IMMINENT DEFAULT LOOMS FOR STUYVESANT TOWN One of the biggest, most high-profile deals of the commercial real-estate boom is in danger of imminent default, individuals familiar with the situation tell the Wall Street Journal. If that weren’t enough, the New York Times reports that the Court of Appeals ruled that the owners improperly began charging market rents on thousands of apartments; an estimated $200 million in rent overcharges and damages to tenants of some 4,000 apartments may have to be returned. The sprawling Manhattan apartment complex known as Peter Cooper Village and Stuyvesant Town - acquired for $5.4 billion in 2006 by a venture of Tishman Speyer Properties and a unit of BlackRock Inc. - was running out of cash even before the decision. As of the end of September, it reportedly had $33.7 million left of the $400 million in interest reserves set up to service its debt. At its current burn rate of about $16 million per month, the Journal calculated, the reserve could be depleted before the end of the year. But some sources have said the venture could avoid default until February. The partnership includes high-profile investors such as the Church of England and the California Public Employees' Retirement System, and there are said to be no current plans to inject more capital into the venture. PROPERTY SWAP RESULTS IN UNEXPECTED TOWERS The upper Upper West Side thought it was done with luxury high-rise problems when, in a bout of anti-Ariel fury, the community board and the City Council downzoned 51 blocks of the sprawling Manhattan neighborhood, notes Curbed.com. But the community board left out one site: The Jewish Home Lifecare campus at 120 W. 106th St., which plans to swap properties with developer Joseph Chetrit. The result: Jewish Home can build a new 22-story building on what is now a parking lot near the new Whole Foods and the developing Columbus Square in Chetrit's Park West Village on 100th Street, where the new zoning called for open space. In return, Chetrit can build luxury housing on the current retirement home site. According to Curbed, Upper West Siders are charging conspiracy and drafting legislation to take back the Jewish Home's zoning exemption. Commented spinmeister Ethan Geto, the Jewish Home spokesperson: "It's not a betrayal. The only thing it is, it's unexpected." REBNY, TOO, SEES PROMISE IN THIRD QUARTER STATISTICS The Real Estate Board of New York (REBNY) says house prices rose 4 percent from the second to the third quarter and the number of sales went up 35 percent. Manhattan prices declined, dropping 5 percent to $1,233,000, from the prior quarter, but the borough’s sales volume swelled by 59 percent. Year to year, the report found that the average Manhattan home sales price saw the steepest declines of the five boroughs, dropping 17 percent. “The residential real estate market came back to life in the third quarter and reversed the downward trend of the last several quarters,” proclaimed REBNY President Steven Spinola. “However, the trend needs to continue for at least two more quarters before we can say with confidence that a recovery is under way. Clearly, the market is not back to the high velocity of transactions and sales prices of the pre-financial crisis period.” You can read the long detailed report, which analyzes borough and neighborhood trends. CANCER PATIENT AND HIS CO-OP BOARD ARE AT LOGGERHEADS The board of a 69-unit prewar building on the Upper East Side voted in June to terminate the proprietary lease of a former board member, according to BrickUnderground.com. Now, the owner - who has Stage 4 cancer – is asking New York Supreme Court to let him stay in his apartment and award him $5 million for intentional infliction of emotional distress. The apartment owner, an unnamed fashion designer in his 50s, alleges he was kicked off the board as a retaliatory gesture for his whistle-blowing efforts and otherwise harassed. Among other things, he charges that two board members gave themselves preferential treatment with regard to subletting policies. Court papers allege that he improperly combined two apartments, installed a washing machine and dryer without approval, “yelled profanities, insults, lewd comments and threatened litigation against numerous building residents, shareholders and board members,” invited women over late at night to dance in high heels as part of a campaign to “terrorize” the librarian living below, nearly ran his car over another resident on purpose, and conducted “vexatious litigation.” Does this mean he won’t be borrowing a cup of sugar any time soon? UNEMPLOYMENT RATE TICKS UP IN THE BIG APPLE The city's unemployment rate remained in double digits last month, rising slightly to 10.3 percent from a revised 10.2 percent in August, Crain’s reports. The state Department of Labor shows that the jobless rate was up from 6 percent last September and is at its highest level in 16 years. The number of New Yorkers unemployed for six months or more jumped more than 60 percent to 111,497 from the second to the third quarter, according to an analysis of Current Population Survey data by the city comptroller’s office. Said James Brown, principal economist at the state Department of Labor: “It's a weak picture. It's continued losses in key sectors like finance and professional and business services.” Private sector employment in the city fell by 3.5 percent for the 12-month period ending in September. The largest loss was in financial activities, which shed 32,000 jobs. Trade, transportation and utilities, professional and business services, and manufacturing rounded out the biggest losers. BURDEN HAS LED REZONING OF ONE OUT OF FIVE NYC BLOCKS As chair of the New York City Planning Commission, Amanda Burden’s influence on ADVOCACY GROUP DOCUMENTS HUGE DECLINE IN CONSTRUCTION Led by sharp declines in private sector building, overall construction spending is expected to decline by 20 percent in 2009, according to an annual forecast by the New York Building Congress. The situation seems to be stabilizing, however, and it is possible that the City will get through the current downturn without further deterioration in annual spending, the forecast says. After five consecutive years in which residential construction exceeded 30,000 new dwelling units, the Building Congress projects construction of just under 6,300 units with a total construction value of $3.5 billion in 2009. The forecast calls for 7,900 units ($4 billion) to be produced in 2010 and 9,900 units ($5 billion) in 2011. This total of 24,000 units constructed between 2009 and 2011 will fall 10,000 units short of what was constructed in 2008 alone. Overall, construction spending in New York City is expected to reach $25.8 billion in 2009, a 20 percent decline from 2008’s all-time high of $32.4 billion. YOU COULD BE THE ONE LUCKY WINNER OF AN OFFICE FOR A YEAR Regus, which has 18 Manhattan locations offering short-term leases, is offering a fully-furnished office for 12 months in a sweepstakes that obviously has nothing to do with publicity. Entries will be accepted until Dec. 31, with the winner announced by Jan. 15. There is no purchase necessary to enter. To be eligible for consideration, contestants can fill out an entry form online. You can enter here. BUILDING ACTIVITY IS DIVING TO 26-YEAR LOW Building sales activity in Manhattan is expected to plunge to a 26-year low this year as a lack of both credit and available properties combine to squelch transactions, according to a new report from Massey Knakal Realty Services, reports Crain’s. The company predicted that only about 1.2 percent of the roughly 27,650 buildings it tracks will change hands this year - less than half the average turnover of 2.6 percent seen over the last 25 years. Turnover levels were at 1 percent through the end of September. The previous low of 1.6 percent was reached in both 1992 and 2003. In the first nine months, 209 properties were sold, down 60 percent from the corresponding period in 2008 and 75 percent from 2007. Prices are also falling. Sales volume hit $3.2 billion, an 82 percent plunge from the year-ago period. This year, 25 percent of the buildings sold went for under $25 million. ONE CO-OP BOARD LOOKS DOWN ON BIMBOS A father buying a co-op apartment for his son to use during college showed up at the board interview with a twenty-something girlfriend, according to Habitat magazine in BrickUnderground.com. One of the board members asked him what he planned to do with the apartment once his son graduated. Gesturing toward his companion, he replied: “I don’t know. Perhaps I will let the bimbo move into the apartment after my son moves out.” His application was rejected, and the seller sued the board. He lost. Well, he’s a loser, no? WILL NOT ALL THE PERFUMES OF ARABIA GET THEE OUT Maybe not. Lady Macbeth may have had better luck with dark stains on wood floors than on the blood that she imagined on her hands. Those stains (on wood) generally mean that moisture, often water or pet urine, has penetrated the finish and soaked into the wood, says the Washington Post, which adds that trying to hide the stains with a darker color will only worsen the problem. If you want to remove the stains, you'll need a suitable wood bleach containing oxalic acid. Remove old finish from the stained area with 150-grit sandpaper or steel wool before applying the bleach. Then let the floor dry thoroughly and try to match the existing finish. (Well, you can try.) How you do this depends on the type of finish the flooring has - polyurethane, a penetrating oil and wax finish, or shellac. Try touching up the treated spots so they blend with the rest of the floor, the newspaper suggests unhelpfully. But in the end, you might want to sand and refinish the entire floor. Nothing ventured. . . IF YOU SUFFER THE HEARTBREAK OF GREASY WALLS, TRY THIS A number of cleaners called degreasers should cut through grease accumulation, the McClatchy-Tribune News Service advises messy cooks in the Washington Post. Or mix a cup of ammonia in a gallon of hot water, add a few tablespoons of dishwashing detergent that does not contain chlorine bleach, soak a clean cloth in the solution and scrub away, changing cloths frequently. Paint thinner, too, is a fine, if inflammable, grease cleaner for finished wood such as cabinets. A little paint thinner on a rag will easily remove the greasy smudges that often accumulate around cabinet handles. Moisten a clean cloth with paint thinner and scrub gently with the grain of the wood, again changing cloths frequently. When you have removed the grease, restore a shine to the wood with a cleaner-polish such as Pledge. Then take the rest of the day off. RATES ARE TRENDING UP AGAIN Freddie Mac says the 30-year fixed-rate mortgage (FRM) averaged 5.00 percent for the week, up from last week’s 4.92 percent. Last year at this time, it was 6.04 percent. The 15-year FRM this week reached 4.43 percent from 4.37 percent a week ago, yet it was far below the 5.72 percent of a year ago. The five-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 4.40 percent this week in comparison with 4.38 percent last week and 6.06 percent last year. The one-year Treasury-indexed ARM slipped to 4.54 percent from 4.60 percent; at this time last year, it was 5.23 percent. Commented Frank Nothaft, Freddie Mac chief economist: "Although rates for 5/1 ARMs and traditional one-year ARMs are around half a percentage point below 30-year fixed mortgages, consumers appear to be seeking the stability of fixed-rate mortgages. According to the Mortgage Bankers Association, ARMs averaged only about 6 percent of the number of mortgage applications in September and October thus far.” FORECLOSURES RISE 5 PERCENT FROM 2ND TO 3RD QUARTER RealtyTrac says default notices, scheduled auctions and bank repossessions were reported on 937,840 properties in the third quarter, a 5 percent increase from the previous quarter and an increase of nearly 23 percent from one year earlier. One in every 136 U.S. housing units received a foreclosure filing during the quarter. Nevada continued to post the nation’s highest state foreclosure rate in the third quarter, with one in 23 housing units receiving a foreclosure filing; the rate was nearly six times the national average. California, Florida, Arizona, Nevada, Illinois and Michigan accounted for 62 percent of the nation’s total foreclosure activity in the third quarter. 41 LENDERS AND OTHERS COLLECT THE WAGES OF SIN Federal prosecutors accused 41 lenders, lawyers and others in the real estate industry of using fraud to obtain more than $64 million in loans connected to more than 100 residential properties in New York State, says the New York Times. An investigation involving the F.B.I., Secret Service, New York State Banking Department and other agencies led to the wire fraud, bank fraud and conspiracy charges against the lawyers, mortgage brokers and loan officers. They engaged in complex plots that operated over a period of years, said U.S. Atty. Preet Bharara. “The fraud schemes alleged in the cases unsealed today reflect a veritable smorgasbord of scams,” Bharara said. The investigation uncovered eight separate cases in which people were accused of obtaining loans through fraudulent means by falsifying mortgage applications, flipping properties and stripping equity from properties, the prosecutor alleged. The targets of the fraud included desperate homeowners who were having difficulty making mortgage payments or facing foreclosure. YOU CAN HEDGE, WARILY, AGAINST A DROP IN YOUR HOME’S VALUE A firm named Equity Protection charges a homeowner 1-2.5 percent of a home’s value for a guarantee that they will not lose money because of a market downturn, the New York Times says. The Equity Protection contract is not considered an insurance product, however, meaning it is not covered by insurance regulations in most states. Craig Focardi, an analyst with the Tower Group, likened the product to a put option, which protects a stockholder against lower stock prices. “I would look at it more closely if I was definitely planning to move in a few years,” Focardi said. “There’s a very strong scenario that says home prices will decline another 10 or 15 percent, and in that scenario, if you pay 1 percent for this and you sell your home in the next two or three years, it could be a good investment.” Jonathan M. Satovsky, the chief executive of Satovsky Asset Management in Manhattan, said the new product was “definitely worth looking into, but you really have to think through the ‘what if’ scenarios.” MORTGAGE ACTIVITY FALLS OFF The Mortgage Bankers Association (MBA) says mortgage loan application volume decreased 13.7 percent from one week earlier for the week ending Oct. 16 on a seasonally adjusted basis that accounts for Columbus Day. On an unadjusted basis, the change was 22.4 percent. Refinancings also dropped, declining16.8 percent below the previous week. Purchase applications slumped by 7.6 percent; unadjusted, they were 6.7 percent lower than the previous week and 3.4 percent lower than the same week one year ago. The refinance share of mortgage activity slipped to 65 percent of total applications from 67.4 percent the previous week, while the adjustable-rate mortgage (ARM) share grew to 6.4 percent from 6.2 percent. AN INDEX DOCUMENTS RECOVERY IN HOUSE PRICES WORLDWIDE Real estate markets worldwide are stabilizing and showing signs of a tentative recovery, according to a newly released report from London-based global property consultancy Knight Frank, says Business Week. The quarterly Knight Frank Global House Price Index shows property values increasing in almost half of 32 countries surveyed during the second quarter of this year. "Significantly, quarterly price falls accelerated in only 22 percent of the locations and did not exceed 10 percent in any country," said Liam Bailey, head of residential research for Knight Frank. "This compares with double-digit falls in a number of locations during the first quarter." Some of the strongest signs of recovery are coming from the Nordic countries, and countries as diverse as Australia, Israel and the Netherlands also are posting solid gains. "One could . . . say that house prices are now artificially boosted by low mortgage rates," commented Magnus Lange, a partner in the Stockholm office of real estate brokerage Cushman & Wakefield. "I'm expecting to see [Swedish] house prices fall by 15 percent in the year ahead, once banks raise their interest rates." And some countries are still basket cases – for example, Bulgaria. HEIRS OF THE HOWARD HUGHES ESTATE ARE GLUM The reclusive billionaire, who died in 1976, left with no will or children (or trimmed fingernails), observes the Wall Street Journal. His estate now has more than 1,000 heirs and beneficiaries hoping for one last big payout from a swath of Las Vegas land bought by the tycoon in the 1940s to establish an inland base for his aerospace operations. But the 7,000 acres left in what is now called the Summerlin development once were thought to be worth as much as $2 billion. The property also has gotten bogged down in the bankruptcy of mall giant General Growth Properties, which now controls the land and was supposed to make a final payment to the Hughes group early next year. "There's terrible disappointment," says Platt Davis, a second cousin of Hughes. The 2010 payment is supposed to be equal to half the appraised value of the remaining land at the end of this year. Those payments amounted to roughly $570 million in stock as Summerlin was developed. But land values have fallen so drastically in Las Vegas that the Summerlin claim might now be worth less than $100 million, says analyst Kevin Starke of CRT Group LLC. And General Growth, which has owned the property since2004, inheriting the pact with the heirs, is seeking bankruptcy protection. So the Hughes group must get in line with the hundreds of other creditors. HONG KONG APARTMENT SALE MAY HAVE SET WORLD RECORD One of Hong Kong’s largest developers proclaimed that it had sold an apartment for 439 million Hong Kong dollars, setting a record, says the New York Times. The announcement came just hours after the city’s chief executive warned that the city might be facing a real estate bubble. Valued at the equivalent of $56.6 million, the purchase set a record price per square foot for Hong Kong. The developer, Henderson Land, said it was not aware of a higher figure’s having been paid anywhere else. The company declined to disclose the buyer’s name. The apartment on Hong Kong Island, near the top of a skyscraper overlooking Victoria Harbor, is a two-story unit with five bedroom suites. It measures 6,157 square feet and has a garden of 340 square feet for a price per square foot of 71,289 Hong Kong dollars, including the garden. That measurement includes common areas such as elevator lobbies that are partially allocated to individual units. Most real estate markets use a narrower definition of square footage, excluding such common areas. Henderson Land said the price per square foot of usable area, a more common international measure, was about 88,000 Hong Kong dollars, or $11,350. BIG BROTHER IS WATCHING YOU, FIRST-TIME BUYERS The Internal Revenue Service is examining more than 100,000 suspicious claims for the first-time home-buyer tax break, according to the Wall Street Journal. More than a million claims for the credit have been received so far, and some lawmakers and tax experts now say there is evidence that a significant number of the claims might prove to be unjustified or even fraudulent. The IRS said it was investigating 167 "criminal schemes" involving the credit, according to the House Ways and Means oversight subcommittee. IRS officials declined to describe the suspected schemes or provide additional details. THE SLUMP IS SLIPPING AT THE END OF LONG ISLAND The residential real estate market on Long Island's East End is looking better, although the end of the slump is still not in sight, says the Real Deal. There were 459 homes sales in the Hamptons and North THE SECRET IS OUT Real-estate mogul Steven Roth has bought Bernard Madoff's beach house in Montauk, N.Y., for $9.41 million, nearly 6 percent more than its asking price, the Wall Street Journal reveals. Roth, 67, is chairman of Vornado Realty Trust, a real-estate investment trust that's one of the country's largest owners of retail and office space, and Madoff is, of course, now a permanent guest of the government. Set on 1.2 acres, the shingled, 3,000-sf home was put on the market by U.S. Marshals in September as part of the effort to repay the victims of Ponzi scheme. The home garnered four bids, and the closing occurred a week ago. FROWN LINES COULD BE HER BIGGEST PROBLEM NOW Supermodel Gisele Bündchen has gone into contract on her penthouse in New York's West Village, reports the Wall Street Journal. The latest listing price of $4.5 million was less than half the original September 2007 price tag, reports the Wall Street Journal. It couldn't be learned who has agreed to buy or at what price. The Brazilian first listed the two-bedroom triplex for $10.9 million, eventually took it off the market, changed brokers and relisted it in September. Bündchen bought the 1,700-sf condominium unit in 2002 for nearly $3 million, records show. The two-bedroom, two-bath condo has a wraparound terrace, deck with a Jacuzzi and views of the Hudson River. The model’s nearby townhouse remains on the market for $13.95 million. Let’s see half of that would be around $7 million. NOW SHE CAN PAY FOR THAT NEW HOME IN NEW JERSEY In New Jersey? Whoopi Goldberg has gone into contract to sell her two-bedroom loft at 101 Wooster St., says CitiFile.com. She bought the 3,700-sf SoHo co-op in 2006 and put it on the market for $3.99 million in June. She closed on the $2.8 million purchase of a home in West Orange just last week. The full-floor Manhattan loft was listed at $3.99 million; the buyer and sale price could not be learned. With exposed brick and high ceilings, the loft also has a private master suite, two full baths and access to a rooftop deck and basement storage. PERHAPS HE’S TAKEN ‘GET THEE TO A NUNNERY’ TOO SERIOUSLY While in town to star as Hamlet, Jude Law has taken up residence in a former church, notes the New York Post. That would be the Novare building on West Fourth Street, where the actor is renting the three-bedroom, two-and-a-half-bath, 3,500-sf unit with 20-foot ceilings and a terrace. In a building that, unsurprisingly, features stained-glass windows and soaring – yep - cathedral ceilings, Law’s neighbors include musician/actor Steven Van Zandt, who bought a 3,500-sf three-bedroom penthouse for $6 million last year. The building was a church for 145 years until it was reincarnated as a condominium. WILL HE FIND A CHAMBER OF SECRETS THERE City records show that a brownstone on West 12th Street, which was apparently built 162 years ago by a sea captain, was just sold for $5.65 million to the same limited liability corporation that owns Daniel Radcliffe's apartment at Jean Nouvel's 40 Mercer Street, according to the Observer. The 20-year-old actor's mother is listed on the deed. The listing says that the townhouse was one of three built by a sea captain in 1847 for his three daughters. It has six working fireplaces, 39-foot-long backyard ("cooled by beautiful old trees and landscaping") and a balcony off a bedroom overlooking it. It is not clear whether the actor's moving to the West Village, or, like the apartment he bought at 40 Mercer, keeping the house as an investment. Last year, Radcliffe bought an apartment at One Morton Square and reportedly was going to move there in time for his appearance in “Equus.” SELLING HER APARTMENT HAS HARDLY BEEN A GOOD THING Alexis Stewart is hoping the third time is the charm when it comes to unloading her apartment at 27 North Moore St., says CityFile.com. The 3,884-sf duplex penthouse loft, which Stewart tried to sell for $12.4 million in both 2007 and 2008, was taken off the market most recently this past July. But now the apartment is back - and it's sporting a higher price tag, too. The loft is listed for $12.95 million. HE AGREES TO AN INCREDIBLE SHRINKING PRICE Nearly five years after his seven-bedroom Englewood, N.J., mansion went on the market for $30 million, Eddie Murphy has slashed the asking price by $15 million, reports the New York Daily News. Known (with uncommon prescience) as Bubble Hill, the 25,000-sf dwelling, on a five-acre estate, comes complete with a bowling alley, theater and recording studio. Among its other features are a full-size racquetball court, indoor pool, elevator and a carriage house with gym. Annual taxes on the property with its 32-room mansion are $197,723. When the spread first hit the market in 2004 with a $30 million price tag, it was called the most expensive single-family home in the Garden State. To see a photo of the home, visit the Service You Can Trust blog. SELLING SHOES SEEMS TO PAY OFF HANDSOMELY Steve Madden has purchased a $2.2 million, two-bedroom apartment at 175 East 73rd St., a townhouse divided into co-ops, according to the Observer. Considering that the unit needs work and has just one bedroom of decent size (plus a small one), the price was high. “Staggering number - oh, staggering!” sniped a source familiar with the house. “One bedroom is the size of the interior of a Volkswagen.” Said Madden: “We just wanted the place. We overpaid.” The townhouse contains an apartment that Madden rented after serving a 41-month prison sentence for stock fraud. In September 2006, he bought his rental - the ground-floor apartment, plus the back half of the second and third floors - for $3.6 million. His new purchase means that Madden, along with his wife and two children, possesses the other half of those second and third floors leaving to others all but two small apartments upstairs. “We’ll see what happens,” says he. “It’s a nice building, we’ll see.” IF A BIDDING WAR IS A PHOTO FINISH, HE MUST BE HOPING FOR IT There are few signs of a five-acre property's wild past as an epicenter of the 1970s Studio 54 scene, says the Wall Street Journal. The likes of Mick and Bianca Jagger, Jacqueline Onassis and Andy Warhol - if there ever could be such likes - converged on the easternmost oceanfront swath of the Hamptons owned by photographer Peter Beard and his wife Nejma. After a couple of attempts to sell the property for $32 million and then for $26 million, the Beards are now trying to sell it through personal contacts. "I see myself as a guardian of the land," says Nejma Beard, who confides that she's looking for the right buyer and that the couple recently turned down an offer for $21 million. In this shaky market, brokers say the property, consisting of five ramshackle cottages, is likely worth south of $25 million. Beard bought his property in 1972 for around $135,000, preferring it to Warhol's down the road. The Beard says the area has lost its edge. HOUSING PRODUCTION RISES ANEMICALLY, PERMITS FALL Nationwide housing production remained virtually unchanged in September, edging up half a percent, according to the U.S. Commerce Department figures. Issuance of new building permits, an indicator of future construction activity, fell by 1.2 percent to a seasonally adjusted 573,000 units. ". . . The fact that builders are pulling fewer permits right now is an indication of the increasing uncertainty about where this market is headed,” said Chief Economist David Crowe of the National Association of Home Builders. Starts of new single-family homes made up some of the ground lost in previous months with a nearly 4 percent gain, while multifamily starts fell 15.2 percent. Single-family permits were down 3 percent, but multifamily permits gained 5.1 percent. THE FED’S ‘BEIGE BOOK’ MAKES EXPECTED OBSERVATIONS Most Districts reported that housing market conditions improved in recent weeks, primarily from a pickup in sales of low- to middle-priced houses, according to the Federal Reserve’s “Beige Book.” “Contacts reported that sales were boosted by the government's tax credit for first-time homebuyers,” the account said. “Resale activity also edged up in parts of the New York District, although prices continued to be depressed due to a substantial volume of foreclosures and short sales. New and existing home sales remained flat in the Philadelphia District, and home sales continued to decline throughout the St. Louis District. Sales of higher-priced homes were very slow, according to Philadelphia, Cleveland and Kansas City. Moreover, real estate agents in the Boston and Cleveland Districts were uncertain about the future of home sales once the tax credit expires. Availability of financing continued to be a concern for potential buyers in the Cleveland and Chicago Districts. Residential construction activity remained weak in most Districts.” BUILDER CONFIDENCE PROVES TO BE FRAGILE Although builder confidence was inching up, it slipped one point, to 18, in October, according to the latest National Association of Home Builders/Wells Fargo Housing Market Index (HMI). Anything higher than 50 suggests confidence. The index gauges builder perceptions of current single-family home sales and sales expectations for the next six months as "good," "fair" or "poor." The survey also asks builders to rate traffic of prospective buyers as "high to very high," "average" or "low to very low." The component gauging current sales conditions fell one point, to 17, while the sales expectations component declined two points, to 27, and the traffic index dropped three points, to 14. "This is the first time since November of 2008 that all three component indexes of the HMI have declined," noted Chief Economist David Crowe of the association. "Clearly, builders are experiencing the effects of the expiring tax credit on their sales activity. . .” IF YOU HAVE MEAGER INTEREST IN REALTORS, DON’T READ THIS The 2009 Membership Profile of the National Association of Realtors (NAR), reports Realty Times, reveals that respondents’ median income was down to $36,700 annually in 2008, 14 percent below the previous year’s. The median number of transactions dropped from eight transaction sides to seven. As for income, the median for those with only two years in the business was $8,600. For Realtors who had been in the business for more than 16 years, it was $53,900. But 10 percent of those experienced Realtors reported at least $200,000. Among those who said they worked no more than 20 hours a week, the median was $8,200. For those who reported working sixty or more hours, it was $74,000. Florida agents are suffering more than most: Membership in the Florida Association of Realtors is down 29 percent since 2006, adds the Wall Street Journal, which writes that NAR’s membership fell to 1.14 million in September from 1.35 million in September 2006. Although NAR surveyed 100,000 of its members, another 800,000 real estate professionals are not members of the organization (many of them in New York City). SHILLER WORRIES THAT MARKET TIMING COULD SPOOK RECOVERY Noting that the Case-Shiller 10-City index for the U.S. rose 3.6 percent between April and July, Yale economist Robert Shiller has acknowledged in the New York Times that the suddenness of the shift from a decline of 4.8 percent between January and April surprised him. Consumers’ short-term expectations show big changes in surveys conducted by S&P Case-Shiller. “How much of a change do you expect there to be in the value of your home over the next 12 months?” respondents are asked. The average answer for June-July 2009 was a 2.3 percent rise versus a negative 0.4 percent a year earlier. “That was a dramatic change,” Shiller writes. “At the moment, it appears that the extreme ups and downs of the housing market have turned many Americans into housing speculators. Many people are still playing a leverage game, watching various economic indicators as well as the state of federal bailout programs in an effort to time their home-buying decisions.” The sudden turn could signal a new housing boom, but is more likely just a sign of a period of higher short-run price volatility, the economist contends. For more on his column, plus commentary on his speculation, see the Service You Can Trust blog. PANELISTS SHARE DISPARATE VIEWS ON THE NEW YORK MARKET The New York condo market has nearly bottomed out, the commercial market in the city hasn't even "tasted the pain that's about to come" and, despite years of controversy, Coney Island will get redeveloped. So said panelists at forum sponsored by the Real Deal. Mark Zandi, the chief economist and cofounder of Moody's Economy.com, suggested that "New York's recession is just about over, adding, "It's going to be a slog." MORTGAGE INSURER CONTENDS THE WORST IS ‘BEHIND US’
MORTGAGE BANKERS PREDICT HIGHER RATES NEXT YEAR Mortgage originations should reach $1.5 trillion in 2010, says the Mortgage Bankers Association (MBA). Fixed mortgage rates are expected to average about 5 percent in the fourth quarter of 2009 and increase to 5.6 percent by the end of 2010. Modest increases in home sales should drive purchase originations, but refinance originations are expected to decline as mortgage rates rise, the organization’s chief economist, Jay Brinkmann, said. “Perhaps the biggest unknown is the level and volatility of interest rates,” the economist added. “While the lack of inflation, high unemployment and excess capacity in the economy should hold interest rates down, there is a lot of uncertainty regarding rates immediately following the termination of the Federal Reserve’s purchase of mortgage-backed securities. No doubt the Fed will do its best to minimize adverse effects, but the elimination of these purchases will put upward pressure on all long-term rates as well as the spread between mortgage rates and Treasuries. The size of any resulting rate move will largely determine the size of the refinance market.” FINANCIAL FIRM SEES PRICES DROPPING 11.3% BY MID 2010 Home values are predicted to drop in 342 out of 381 markets during the next year, according to a new forecast of real estate prices reported by CNNMoney. Overall, the national median home price is predicted to drop 11.3 percent by June 30, according to Fiserv, a financial information and analysis firm. For the following year, the firm anticipates some stabilization, with prices rising 3.6 percent. Fiserv had anticipated the rapid decline in home-sale prices over the past few years - though it underestimated the scope. The firm says six markets will remain flat and 33 will actually post gains. The biggest winner will be the Kennewick, Wash., metro area, where home prices have ramped up 8.9 percent over the past three years and are expected to increase another 3.4 percent by June 2010. Fiserv anticipates that Fairbanks, Alaska, will see prices going up 2.5 percent, while Anchorage will climb 2.1 percent. However, New York City is predicted to under perform the nation as a whole over the next two years. Prices are expected to fall 17.4 percent by June 2011. As for the Detroit metro area, prices have dropped 51.7 percent to a median of $50,000, and Fiserv believes they will fall another 9.1 percent before stabilizing. NEWSPAPER’S REVIEW SEES SHARP DROP OF LISTED HOMES Despite some tentative signs of recovery, the U.S. housing market remains vulnerable to further price drops - especially in areas where large numbers of mortgages are headed toward foreclosure over the next few years, says the Wall Street Journal. A quarterly survey of data in 28 major metro areas records those inventory drops, but the newspaper notes that the potential supply of homes is far larger because banks are likely to acquire significant numbers of foreclosed homes in areas such as Las Vegas, Atlanta, Detroit, Phoenix, Miami, other parts of Florida, and Sacramento, Calif. over the next few years. By contrast, metro areas with relatively low foreclosure and mortgage-delinquency rates include Boston, Denver, Minneapolis, San Francisco, Seattle, Raleigh and Portland, Ore. "The number of people receiving paychecks will drive the demand for houses and apartments," Jay Brinkmann, chief economist for the Mortgage Bankers Association, said in testimony to the Senate Banking Committee, "and the recovery will begin when unemployment stops rising." And Mark Zandi, chief economist at Moody's Economy.com, predicts that average national home prices will bottom out in next year's third quarter, assuming that employment begins growing again in mid-2010. But prices in some metro areas still have a long way to fall, he avers. You can read the entire article and access a table outlining conditions in various cities. RESEARCH FIRM PREDICTS A MARCH DATE FOR THE BOTTOM First American CoreLogic is predicting that its U.S. home-price index will bottom out in March, the Wall Street Journal reports. The Santa Ana, Calif.-based research firm said the index in August was down 10.1 percent from a year earlier versus 11.6 percent in July and 14.1 percent in June. Excluding “distressed” sales - foreclosed properties or homes sold for less than the mortgage balance - the index in August was down 6.2 percent from a year earlier. So far, the index has dropped approximately 28 percent from its peak in April 2006. The firm expects it will have fallen 37 percent from the peak by March, when First American expects the index to hit bottom. Here’s your bonus question: Can you see it now? Where’s that bottom everyone is talking about? Buyers seem not only to be looking again, but they are starting to make offers. And the offers are less likely to be insulting than they were just a couple of months ago. Much of the activity appears to be centered on properties listed below $1 million, though buyers at higher levels clearly are less gun-shy than they were in the recent past. Ask them why, and the answers are almost the same:
Whether you believe that the market in Manhattan already has hit bottom depends on who you read and how good are both your powers of analysis and the clarity of your crystal ball. The variables are many:
It could take a book to explore all the variables, of which there are more. So let’s focus on one: Bonuses. Before the collapse of Lehman Brothers on Sept.15, 2008 and the thousands of layoffs that had blood running in the Street, Wall Street money evidently fueled the New York housing market, especially luxury properties. At the time, it was said that 7 percent of the city’s payrolls were linked to financial services and produced 23 percent of the employment income. The conventional wisdom has been that the tribulations of the stock market would profoundly affect not only home prices in Manhattan but also stifle their recovery. True, in the fourth quarter of 2008 and into the first quarter of this year, the Big Apple’s housing market was moribund and Wall Street’s woes indubitably were a root cause. Now, however, the market is showing signs of life. (Actually, as you know, so are both markets.) The question, then, is what will be the affect of the mind-boggling bonuses that once more are now expected on Wall Street. Only an ostrich would fail to know that Goldman Sachs is on pace to pay bonuses that will rival the records set in 2007, when the housing bubble continued to inflate. The bank already has set aside $16.7 billion for compensation, enough to pay each of its 31,700 employees an average of $700,000. Those at the top will receive millions, even hundreds of millions, of dollars, and those toiling in open cubicles will collect impressive sums as well. Morgan Stanley and JPMorgan Chase together also are expected to pay out close to a total of $30 billion – with a “B” – in bonuses as well, and the amount won’t drop just because the Obama administration is seeking to cut executive pay at the highest levels. Credit Suisse, which posted a $2.4 billion profit in the third quarter, is on track to award nice bonuses as well. There are three significant questions related to such bonuses:
In the New York Times, Andrew Ross Sorkin notes that Goldman’s executives are paid mostly in stock, which vests over three years beginning at the end of 2010. In addition, the bonuses have yet to be given out. Goldman may impose a clawback provision that would require employees to give up some of their compensation if trades go the wrong way, similar to ones that Morgan Stanley and several others have already proposed, Sorkin writes. Credit Suisse subsequently made a splash by announcing an overhaul of its system as well. Some 2,000 U.S. employees will receive a greater portion of their total compensation in the form of monthly cash salaries, while bonuses will be split evenly between cash and stock. And that stock will vest over four years, while the cash portion of the bonuses will pay out in three; each portion will be adjusted based on the bank’s performance over those periods. All things considered, it is hard to make the argument that housing prices and sales activity will surge in any amounts like 2007. Whether the economic recovery is V-shaped, W-shaped, U-shaped or L-shaped, as various experts have postulated, the likeliest scenario is for a year in which the metrics are generally flat but gently rising. Or not. Below are recently visited properties that have been listed by various brokers:
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. Click Here to Sign Up For Your Free Issue of Realty Digest!
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everything from building design to land use is transforming vast swathes of the landscape in all five boroughs, notes Crain’s. In her nearly eight years in office, the controversial official has led the rezoning of about 20 percent of the city's blocks, including 368 in Jamaica, Queens, 299 in the Throgs Neck section of the Bronx and 250 in Canarsie, Brooklyn. Her 100th rezoning, which will affect 86 blocks in and around Carroll Gardens in Brooklyn, is imminent. Among developers, architects and architecture critics, she has plenty of detractors. But Kent Barwick, the former president of the Municipal Art Society of New York, does not count himself among them. “Amanda has made a mark on the city in a way few others have,” he opines. “Her accomplishments have been extraordinary.” 
Fork together in the third quarter, a 29.3 percent leap from 355 in the same quarter of last year, and 49.5 percent more than last quarter, according to a quarterly report prepared by the Miller Samuel appraisal firm. Thus, the region saw a respite from the steep price declines it has experienced for the past two years. The average sales price of a home in the region grew 1.3 percent to $1.34 million, up from $1.32 million in the third quarter of 2008, and increased 4.3 percent from the second quarter. The median price was $700,000, 4 percent lower than the prior-year quarter but 2.9 percent more than the last quarter. "The worst is over," declared appraiser Jonathan Miller, CEO of Miller Samuel. "After a precipitous drop in the first couple quarters, we saw prices move sideways, and even a little uptick in the summer." That doesn't mean there won't be further price declines, he said, thanks to the tenuous state of the economy and still-rising unemployment. 
Analyzing trend data from First American CoreLogic and the Federal Housing Finance Administration, PMI Mortgage Insurance reports in its latest Housing Mortgage Market Review “that the bulk of the home price declines are behind us.” The document goes on to say that both sets of data also suggest that house prices have still not reached their long-term trend levels. “If sellers put continue to put properties on the market at a measured pace to avoid addition sharp drops in home prices, PMI suggests, “home prices would be relatively flat for the next several years.” Such a scenario, it said, is more likely than one in which home prices fall significantly farther from now. 
