Tips, Trends and Tales from a Pro
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Manhattan Residential real estate
Is it legal for an attorney to send out multiple contracts on the same property simultaneously? The answer is yes. Is it ethical? The answer depends on whether there’s full disclosure. In the same vein, is it lawful and ethical for an agent to represent more than one buyer in negotiations on the same property? Both queries are thorny and merit serious consideration.
The more things change, the more they remain the same. Ten years ago, I concluded in a column, “Some sellers get no respect.” Homeowners who set unrealistic values on their homes—who fail to heed conservative pricing advice from experienced agents—lose valuable time and ultimately money. That message is worth repeating, particularly in today’s climate where price drops abound and where activity has slowed.
Three years ago, several weeks into the start of 2013, I reflected on the Wall Street adage “As January goes, so goes the year.” At the time, impressive financial gains were scored with both the S&P 500 and the Dow which were up in the month of January 2013 by 5.05% and 5.77% respectively, signaling the best start to the year since 1987. In residential Manhattan real estate, January 2013 witnessed a jump of nearly 28% in signed contracts over January 2012 (2,888 vs. 2,265). Sofia Song, at the time StreetEasy’s Head of Research, called it “The Year of the Frustrated Buyer.” I termed it “The Year of the Smart Seller.”
With the exception of well priced apartments under $2M which continue to attract multiple competitive bids and top sales dollars, price increases of Manhattan homes have abated. Sellers have relinquished their upper hand as buyers find more balanced footing in a market that seems to be heading back slowly to equilibrium. Throughout this year, new development options have come to market steadily yielding more than two and a half times as many choices for buyers than in 2014: approximately 6,500 units in 100 new buildings compared to roughly 2,500 units in 59 buildings last year. At the ultra high end, sales are stalled. In 2015, Manhattan’s residential real estate market shifted in more ways than one.
The allure of a penthouse or for that matter any apartment with a setback terrace is irresistible. A precious and highly coveted commodity, terrace ownership connotes a certain quality of life with bragging rights. To the urban dweller, outdoor space offers oases of air, light, sky and ultimately status. Outdoor space sells at a premium in New York City, and for the purchaser, caveat emptor reigns supreme. It’s critical for a buyer to understand the governing Proprietary Lease and House Rules which will vary from building to building and also to consult with an attorney regarding local ordinances and building codes as they relate to what can and cannot be done, placed or built on a terrace.
In 35 years, I’ve had my share of challenging transactions, but this one takes the most recent proverbial cake. I closed on the terraced penthouse in Carnegie Hill this summer, nearly two years after my first meeting with the estate’s executor. For the deal to happen, I needed to overcome at least three significant obstacles. First, the property’s interior had been reconfigured 35 years earlier by an abstract architect with distracting curved walls and pivoting room dividers and needed a total redo. Second the co-op board put up a series of roadblocks by questioning the legality of an upper level that had been annexed to the apartment by a former owner. The 17’x11’ addition with wet bar and bathroom sat directly beneath the building’s water tank and was accessed by a narrow spiral staircase in a corner of the Living Room. A 1992 House & Garden feature highlighted this “Tower Room,” a term I adopted in my marketing. Responsibility for the Penthouse’s wrap terraces was the third serious bane of a sale.
This new year will feel a little like Yogi Berra’s “déjà vu all over again.” Real estate headlines for 2015 will echo many of last year’s dominant themes with a few twists.
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.
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.
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.
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.
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.
In mid July, Fred Peters posted a blog about the complexities inherent in a broker’s job “as well as the multiple pleasures.” He mused, “Our business involves strategizing . . . relationship management . . . aesthetics . . . negotiating skill, and it often involves being a strong hand within the softest velvet glove,” concluding, “There is no other work quite like it.”
This spring, as the real estate market rebooted, there were signs of recovery and stability everywhere in Manhattan. A little over three and a half years after the worst financial tailspin in recent memory, activity and sales were robust again. As buyers and sellers grew more in sync, the spread between asking and closing prices narrowed, and the numbers of signed contracts and closings increased. Confidence was up in Manhattan during the second quarter of 2011.
In a previous column I posed the question: Isn’t it time to drop SoHo’s AIR requirements? Several brokers wrote to say they would welcome an opportunity to join in a concerted effort to accomplish this. A number of attorneys said they were actively involved with clients to effect a change. A handful of non-SoHo homeowners were astonished that such outdated laws were still on the books. One reader expressed regret that artists were being displaced and that the area “has turned into a mall.”
“We are a nation of Google and Facebook.” That particular phrase from the President’s State of the Union Address resonates strongly with real estate professionals. There’s a great deal of pressure in our business of late to keep up with fast changing technology and with online social networking trends.
On December 24th as 2010 was drawing to a close, a front page New York Times headline reported “Experts Citing Rising Hopes for Economy.” Heralding a “new optimism” and quoting forecasters and policy makers who were revising earlier predictions, the Times journalist declared that our recovery “will gain substantial momentum in 2011.”
The key word above is “substantial” and to that we add the Yiddish word “halevai.” Pronounced phonetically in three syllables, sometimes dropping the initial “H,” ha-le-vai is a wonderfully expressive sentiment. From the Hebrew meaning “would that,” it has come to mean “it should only be so.”
I’ve taken liberties with a line from Alexander Pope’s philosophical poem “The Essay on Man” for my title. This spring, we’ve witnessed a new bounce in our residential marketplace along with a renewed buzz, increased activity and stabilizing prices. As of this writing, roughly 18 month’s after banking institutions failed on Wall Street, Manhattan real estate is recovering. An improved momentum is expected to be sustained this quarter resulting in strong April to May stats for contracts signed.
