Tips, Trends and Tales from a Pro
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.
March 5, 2012. What’s a buyer and seller to think when on March 1 we read on wsj.com about a “weakness in sales” and a deepening real estate slowdown during the first two months of this year, and then on March 2nd urbandigs.com highlights the highest deal volume since 2008 in February? Shut the front door, we say, as we proclaim that February was an especially strong month. We expect the first quarter of 2012 to finish on an uptick, signaling continued stability as we enter the spring market.
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.
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.”
Selling a prewar loft in SoHo has become problematic of late because of renewed attention to AIR—artist in residence—zoning requirements. Though the law has been in effect since the early 70’s, it’s been virtually ignored—until now. Although the reasons behind the new focus are sketchy, it’s clear that if the zoning rules currently on the books for SoHo were enforced strictly, real estate values would be undermined. It’s time to amend the outdated ruling and acknowledge that SoHo is a different place today than 40 years ago.
“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.”
We're poised in these last months of 2010 to finish the year with an improved 4th quarter. After a tumultuous 2009, our market rose slightly and hesitantly as 2010 began, picking up unexpected steam steadily through April, May and June, but then slowing and falling flat through much of the summer. Following on the heels of Labor Day, market activity resumed, and the mood is upbeat again. As of this writing on a crisp October 3rd morning, the possibilities loom that the spring momentum can be repeated in the next eight weeks before Thanksgiving.
We're poised in these last months of 2010 to finish the year with an improved 4th quarter. After a tumultuous 2009, our market rose slightly and hesitantly as 2010 began, picking up unexpected steam steadily through April, May and June, but then slowing and falling flat through much of the summer. Following on the heels of Labor Day, market activity resumed, and the mood is upbeat again. As of this writing on a crisp October 3rd morning, the possibilities loom that the spring momentum can be repeated in the next eight weeks before Thanksgiving.
Remember the game “52 Pickup”? It’s the “trick” played by a practical jokester on an unsuspecting victim who must pick up 52 cards that have been scattered willy-nilly on the floor. “That’s what the board packages we get look like sometimes—especially from the larger firms where there seems to be less supervision,” says Jane Bayard, Warburg’s Executive Vice President. She’s describing how sometimes what we get from our co-brokers makes no sense. “It looks like the papers have been literally dropped on the floor, then picked up totally out of order and reassembled haphazardly with no thought to logical sequencing of information and with numbers that just don’t match up.”
Renovating an apartment in Manhattan presents a set of unique challenges. I’ve written on the subject before, and with the perspective of my recent 6th renovation behind me, I offer some advice to the uninitiated.
First Do Your Homework
Talk to as many people as you can who have been through the process. Get recommendations, ask questions and take notes. Interview your primary professionals carefully, visit their past projects, and check references. When evaluating bids, take into account reputation and experience as much as you consider price. Determine whether projects were finished on schedule. When checking references, ask how each trade handled problems that surfaced during and especially after the job. The lowest bidder may not be the wisest choice.
In late June, Fred Peters wrote in the Warburg Blog about how real estate brokerage has changed since 1980 when he first got started in the business. I began as a broker in the same year, and Fred’s musings got me thinking about how remarkably different our business was then, and how it has evolved.
