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Can a condo owner sell while a tenant is in place? What happens to the tenant?

Thanks to streeteasy for this one. Usually the lease overrides but does not preclude the sale — so yes, the owner can sell, but then the new owner has to wait for the tenant’s lease to expire before moving in.

Posted 11 years, 6 months ago at 5:19 am.

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What’s the deal with the fourth quarter market numbers?

Hi All, Happy New Year! Below is the text of the first front_porch newsletter is a quick attempt to give you a little analysis of the New York City market reports that are coming out today.

* We’ve hit the stall, which can been seen because days on market lengthened significantly. According to the Miller Samuel Elliman report, average 3Q days on market were 134, 4Q days on market 159: There’s the September collapse of Lehman Brothers.

* Prices didn’t really rise as much as some reports say. The Halstead/BHS report shows a rise (you read that right) in median prices of 8%, but that’s really a change in mix as some more expensive apartments closed while starter buyers either waited on the sidelines or negotiated discounts. From the field, I can tell that you prices of $2 million apartments are near flattish, while prices of $500,000 apartments are probably down around 7%. If you don’t want to believe me, one of the best indicators ran in the New York Times on Sunday, which showed declines in the Chelsea Stratus of around 7% from 2007 to 2008.

* We are probably not all going to be living in boxes in 1Q 2009. We know that there are new condo buildings where buyers are not closing – I can think of two in the Financial District that are in trouble, and Brooklyn’s showplace One Hanson Place is renting units — but the numbers show the even post-Lehman, co-ops are continuing to resell, and many existing new condo contracts are continuing to close. In fact, average price per square foot dropped by less than one percent, from$1,193 in Q3 to $1,183 in Q4.

However, “listing discount” — which is one of my favorite stats, expanded from 2.6% in Q3 to 7.3% in Q4.  I think this is a sign of weakness in the quarter to come.

Most likely are continued single-digit price declines until market psychology changes — which means the Obama stimulus measures actually cause lenders to make mortgage money available again.

I’m moderating a panel called “Finding the Turnaround” with Jonathan Miller and four other economic gurus on Friday — part of the Inman Connect Conference. I encourage the press to attend, but I’ll also send out a note telling you what they said after.

Posted 11 years, 7 months ago at 2:34 pm.

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What are New York’s “Good Buildings?”

In 1985, Tom Wolfe wrote an Esquire article where he talked about 42 New York buildings as “Good Buildings.” For your curiosity, the list is below.

Now since I was too lazy to go back and find the original article, this list is via Stephen Gaines’ The Sky’s the Limit: Passion and Property in Manhattan. If you are reading this post you’ve probably already read this book, but if not, buy it here now.

Of course, the question arises “in a downturn, what holds its value?” In the early ’90s, for example, the Gold Coast of Greenwich Village held up well, but currently it feels like celebrities would rather like in 15 Central Park West than down there. So we’ll have to see; the future will come to us.

But do bear in mind that some of New York’s best (or at least most hyperexpensive) buildings are not on this list — and some of those that were at the time aren’t. No Dakota, no Forty Fifth Avenue.

1 Beekman Place

10 Gracie Square

1 East End Avenue

120 EEA

550 Park Avenue

555 Park

635 Park

640 Park

720 Park

730 Park

740 Park

765-75 Park

770 Park

778 Park

812 Park

810 Fifth Avenue

820 Fifth

825 Fifth

834 Fifth

953 Fifth

960 Fifth

998 Fifth

1020 Fifth

1030 Fifth

1040 Fifth

River House — 435 East 52nd Street

4 East 66th Street

131-5 East 66th

2 East 70th Street

4 East 72nd Street

19 East 72nd

36 East 72nd

117 East 72nd

160 East 72nd

50 East 77th Street

21 East 79th Street

39 East 79th

66 East 79th

79 East 79th

25 Sutton Place North

One Sutton Place South

Posted 11 years, 10 months ago at 11:58 am.

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Are the current Wall Street layoffs the worst ever? What do they mean for the real estate market?

Let’s take a look at some historical data from the New York State Department of Labor:

Peak Date     Peak Employment     Trough Date     Trough Employment     Job Loss

Jul ‘69         111,600                            Oct ‘70               82,900                             25.7%

Jul ‘71           90,000                            Jan ‘75               65,300                             27.4%

Dec ‘87           163,000                        Oct ‘91                127,800                            21.6%

Dec ‘00           200,300                       Apr ‘03                159,000                          20.6%

Aug ‘07            191,800                        TBD                    TBD                                 TBD

Source: New York State Department of Labor. Current Economic Statistics Survey as Printed in “Employment in New York State” newsletter, July ‘08

If the current dropoff is in line with previous slumps, we should expect a loss of around 40,000-50,000 New York City Wall Street jobs.

That will obviously impact the housing market, though by how much is going to depend on other factors. Oldsters like me tie the NYC housing downturn of the late ’80s/early ’90s  — which was anecdotally 30-50% peak-to-trough, depending on what kind of building you lived in –  to simultaneous high interest rates.

We didn’t see that magnitude of price drop in 00/03, when Wall Street was suffering roughly equally but interest rates were “relatively” good.

Posted 11 years, 11 months ago at 9:37 am.

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What does the bailout of mortgage agencies Fannie Mae and Freddie Mac mean to me?

Hi taxpayers, welcome to another government bailout. I remember being on Wall Street (DLJ) twenty years ago and hearing an analyst talk about what a unique, sweet deal mortgage agencies had — this was probably even before these two grew into giants, but at least someone saw what was coming.

However, it’s 2008. Ron Lieber did a good job of giving broad perspective about the bailout in this New York Times article.

Specifically, though, we saw mortgage rates dive 3/8s of a point yesterday. That’s a huge one-day drop, and it puts us at a pretty favorable, 6% benchmark. (If you want real mortgage specifics, talk to Dave Steinberg, a mortgage broker who publishes Ratewatch — here’s his firm’s website.

For buyers, that should provide a little reassurance through the fall. If you think New York City is going to tank, you’re not buying until 2011 anyway. But if you think NYC  is seeing just a slight recession  (I’m in this camp) then we’ll probably see flattish pricing for a couple of years, and if prices are flat you obviously want to jump in when you can get the cheapest money possible.

For sellers, it makes the question of “what price do I list at?” more relevant than ever. Buyers aren’t biting at listings that have 2007 pricing. We are, however, seeing apartments move at “proper” pricing — that means units that are in line with what’s closed in the past three or four months, and that can hold their own against the competition that’s for sale.

Obviously, a downward tick in mortgage rates makes this process a smidgen easier.

Strap on your seat belts for a long ride — in  prime Manhattan, we are looking at four to eight months between list and close — but you should be happy with the deal you get at the end of it.

Posted 11 years, 11 months ago at 8:15 am.

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Can I get a commission discount just by asking my realtor for one?

According to Consumer Reports, yes.

A recent survey of brokerage customers found that 71 percent of the people who asked their real estate agent or broker for a deal got one.



Posted 11 years, 11 months ago at 12:26 pm.

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What does the second quarter Manhattan market report mean for co-ops?

Leaving aside the “median” price — which is easily skewed by high-end inventory cycling through the market, and means nothing to you because you’re probably not buying or selling a “median” house — the Miller Samuel 2nd quarter report was very mixed.

Co-op sales are still historically high — while the number of transactions was down some 20% from the first quarter, it was still the third-highest quarter for volume in the past three years. This says something about the credit crunch, because sales that closed in April were deals that were done in, say, December or January, so it means that buyers managed to get financing even after the awful credit squeeze of last summer.

However, inventory has soared, with more than 3,000 apartments available. This reads to me like sellers fear that the market is declining, and they all want to “pile in” and sell while there’s still time.

Logically, this should produce downward pressure on prices. There is more flexibility in the numbers, with the listing discount expanding to 3.9% from 1.7% a year before. Co-ops are moving a little more slowly, too, with average days on market expanding to four and a half months, up from about four a year ago.

In a situation like this it’s going to be all about interest rates, and if rates bump up, sales will slow even more. If we continue to have decent (6 percentish) money, co-ops will keep moving, despite everyone’s doomsday predictions. Buyers should not be looking to lowball for 15% off deals, but should concentrate on arming themselves with information so they can get their pick of properties at nice single-digit discounts.

Sellers, meanwhile, should realize that they are in a very crowded field, so it is even more important to pick a good market position and stick with it.

Posted 12 years, 1 month ago at 11:12 am.

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We are selling a $4 million apartment in New York City, and have two family friends who are realtors. How do we pick which one to work with?

Are you buying, too? If you are obligated for reasons of family politics to involve them both, the “easiest” thing to do is to have them both pitch you for the sales listing, and to use the one you don’t pick as your buyer’s broker.

Since you then will be working with a buyer’s broker who has never pitched you as a buyer’s broker, you will need to sit down and have a  conversation that you are bringing him on the deal because of family ties, but you expect x, y, and z. This conversation will be slightly uncomfortable to have, but it’s waaay easier than trying to get brokers from different firms to market a co-exclusive.

Posted 12 years, 3 months ago at 10:45 am.

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My apartment has been on the market for four months and no takers. Should I fire my agent?


Let’s ask first — whose price is it sitting at? Yours, or your agent’s?

If the apartment is listed at your price, is that different from the price your agent advised you to list at?

Because if you’ve gone AMA (against medical advice) it’s not really your agent’s fault.

If you’ve listed at a price that you both think is reasonable, the next thing to thing to check is how traffic is, both at your listing and at competitive listings.

As a rule of thumb, your buyer is probably not going to come through an open house — anyone with a true will to buy can take a couple hours off work during the week — but open house attendance is still a check that the house is being marketed properly. However, there are cases of bad weather, holiday weekends, etc., when buyers just don’t come out.

If you are at a decent price and generating traffic, you might want to consider doing some restaging before you move on to broker #2.

Posted 12 years, 5 months ago at 8:51 am.

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Question from California here: My house has fallen out of escrow four times. Do we throw in the towel?

I kid you not, the above question is from Trulia Voices .

Here’s my answer: It is hard not knowing what area of the country you are in, but clearly, you are going to contract too quickly. Try dating a little while before shacking up. There are probably things that need to be done on both sides — when your buyers present their offer, is it attached to real-life loan financing? Do they attach evidence of their ability to finance their down payment? Employment letters stating salary? Or are you just taking their word that they have money?

On your end, there may be something about the house that “pops up” a little late in the game. One way to deal with this is for you to pay for a pre-inspection report (I would recommend using someone from the National Association of Home Inspectors so that the buyers have some idea of what they’re getting.) You and your broker should suggest that this report is no substitute for the buyers hiring their own home inspector, but it might ease some of whatever their concerns are.

For New Yorkers, obviously, escrow isn’t an issue, but co-op boards are, so sellers should give themselves an extra month or two for properties to fall in and out of contract.

Posted 12 years, 6 months ago at 8:46 am.

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