The Big Apple
1ST QUARTER PRICES DROP 23% CITYWIDE, REBNY REPORTS
The average sales price of a home in New York City, including coops, condos and one-to-three-family dwellings, declined to $660,000 in the first quarter compared with the same period last year, according to a report by the Real Estate Board of New York (REBNY). The Manhattan average home sales price for all housing types was $1,424,000, off by 11 percent from a year earlier.
For other report information in PDF format, please click here.
STREETEASY SAYS Q1 PRICES FELL FOR APARTMENT RESALE
The average Manhattan sales price increased by 0.7 percent to $1.435 million since the previous quarter but decreased by 12.1 percent in a year, the Web company said. The resale median price of condos declined to $895,000, a 4.7 percent decrease since the last quarter of 2008 and a 7.5 percent decrease since last year. The average price was down 7.6 percent for the quarter and 10.8 percent since last year. For co-op resales, the median price dropped by 11.3 percent compared with the prior quarter and by 16.7 percent since last year. The average sales price declined by 17.5 percent since last quarter and by 25.8 percent since the prior year. However, the median price for new developments continued to increase, by 10.4 percent since the previous quarter, to $1.275 million and by 26.4 percent over a year. Also rising was the average sale price, up by 17.5 percent since the prior quarter and by 7.4 percent since last year. Other findings were consistent with other reports.
THE FED SUMS UP REAL ESTATE IN ITS NEW YORK DISTRICT
In its "Beige Book" released Wednesday, the Federal Reserve noted that housing markets have continued to weaken in much of the area since the last report - particularly in the multi-family segment. Said the Board: "New York City's rental market continued to soften in March: asking rents in Manhattan were estimated to be down just 5-6 percent from a year earlier, but with the growing prevalence and size of concessions (waiving of rental fees, 1-3 months free rent, etc.), effective rents have reportedly fallen much more sharply - especially in full-service buildings. The inventory of rental listings has continued to increase, particularly in non-doorman buildings; one large brokerage firm reports that the rental vacancy rate has nearly doubled over the past 12 months. Manhattan's apartment sales market deteriorated markedly in the first quarter: the median sales price for condo re-sales was down 16 percent from a year earlier, while co-op prices fell 22 percent. The number of sales transactions fell nearly 50 percent from a year earlier, while the inventory (number of units listed) jumped 34 percent. Moreover, an industry contact maintains that there is a sizable "shadow" inventory of apartments - new condo units that are unsold but not yet listed. While quarterly data are not yet available for other parts of New York City, Brooklyn's market has reportedly slackened to an even greater extent than Manhattan's, largely due to a huge supply of newly constructed units." (For the Richmond District, the Beige Book found that "sales activity decreased 40 percent from last year in D.C. House prices fell across much of the District.")
THE BOWERY'S DOWN AND THE EAST SIDE IS UP
Streeteasy.com's first quarter data show that the Upper East Side was the only Manhattan neighborhood to show gains in overall median price, to $1.124 million, up 5.4 percent from the previous quarter and 24.9 percent from the same period last year, says the Real Deal monthly trade magazine. By contrast, the Web service found, the overall median price on the other side of Central Park dropped 29.6 percent year over year to $695,000 and 14.2 percent from the end of 2008. Condo sales drove the increase. While the median co-op sales price on the East Side dropped 2.6 percent year over year to $745,000, the prices in new developments skyrocketed 107 percent to $2.98 million. Experts agree that the median likely resulted from the settlement of condos that went to contract more than a year ago.
$1,000/SQUARE FOOT MILESTONE IS BEING SEVERELY TESTED
In 2004, the average price per square foot in select areas of Manhattan started inching over the $1,000 mark for the first time, notes the New York Post. "If you're using price per square foot as the barometer, there is definitely a lot more product now below $1,000 a foot than there has been in the last three or four years," says Shaun Osher, CEO of Core Group Marketing. "We're even doing deals in prime locations like SoHo at below $1,000 a foot." Sellers are a year behind the market, or more," adds Jonathan Miller, president of appraisal firm Miller Samuel. "They're still thinking of their property in relation to the high sale of the last few years, and so sellers are thinking they're being conservative by pricing at the last high-water mark in the building rather than pricing it above. But really, anything that's happened prior to September is irrelevant."
WHAT ARE THEY THINKING
A recent poll found that almost half of young America wants to move to New York, says New York magazine, which spoke to 160 people who recently followed that dream - and 30 who achieved it. Despite the economy and events in financial services, they pack their bags, sell their furniture, jam their cars full of everything else and move to New York. And for each one who comes, many more are still dreaming of getting on a plane or strapping a mattress atop the family's old station wagon. When a recent Pew Research poll asked Americans about different cities and whether they'd like to live there, 45 percent of the people under 35 said they'd like to live in New York. So if you're already here, roughly half of young America would happily switch places with you right now. For more, click here.
AS BANKS AND STARBUCKS RECEDE, DRUG STORES MOVE IN
Duane Reade, CVS and Walgreens are moving aggressively to scoop up square footage left behind by Starbucks and Chase Bank, Crain's observes. "Drugstores are filling the vacuum for retail," says Candace Corlett, president of WSL Strategic Retail. "More than selling drugs and shampoo, they've become mini-super centers." Not every brand is stocking up on real estate, however. Rite-Aid, with 240 New York locations, has no plans to open any more here, according to a spokeswoman. But Walgreens, which opened a 16,000-sf flagship in Times Square last fall, has 17 more city locations on the drawing board. Duane Reade opened more than a dozen locations in 2008, including one in a former Chase branch on the Upper East Side; it plans to cut the ribbon on at least another 10 this year. "Our goal ultimately is to transform Duane Reade to be more of a destination store," CFO John Henry said in a recent conference call.
FINANCIAL DISTRICT IS BECOMING LAST STOP BEFORE BROOKLYN
The neighborhood is quickly becoming the least expensive option before renting in Brooklyn, says the Observer, which charted average rents in four neighborhoods on different-sized apartments from the peak of the boom in September 2007 to last month. The four neighborhoods were the Financial District, which was once the next hot neighborhood as, like Harlem, it could be a refuge for renters who wanted to stay in Manhattan and maybe didn't have the cash to pay the record rents elsewhere; Greenwich Village, where everyone wants to rent always; the Upper East Side; and the Upper West Side. Of the four, the Financial District is the only one to have experienced a decline in rents for studios, one-bedrooms and two-bedrooms in both doorman and non-doorman buildings. Leading the FiDi retreat was the doorman studio market, where rents have fallen 18.2 percent in the 18 months since September 2007. Upper East Side rents on doorman studios and one-bedroom apartments have dropped 9.1 and 7.8 percent, respectively, while rents on non-doorman studios, one-bedrooms and two-bedrooms have tanked 10.1 percent, 15.1 percent and 15.5 percent, respectively. For more, click here.
FED'S BEIGE BOOK SEES SIGNS OF STABILIZATION
"Housing markets remained depressed overall, but there were some signs that conditions may be stabilizing. Many Districts said factors such as homebuyer tax credits, low mortgage rates, and more affordable prices led to a rising number of potential buyers," the Federal Reserve Board's publication says. "The Richmond, Atlanta, Minneapolis, Kansas City, and San Francisco Districts noted a modest improvement in sales in some areas. New home construction activity fell further, however, as inventories remained elevated. Nonetheless, several Districts, including Atlanta and Kansas City, said that inventories of unsold homes had turned down slightly. Home prices continued to decline in most Districts, although a few reports noted that prices were unchanged or that the pace of decline had eased. Low mortgage rates were fueling refinancing activity. Outlooks for the housing sector were generally more optimistic than in earlier surveys, with respondents hopeful that increased buyer interest would lead to better sales."
HOUSING STARTS AND PERMIT APPLICATIONS DROP
Characteristic volatility in the multifamily sector pushed nationwide housing starts down 10.8 percent in March as production of single-family homes remained unchanged, according to the U.S. Commerce Department. There was a 29 percent reduction on the multifamily side, largely offsetting a big gain in apartment and condo building in the previous month. While builders have been seeing more sales office traffic and fielding more calls in recent weeks, Chief Economist David Crowe of the National Association of Home Builders says, many continue to grapple with a severe credit crunch for acquisition, development and construction financing. Building permits, which can be an indicator of future building activity, also fell in March, down 9 percent. "There's still no clear indication that the construction market is coming back," Mike Larson, a housing analyst at Weiss Research, told the Times. "Even if companies want to start projects, they're having a harder time getting the money to do so. We're being overwhelmed by distressed inventory as well as regular sellers trying to get out of their homes. There's not a heck of a lot of incentive for builders to ramp up construction." Still, some housing experts say the decline in home building was a crucial step toward lowering the glut of unsold houses and condominiums on the market so that housing supply once again lines up with demand.
THE RENTAL MARKET IS DETERIORATING NATIONWIDE
The vacancy rate for the top 79 U.S. markets jumped to an average 7.2 percent, a full percentage point increase over the past two quarters and the highest level since the first quarter of 2004, according to statistics from Reis Inc., a New York real-estate-research firm, reports the Wall Street Journal. Meantime, asking rents, which exclude concessions and are often the starting point for rent negotiations, fell 0.6 percent, the largest fall since Reis began its count in 1999. Effective rents, or the rents that landlords actually collect, fell 1.1 percent in the first quarter to $984. Reis is forecasting rent declines of as much as 2 percent for the year and a vacancy rate that tops out at about 8 percent, the highest level since the late 1980s. Rents fell sharpest in markets that saw heavy job losses in the financial-services sector, posting declines of more than 2 percent in New York (where rents were off by 2.6 percent), Long Island, San Francisco and San Jose.
Home and Hearth
HERE'S A TECHNIQUE LADY MACBETH WOULD HAVE EMBRACED
Okay, floors weren't her problem. But she was compulsive, right? To clean floor tiles, the Washington Post suggests, mix any high-quality oxygen bleach with warm water and stir it until it dissolves. Then pour the solution onto the floor tile so the grout lines are flooded with the solution. The longer you let the solution sit on the grout, the less work you have to do cleaning tile flooring. To get maximum cleaning results, it helps to scrub the grout lightly after 30 minutes. Always pour new solution onto the grout as you scrub. An oxygen bleach solution will remove red wine stains in minutes. Beet juice is not a problem. Nor would blood be an issue. Once you have clean floor tiles, you can keep the grout looking like new by adding oxygen bleach powder to your mop water.
SOMETHING THERE IS THAT DOES NOT LIKE. . . A WALL
Only fearless do-it-yourselfers need read how to construct a wall as prescribed by the New York Post. Hint: You don't start by assuming a can opener. But the supplies list alone may well be intimidating: "Metal or wood studs for framing (I recommend metal studs because they are fire-rated and easier to use); metal track (this runs along the floor and ceiling), drywall (5/8-inch Sheetrock/wallboard), screws (drywall screws and metal self-drilling "zippy" screws); joint compound (spackle); and drywall tape. You may also want insulation for soundproofing." And that's just for starters. If you're not yet overwhelmed, click here for the details.
MILDEW DOESN'T HAVE TO GET YOU DOWN
To remove mildew stains, try an oxygen-type bleach, such as hydrogen peroxide, says the Washington Post. Use it straight from the bottle, without dilution. Another bleach of this type is sodium percarbonate, an ingredient in some color-safe fabric bleaches. Or you can use a half-and-half combination of water and chlorine bleach, but that can change the color of wood. You may need to reapply any bleach several times. Once you see no further improvement, rinse thoroughly if you used something other than hydrogen peroxide, which doesn't need to be rinsed because it breaks down into water.
WITHOUT PAINT, YOU STILL CAN MAKE YOUR HOME GREEN
Uncle Sam is offering up to $1,500 in tax credit for energy-efficiency upgrades such as new insulation and windows, the New York Times reminds readers. The credits are worth 30 percent of the total cost for the upgrades. There are some tax credits available for improvements last year, but they are only for renewable energy technologies, not for windows, doors, insulation and HVAC. Products need to meet certain criteria to qualify, so it's a good idea to do some research. Ask your retailer, check product packaging, or try manufacturers' Web sites, the Alliance to Save Energy (ase.org) and the site of the Tax Incentives Assistance Project (energytaxincentives.org). Energy Star (energystar.gov) also provides details on qualifying products and estimated savings.
IT'S NOT A GOOD IDEA TO MAKE A SALAD OF THESE PLANTS
Common houseplants that can have toxic effects include aloe, dieffenbachia, philodendron and calla lily, says the Washington Post. Also avoid them if you have pets that like to nibble on plants. Some houseplants that are safe to grow are African violets, begonias, spider plants, Swedish ivy, wandering Jew, snake plant, weeping figs, dracaenas and jade plants.
This and That
PRICES UNEXPECTEDLY RISE IN THE U.K.
House prices rose 0.9 percent between February and March, the first monthly gain since October 2007, the Nationwide Building Society said, according to the Wall Street Journal. The U.K.'s largest mortgage lender cautioned that despite the increase, it was too soon to say that the bottom of the housing market had been reached. The data surprised economists who, in a survey conducted by Dow Jones Newswires, had forecast a 1.9 percent decrease and a fresh record decline of 18.5 percent on an annualized basis. Now, prices are predicted to be off by 15.7 percent. Liberum Capital analyst Charlie Campbell, who is "neutral" on the sector, agreed with others that it was far too early to call an end to the correction. Meantime, the Bank of England said the number of mortgage approvals totaled 38,000 in February, the highest level since May 2008.
TO BUY AN INVESTMENT PROPERTY, CONSIDER YOUR IRA
So advises MarketWatch, which says the technique is possible even if the purchase price exceeds your reach. Little-known IRS rules allow retirement savers to take "nonrecourse" loans against IRAs and leverage their savings as a down payment to buy investment real estate. With 30-40 percent down, IRA borrowers can get loans on a condo or townhouse, a single-family home, a multi-unit apartment building and even commercial property so long as the rental income will yield positive cash flow.
EVEN WITH ITS HILLS, SAN FRANCISCO IS BEST CITY TO WALK
So says Prevention magazine, which tops the list because its city government devotes 12 agencies - 12 of them! - to walking issues, says Realtor magazine. Selection of the best cities for walking were based on 19 criteria, including population density per square mile, use of mass transit, crime rates and square miles of local and state parks. Prevention arrived at its conclusions along with the American Podiatric Medical Association, Sperling's Best Places and a panel of nationally recognized experts in the field of walking communities. A gold star if you can name one such expert. Anyway, after San Francisco, the winners were, in order: San Francisco, Boston, New York, Philadelphia, Chicago, Washington D.C., Seattle, Honolulu, Portland, Ore., and Pittsburgh.
IN A CLASSIC MOVE, ARTISTS ARE SAVING AND SAVING THE DAY
Drawn by available spaces and cheap rents, artists are filling in some of the neighborhoods being emptied by foreclosures, reports the Wall Street Journal. City officials and community groups seeking ways to stop the rash of vacancies are offering them incentives to move in, from low rents and mortgages to creative control over renovation projects. "Artists have become the occupiers of last resort," said Robert McNulty, president of Partners for Livable Communities, a Washington-based nonprofit organization. "The worse things get, the more creative you have to become." Artists and architects are buying foreclosed homes in Detroit for as little as $100. In St. Louis, artists are moving into vacant retail spaces in a shopping mall, turning stores that stood empty for more than a year into studios and event spaces for rents of $100 a month. Artspace Projects, a national nonprofit development corporation, plans to create 35 live/work spaces for artists on vacant property in Hamilton, Ohio, after converting an empty car factory and an adjacent lot in Buffalo, N.Y., into 60 artists' lofts last year. And Cleveland is emerging as a testing ground for the strategy. For example, last November, local painter Katherine Chilcote bought a boarded-up, bank-owned house for $5,000 in Cleveland's Detroit-Shoreway neighborhood, where one in four family homes has gone into foreclosure in the last three years. The 29-year-old artist and four friends spent months ripping up moldy carpet, laying down new tiles and hardwood floors, repairing walls and stripping peeling paint.
FOR SOME REASON, NEBRASKANS ARE THE HAPPIEST OF ALL
The state that brought you Kool-Aid, CliffsNotes and the world's richest person, Warren Buffett, is feeling better off than the residents of other states, according to MainStreet.com's new Happiness Index. Looking at household income, debt, employment and foreclosures, the index focuses on which states are best weathering the current economic storm. After Nebraska came Iowa and Kansas respectively. Other states did better in particular areas, but none had a higher blended average. Maryland, for example, was burdened by higher unemployment and foreclosure rates despite having one of the lowest percentages of annual income spent on non-mortgage debt. In order, the other happy states, according to the index, were Hawaii, Louisiana, Oklahoma, Wyoming, South Dakota, West Virginia and Wisconsin. Crying towels available on line.
TALL TALES FROM THE DEPARTMENT OF INSIGNIFICANT NEWS
A recent study by the Council on Tall Buildings and Urban Habitat (CTBUH, which is pronounced how?) finds that more tall buildings - and taller ones - were completed in 2008 than ever before, reports Architectural Record. The council expects 2009 to be another record year. The CTBUH study, released at the end of January, reports that the concurrence of failing financial markets and skyscraper grand openings is not unusual because it takes so long between breaking ground and completing a building, especially if it's the site of the World Trade Center. The study also found that, beyond rising heights, current and future trends in tall building include a material shift from steel to concrete, a programmatic shift from office to mixed-use and residential, and a geographic shift from North America to Asia and the Middle East. The study predicts that completion of super-tall towers will dip in 2011, with the average height of the ten tallest skyscrapers finished in the following few years dropping by as much as 300 feet.
MANY FOLKS ARE GETTING OLDER AND STAYING PUT
More remodeling clients are planning ahead and opting to alter their homes for aging-in-place, according to recent data gathered by the National Association of Home Builders' Remodelers. Seventy percent of remodelers surveyed reported making universal design home modifications, a significant bump from 60 percent in 2006. The aging-in-place modifications most frequently purchased by homeowners include: Adding grab bars (78 percent); installing higher toilets (71 percent); upgrading to a curb-less shower (60 percent); widening doorways (57 percent); constructing ramps or lower thresholds (45 percent); and enhancing lighting and task lighting (45 percent).
PROFESSOR SAYS THE HOUSING 'CRISIS' ISN'T ALWAYS SUCH
Law professor Todd Zywicki of George Mason University says his research has revealed three distinct types of housing markets - and only one of the three shows real signs of distress, according to Forbes. Even then, that distress is only in a limited number of areas. One of the three types of markets, Zywicki contends, appears in New York, Boston, San Francisco and Washington, D.C., where a long history of price volatility has occurred. "The housing stock in these markets is constrained either by geography - San Francisco is surrounded on three sides by water, for example- or land use controls," the professor says. When demand in such a market increases, prices soar. And when demand weakens, prices plummet. "But the people who live in these markets expect big price swings," Zywicki continues. "They've learned to live with them. They're holding onto their homes because they're confident prices will eventually recover. Again, there hasn't been any tragedy." Read the whole story here.
BUILDERS ARE FINALLY FEELING A BIT MORE CONFIDENT
Builder confidence in the market for newly built, single-family homes rose five points in April to the highest level since October 2008, according to the latest National Association of Home Builders/Wells Fargo Housing Market Index (HMI). This gain was the largest one-month increase recorded since May of 2003, taking the index out of single-digit territory for the first time in six months. "This is a very encouraging sign that we are at or near the bottom of the current housing depression," commented Chief Economist David Crowe of the association. Of course, it would be news if he didn't, in fact, say that.
The Mortgage Biz
RATES FALL BACK AGAIN AFTER DOWNS AND UPS
The 30-year fixed-rate mortgage (FRM) averaged 4.82 percent for the week, down from last week's 4.87 percent and last year's 5.88 percent, reports Freddie Mac. The 15-year FRM was 4.48 percent in comparison with 4.54 percent the prior week and 5.40 percent one year earlier, dropping to its lowest level since Freddie Mac began tracking it in August 1991. Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) averaged 4.88 percent; they were 4.93 percent last week and 5.48 percent a year ago and achieved the lowest point Freddie Mac began tracking the product in January 2005. But one-year Treasury-indexed ARMs were 4.91 percent, up from 4.83 percent while down from 5.10 percent at this time last year. Said Freddie Mac Chief Economist Frank Nothaft: "The housing industry is starting to exhibit some positive signs, albeit scarce and too early to tell how permanent."
DON'T EVEN THINK OF GOING THERE
To determine which of the 50 largest U.S. metropolitan statistical areas is hardest to get by, Forbes measured cost of living, unemployment rate and median income in each. The 10 cities where the over all conditions thereby look the worst were, in order from the top: Providence; Los Angeles; Riverside, Calif.; Tampa; Buffalo; Portland, Ore.; Orlando; Detroit; Miami and Louisville. For the down and dirty, go here.
JUMBOS (UP TO $729,750 IN SOME AREAS) ARE NOW A GOOD DEAL
Bank of America recently began trumpeting its jumbo program, offering 30-year fixed-rate jumbo mortgages with rates in the high-5 percent range, notes the Wall Street Journal. "We decided it was time to really go after that market," says Vijay Lala, a product management executive for the bank. More lenders may soon join in, says Guy Cecala, publisher of Inside Mortgage Finance. He says Bank of America appears to have lower jumbo rates than its giant banking competitors Wells Fargo, JP Morgan Chase and Citibank. "I suspect the others will slowly follow suit," Cecala avers. Availability may be increasing, but requirements are still stiff. Bank of America jumbo loans, for example, require at least a 720 credit score and a 20 percent down payment (or 20 percent home equity on a refinancing). And borrowers need to have at least six months worth of reserves in the bank. ING Direct requires 25 percent down.
A RECORD NUMBER OF LENDER FAILURES IS IN THE WIND
The mortgage sector is on pace to see a record number of failures this year as regulators seize banks at an accelerating rate, according to data tracked at the Mortgage Graveyard - a depressing journal of failed, ailing and acquired lenders. MortgageDaily.com reports 50 mortgage-related company closings in the first quarter, and failures at an annual rate of 200 compare with 120 during 2008 and 160 in 2007. At 21, federally insured bank failures are on a pace to exceed 80 this year - about three times last year's level. First-quarter nonbank closures were 25, while four credit unions were shut down.
BIG LENDERS BEARING DOWN ON DELINQUENT HOMEOWNERS
Some of the nation's largest mortgage companies are stepping up foreclosures on delinquent homeowners, observes the Wall Street Journal. JP Morgan Chase, Wells Fargo, Fannie Mae and Freddie Mac say they have increased foreclosure activity in recent weeks. Those companies say they have lifted internal moratoriums that temporarily halted foreclosures. Now, they have begun to determine which troubled borrowers are candidates for help, then move the rest through the foreclosure process. Completed U.S. foreclosures jumped 44 percent in March to another record high, according to foreclosure-listing service ForeclosureS.com. The surge to 175,199 comes just two months after the firm said foreclosures fell sharply in January, leading it to speculate that the market might be seeing a turnaround.
SO, OF COURSE, FORECLOSURE ACTIVITY RISES 9% IN 1ST QUARTER
That's the increase from the previous quarter, according to RealtyTrac. From February to March, the increase was 17 percent; from March of 2008 to March this year, it was 46 percent; and it was 24 percent from the same quarter last year. Foreclosure filings - default notices, auction sale notices and bank repossessions - were reported on 803,489 properties in the first quarter. The March and first quarter totals were the highest monthly and quarterly totals since RealtyTrac began issuing its report in January 2005, despite a decrease in bank repossessions (REOs), which were down 13 percent from the fourth quarter of 2008 and 3 percent from February totals. In New York, foreclosure activity declined more than 41.77 percent in a year; it decreased 23.14 percent in D.C.
SCAM ARTISTS INCLUDE HOMEOWNERS NOT IN TROUBLE. YET
An increasing number of owners are trying to pull the wool over their lenders' eyes, reports the San Diego Union-Tribune. In some cases, they are lying in an effort to save their homes from foreclosure; in other instances, they are trying to convince lenders to grant them new, more favorable loans they don't really deserve. Frank Sillman, managing partner at Fortace, a Los Angeles-based fraud pursuit and recovery company, has seen a marked increase in loan-modification fraud, which could be described as just the opposite of the loan-approval fraud committed by many people to obtain mortgages for which they didn't really qualify. Sillman's firm has uncovered numerous questionable short sales in which the "buyer" is really a friend or family member as well as many instances where solvent owners are imploring employers to tell lenders they no longer work there or are temporarily signing over assets to friends or distant relatives. "First, they overstated their incomes," Sillman says. "Now they are understating them." Digital Risk, an Orlando, Fla., firm that analyzes loan portfolios on behalf of potential investors, has found numerous cases where co-workers are supposedly verifying income rather than the boss or where people are claiming they have been told they will be laid off in 30 or 60 days so they qualify as "imminent defaults."
LENDERS OVERLOOK OLDER HOMEOWNERS ON FIXED INCOMES
As the government presses lenders to modify mortgages, a large subset of distressed borrowers is being left out: older homeowners on low fixed incomes, reports the Wall Street Journal. Many of them are now facing foreclosure, say legal-aid advocates and AARP attorneys, because they were sold loans they could never afford, often fraudulently. Many of these homeowners had lived for decades in their home and had built up substantial equity but had low incomes. The equity made them tempting targets for brokers, who persuaded them to refinance their mortgages, telling them they could lower their monthly payments. Instead, many of these loans were loaded with fees and exploding interest rates and quickly became unaffordable. These borrowers' incomes are often so low - many are living solely on Social Security - that few qualify for mortgage-relief programs.
LOAN APPLICATIONS PLUNGE DURING RELIGIOUS-HOLIDAY WEEK
The Mortgage Bankers Association (MBA) reports that mortgage volume fell 11.0 percent on a seasonally adjusted basis for the week ending April 10 below one week earlier. On an unadjusted basis, the decrease was 10.9 percent lower than the previous week and 45.6 higher than the same week one year earlier. Refinancings declined 10.9 percent from the previous week, and purchase applications dropped11.3 percent. (The MBA does not provide a holiday adjustment for the Easter/Passover weekend, which may have contributed to this week's decrease in application volume.) The refinance share of mortgage activity decreased to 77.8 percent of total applications from 77.9 percent the previous week, and the adjustable-rate mortgage (ARM) share was unchanged at 1.5 percent.
SOME LENDERS BLACKLISTED STUBBORN APPRAISERS
The Center for Public Integrity said it has obtained copies of lenders' "blacklists" containing the names of thousands of appraisers who refused to inflate home values. The Center also found many appraisers who say they bowed to lender pressure to "hit the numbers" in order to remain in business. Amerisave, one of the largest online mortgage lenders, has close to 12,000 appraisers on its "ineligible appraiser list," which was removed from the Atlanta-based company's website after the Center made inquiries about it. After conferring with top management officials, Martin Wilhelm, an Amerisave vice president, declined to answer questions about how it compiles its blacklist, the Center said.
HOW LONG BEFORE THE OVERSUPPLY WILL BE ABSORBED
Projections by housing analysts range from as early as this year in some areas to as late as 2014 in others, says USA Today. Harvard economist Edward Glaeser tells the newspaper that it will take two more years. Predicts John Burns of his eponymous consulting firm in Irvine, Calif.: "From a pure need for shelter, we don't need more homes built for the next several years. . . We clearly overbuilt." But the U.S. will need all this housing at some point, says Robert Lang, head of the Metropolitan Institute at Virginia Tech: "The population is still growing, and sooner or later, you'll want to move out of relatives' basements." Arthur C. Nelson, director of the University of Utah's Metropolitan Research Center estimates that housing markets in the West and South will start to bounce back later this year and the first half of 2010; the Northeast and Midwest will have the slowest comeback, possibly beyond 2012. "Keep in mind that 'recovery' does not mean 'happy days are here again,'" he cautions, but "that there is sufficient pent-up demand for new housing as to warrant new construction." When the recovery begins, homes will be selling at the lowest prices this decade, Nelson says.
THE TIMES LOOKS INTO ITS CRYSTAL BALL
The Manhattan real estate market has just begun a steep slide, writes New York Times staffer Josh Barbanel. It parallels the decline in New York's financial services industry, and housing analysts say it may continue long after other markets heal. While brokers say they are seeing more activity lately, especially from first-time buyers taking advantage of lower interest rates, housing analysts are predicting a prolonged slump in prices and sales that could last as long as four or five years. The stress is most severe at the high end of the market: There are 350 apartments and town houses for sale in Manhattan with asking prices of more than $10 million, and inventory has been growing. It would take about six years at the current sales rate to absorb all those listings. Despite government efforts to ease credit around the country, the market in New York is being starved by a limited availability of credit, especially for jumbo mortgages, which are loans of more than $729,750. More than half of all apartment sales in Manhattan are above even the expanded limits of conventional mortgages. To read commentary on his piece, don't miss "Out and About" below.
ANALYSTS SEE BOTTOM IN THE PAST AND SALES GROWING
Analysts at PMI Mortgage Insurance Co. say sales of existing homes probably hit bottom in the first three months of the year,and are projecting sales will increase every quarter for the remainder of this year and next, reports Inman News. Increased sales of foreclosed and distressed properties will push sales of existing homes from an annual rate of 4.6 million homes during the first quarter - the worst quarter so far in the current downturn - to an annual pace of 5.2 million during the last three months of the year, PMI projects. PMI projects sales of existing homes will continue to rebound in 2010 as economic conditions improve, reaching 5.37 million. Although PMI doesn't see the unemployment rate peaking until the first half of next year, at around 9.5 percent, recovery of job markets tends to lag behind the economy. Seeing signs that the recession will bottom out in the second half of the year,the analysts predict that new-home sales will fall 28 percent from last year before rebounding 38 percent to in 2010. Their report says last year's 9 percent drop in median resale-home prices will likely be followed by another 12.9 percent decline in 2009. Much of the expected decline for 2009 took place in the first quarter, and existing-home prices should stabilize next year and post a small (1 percent) gain, PMI projects. For the complete report, click here to obtain the PDF.
A YANKEE PITCHER OPTS FOR LEFT FIELD
C.C. Sabathia consoled himself after his first abysmal game by spending $15 million on a six-bedroom house in Alpine, N.J., says the New York Post. That's spare change for the 250-pound, 6-foot-7 ace, who signed a $161 million contract with the team in the off-season. The 12,000-sf mansion on two acres was on the market for fewer than two weeks. Sabathia, 28, paid all cash for his dream house, where he'll live with wife Amber and their three kids. The area boasts neighbors such as Sean Combs, Mary J. Blige, Stevie Wonder, Chris Rock and Britney Spears. Single guy Rob Walker, who manages Pharrell Williams of the Neptunes, sold the family-style place because he fell in love with a nearby bachelor pad in the $15 million-$20 million range. That deal may close soon.
AND A ONETIME CENTERFIELDER IS OUT HIS TOP PRICE
Former major-league centerfielder Devon White has cut the price of his Phoenix-area mansion to $3.8 million a year after listing it for $4.7 million, according to the Wall Street Journal. In 1995, White bought the one-acre property - in Paradise Valley, in the La Place neighborhood - and custom-designed the 10,500-sf home with an atrium and imported African stone floors. It has a gym, a 10-seat screening room and a pool table room. There's also a pool, a six-car garage and a 1,200-sf guest house. He and his wife Colleen plan to move to a smaller home.
AIMING HIGH, HE MISSES
Four years and several price cuts after Shaquille O'Neal first tried to sell his Miami Beach mansion, he's trimmed the listing price 10 percent, to $22.5 million, says the Wall Street Journal. The Miami Heat center paid roughly $19 million for the nearly 20,000-sf house in 2004, then listed it for $32 million in 2005 and $35 million in 2007. Since then he's shaved the price several times. On Star Island, off Miami Beach's southern tip, the 2.5-acre property includes a Mediterranean-style house with eight bedrooms, indoor basketball court, a pool, tennis court and dock.
THE HEIRESS DOESN'T QUITE TAKE A BATH
According to city records, Anne Chandler Bass - daughter of oil/aerospace/media magnate Robert M. Bass, the 62nd richest man in the nation - has sold her six-room co-op at 956 Fifth Ave. for $6.25 million after asking $7 million, the Observer reports. The unit has a corner living room with wood-burning fireplace, excellent floor plan and a master bedroom with "en-suite his/her baths and dressing room." Not to be overlooked was a mahogany-paneled butler's pantry and wet bar.
THE CONDO THAT JACK SORT OF BUILT CAN BE YOURS
Jane Beasley, the ex-wife of former GE chief Jack Welch, has put her 3,663-sf condo at the Trump International up for sale. Beasley acquired the apartment in 2003 as part of her divorce settlement with Welch. It now can be yours for $28.8 million, says Citifile.com.
IT'S NOT MANAGERS, BUT A PRICE, THAT A TEAM OWNER CUTS
Arthur Blank, owner of the NFL's Atlanta Falcons and co-founder of Home Depot, has cut the price of his suburban Atlanta home by 18 percent, to $8.9 million, after a year on the market, according to the Observer. In 1993, Mr. Blank paid $3.38 million for the house in the Tuxedo Park area of Atlanta's Buckhead district and created a lavish garden on the 4.2-acre property. The 1952 colonial revival-style house has seven bedrooms, four fireplaces, a three-car garage and a pool. Blank also owns the Georgia Force, an Arena Football League team. In his 23 years with Home Depot he developed the home-improvement leader from two Atlanta warehouses in the late 1970s. Blank and his wife Stephanie plan to move to another home in the area.
THE MATERIAL GIRL PROVES AGAIN THAT SHE'S IT
Yes! Madonna is moving to the East Side. The Post says Madge has signed a contract to buy a four-story, Georgian-style townhouse at 152 E. 81st St. for about $40 million, some $5 million less than the original asking price. But her new home in what brokers call the "Far East" does not appear to be all that much of a bargain. No residence in that area "has ever sold for $20 million, let alone $30 million - or ever will again," sniffed a broker who asked not to be identified. Also, the place has bad vibes: Lexington Avenue subway trains can be heard and felt inside the 26-room mansion. But the double-wide mansion does have a two-car garage, a 3,000-sf garden, nine fireplaces, an elevator and a wine cellar with a grotto. And with 13 bedrooms and 14 bathrooms, it certainly has the space to accommodate Madonna's family. The Material Girl plans extensive renovations, along with major security upgrades.
THE ABSURD MEETS THE RIDICULOUS HEAD-ON
Biotechnology venture capitalist and major Republican donor Lindsay Rosenwald paid $30 million a year ago for an 18th-floor duplex at 15 Central Park West, the third most expensive apartment sold in the new building, notes the Observer. Dr. Rosenwald's four-bedroom, 5,870-sf apartment was listed soon after for $90 million, widely assumed as the highest priced listing in New York City. It now been rented for $75,000 per month to a tenant described a single man in the film business who is not an actor.
MAYBE HE'LL SELL THIS PLACE BY COLUMBUS DAY
Val Kilmer, who's failed to find a buyer for parts of his 6,000-acre New Mexico ranch, has now listed all of it for $33 million, says the Wall Street Journal. The 49-year-old actor says he's listing HIS Pecos River ranch so that "someone who has the time and the finances" can maintain and preserve the property. Approximately 25 miles southeast of Santa Fe, the property remains largely wild with canyons and pine forests. But there's a main log house of about 5,600 square feet with four bedrooms and two guest houses.
Is Bad News No News?
Summarized in "The Soothsayers" above, the New York Times had a front-page story in which the author maintained that it could be four or five years before the housing market recovers in New York City. In the opening paragraph, Josh Barbanel wrote:
"While sales have picked up a bit in some suffering housing markets in the West, creating a glimmer of hope that home prices nationwide may be approaching a bottom, the Manhattan real estate market has just begun a steep slide. It parallels the decline in New York's financial services industry, and housing analysts say it may continue long after other markets heal."
Such an observation could not have surprised many New York City residents, especially faithful readers of this e-newsletter. Warned repeatedly that Manhattan, when it comes to the real estate market, is less an island than a peninsula, readers were told that the city inevitably would lag the rest of the country. What could not be foreseen, even as bubbles were bursting destructively from coast to coast, was the collapse starting Sept. 15 of confidence in Wall Street institutions and in the economy's perceived invulnerability. The local housing market went from sizzling to fizzling overnight.
Barbanel's piece was nothing short of alarmist, resurrecting well-worn first-quarter statistics - the "bad news" in the headline above. Those first-quarter numbers issued more than two weeks ago were neither heartening nor surprising since they merely confirmed activity that was known but not yet documented at the end of 2008. Barbanel depended in the article on scary figures, a patina of historical perspective, a couple of worst-case examples and the speculations of no one who could be called a credible "analyst" in the sense that he or she possessed a clear crystal ball. Instead, he relied on the musings of a total of two real estate brokers and one appraiser, each of them highly regarded. Not one economist was cited (though, admittedly, the ability of economists to predict human behavior is called into question daily).
The plaint in this e-newsletter may sound like a broker's defensiveness and perhaps a failed attempt at salesmanship. Not true. Be that as it may, the fact is that predictions about the future of market movements are notoriously unreliable. If they weren't, why is your 401K so much smaller today than it was on Sept. 1?
Giving credit where it is due, let's acknowledge that Barbanel did place significant emphasis on jobs, especially those on and related to Wall Street, and the rising rate of unemployment. Approximately 5 percent of city residents worked in financial services, earning a bit under a quarter of the income of everyone who lives here. The city's Independent Budget Office expects job losses to continue until the middle of next year and employment growth to lag the rest of the country thereafter. The office forecasts employment will fall behind the last quarter of 2008 even at the end of 2013.
It is axiomatic in real estate that the market depends for its health upon jobs first, second and third. So, the pace of re-employment will affect the accuracy of anyone's forecast. It is not irrelevant that a campaigning Mayor Bloomberg is emphasizing jobs growth at levels that, while optimistic, would belie the Independent Budget Office's projections. And the federal government's stimulus legislation, aimed at creating jobs, is yet another wild card.
Factors other than employment are not negligible either.
Obviously, the diminished availability of credit has had a major impact on the housing market. What is unknowable is the effect of loosened credit, never mind mortgage rates dipping to historic lows. Even with housing inventory double what it was at the end of 2007, how long will it take to absorb the excess supply with the cost of borrowing so tempting? Certainly, the two brokers and the one appraiser quoted by Barbanel have no way of knowing, though they don't shrink from guessing.
Also, what will be the strength of the dollar and the global economy? Investors from overseas, who supercharged Manhattan's market, have all but disappeared. Will they be back? And, if so, when?
In addition, consumer confidence needs to be part of the equation. Uncertainty about the direction of the economy, the health of the stock market, job security, lifestyle, school choices and family size play substantial roles in the decision to purchase real estate. As such concerns abate, how quickly will consumers feel comfortable making what usually is (to revert to cliché) the biggest investment of their lives?
Then, too, there is the issue of prices and timing the bottom of the market. The moment the zeitgeist manifests itself to provide a sense that it's a good idea to buy and sell at whatever the right price is, watch out for a herd of buyers galloping into the housing market who have postponed the pleasure of early gratification and ignored the value of living where they want.
Whether Manhattan's market will recover in a matter of months, a year, two years or more is a question that cannot be answered with any certainty. But one thing is crystal clear: Bad news is not always any news at all.
These recently visited properties have been listed by various brokers:
- On West End Avenue in the very low 100s, a rundown seven-room condo that has within its 1,800 square feet small-proportioned rooms, including three bedrooms, a maid's room and formal dining room. In a 1910 doorman building that was converted from rental only two years ago, the apartment offers more or less open exposures and needs close to $300,000 in renovations. It went on the market for $1.950 million a year ago and has had the price reduced to $1.650 million with common charges and taxes totaling $1,277 a month. If it didn't sell for $300,000 more when the market was hot, why would it sell now at the price that has been asked since early February?
- A stylishly renovated two-bedroom, one-bath pre-war co-op in the mid 90s west of Columbus Avenue. This 1,050-sf apartment offers a spacious welcoming foyer, split bedrooms, good closet space, expensive stone finishes and stainless steel kitchen appliances, spa-like bath with floor-to-ceiling Udaipur tiles and crushed-glass accents, and southern exposures from the fifth floor. The current owners bought the unit two years ago, when it was listed for $749,000. At $949,000 now with $1,392 in monthly maintenance, the apartment is too expensive in the current market, even beautifully renovated.
- Are "mausoleum," "church" or "museum" the right descriptors for a three-bedroom, two-and-a-half-bath co-op on a Central Park block in the high 70s? In a 1907 building encrusted with Gothic details, this 2,800-sf apartment marketed as a "trophy" has 14-foot ceilings, extraordinary kitchen, superior master suite, wood-burning fireplace, basement storage, exposures north toward the American Museum of Natural History and original plaster ornamentation such as Corinthian pilasters. The eight-room apartment, which changed hands in 2004 after it was listed for $5.65 million, was offered at $6.4 million in January with maintenance of $6,484 a month and reduced in February to $5.9 million.
- In the northwest reaches of Morningside Heights, a formerly one-bedroom and now two-bedroom co-op in a pre-war building for buyers with limited income. This shabby unit has decent light in the front, nothing to commend the place otherwise. Listed originally for $440,000 last June, the unit had its price reduced to $425,000 in October and $399,000 the following month with monthly maintenance of $642. So the price is too high, right?
- A 750-sf one-bedroom condo across from Lincoln Center in original, decently maintained condition. This apartment in a 1982 full-service high-rise has a pass-through galley kitchen, excellent closet space and open southern exposures. It is offered for $665,000 with monthly charges totaling $1,434, plus a $79 special assessment through year's end. Given the prices of the five other listed properties in the building and its prime location, the asking price is more or less appropriate.
- West of Columbus Avenue in the mid 80s, a triplex with three bedrooms, three baths, two half baths and a 450-sf private backyard at the rear of the 1910 townhouse in which the co-op has made the best of a difficult space. Renovated to include on the parlor floor, which has 11-foot ceilings, a bedroom and an expansive high-end kitchen open to the 20'3" x 15' living room and a small dining area with banquette. Upstairs is the sizable master suite (painted navy blue), incorporating an office area, laundry, walk-in closet and bath with steam shower. Below the parlor floor, in the basement, is a windowless Hollywood-style media room (painted scarlet) that boasts overstuffed reclining chairs on two levels facing a giant screen in addition to three flat-panel televisions for what appears to be a family of sports lovers. This place went on the market on March 4 for $2.65 million with maintenance of $3,449 per month and was reduced to $2.21 million just two weeks later, probably in the hope it will sell for $2 million. Time will tell.
- A vacant two-bedroom, two-bath co-op that evidently has had pastel-yellow paint splashed on its walls in a vain attempt to spruce it up for a sale. Both bedrooms (one of which affords a slim river view) face West End Avenue in the low 100s, the baths are small and ugly, the galley kitchen cries for updating, there is a formal dining room and oversize windows bring in good light. The ninth-floor apartment with a center hall was offered first in November for $1.295 million with maintenance per month of $1,684. In December, the price went down to $1.195, which is demonstrably too much.
- In the low 70s on a busy corner of Amsterdam Avenue, two 450-sf one-bedroom condos, one of them renovated as cheaply as possible and the other with only refinished floors. Each has a kitchen hardly bigger than a walk-in closet and no open views in a pre-war pet-friendly building with only a roof deck, live-in super and laundry room as amenities. The renovated unit is $530,000 with combined monthly costs of $681, plus a $138 special assessment for the next three years (!); the unimproved property is $480,000 with slightly lower monthlies. More than $1,000 a square foot is mighty aggressive for these apartments.
- For buyers eager to toss their StairMaster machines, a duplex penthouse three and a half flights from the sidewalk on a block between Columbus and Amsterdam avenues in the low 80s. Totally renovated over the last two years, this approximately 1,500-sf co-op in great condition has three terraces totaling 1,000 square feet, three bedrooms, two baths, a washer/dryer, two gas fireplaces, central heat and air conditioning, modern kitchen open to the smallish living/dining area and an airy ambience. The master and terraces occupy the top floor, which was added to the 1910 townhouse, the public areas of which have retained virtually all the woodwork and feeling of their post-Victorian heritage. Reduced in small stages since it went on the market in October for $2.7 million with maintenance per month of $1,673, the co-op is now at $2.35 million, which remains too high.
- On Manhattan Avenue, a 17-foot-wide townhouse with a renovated owner's duplex on the lower floors, two rental units, pleasant garden, disconcertingly open basement master suite that has a bath it shares with a second interior "bedroom." Upstairs is an open kitchen boasting a granite-topped center island on the main floor, where there is a third bedroom and second bath. The rent roll of this 1900 building with 3,480 square feet totals $63,600 annually, and the taxes are currently $4,145. Before the original listing in July expired last month with the dwelling unsold, the price was $3.275 million. Then it was relisted at $2.995 million. Today's price: $2,799,500.
- A nearly 1,100-sf one-bedroom in the low 90s on a corner of Amsterdam Avenue. With a second "bedroom" carved out of the window end of a renovated pre-war co-op with good closets, big foyer, sunken living room and raised dining "balcony," this well-maintained co-op in a pet-friendly building adjacent to a public school has plenty of light from the fourth floor. It is well priced at $699,000 with monthly maintenance of $1,192.
- On Broadway in the mid 80s, a in a 1989 building loaded with amenities and 18 other apartments for sale, a partially renovated 2,000-sf condop with four bedrooms, two and a half baths, standard-height ceilings, enormous master suite, pass-through kitchen and scuffed cherry floors. This sunny corner unit has been offered since mid-March at last year's price of $2.75 million with maintenance of $3,767 a month.
- A 2,000-sf corner co-op that has been on the market for more than a year in the mid-90s between Amsterdam Avenue and Broadway. In an 1899 pet-friendly building, the recently renovated apartment has five bedrooms, two and a half dated baths, 10-foot ceilings, new rosewood floors, new oversize windows, much improved eat-in kitchen, formal dining room, and bright exposures south from the public rooms but otherwise unremarkable. Much has been squeezed into the space, to the detriment of the master suite, and another deficit is the 46-foot-long hall that guests must negotiate past all those bedrooms to the living room. The original price was $2.749 million with monthly maintenance of $2,486 plus a $428 assessment. Five reductions later, the price since the middle of last month has been $2.199 million; the sale price will be close to $2 million - but only if the sellers are very lucky.
of Manhattan's Latest Listings
here to view a sampling of newly listed properties. To see more of them or to obtain more information, please don't hesitate to be in touch.
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