I’m at the midpoint of my current co-op renovation, a total gut of a two bedroom apartment, and this is my 6th undertaking to date, not including my Westchester home which was a builder’s spec house that I finished. I’ve renovated the one bedroom units for my two children, altered our first family postwar on East 79th Street, then our seven room prewar on Central Park West, and 5 years ago I gutted a one bedroom pied a terre. Renovating a Manhattan co-op presents unique challenges and requires careful planning.
Our residential marketplace set new highs in 2Q2015. Reports from real estate brokerages are trumpeting similar though slightly differing stats, and news agencies have been buzzing with the story because everyone loves to talk and read about real estate. Record levels have been achieved in both average and median sales prices, inventory though up initially last quarter is still stalled at about 20% below the 10 year average—especially for properties under $2M, and trading volume is down.
Standards for measuring NYC apartments would be a boon to the industry. It’s a subject I’ve broached before, and one that merits re-consideration. Without uniform guidelines, the challenge of computing accurate square footage in order to compare properties persists for agents and consumers alike. While price per square foot is only one of many factors that contribute to a property’s value, square footage has become the common denominator, if not the virtual currency in which real estate properties trade. And yet, because standards are not in place, calculating square footage remains inexact.
New residential construction is booming in New York City. Pounding jack-hammers and vibrating power saws provide the backdrop din; monster construction cranes and huge cement trucks crowd the streets; giant lego-like barriers divert pedestrian traffic; billboards on elaborate scaffolding and tall screens broadcast the players of a thriving construction industry.
It has become increasingly more challenging for buyers who require financing to compete with cash purchasers. Given the chronic market conditions of tight inventory and high demand, buyers continue to outnumber sellers, and multiple bidding has become the norm. For every five bidders, as many as three can be all cash. Clearly the cash purchaser has obvious advantages over the buyer who needs financing to close a transaction; however, there are definite tactics to consider when competing with all cash rivals.
NYC property values have been rising steadily for more than two years. According to reports from the major brokerages, the number of closed transactions in Q1 2014 was at a seven year high, setting new records with average apartment prices exceeding $1.7M. Limited supply and high demand have become chronic market conditions which continue to drive up prices. Month after month, a strong local economy, historically still low mortgage rates and robust foreign investments contribute to successive price increases. As the climate for buyers becomes ever more challenging, I offer a basic primer for those purchasers who seek to win in the current hot seller’s market.
September 9, 2013. The fundamentals of Manhattan’s residential marketplace that have characterized most of 2013 are expected to continue into the fourth quarter with some notable variations. Demand will remain strong; inventory will improve somewhat; prices will hold steady; interest rates are trending higher however.
Combining apartments to create larger residential spaces is not a new concept, but it’s also not an everyday occurrence. Despite Mayor Bloomberg’s advancement of affordable pint sized micro units, the demand for large properties continues as does the practice of putting together multiple units. Even developers of new condo products are going back to their drawing boards to combine apartments to capture higher price yields per square foot. Given the current shortage of sizeable properties, one wonders whether we will be seeing more combinations.
Does the direction of January predict the course for the year? Wall Street where the adage originated thinks so. The first month of 2013 scored impressive gains with the S&P up 5.05% and the Dow gaining 5.77%—signaling the best January since 1987 and rising above 14000 for the first time in over five years. In Manhattan’s residential marketplace, a similar scenario is occurring on the Main Streets of our city with 859 contracts signed in the first month of 2013, up 30% compared to January 2012 and the highest January according to Noah Rosenblatt since his online UrbanDigs began compiling real time analytics in 2009. Following a gangbuster December when players raced to close before January 1 tax changes, and contrary to expectations for a beginning of the year slowdown, properties in January were snapped up by buyers who competed aggressively and speedily for a limited supply of homes.
There’s plenty of data available to support a U.S. housing recovery even in areas that were hardest hit by the downturn like Miami and Phoenix. New residential construction is on the rise nearly everywhere, and home builders like Toll Brothers, DR Horton and Lennar have been posting significant gains monthly since October 2011. While the housing market indeed is improving across the nation, New York City continues to dazzle as it attracts not only foreign buyers who have found safe haven for sovereign money, but the brightest and the best who make NYC their home.
There’s a palpable boom at the top of the new development market as a growing supply of high end products sizzles with through-the-roof pricing. At the same time, price conscious home buyers are choosing from a shrinking inventory of resale properties. Both phenomena are reasons for optimism.
Is there an optimum time to list a property? Yes and no. Spring is the season of perennial promise when inventory, demand and activity peak. But buying and selling occur year round, and while the seasonal calendar affects the volume and velocity of sales, there are two more important considerations than the time of year a property comes to market—namely the life stages of buyers and sellers defined by marriage, birth, death, and employment and the life cycle of a listing which is shaped by pricing and condition.
Last December as the year was coming to a close, the New York Times characterized 2011 as “The Year of the Turndown.” In addition, the reporter acknowledged that it was becoming more common for co-op boards to grant provisional consent to buyers, requiring that significant sums of money be held in escrow to ensure that monthly charges would be paid on time. This year, co-op board rejections and conditional approvals have not diminished; in fact, they are on the rise.
Five years ago on 4/30/07, I wrote a column about Best and Final offers. The real estate market was at its peak, and competitive bidding was commonplace in all price ranges and categories. Discretionary Wall Street bonus money jingled with frothy cash payments, interest rates hovered at 6%, buyer demand was high, and quality inventory was tight. Open houses were crowded with as many as 30 people showing up in an hour, and activity was brisk. Apartments were not staying on the market very long, often trading 10-15% above asking prices.
New York Residential Specialists stand out above the crowd. The new credential—the highest offered by the Real Estate Board of New York—encourages the best among us to step up to be recognized for our commitment to professional excellence and advanced education. The designation—or its acronym NYRS—identifies those who meet qualifying criteria and complete an eight week educational course with renewal classes biannually. For the industry, the new designation is all about raising the bar and maintaining high standards of professionalism, ethics and leadership. For brokers who achieve the new title, a certain competitive edge is gained. For consumers, the credential is the industry’s quality control and veritable seal of approval.
The Real Estate Board of New York is bringing critical attention to an issue of great complexity. Their recently released seven minute video, appearing on www.rebny.com and titled “Property Tax Fairness—No Margin for Delay” focuses on New York City’s rising real property taxes. The subject is as convoluted as it is complicated, and as political as it is inequitable. It’s tough to even speculate how solutions will be tendered to a problem of such complex proportions.
Price per square foot, or ppsf, is only one of several factors that contribute to a property’s value. Other considerations include condition, view, layout, light, time on market and market conditions. Yet ppsf has become the common denominator, if not the virtual currency in which real estate properties trade. Although it’s a basic unit of measure for floor area, the square foot is not always absolute and sometimes grows bigger by degrees depending on who is doing the measuring.
Square footage is a critical consideration in determining and comparing property values. Yet there are no uniform standards for measuring space in New York’s residential housing stock of co-ops, condo’s and townhouses.
I’ve taken to begin these columns with a dateline because the global economic picture is unclear and can change on a dime. There’s no magic bullet or one government tool that will repair our struggling world economy. Are we headed for another recession as some economists forecast? Pimco’s Mohamed El-Erian sees a financial crisis looming again as European sovereign debt spreads well beyond Greece and observes that all intervention despite being “massive” has not been enough to function as a “circuit breaker” to contain the quandary.
A dateline is essential when faced with a 2 month advance deadline for an October publication issue—especially when it’s 3 days after Standard and Poor’s downgraded the credit rating for U.S. Treasuries from AAA to AA+. The Dow plunged today 635 jaw-dropping points, the biggest stock market decline since December 2008. It will take time to absorb the full impact of this unprecedented measure, and all eyes will be watching as events unfold.