paid by seller, except sale by sponsor)
 Miscellaneous Title Fees $100.00
 Payoff Bank Attorney $300.00

For The Purchaser

 Own Attorney $1250.00 and up
 Bank Fees:
Points 0 to 2% of loan value (optional)
Application, credit check, etc. $300.00
Bank Attorney $500.00
Short Term Interest Up to 1 Month
Tax Escrows $2 to 6 months
Bank Underwriting Fees $350.00
Appraisal Fees $300.00 to $750.00
(Dependent on the price)
 Recording Fees $100
 Mortgage Tax 1.75% of amount of mortgage on
Loans under $500,000.00; and 1.875% of amount of mortgage on loans over 500,001.00

 Fee Title Insurance Approx. $675.00 per 100,000.00
 Mortgage Title Insurance Approx. $500.00 per 100,000.00
 Violation Search $170.00
 Managing Agent Fee $250.00
 Common Charge Adjustment $1 month
 Real Estate Tax Adjustment 1 to 3 months
 Mansion Tax 1% where price exceeds $1,000,000.00

CLOSING COSTS
COOPERATIVE APARTMENTS

For the Seller

 Broker 6%
 Own Attorney $1,250.00 and up
 Coop Attorney $450.00
 Flip Tax 1% to 3% of price (if applicable)
 Stock Transfer Tax $0.05 per share
 Move-out Deposit $500.00
 New York City Transfer Tax 1% of price up to $500,000.00, plus
$25.00 recording fee, and 1.425% of price over $500,001.00 (Paid by seller, except sale by sponsor)
 New York State Transfer Tax 0.4%
(Paid by seller, except sale by sponsor)
 Payoff Bank Attorney $300.00
 UCC-3 Filing Fee $20.00

For The Purchaser

 Own Attorney $1,250.00 and up
 Bank Fees:
Points 0 to 2% of loan value (optional)
Application, credit check, etc. $300.00
Bank Attorney $500.00
UCC-1 Filing Fee $20.00
Bank Underwriting Fees $350.00
Appraisal Fees $300.00 to $750.00
(Dependent on the price of the apartment)
Short Term Interest Up to 1 Month (wash)
 Move-in Deposit $500.00
 Lien Search $250.00
 Maintenance Adjustment 1 Month
 Mansion Tax 1% where price exceeds $1,000,000.00