The Big Apple

APPRAISAL FIRM CHRONICLES ANCIENT HISTORY

Manhattan apartment sellers cut prices by the most in five years last year and unsold inventory rose to the highest since 1999 as the economy retreated, says Bloomberg in summarizing new data from appraisal firm Miller Samuel. The average listing discount climbed to 4.1 percent, the highest since 2003, as buyers negotiated for reductions off the asking price. The number of condominiums and co-ops for sale jumped 41 percent last year to 9,081 even as the median price reached a record $995,000, Miller Samuel said in a report on the last 10 years, but the number of sales declined 23 percent from 2007. The median sales price of Manhattan apartments in 2007 rose 11 percent to a record $955,000; in 1999, it was just $310,000 and almost doubled to $605,000 by 2004. Ranging from an average $993 per square foot for studios to $2,831 per square foot for apartments with four or more bedrooms, the overall average price per square foot of Manhattan apartments jumped 11.7 percent in 2008 to $1,251. The average sales price was $1,591,823 last year, up 17.8 percent from the $1,351,621 record set in 2007. There were more sales of two-bedroom apartments (4,139) than of all other types of apartments in 2008, the report states. And all apartment types experienced a sales decline last year except four-plus-bedroom apartments, with a rise from 169 sales in 2007 to 193 sales in 2008. Average days on market rose 14.4 percent, to 143 days. Prices skyrocketed for Manhattan townhouses, too. In the past decade, the median rose 156 percent to $4.995 million. In the Hamptons, the median fell almost 13 percent last year to $850,000, the first decline since 2000, according to the firm in its report for Prudential Douglas Elliman. To see the whole report, click here.

SOME NEIGHBORHOODS ARE MORE AFFECTED THAN OTHERS

In examining price cuts in Manhattan, the Real Deal divided Manhattan into 12 districts, gathered customized data for each on past sales by PropertyShark and on current listings by StreetEasy, and discussed with industry players discussed how far listings would need to drop for property to move. The comparison found that in every neighborhood, current listing prices and recent actual sales differed widely, indicating a deep disconnect between sellers and buyers in the current downward market. Median listing prices would need to drop from 8 percent in Soho and Tribeca to a whopping 42 percent in the West Village and Greenwich Village just to equal the actual median sales price in those neighborhoods during the last quarter of 2008. Depending on the neighborhood, the divide could indicate a high number of luxury or large-sized properties sitting on the market (reports have found studios and one-bedrooms have been selling better), and also could be affected by the large number of unsold apartments in newly constructed luxury high-rises.

WILL SLOWDOWN IN CONDO SALES DAMAGE NEIGHBORHOODS

The Citizens Union Foundation worries in its Gotham Gazette that downtown Brooklyn, Williamsburg, Long Island City and other areas will suffer if apartments in sleek new condos languish on the market. Says Bill Staniford, chief executive officer of Property Shark: "Right now we have a glut of supply and no demand." He projects another 15-20 percent drop in value before the end of 2009. "I keep looking at it and I don't see how it stops. I don't think we have seen the complete repercussions of this," he said. The outer boroughs face particular challenges, opines appraisal guru Jonathan Miller, because new development there was fueled by the high prices in Manhattan. The notion was that developers would be able to market homes in successfully Downtown Brooklyn or Williamsburg to buyers who wanted a luxury residence but who couldn't afford Manhattan prices. But many buyers simply no longer need to look to Brooklyn or Queens.

Some worried developers are planning to auction off some luxury condos in the spring for around half of what they were asking just a year ago, according to the New York Times. Even a handful of auctions could reset prices for new condominiums citywide, said the ubiquitous Jonathan Miller, the president of Miller Samuel, a Manhattan research and appraisal company. He said he expects the auctioned properties to sell for 40 to 45 percent below the asking prices of the first quarter of 2008, when the market peaked. Accelerated Marketing Partners, a real estate marketing firm, is discussing auctions that will start as early as April on five mid-range to high-end projects in desirable neighborhoods of Manhattan and Brooklyn. There are 8,000 new condos on the market in New York City, and 22,000 more are scheduled to go on the market by the end of next year. In the auctions, only a portion of a building's unsold units are offered in one swoop, to avoid depressing values more than necessary. The remaining ones are marketed the traditional way, at the new, lower auction prices. Auctions have succeeded in loosening other battered markets - for example, South Florida. In two held there last fall, 30 to 40 units in partly sold developments went for about half their peak prices. The developers say sales have picked up since then, at prices slightly below those received at auction.

Co-ops may be emerging as a more financially stable and attractive option than condos, suggests the Real Deal monthly trade publication. But they are still facing challenges. In an effort to preserve their property values, many co-op boards are rejecting buyers because the prices that they're offering on their target apartments are too low. "I'm finding co-op boards to be even further behind the market than sellers," says Jonathan Miller, president of appraisal firm Miller Samuel. Co-ops are not only cheaper than condos; experts say they're also holding their value better as the economic downturn grips Manhattan. "For the past 10 years, people thought, 'Why would anyone want a co-op?" observes Kathy Braddock, co-founder of Charles Rutenberg Realty. "For them to kill a transaction because it's priced too low is counterproductive for them," Miller says. "It has the effect of damaging the collateral they're trying to protect. By constraining the market, they hurt the values in their building." Price isn't the only reason boards are rejecting buyers: Many are now stricter when it comes to financial requirements and look askance at buyers who work on Wall Street.

Some buyers are forfeiting six-figure deposits rather than close on deals they have made, according to the New York Times. At 304 Spring Street, the buyer for the duplex penthouse recently decided he would not go through with the deal and walked away from a $780,000 deposit. At 1120 Park Avenue, it appears that a buyer forfeited a deposit of as much as $1.1 million. Real estate agents representing buyers of at least three other multimillion-dollar properties also report clients who knowingly left deposits of more than $1 million or hundreds of thousands of dollars on the table. In each case, the buyers had signed their contracts before the financial meltdown last fall but decided in recent months that because values in the luxury real estate market have dropped 20-40 percent, it no longer made sense to go through with their deals. In some cases, agents say, buyers who signed contracts before the market started to fall have managed to renegotiate the sales prices to reflect the current market more accurately.

With real estate prices falling for the first time in a decade, home seekers are just as intent on price cuts as they once were on floor-to-ceiling windows and Sub-Zero refrigerators, says the Real Deal. Since September, price cuts have emerged as the single most important factor in home sales. But with so few sales having closed since September and the stock market wildly fluctuating, finding the right price is a tall task. "It's just a moving target," said Kathy Braddock, the co-founder of Charles Rutenberg Realty. "Nobody has ever seen a market like this." Still, a number of brokers have begun fighting back with eyebrow-raising price cuts - in both the stratosphere of the market and the below-$1 million price range. Their new "bargain" listing prices are 20 or 30 percent lower than they would have been just months ago.

With apartments that need work now an extremely hard sell, brokers are encouraging sellers to do anything they can to spruce up their apartments before putting them on the market. Contractor Paul Barnla, the owner of Artistic License Interiors, told the Real Deal that more of his business is now coming from sellers doing minor changes to prepare their apartments for market than buyers renovating their new homes. "A lot of people are getting ready to sell," said Barnla, who gets much of his business from real estate agent referrals. "They're just sprucing things up, not doing a total gut." He added that more clients are focused on smaller, basic repairs than in the past.

Residents of a 54-unit Upper East Side co-op got the bad news last month - despite the board's intense efforts to trim expenses - maintenance fees are rising 15 percent, nearly double last year's hike. "People are furious," Steven Sladkus, president of the co-op board, told the Crain's. Even as the city's economy sinks, maintenance fees and common charges for co-ops and condos, respectively, are rising at the highest rates in years. Co-op managers blame soaring expenses, primarily property taxes. And things could get much worse. Income derived from renting retail space and levying charges on unit sales is plummeting, and the number of owners defaulting is starting to rise. Monthly fees at co-ops are going up at more than double the rate of recent years. Though steeply falling fuel costs have given buildings some relief, most boards cite drastic hikes in real estate taxes. Fees have spiked 7-12 percent at the 300 Manhattan co-ops and condos managed by Cooper Square Realty, according to Chief Executive David Kuperberg. "This is happening citywide." The squeeze has just begun at co-ops and condos where rental income from retail and office space is important. The retail vacancy rate in Manhattan residential buildings is running at nearly 18 percent - triple that of 2008. With declines in sales prices and transactions, co-ops that still look for income from flip taxes are feeling the pinch. Deal volume was down 23 percent in the fourth quarter from a year earlier, according to appraisal firm Miller Samuel.

In all five boroughs, the decrease was 3 percent between January and February, to 269 new foreclosures from 278, according to Propertyshark.com. Compared with February 2008, foreclosures have dropped 10 percent. Single- and two-family homes saw the highest number of foreclosure auctions, while condos and co-ops saw the lowest. Foreclosure statistics in the boroughs varied widely year-over-year. For example, Brooklyn foreclosures dropped by 77 percent between February 2008 and February 2009, while the number in Queens grew to 183 last month from 169 a year earlier. Manhattan had four foreclosures in contrast to nine in January.

A total of 232 foreclosed homes will be sold to the highest bidder at the Javits Convention Center, Crain's says. USHomeAuction.com, an Irvine, Calif.-based real estate auction firm, expects more than 3,000 attendees on March 8 at the Javits Center. Foreclosed homes in New Jersey and Pennsylvania also will be offered. Starting bids are discounted by a minimum of 70 percent from their previously valued price. For instance, one 2,500-square-foot house in Jamaica valued at $555,000 has a starting bid of $69,000. "In the past, there weren't enough foreclosed New York homes to hold an auction," said Rick Weinberg, a spokesperson for USHomeAuction.com. "This year I suspect that there will be a second and third auction in the city. They're not the nicest properties, but people can get a great bargain, especially if you're handy." Prospective vultures, you've been warned.

For the first time in recent memory, brokers say, many Manhattan rentals are now cheaper than comparable apartments in desirable outer-borough neighborhoods, according to the Real Deal. The reason: Rents are dropping faster in Manhattan than they are in the outer boroughs and landlords in Manhattan are throwing in more incentives than landlords elsewhere. As a result, some rental apartments in neighborhoods such as Long Island City, Park Slope and Brooklyn Heights are actually pricier today than comparable Manhattan apartments. But brokers say reductions in the outer boroughs are already beginning to catch up with those in Manhattan. One reason the outer boroughs have been slower to cut rental prices: They're not tied as directly to Wall Street job losses as Manhattan. Another reason is limited supply. In Brooklyn Heights, for example, one-bedrooms are renting for $2,700-2,900. Yet, in Stuyvesant Town, north of the East Village, newly renovated one-bedroom apartments start at about $2,600, and the landlord is offering one free month of rent to new tenants.

A LIVE-IN SUPER TAKES HER ROLE TOO SERIOUSLY

A Manhattan newcomer is accusing a building super is filing a $10 million lawsuit against her former landlord, says the New York Daily News. Navah Meller, 22, moved out of her rent-stabilized apartment after she says the super at the E. 80th Street building repeatedly rifled through her drawers. And her drawers. "My unmentionables were moved," Meller said. "I felt dirty knowing they had been handled by strangers." The recent college graduate from Massachusetts moved out in January after fewer than six months in the building, giving up a sweet $1,595-a-month deal on a studio. Meller contends that 79-year-old super Ilona Biro rearranged her belongings, rolled up a tube of toothpaste, opened "care packages" from her mom and folded her panties without permission. George Biro, 84, who is the building's super along with his wife, Ilona, called the allegations "impossible" and said Meller provided him and his wife with a key to the apartment so he could fix leaks in the ceiling and bathroom. "I don't know anything about her underwear," he said. "She gave me the key and said I could go in." In January, the suit charges, Meller was sleeping under a blanket on a sick day from work when she was awoken by Ilona Biro entering her apartment. "She let herself in without knocking," Meller said. "I was really upset." And who could blame her?

U.S. Markets

SALES OF PREVIOUSLY OWNED HOMES DROP AGAIN

Existing-home sales declined in January by 5.3 percent from December to a 12-year low, bringing the annual rate to a level 8.6 percent lower than it was one year earlier, according to the National Association of Realtors (NAR). But the silver lining is that inventories fell 2.7 percent to a two-year low and a 9.6-month supply. The national median price plunged to $170,300, down 14.8 percent from a year earlier, partly because of sales of distressed properties. NAR estimates that the sale of foreclosed properties or those requiring a lender-mediated short sale made up approximately 45 percent of all sales in January. Single-family home sales were off 4.7 percent, bringing the median down 13.8 percent from a year ago, to $169,900. Existing apartment sales plummeted 10.2 percent from December, 20.3 percent lower than the same month last year. The median was $174,400 versus with 20.6 percent in January 2008.

THE SELECTIVE CASE-SHILLER INDEX ALSO SHOWS DECLINES

The Case-Shiller Home Price Indices recorded an 18.2 percent decline in the fourth quarter of 2008 from one year earlier, the largest in the series' 21-year history. The 10-city and 20-city composites also set new records, with annual declines of 19.2 percent and 18.5 percent, respectively. Each of the 20 metropolitan statistical areas (MSAs) reported annual declines, and eight of those MSA's now have negative rates exceeding 20 percent. As of December 2008, average home prices across the United States are at similar levels to what they were in the third quarter of 2003. From the peak in the second quarter of 2006, average home prices are down 26.7 percent. But Boston, Denver, Los Angeles, San Diego and Washington D.C. are reporting a relative improvement in year-over-year returns in terms of lesser rates of decline than last month's values. Detroit showed a marginal improvement in monthly returns but was worse off in its annual rate. Minneapolis, Las Vegas and Phoenix all reported monthly declines in excess of 4.5 percent in December. Eighteen of the 20 metro areas are in double digit declines from their peaks, with half of the MSA's posting declines of greater than 20 percent and four of those (Las Vegas, Miami, Phoenix and San Francisco) in excess of 40 percent. To get into the weeds, go here. www.homeprice.standardandpoors.com By analyzing the indices" monthly declines, year-over-year declines and how many months of equity that homeowners have lost, Forbes determined that the 10 best housing markets in the were New York City, Washington, D.C., Charlotte, N.C., Portland, Ore., San Diego, Denver, Boston, Dallas, Los Angeles and Seattle.

NEW-HOME CONSTRUCTION DIVES 10.2 PERCENT TO A NEW LOW

U.S. Commerce Department data show that sales of newly built, single-family homes fell 10.2 percent in January. The number of new homes on the market fell for a 21st consecutive month. But, owing to the historically slow sales pace, the months' supply continued to rise for a fourth consecutive month, to 13.3.

BUYING MAY NOW OUTPACE THE WISDOM OF RENTING

In more than half of the top 50 U.S. housing markets - including Los Angeles, northern Virginia and Las Vegas - the relative cost of owning is now below its 18-year average, observes the Wall Street Journal. In Los Angeles, for example, mortgage payments averaged 60 percent more than rent payments between 1990 and 2008. Now, those payments average 30 percent more than rent. "We're not saying on an absolute basis that it's cheaper to own a home, but on a relative basis. . . owning is looking much more attractive than it has in a long time," said Andrew McCulloch, an analyst with the real-estate advisory firm Green Street Advisors. "It's not a 'no-brainer' anymore if they're going to rent versus own," he said. If mortgage rates fall to 4.5 percent, mortgage payments would average 14 percent more than rent payments, a level last reached in 1998. A separate report by Moody's Economy.com also finds that home prices relative to rents are more in line with their historical relationship. Using data that measure average home prices and rent payments for 54 metro areas between 1984 and 2004, Moody's Economy.com estimated that eight markets are undervalued. In those eight markets, home prices relative to rents are below or within 5 percent of their historical levels. "The bottom is coming into view," said Mark Zandi, chief economist at Economy.com, "but we've still got a ways to go." The report notes that home prices relative to rents remain well above historical levels in 30 markets, including Philadelphia; Portland, Ore.; and Virginia Beach, Va.

PENDING HOME SALES INDEX FALLS 7.7 PERCENT TO RECORD LOW

The forward-looking indicator, based on contracts signed in January, was 7.7 percent below December and 6.4 percent lower than one year earlier. The index is at the lowest level since the National Association of Realtors (NAR) began tracking the data in 2001, when the index value was set at 100. Private analysts surveyed by Dow Jones Newswires had expected pending sales would fall 3.5 percent.

The Soothsayers

FED CHIEF SAYS HOUSING COULD DRIVE DOWN ECONOMY

Ben S. Bernanke told a House committee that the glut of unsold homes currently on the market could drive prices down too much. The problems "could put us in real danger of driving housing well below fundamentals," he was quoted as saying in the New York Times.

iEmergent projects that the $787 billion stimulus bill and the Obama administration's new foreclosure prevention initiative could boost mortgage loan refinancings by 55 percent in 2009, reports Inman News. The forecasting concern also is predicting a slight increase in purchase mortgage originations in comparison with the company's previous forecast for 2009-13. Its projected 55 percent growth in refinance volume is based on expectations that the Obama administration's plan to help lenders modify or refinance up to nine million loans will keep pressure on mortgage rates, unfreeze credit and slow the rate of home-price declines. The bill increased the $7,500 limit on an existing tax credit for first-time homebuyers to $8,000, extended its sunset to Dec. 1, and eliminated a repayment requirement. (Anyone who hasn't owned a principal residence in the last three years is considered a first-time buyer). It also restored the $729,750 upper loan limits for Fannie Mae and Freddie Mac in high-cost housing markets that was in place during much of 2008.

Boldface

HOW DO YOU SPELL C-H-U-T-Z-P-A-H

Aby Rosen, who owns the Seagram Building and Lever House, told the Observer that he has turned down not one, but two, $60 million offers for his 45-foot-wide limestone mansion at 22 East 71st St. At $75 million, it is far and away the most expensive official residential listing in New York City. "Have you been to this house?" he asked. "Honestly! Forget about all the bullshit. It's the best house in New York City. It's awesome. If I hadn't just finished my house's renovation, I would move in there in a heartbeat." (So, he lives in the second-best house in New York?) Rosen said, and a second source confirmed, that it was last year when he received the offers, before the market was transformed. "One was too low," he related, "and the other I didn't like the guy." Rosen paid $15.65 million for the house in August 2004 but won't cut his $75 million asking price. "You know what? The guy who wants it will pay whatever. It doesn't make a difference if I put it at 65 or 75, I will find somebody who will understand this house," he said, winningly. "If it sells this year, it will sell this year; if not, it will sell next year." And if not...

Iceland's government, devastated by the financial bust, is trying to sell ambassadorial residences in Washington, New York, London and Oslo for a total of more than $25 million to raise money, says the Wall Street Journal. In Washington, Iceland is asking $5.65 million for a 1928 mansion, the home of its ambassador, which it has held for nearly half a century. The 10,000-sf mansion sits on 0.17 acres in Kalorama Heights. It has 10 bedrooms, five bathrooms and a pool. Iceland is planning modest replacements. "We are looking at nice, smaller residences... not in the most sought-after areas like this one," says Iceland's ambassador to the U.S., Hjálmar Hannesson. But he adds, the homes "are not going to be sold if a proper price is not to be had." In New York, Reykjavik is asking $5.6 million for the home of its United Nations ambassador. The four-bedroom apartment, on Park Avenue at 55th Street, comes with separate staff or guest quarters on the penthouse level.

Billionaire J. Christopher Flowers is putting the Harkness Mansion back on the market for millions of dollars less than what he paid for it two and a half years ago, reports the Observer. According to a source, Flowers' 113-year-old, 50-foot-wide limestone townhouse at 4 East 75th St. is quietly being offered for $49.95 million, even though in 2006 he paid $53 million, still the biggest-ever individual deal in New York City. That's going on the market because the guy's getting divorced," a second source, voice quite low, gossiped. City records indicate that Flowers, who leads his own massive buyout firm, spent more than $4 million gutting the more than 20,000-sf mansion. But a source said that official estimate is wildly low, perhaps as much as $12 million.

Seagram heir Matthew Bronfman's has listed his 9,000-sf mansion in Westchester County to rent for $28,500 per month, says the New York Post. In the hamlet of Katonah, the property is in a ritzy estate area in the town of Bedford and includes eight bedrooms, eight bathrooms and a swimming pool. It's perched on 19 acres with formal gardens and flagstone terraces. Here's lookin' at you, kid.

This and That

CAN YOU GET INTO THIS

The housing crisis is now affecting cave dwellers, reports the Wall Street Journal. That's the case for Curt and Deborah Sleeper of Festus, Mo. They have fewer than three months to pay off the $83,000 balance on their home, just outside of St. Louis in a former mine that once produced limestone and sandstone. The family of five has put their dwelling up for sale on eBay priced at $300,000 and received some one million hits. The Sleepers bought the 15,000-square-foot cave through the auction site in 2004. The initial idea was to build a regular home outside and use the cave as a place for the kids to play, Curt Sleeper says. Later, he decided to build the house inside the cave. Sleeper says he has been unable to secure the new loan he needs. "I'm self-employed, my credit score is somewhere between 600 and 710, depending on who you talk to. I live in a cave with no comparable homes in the area and I gave up credit cards 10 years ago," he says.

StreetEasy and Trulia each say that more than 100,000 users have downloaded free apps they've created to download listings, says the Real Deal. StreetEasy's app uses the iPhone's built-in global positioning system to pull up listings near wherever a user happens to be. And, at the moment it has the market to itself as the only real estate iPhone application that focuses exclusively on New York listings. "If I'm by the Flatiron [Building], I'm going to see apartments for sale in Gramercy," said Dawn Doherty, StreetEasy's vice president for strategic development.

As real-estate investment trusts try to hoard cash, shareholders are poised to lose out on some $4.76 billion of dividend payments over the next year, says the Wall Street Journal. Investors are concerned because dividends are the core driver for investing in REITs, which must pay at least 90 percent of their taxable income out as quarterly payouts. Within the past 10 months, roughly 30 percent of all listed REITs have suspended, cut or switched to paying part of their dividend in company stock, according to data compiled by BMO Capital Markets.

The hotel, which became the Waldorf-Astoria, welcomed its first guests in March of 1983 on the site of the Empire State Building, notes the Real Deal. The 13-story Waldorf Hotel, at the southwest corner of Fifth Avenue and 33rd Street, was built for more than $3 million by William Waldorf Astor on the site of the family mansion. Astor hired Henry Hardenbergh, who designed the Dakota apartment building on the Upper West Side, as the architect. Astor's aunt, who lived next door to the site, had her home demolished within a few years to make way for the 17-story Astoria Hotel, which opened in 1897. Filled with luxurious details such as marble tiling and hand-carved wood ornaments, the Waldorf charged as little as $2.50 for room. The hotel expanded after the completion of the 550-room Astoria Hotel next door, on Fifth Avenue and 34th Street. The hotels were connected by a corridor and operated as the Waldorf-Astoria Hotel. But the structures were torn down in 1929, and a new Waldorf-Astoria Hotel was opened in 1931 at 301 Park Avenue.

INVESTORS, THIS IS THE OPPOSITE OF A WIN-WIN SITUATION

What does happen if you sell a property that you bought in a 1031 exchange at a loss? asks Realty Times. When you do a 1031 exchange, your basis from the Old Property rolls over to the New. The Old basis is modified slightly if you buy-up, but not if you buy-down. For example, if you paid $200,000 for a property, sell it for $175,000 and your basis is $125,000, you have a gain of $50,000. The net effect of the transaction is that you had a deferred gain of $75,000 when you did the exchange, but then lost $25,000 of value resulting in a taxable gain of $50,000 when you sold it.

Research

NOT EVERY HOUSING MARKET SUFFERED LAST YEAR

But why would you want to live in Cedar Rapids Iowa or Elmira, N.Y.? In its report on the fourth quarter, First American CoreLogic, which predicts loan performance for banks, says housing prices were down 11.1 percent last year and predicts that home values will continue to decline through 2010, according to Realtor magazine. The report found that home price declines accelerated in some states where home values previously had been fairly stable, including Maine, Pennsylvania, Arkansas, Oregon and Rhode Island. "The geographic breadth of price declines rapidly expanded in the second half of 2008, which means that housing wealth losses are broadening across much of the country," says the company's chief economist, Mark Fleming. The 11 cities with the highest home price appreciation in 2008 were: Cedar Rapids, Iowa, 8.83 percent; Binghamton, N.Y., 7.78 percent; Amsterdam, N.Y., 7.89 percent; Malone, N.Y., 7.60 percent; Bay City, Mich., 6.87 percent; College Station-Bryan, 6.78 percent; Rocky Mount, N.C., 6.69 percent; Auburn, N.Y., 6.51 percent; Lebanon, Pa., 6.41 percent; Elmira, N.Y., 6.28 percent; and Johnstown, Pa., 6.20 percent.

The Mortgage Biz

THE COST OF REFINANCING HAS CLIMBED

Borrowers in the best position to refinance profitably have loan balances of $417,000 or less secured by a single-family house in which they reside, have a credit score of 800 or more, and have equity in their property of 20 percent or more, notes Jack Gutentag in Inman News. The interest-rate premiums associated with deviations from this standard are larger than ever. So-called "conforming jumbo" loans carry a 1 per cent premium. But borrowers with balances in excess of $417,000 who do not live in a high-cost area or who have balances in excess of $625,500 will pay a premium closer to 2 percent. These are "nonconforming jumbos." If a loan is secured by an investment property, figure on paying a rate premium of about 1.375 percent. Shortfalls from excellent credit, defined as a FICO score of 800, have become very expensive. Even a score of 780 can cost a rate premium of 0.125 percent. The premium on a score of 700 is about 1.125 percent, and on a score of 600, it can be a prohibitive 2.625 percent.

Borrowers looking for such guarantees these days face more hurdles and higher fees, especially if they need to lock in a rate for more than a month, reports the New York Times. According to Michael Moskowitz, the chief executive of Equity Now, a mortgage broker and direct lender based in Manhattan, "during the last ‘refi' boom, lenders were locking in people willy-nilly, no questions asked" only a few years ago. "But things have shifted because lenders are more attuned to the bottom line," he added. The cost of a rate lock is usually built into the lender's fee, which is expressed in "points." An up-front charge, a point is equal to 1 percent of the loan amount. For a 30-year mortgage of $250,000, for instance, Equity Now's borrowers with good credit would have received an interest rate of 5.125 percent earlier this month and would have paid a point, or $2,500, to lock that rate for 30 days. Before the credit crisis deepened last year, said Matthew Hackett, Equity Now's underwriting manager, borrowers would have paid 1.25 points to guarantee an interest rate for 60 days. Now, he said, the price is 1.75 points.

IF, AS IS LIKELY, YOU NEED A JUMBO MORTGAGE, BRING CASH

While total mortgage originations fell by 17 percent in the fourth quarter from the previous quarter, jumbo originations fell by 42 percent to $11 billion, according to Inside Mortgage Finance. The Wall Street Journal says that's the lowest volume ever tracked by the trade publication, which has figures dating to 1990. ING Direct is one of the few lenders that are boosting jumbo originations, though it requires a minimum 30 percent down payment in the most expensive housing markets, up from 20 percent earlier last year. For condos, ING requires a minimum 45 percent down payment. Like most jumbo lenders, ING offers mainly "hybrid" adjustable-rate mortgages that carry a fixed-rate for five or seven years and then reset annually to an adjustable rate. The gap between jumbo and conforming loans, historically around 0.3 percentage point, is now about 1.55 points, with jumbo rates averaging about 6.77 percent. Some banks, though, are quoting much-higher jumbo rates. Around 4 percent of all borrowers have loans that exceed conforming limits, but that share rises in high-cost states such as California, at 17 percent, and New York, at 8 percent.

The president's budget takes on what has long been considered a sacred cow by trying to reduce the mortgage-interest tax deduction for top earners, notes the Wall Street Journal. The president's budget seeks to raise $318 billion over the next decade by lowering the value of itemized tax deductions for the wealthy - including interest paid on home mortgages. Households that currently pay income taxes at the 33 percent and 35 percent rates would be able to claim deductions only at the 28 percent rate. That means that for every $1,000 in deductions, a household in the top tax bracket would realize a tax savings of $280, down from the current $350. The proposal wouldn't take effect until 2011. For more on this proposed change, click here.

The company says it will reduce the monthly payments of homeowners who lose their jobs and are behind on their mortgages to an average of $500 a month for three months, according to Inman News. The new Homeowner Unemployment Assist initiative is available only for first mortgage loans on a principal residence that conformed to Fannie Mae and Freddie Mac's limits at the time of origination. Borrowers must be 60 days or more behind on their payments or in foreclosure and cannot participate if they are eligible for a long-term loan-modification using criteria developed by the FDIC and adopted by Citi. If participating borrowers aren't employed again within three months, Citi says it will work with them on a "case-by-case basis" to "explore the best solutions for the customer." The program may be expanded to include borrowers at earlier stages of delinquency or those who are current on their loans depending on initial results.

For the year ending last June 30, federally regulated financial institutions filed 62,084 depository institution suspicious activity reports (SARs) regarding mortgage loan fraud, says a unit of the U.S. Treasury Department. Mortgage loan fraud was the third most reported activity during this period. In approximately 34 percent of the reports, the filing institutions said they detected the attempted mortgage fraud before funding the loans, a welcome increase from 21 percent of the time over the past decade that reflects heightened vigilance. Mortgage fraud is often uncovered during housing downturns because falling home prices can expose house-flipping schemes that relied on inflated home valuations and falsified borrower information.

The mortgage debt on about 20 percent of all U.S. single-family homes exceeded the estimated current value of those properties as of Dec. 31, says real estate information concern American CoreLogic, according to the Wall Street Journal. That's a situation often known as being "underwater" or "upside down." That proportion will rise to 25 percent of single-family homes if prices fall another 5 percent, the firm said. The problem is most acute in Nevada, where the percentage is 55 percent, followed by Michigan (40 percent), Arizona (32 percent), Florida (30 percent) and California (30 percent). Stripping out those five hard-hit states, the national percentage is about 14 percent. In New York State, the tally is just 4.7 percent.

The Mortgage Bankers Association (MBA) says loan application volume decreased 12.6 percent for the week ending Feb. 27 on a seasonally adjusted basis from one week earlier. On a basis unadjusted for President's Day, the decline was 2.0 percent compared with the previous week and 6.7 percent compared with the same week one year earlier. Refinancings dropped 15.3 percent, while purchase activity slipped 5.6 percent from one week earlier. The refinance share of mortgage activity decreased to 66.9 percent of total applications from 69.7 percent the previous week, and the adjustable-rate mortgage share of activity was up 2.3 percent from 1.9 percent.

HOUSING RESCUE PLAN TO HELP ONE OF NINE HOMEOWNERS

The Obama administration said its plan would help as many as one in nine homeowners, from low-income Americans struggling to avoid foreclosure to well-off borrowers who owe more than their homes are worth, according to the Wall Street Journal. The plan has two main components. First, the government will offer financial incentives and subsidies to persuade mortgage-servicing companies to ease up on borrowers who are in financial straits so severe that they risk losing their homes. Borrowers will have to sign affidavits attesting to their financial hardships. In return, they will see their interest rates drop to as low as 2 percent, their payment periods lengthened and other modifications approved in an effort to bring their monthly payments to 31 percent of their income. The program will be limited to first-lien mortgages with outstanding principal balances that don't exceed $729,750 in the case of single-family homes. The second main component of the plan calls for Fannie Mae and Freddie Mac to refinance loans for millions of borrowers who may owe more than their homes are worth even if they are wealthy enough to afford their current payments.

Freddie Mac announced the official launch of its new REO Rental Initiative giving qualified tenants and former owners the option to lease their recently foreclosed properties on a month-to-month basis. "Freddie Mac's REO Rental Initiative can help ease a foreclosure's impact by giving renters and former owners more time to determine what options are best for them and their families. At the same time, the REO Rental Initiative helps stabilize property values and local communities by keeping homes occupied and less vulnerable to vandalism," said Ingrid Beckles, Senior Vice President, Default Asset Management at Freddie Mac.

The 30-year fixed-rate mortgage (FRM) averaged 5.15 percent for the week, up from last week's 5.07 percent and below 6.03 percent last year at the same time, reports Freddie Mac. The 15-year FRM this week was 4.72 percent versus 4.68 percent the previous week and 5.47 percent a year ago. Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) averaged 5.08 percent, up from last week's 5.06 percent and lower than last year's 5.34 percent. One-year Treasury-indexed ARMs were 4.86 percent this week. They were 4.81 percent the prior week and 4.94 percent in 2008 at the same time. "Mortgage rates followed bond yields higher this week following reports of record continuing jobless claims and a downward revision in economic growth in the fourth quarter of 2008," observed Frank Nothaft, Freddie Mac vice president and chief economist.

Hearth and Home

YOU DON'T HAVE TO SUFFER WITH AN UGLY BATHTUB

When all is said and done, buying and installing a tub could cost more than $2,000. And you'd still have to get rid of that 800-pound gorilla in the (bath)room, says the New York Times. As a result, many homeowners opt to refinish their tubs, which cost $400-500. "Just about any old bathtub can be refinished to look like new," said Nathan Oettinger, the owner of the Painted Otter Refinishers (paintedotter.com) in Middletown, N.Y. Oettinger's company offers a refinishing process that is relatively common in the industry. It starts with a thorough cleaning, he said. Any deep scratches or pits are filled with a substance similar to an auto-body filler and then sanded smooth. The surface is then etched with a highly diluted acid mixture or a slightly "greener," less corrosive industrial detergent. The etching opens tiny pores so that the primer can bond tightly. An acrylic urethane finish, which comes in a variety of colors, is sprayed over that. It takes about four hours to complete the process, including three coats each of primer and finish, and the tub is ready for use after 24 hours. Miracle Method Surface Restoration (miraclemethod.com), a Colorado Springs company with franchises across the country, uses a similar technique.

Most household electronics can be recycled because they have metal and other materials that are of value to recyclers, according to the New York Times. But the longer you hold on to your device, the less of a chance it has of being reused. Some towns and cities sponsor drop-off centers or periodic collection events. You can find information about where to go at electronicsrecycling.org. Other sites include MyGreenElectronics.org and Earth911.com. Also, several big chain stores, including Best Buy and Staples, allow you to drop off most small electronics for recycling. Manufacturers are starting to offer recycling, too. Apple, Dell, Samsung, Sony and others now offer free recycling either through mail-in programs or at drop-off sites specified on their Web sites. And there is a national recycling program for rechargeable batteries; Sears, Staples, Target, RadioShack, Best Buy, the Home Depot and Lowe's are participants. A growing number of Web sites that will actually pay you for old gadgets include Techforward.com, Gazelle.com and MyBoneyard.com.

Out and About

Who Do You Trust?

National polls demonstrate that real estate brokers rarely rank much higher than used-car salespersons. So trust is not something that goes with the territory of such a career. Moreover, many folks express the belief that brokers are overpaid.

Without regurgitating the arguments in detail, let it be said on the compensation question that the public often forgets that brokers are independent contractors who, therefore, essentially own their own businesses, paying fro their own medical insurance, home-office equipment, marketing materials and supplies.

The cost of their affiliation with broker agencies is sharing their commissions - frequently giving up as much as half for the privilege of belonging to an agency and enjoying its support. Too, there are numerous hours with reward - for example, the numerous false trails followed with buyers who ultimately decide to postpone a purchase or (quixotically, it sometimes seems) make an offer through another broker.

Still, there are brokers and brokers, and, arguably, many with questionable competence, intelligence, initiative and responsiveness are overpaid. The threshold for becoming a broker (here used interchangeably with sales associate) is embarrassingly low. Writing more would sound only self-serving, so that's it for now. Just ask if you'd like to know how you can tell the difference between working with good brokers and those who are variously merely adequate, lazy or otherwise unworthy.

The question underlying this screed is whether there's any point either for buyers or sellers to work with a broker who is good, as opposed to bad or indifferent. You can imagine that the answer here is bound to be yes, and you'd be correct. Whole book chapters could be, and have been, written about the many reasons, so here is an outline of just a few of the most compelling ones:

Sellers

Of course, brokers make the seller's life more convenient. It's the broker, not the seller, who fields phone calls, answers the same questions again and again, schedules appointments and notes the features of an apartment. In short, it's the broker whose job and expertise is selling face-to-face, and not every investment banker, dentist or shoemaker has the selling skill set. (In addition, prospective buyers often are intimidated by the presence of owners, who may well exacerbate their intimidation by talking too much. Buyers faced with sellers hesitate to open doors, ask pressing questions or stay much longer than a bee at a bloom.)

It also is the broker's responsibility to develop a sales strategy and market the property. That means knowing not only to whom it might appeal but how it might be shown to its best advantage. It means taking or arranging for tempting photographs, writing colorful descriptions, obtaining show sheets and promulgating the listing in appropriate media, of course, including the Internet.

Most important, pricing correctly is an indisputablel value that brokers can add, the most critical component of a successful sale. When you read the reports of appraisal firms and other sources, you are reading history. In many cases you also are reading the results of skewed samples. Thus, it is the broker - who easily may see 10 or 20 properties a week, scans listings usually every day, gossips with other brokers and has sold a number of properties over a career - on whom a seller can count for making the best educated guess of what is the price for which a property should be marketed and what the final sale price will be. And it is the broker who is most in tune with changes in the market on at least a weekly basis since the environment always is dynamic.

Negotiation is another area in which a broker's contribution can make or break a sale. The dispassionate third party is going to be better at achieving a meeting of the minds, romancing the other side while presenting realistic choices to the seller. When someone has traveled the corduroy road of difficult negotiations over and again, the experience that a broker brings to the table helps move what may not even seem possible to an offer that is successful.

Can a seller succeed without a broker? Of course. Can he or she get the best price in the shortest time with the least effort without a broker? If the pricing, marketing and negotiating are unprofessional, this is the answer: Doubtful. A penny saved may well be lead to an experience that is learned the hard way.

Buyers

The Internet has changed everything for buyers; four out of five them search the Web for available properties, according to the National Association of Realtors. Whereas real estate agents in Manhattan once held onto information about listings close to the chest (and a few still do), forcing buyers in their direction, there now are numerous sources of that information. Such sources include newspaper Web sites, individual broker sites and centralized sources designed to publicize properties such as Streeteasy.com or OLR.com.

But learning about available homes is only part of a buyer's needs. For example, how does a "civilian" winnow the chaff from the wheat? Pictures taken with a wide-angle lens are one thing, while a broker's on-site inspection as part of a routine is quite another. Equally important is a broker's knowledge of a building, its board practices, its policies and its shortcomings. A broker with intimate familiarity about a neighborhood may well know far more than an Internet visitor about its pluses and minuses.

Among the many other ways a broker can make a buyer's life better are these: checking listings and their updates as often as several times a day; previewing properties at open houses for brokers only; having exhaustive knowledge of a market and the value of various properties; being able to make referrals to accountants, lenders, lawyers and contractors; knowing the subtleties of transaction requirements such as the importance of sufficient fidelity bonds for buildings; and arranging appointments that satisfy the schedules of sellers, two sets of brokers and prospective buyers.

Can a buyer whose every day is not devoted to real estate decide what the best price for a property should be? What are the last year's comparable sales, never mind last week's? Exactly what has happened to the market in general? Where might it be headed? What is the history of a particular property?

As with sellers, the ability of brokers to bridge the gap between a seller's price and a buyer's offer, including not only amount but terms, can make all the difference between a successful sale and a disappointed buyer. Best of all, it costs the buyer nothing to be represented by a broker. There is everything to gain and much to lose.

So, who do you trust? Is it you as seller, who has an obligation to himself or herself, to be the best salesperson? Or is it you as buyer, who must bring to the table the most comprehensive knowledge of the market and the smartest insights into negotiating strategies? If you trust yourself more than a broker, you'll eventually sell your property or buy the one will you love. But do you trust yourself to obtain the best price under the best terms and ensure that the transaction proceeds as smoothly as possible? Would you trust yourself to pull a tooth, install a new window or cater a party for 100?

Below is a sampling of recently visited properties that are listed by various brokers:

• A laughably overpriced one-bedroom condo with a terrace that has terrific views of nearby Central Park. A testament to an investor's greed featuring good-looking but cheap improvements to the kitchen and bath, this dolled up sponsor apartment facing north in a 1961 building with institutional ambience has little going for it except the terrace and excellent closet space. Certainly, it is devoid of charm. On the market since last March at an even higher price (!), the unit now is listed at $975,000 with combined monthly costs of $686.
• With four bedrooms, three baths, modern open kitchen, large rooms, including the foyer, a washer/dryer, three exposures and stunning river views from the major rooms, a high-floor co-op in a pre-war building near Riverside Drive in Morningside Heights. This beautiful airy unit has everything going for it but its price, reduced from the original $3.175 million with $2,439 monthly maintenance in September to $2.94 million in December.
• In the mid-90s between Amsterdam and Columbus avenues, a lovely, sunny two-bedroom, one-and-a-half-bath apartment in a 1911 pet-friendly building with little in the way of amenities. Even the rear exposures of this south-facing 1,200-sf co-op provide plenty of light and views that do not face arms-length brick walls. The kitchen and baths have been nicely updated, there are good closets, ceilings are 9.5-feet high and there is an adequate formal dining room. Having lived there fewer than three years, when the unit was offered at $999,999, the owners have the misfortune of trying to recoup their costs. So they have listed the place at $1.195 million. They will soon learn that what they wish for and what they can get are two vastly different things.
• A one-bedroom apartment that must be described, regrettably, as "cute" or "cozy." On Broadway near an express subway stop, this 545-sf condo, offered at $390,000 when the current owners bought it, has scuffed parquet floors, closets with bi-fold doors and a dated kitchen replete with laminated countertops and original appliances. When you open the door to the unit, you find yourself a step or two away from the inside of that pass-through kitchen. Facing south, this apartment in a full-service, pet-friendly building overflowing with amenities has had its price bounce up and down since it was listed in November for $550,000. Now it's $530,000 with taxes and common charges totaling $830 monthly.
• In a 2006 skyscraper with every amenity, a beautifully finished and laid out five-bedroom, four-bath condo that has a top-of-the-line galley kitchen, 10-foot ceilings, generally open and bright views south and east through floor-to-ceiling windows, Bosch washer/dryer, and gorgeous baths of marble and limestone. This 2,725-sf apartment on a corner of Broadway went on the market in October for $3.799 million with total costs per month of $2,644. In December the price was reduced to $3.499 million, and the owners, who likely paid $3.13 million just a couple of years ago, will have to learn the hard way that it's not down enough.
• A pleasant one-bedroom 850-sf co-op on West End Avenue with a frugally updated eat-in kitchen, river views that are only partially obstructed from the 14th floor, improved bath and sensible layout. This pre-war apartment close to an express subway stop in a building with live-in super and full-time doorman was first offered for $699,000 with monthly maintenance of $1,064. It was reduced only to $677,000 last month and ought to sell in the low $600s.
• In the low 70s close to Central Park, a stunningly renovated three-bedroom, three-and-a-half bath condo with commendable 11th-floor views in three directions, separate dining room, laundry, great finishes, huge top-of-the-line kitchen, great layout and high style. In a pre-war, gut-renovated landmark building, this 2,864-sf unit is listed hopefully at $5.75 million with combined monthly costs of $4,725. However, the asking price is $500,000 too high, and the sale price should approach $5 million.
• A shabby studio in a tired 1930 pet-friendly building in the mid-80s between Amsterdam and Broadway. This second-floor unit has decent garden views facing north, a tiny substandard kitchen wedged into a corner, low ceilings and a wall that nicely creates two sort of attenuated rooms, separating the living and sleeping areas. The asking price is $385,000 with maintenance of $714 per month, and it will never sell so high.
• Needing serious cosmetic improvement, in addition to a new kitchen and baths, a three-bedroom, two-and-a-half-bath apartment close to the top of West End Avenue. This seven-room co-op in a 1913 pet-friendly building has a washer/dryer, considerable extra storage fashioned from an unused hallway, floors that must be refinished and way too many blocked exposures. It was listed at $2.25 million with monthly maintenance of $2.25 million, $300,000-400,000 too much, which the seller recently recognized by reducing the price to $1.95 million.
• In the mid-80s west of Broadway, a charming three-bedroom, two-bath co-op in a small 1908 building without. Loaded with Old World details, including dentil molding and wooden doors that may be mahogany, this 1,500-sf floor-through begs for the prospective buyer to overlook its deficiencies. These include small bedrooms (even the master, which lacks an en suite bath), and windows that look over dark courtyards from all rooms but the living room and the dining room with its stylish, if somewhat outdated, open kitchen. At $1.63 million with maintenance of $1,146 a month, this place is no bargain.

New Listings

Some of Manhattan's Latest Listings

Please click 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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