Upper West Side Open Houses Draw Crowds

Despite the rain, cold and dreary weather open houses were mobbed this week on the Upper West Side of Manhattan. Buyers are entering the market and they are buying. One pre-war 2 bedroom condo priced at $1,399,000 had about 40 people just 15 minutes after it opened.

About 30 people were at the 2 bedroom 2 bath apartments on the third floor of a post-war full service luxury building. One 2 bedroom condo that came on the market the beginning of the week at $1,150,00 is already in contract and the second open house was canceled. Many realtors planning on taking buyers back to see popular homes for a second time are too late. There is very little inventory in the $1M to $1.4M range.

What does it mean? Is it the Wall Street bonuses? Have we bottomed? Last weeks sell off in the stock market? Is New York the last market to decline the first to recover? We haven't had many foreclosures or sub-prime mortgages. The collapse of Lehman Brothers was what caused our market to decline. Prices are still down from a year ago but there is sales activity.

It's not about tax credits in this price range. Even first-time buyers looking at $1M+ apartments tend to have higher incomes than $125,000 single or $250,000 combined. The $6000 tax credit for current home owners is capped at an $800,000 purchase.

While there are all kinds of reports and gloomy economic studies, high unemployment and a poor national economy, we have to be honest about what we see. There are a lot of people with a lot of money buying real estate in Manhattan.

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Manhattan Market May be the First to Rebound

According to industry experts, New York City's real estate market will recover ahead of other areas of the country, and perhaps by the end of the year. Many believe that most of New York's overbuilt office space inventory will finally be absorbed in 2010. What's more, distressed properties will become available through deals or foreclosure sales. Furthermore, developers will have the opportunity to begin repositioning themselves as land, construction and renovation costs drop to more reasonable levels.

The Urban Land Institute warns that New York will see vacancy rates skyrocket into the mid teens, office rents plummet 40% and co-op prices drop 25% in its 2010 market forecast. But it also says "New York offers savvy investors opportunity and more affordable costs over the long term."

Experts bet that New York will recover before other areas of the country because in his view, the region didn't indulge as much in over-development as did places like Las Vegas and Miami. The high construction costs and the wherewithal needed to obtain all the necessary permits prevent many speculators from coming in and developing properties in Manhattan.

Those barriers give well-financed industry players an advantage during times of crisis like now. Since many companies resisted buying properties or starting new projects when the market was peaking between 2005 to 2008, they did not become loaded down with debt. Nor are they stuck owning properties that are now worth significantly less than they were just a few years ago.

When looking at investment opportunities, residential is the healthiest area of real estate because the need for housing is perpetual. Commercial, which will benefit when jobs return, is the next strongest area, followed by hotel, which is benefiting from strong tourism. As prices continue to drop in 2010, individuals should look for opportunities to buy property in Manhattan at a discount while they can.

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NYC Property Taxes Will Increase July 1st

The Department of Finance released a tentative assessment for all residential and commercial properties for fiscal 2011, which begins July 1st.

While property values may have dropped, according to the city, the total market value of property in NYC, including new construction rose 0.12% to $796 billion. NYC taxes properties based on assessed value. Assessed value can rise even if market value declines.

Market values for coops and condos rose 4.04% and assessed values increased 5.09%. NYC Coops and condos are valued as if they were rental properties that generate income. Property values lag two years. Fiscal 2011 assessment is based on 2008 data. The Finance department will publish final assessment values on May 25th. The final assessment will be used to calculate property taxes for fiscal year 2011.

For more information, visit nyc.gov/finance

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Baby Boomers: The New Buyers

While baby boomers largely disappeared from the city's real estate market in the wake of the financial crisis, experts say this key demographic is now becoming active again. By 2030, Manhattan's population of people aged 65 and older is expected to surge nearly 60 percent as the baby boom generation ages.

Falling prices are beginning to stabilize, and many of the city's boomers are now putting their large apartments and townhouses on the market as they look to downsize to one- and two-bedroom homes. Suburban empty nesters are also reentering the market with plans to retire in the city, trading in their large, labor-intensive houses for apartments rich in services.

The preferences of these buyers and sellers have already begun to shape the market in some neighborhoods and buildings and will increasingly sculpt the next wave of real estate sales.

The term 'baby boomers' refers to anyone born between 1946 and 1964, during the explosion of more than 77 million births that followed World War II. As the oldest of this generation approaches retirement, the number of people over 65 in Manhattan is projected to rise to 295,000 by 2030, up 57.9 percent from 2000, according to city data.

Many boomers are looking to retire in urban settings, for at least part of the year, rather than decamping to warmer climates, according to Paul Bishop, the vice president of research at the National Association of Realtors, which published a 2006 study called "Baby Boomers and Real Estate."

"Boomers are looking to move back into an urban setting after years in the suburbs," said Bishop, noting that cities like New York are attractive because they offer easy access to public transportation, health care, culture and restaurants.

Heavy losses in home equity and their stock portfolios caused boomers to largely disappear from the New York City real estate market after the financial crisis of 2008.

The number of baby boomers buying and selling homes in the city will only grow in years to come, brokers said.

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New York City to Receive $20 Million in Stimulus Funds

City Will Use Funds to Assist Homebuyers, Purchase and Renovate Foreclosed Units and Develop Vacant Sites 



U.S. Department of Housing and Urban Development (HUD) has awarded more than $20 million in Recovery Act funding to the New York City Department of Housing Preservation and Development under HUD's Neighborhood Stabilization Program 2.



The grants were awarded competitively to applicants who developed the most innovative ideas to address the impact of the foreclosure crisis on local communities while demonstrating they have the capacity to be responsible stewards of taxpayer dollars. The City will use the funds to buy, renovate and resell foreclosed properties in the most-affected neighborhoods to low- and moderate-income families.



In addition to the award to HPD, two other New York City housing agencies received NSP funding in Round 2: Habitat for Humanity New York was awarded $10.5 million and Community Builders received an award of $5.5 million.

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Fourth Quarter Market Reports: Home sales market revival, or another dip on the horizon?

According to fourth-quarter 2009 market reports released by the city's major brokerages today, a jump in sales activity has slowed the decline in the Manhattan real estate market. However, experts have not ruled out the possibility of a double-dip in prices. 



Sales activity jumped and inventory shrank in the fourth quarter, the reports show, though prices were still far below 2008 levels. Experts attributed the positive signs to low interest rates, pent-up demand from a slow winter, and falling prices. 



While prices in the Manhattan market have declined an average of 25 percent from the peak of the market, fourth-quarter reports show that average apartment prices dropped between 9 and 19 percent from the same period last year.

The average sales price of a Manhattan apartment was $1.296 million, falling 12.7 percent from $1.485 million in the fourth quarter of 2008, and slipping 2.1 percent from the third quarter of 2009, according to the report by Elliman, the city's largest brokerage. 

All of the brokerages reported a significant increase in activity both from 2008 and the third quarter. There were 2,473 closed sales in the fourth quarter of 2009, up 8.4 percent from 2,282 in the prior-year quarter and 10.9 percent from 2,230 in the third quarter.

The listings Web site Streeteasy.com recorded over 3,800 real estate closings in the fourth quarter of 2009, an increase of 28.6 percent from 2,990 closings in the fourth quarter of 2008 and 17.6 percent more than the third quarter. The site found that the average price of an apartment in Manhattan was $1.327 million, down 7.8 percent from the prior-year quarter but up 2 percent from the third quarter.



"The rate of descent in prices has slowed down," said Sofia Song (formerly Sofia Kim), vice president of research at Streeteasy and the author of the report. "The numbers are less drastic this quarter." 

The reports also showed fewer apartments available for sale. There were 6,851 listings for available homes in the fourth quarter, Elliman found, some 24.6 percent less than 9,081 in the prior-year quarter. 

Low interest rates, pent-up demand from a slow winter, and falling prices buoyed the market, real estate pros said.

While experts took the reports as a sign of a healthier real estate market, they cautioned that a double-dip in prices may be on its way, especially with interest rates expected to rise and the first-time homebuyer tax credit scheduled to expire in the second half of 2010. Experts expect that we may have a rise in prices in the first half of the year, and a declining trend in the second half, noting that unemployment is expected to continue rising through much of 2010, bringing with it more foreclosures.

Take advantage of the current buyer’s market while you still can. Contact Alfred Real Estate today.

News Update

Mortgage Rates Drop in First Week of January

After steadily rising for the month of December, the 30-year fixed-rate mortgage averaged 5.09% for the week ending January 7, down from last week's 5.14% average. The mortgage averaged 5.01% a year ago. Fifteen-year fixed-rate mortgages averaged 4.50%, down from 4.54% last week and 4.62% a year ago.

“Current interest rates for fixed-rate mortgages are just about at their annual average for 2009, while ARM rates are considerably below their averages for last year," said Frank Nothaft, Freddie Mac chief economist, in a news release. ARM rates will rise as the economy strengthens and the Federal Reserve decides to raise its overnight target rate, Nothaft added. "However, the federal funds futures market does not anticipate any Fed action until the second half of 2010."

Apartment Rents Down in Fourth Quarter 2009

In New York City, the vacancy rate improved by 0.1 percentage point for the second straight quarter, but around 60% of rental buildings dropped their rents in the fourth quarter from the previous quarter. Effective rents, including concessions such as one month of free rent, fell 5.6% in New York in 2009.

Thanks to falling home prices and record low mortgage rates, it now costs less to own than it has in the past decade on a mortgage-payment-to-rent basis. But falling rents throughout the country are expected to offset some of the recent improvement in affordability, making renting more attractive than owning in some US markets. Low prices have made Manhattan a buyers market over the past few months, so take advantage of this opportunity to buy a new home while the market is still on your side.

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