Archive for July, 2010
Saturday, July 31st, 2010
In this weekend’s New York Times, a story about the highly desirable private garage is a good read….of course, boldly mentioned is 200 Eleventh Avenue, the only condominium tower in the USA featuring private garages attached to each apartment, vertically, known as an En Suite Sky Garage. Developed by Urban Muse and Young Woo & Associates, this building affords each unit owner a private garage attached to their unit, accessed via a car elevator.
“We currently have one unit listed, a 3 bedroom, 3.5 bathroom duplex with un-obstructed park, river and skyline views listed for $ 5.95million,” says Leonard Steinberg director of sales for 200 Eleventh Avenue. ” With only 15 units, this is indeed a collector item.”
Saturday, July 31st, 2010
First it was granite counters, then stainless professional appliances, ESPECIALLY a Sub Zero fridge, then Crestron sound system, and so on and so on….: Could the latest-greatest amenity for you home be the car charger? What about this ultra-sleek-apple-chic charger from GE? Designed by Yves Behar, we think it looks great. With Tesla a publicly traded company, and the Chevrolet Vault on its way, its time to prepare for the future.
“This sleek charger would be simply fabulous in your garage space at 200 Eleventh Avenue, the only building in the USA with En Suite Sky Garages attached to the individual apartments,” says Leonard Steinberg, head of the luxuryloft team and managing director of Prudential Douglas Elliman. “We are always looking for the next best home amenity in our monthly LUXURYLETTER, but this one takes the cake! Hopefully we have enough power in the Summer time for these chargers AND all the AC’s running full blast….so maybe solar panels and a wind turbine should be added to the building amenities package too.”
Friday, July 30th, 2010
The scaffolding and netting are finally coming down on West Chelsea’s most eagerly anticipated building, the Annabelle Selldorf designed 200 Eleventh Avenue. Developed by Urban Muse and Young Woo & Associates, this is the first residential building to be completed facing Chelsea Cove, the new 9 acre park just north of Chelsea Piers. The building is positioned a few steps from Jean Nouvel’s 100 Eleventh Avenue, Neal Denari’s HL23 and Frank Gehry’s Interactive building, three other architecturally significant buildings in the area.
“This is indeed a very special and unique building, fronting a gorgeous new park in the heart of the West Chelsea Arts District,” says Leonard Steinberg, marketing director for 200 Eleventh Avenue and managing director of Prudential Douglas Elliman. “With protected park and river views, steps from the Highline Park, iconic architecture, and New York’s only En Suite Sky Garage (a parking system that allows owners to park alongside their apartments via a car elevator), this is a collector item.”
Friday, July 30th, 2010
With Research in Motion’s announcement today that they are developing a similar device to Apple’s I-Pad, we should feel certain that home automation and real estate brokerage will more than likely be entirely controlled by these devices going forward. And why not? Unlike cell phones, the larger screen is much easier to read, and much easier to operate being touch sensitive.
“I see many luxury households having possibly 2 or 3 (or more)of these devices within the next 12 months.” says Leonard Steinberg, leader of the Luxuryloft team and managing director of Prudential Douglas Elliman. “We have always touted the need for easy-to-use, consumer friendly controls in the home in our monthly LUXURYLETTER. These ‘pads’ will certainly address this need. They will also become the devise of the next decade for New York City luxury real estate brokers, just the way the Blackberry has been for the past 10 years…..already I see the I-Pad in use everywhere.”
Friday, July 30th, 2010
In this morning’s Wall Street Journal, it was reported that Jenna Bush’s wedding cost a mere $ 100,000.00 compared to the stratospheric $ 3 million estimate for Chelsea Clinton’s wedding: “Bottom line? Think more like Jenna Bush, and less like Chelsea Clinton”
A good point, yet one major defining issue was over-looked: the real estate. The Clinton’s do not own a huge ranch to host a wedding like this, and if they were buying the Astor Mansion in Rhinebeck, it would set them back about $ 12 million. The Bush’s 1,600 acre ranch is worth many millions and is (surprisingly) extremely energy efficient and ‘green’: Rush would not approve! So had the Clinton’s owned a spectacular property to host this wedding, would the $ 3 million cost have been significantly less? “Great real estate can be like a great accessory,” says Leonard Steinberg, head of the Luxuryloft team and managing director of Prudential Douglas Elliman.”It can distract from a cheap outfit. An inexpensive wedding on spectacular real estate always looks more expensive.”
Thursday, July 29th, 2010
While aggressive evictions are reducing the number of rent-stabilized apartments in New York, Representative Charles B. Rangel enjoys 4 of them, including 3 adjacent units on the 16th floor overlooking Upper Manhattan in a building owned by one of New York’s premier real estate developers.
The Harlem building where Representative Charles B. Rangel has four rent-stabilized units.
Democrat Mr. Rangel who is chairman of the House Ways and Means Committee, uses his fourth apartment, six floors below, as a campaign office, despite state and city regulations that require rent-stabilized apartments to be used as a primary residence.
Mr. Rangel, who has a net worth of $566,000 to $1.2 million, according to Congressional disclosure records, paid a total rent of $3,894 monthly in 2007 for the four apartments at Lenox Terrace, a 1,700-unit luxury development of six towers, with doormen, that is described in real estate publications as Harlem’s most prestigious address.
The current market-rate rent for similar apartments in Mr. Rangel’s building would total $7,465 to $8,125 a month, according to the Web site of the owner, the Olnick Organization.
Leonard Steinberg, head of LUXURYLOFT team and publisher of the monthly newsletter LUXURYLETTER says: “How on earth does New York continue to allow the abusers of rent control laws to persist, especially an elected official, especially someone this powerful? Democrat or Republican, we should all stand up to this abuse. We all pay for this after all. New York rent control laws are like ANIMAL FARM: We are all equal but some are more equal than others?”
Thursday, July 29th, 2010
The MANHATTAN BIDDING WAR has returned: Carlos Slim, reportedly the wealthiest man in the world, just won a bidding war on the Duke Semans Mansion at 1009 Fifth Avenue in New York City. His winning bid of $44 million outbid a Russian bidder whose bid was around $37 million. This is the largest multiple bid sale of 2010, and an indicator that the high end of the Manhattan luxury real estate market is alive and kicking. “This is an extraordinary sale,” says Leonard Steinberg, managing director of Prudential Douglas Elliman and head of the Luxuryloft team. “Then again, this is a really prized residence so it is not surprising that more than one person wanted to buy it…..especially two buyers who may have had great difficulty buying in the tough co-op’s on Fifth Avenue.” LUXURYLETTER has repeatedly reported on the demand by the super-wealthy for the best of the best, noting that there is actually a shortage of ridiculously expensive real estate in Manhattan.
Wednesday, July 28th, 2010
In this morning’s Wall Street Journal, it is reported that New York and the rest of the country, is experiencing the return of the JUMBO MORTGAGE…..Not long ago, many big banks were turning away New Yorkers seeking jumbo mortgages. This summer, however, banks are competing for the business, creating a wealth of new products and attractive options for borrowers.
Jumbos are mortgages that are too big to receive government backing through Fannie Mae, Freddie Mac or the Federal Housing Administration. The size limits for jumbos vary by region, but in the tri-state area they are mortgages that exceed $729,750.
During the mortgage crisis, many big banks eliminated their jumbo lending operations. Others retained the operations, but scaled back the number of loans they originated, partly by raising down-payment requirements—some were as high as 40%—and tightening credit standards so much that many borrowers couldn’t qualify. But that’s changing fast.
“There are many more players in the jumbo market” than last year, when jumbo lending was dominated by smaller regional banks, said Melissa Cohn, president of Manhattan Mortgage Co. In recent months, several large banks, including J.P. Morgan Chase, Citibank and Wells Fargo have expanded their jumbo lending.
And while the push into the jumbo market is occurring nationwide, banks are particularly attracted to the New York area, said Keith Gumbinger of HSH Associates, a publisher of consumer-loan information in Pompton Plains, N.J. “If you’re going to be in the jumbo business, this is one of the best audiences,” said Mr. Gumbinger, noting the large concentration of wealth in the region and the relatively low default rates in the wealthier ZIP Codes.
Gibraltar Private Bank & Trust, based in Coral Gables, Fla., has been particularly competitive, offering jumbo loans as large as $10 million. “It’s a clear differentiator that we are aggressively lending to the affluent in New York,” says Chris Damian, Gibraltar’s chief lending officer. “We’re doubling our lending staff in the New York market by year-end, which is an indication that this market is booming.”
Interest rates on jumbos typically are higher than rates on smaller mortgages, but the gap has narrowed in the past year. Overall, jumbo mortgages offered in the New York area on a 30-year jumbo loan have declined to 5.59% as of last week from an average of 6.35% a year ago and to 5.13% from 5.91% on a 15-year jumbo loan, according to HSH.
But several small local banks are offering jumbos under 5%. For example, on Monday, Valley National Bank was advertising 30-year jumbos at 4.75% and 15-year jumbos at 4.5%, according to the bank’s website.
The cost of adjustable-rate jumbo mortgages is also falling. On Monday, Apple Bank lowered its rate on a five-year adjustable rate mortgage to 4.25% from 4.5%. A few banks, including J.P. Morgan Chase, are offering rates as low as 3.75% for borrowers making a down payment of at least 20%.
Down-payment requirements are easing. Wells Fargo said late last week it will lend $1 million to borrowers with down payments of 15% as long as they have strong credit.
“Big banks are jumping back in to the jumbo mortgage market because the default rate is relatively low on these mortgages historically,” said Richard Martin, a senior vice president at DE Capital Mortgage LLC, an affiliate of Wells Fargo Home Mortgage. Generally speaking, lenders restrict the size of loans so that monthly mortgage payments are no more than 35% of a borrower’s gross income, he said.
Small and regional banks often try to compete with bigger lenders by appealing to different market segments. Gibraltar’s $10 million loan limit is one of the highest in the area.
Astoria Federal Savings & Loan tries to offer lower rates than its competitors while Apple Bank is the most lenient when it comes to loans associated with new condominium developments. U.S. Bancorp, based in Minneapolis, has the lowest down-payment requirement: just 10%.
Many regional banks are more flexible than the big banks and don’t have a minimum credit score that covers all borrowers, preferring to grant jumbo loans on a case-by-case basis. For example, at Hudson City Savings Bank, which services primarily New Jersey, Connecticut and parts of New York, a determining factor is whether jumbo-loan candidates are consistent in paying their existing mortgage.
“We determine a track record by primarily looking at how borrowers repay their [previous] mortgage debt,” says Tom Laird, chief lending officer at Hudson City Savings. “We want to make sure their income level can carry a jumbo mortgage.”
LUXURYlesson: “Again we are reminded of the resiliency of the Manhattan luxury market”, says Leonard Steinberg, head of the LUXURYLOFT team and managing director of Prudential Douglas Elliman. Making Jumbo mortgages more easily available will widen the list of potential buyers who have till now remained on the sidelines. We reported several months ago in LUXURYLETTER how we saw smaller and out of town banks starting to compete with the ridiculously slow and often unexplainable behaviour of larger banks who were turning down super-qualified buyers for no good reason at all. This is an important indicator showing the un-locking of the credit markets. If a real miracle were to happen, Washington may also acknowledge that the cost of living in Manhattan is significantly greater than other parts of the country and adjust our tax code accordingly: No, Messrs. Obama, Pelosi, Reid: $ 250,000.00 per year in Manhattan does not make you rich!”
Monday, July 26th, 2010
THE ROLLER COASTER DECADE It is becoming increasingly apparent that we live in turbulent times: the see-sawing we are experiencing in markets (and life in
general) appear more acute and exaggerated these days, and I fear we have entered a decade of constant ups and downs.
With every bit of good news that emerges, so too does an equally impressive list of bad news. It seems every day the stock market escalates it is followed by a day where the market ‘plunges’. The press terms a 1% drop a ‘PLUNGE’: Is 1% really a plunge? Plunge is defined as ‘to descend abruptly or precipitously, as a cliff, road, etc.’….so does a 1% drop constitute a plunge? I think not. Yet this is our new reality: a world where a dramatic headline is much more important than a calm, accurate inventory of what is really going on.
Unfortunately, press headlines define people’s perception of reality as no-one seems to have the time or inclination to examine the substance of an issue anymore. One side says a balanced budget with austere cuts is critical to solving the world’s financial problems, yet the other side says doing so instead of continued stimulus will PLUNGE us into a third depression (Paul Krugman, New York Times). The same side that says legalizing un-documented immigrants is bad for the economy and the country, idolizes all of Ronald Reagan’s economic policies, even though Ronald Reagan legalized millions of illegal’s because he felt it was good for the economy. Unemployment figures improved, and the banking sector hired 6,800 people in the past 3 months. Warren Buffet says all his companies are hiring across the board. Then housing figures came in: sales dropped, yet pricing rose, and housing starts dropped, which was viewed as bad news by some and good news by others (lower inventories generally stabilize pricing and valuations).
Maybe if we eliminated the words PLUNGE and SOAR from our vocabulary, and watched the economy unwind from a more balanced perspective we could all benefit. We are emerging from the most serious recession of the past 100 years, yet we want double digit growth back over night. The recovery will be slow and rocky at times. A price will have to be paid for bad behaviour and policies. New technology will continue to change the landscape of employment.
Of course in these panicky, irrational times, great opportunity exists to buy the best real estate. With more choices, extremely low financing rates, and virtually no new great inventory, long term buyers will be rewarded…..but not in the next quarter: let’s leave that thinking to Wall Street.
And buckle up: it’s going to be a bumpy ride!
Leonard Steinberg (Editorial from LUXURYLETTER: www.luxuryletter.com)
Monday, July 26th, 2010
In the WALL STREET JOURNAL: Sales of new homes are near 47-year lows, yet the supply of new and existing homes is expected to grow in the months ahead as construction ramps up and a wave of foreclosed homes hits the market.
LUXURYlesson: “While the USA in general will experience increases in inventories, the luxury market in Manhattan will see moderate inventory gains,” says Leonard Steinberg, Managing Director of Prudential Douglas Elliman. ” Yes, there is shadow inventory, and yes we will see a rise in foreclosures, but these will exist in the lower echelons of the luxury market. Manhattan should not be confused with the NEW YORK MARKET that includes Brooklyn and Queens. Building permits are at an all-time low. Certain classifications of real estate in some areas are in short supply, and those that are planned to fill this need are 2-3 years away from delivery.”
In June, new-home sales were running at a seasonally adjusted annual rate of 330,000 units, the Commerce Department said Monday. While that was up 23.6% from the all-time low of 267,000 in May, the June figures were the second lowest on record.
“What we’re really seeing here is that new-home sales are at what I’d call rock bottom,” said Steve Blitz, an economist at Majestic Research in New York. “The last time we were running these kinds of numbers was the 1982-1983 recession, when we had 100 million less people.”
LPS Applied Analytics, a firm that tracks mortgage data, said Monday that there were 4.56 million loans in default or in some stage of foreclosure in June, down slightly from May. But the number of new foreclosures initiated on properties backed by Fannie Mae and Freddie Mac increased sharply, rising 21% in June from May.
The rise in foreclosures on Fannie and Freddie properties reflects the failure of many troubled borrowers to receive permanent loan modifications plans, analysts said. Having exhausted all options to rescue their homes, many troubled borrowers may now be giving up.
“Looking at the numbers you’re seeing about this pickup in foreclosure starts, it’s hard to see how it’s not going to translate into elevated levels of [properties taken over by banks] down the road,” said Herb Blecher, an analyst at LPS.
Home builders, which began buying up land lots late last year in anticipation of an economic and housing rebound, are stuck with thousands of acres that are prone to lose value as the market struggles. Many will build homes on the land, rather than write off its value and wait for the market to improve.
“Builders are willing to pay a premium to not have that risk on their hands. They’re still facing a tremendous amount of stress,” said Brad Hunter, chief economist at Metrostudy, a housing-market research firm based in Houston. “They’re discounting the homes, they’re making very small profit margins, but they’re building homes. They’re very interested in securing market share.”
Several former bubble markets are seeing the biggest increase in home construction. According to Metrostudy, new-home starts in the second quarter show signs of rising 68.1% in South Florida, 83.7% in Naples/Ft. Myers, 65.1% in Las Vegas and 59.7% in Denver from the same period in 2009.
Other indicators also point to builders preparing to increase home construction, despite lagging sales. The number of finished vacant lots, or parcels of land that have been developed and readied for building, stands at about 1.2 million nationwide, according to Metrostudy, or just 5% below the peak in late 2008.
Most metro areas are flush with vacant homes as well: Metrostudy found that of the 48 metro areas the firm covers, only four—northern Virginia, San Antonio, Houston and Baltimore—have what is considered a “balanced” inventory of unsold homes, or about three months’ supply or less.
Coastal Southern California, which includes many of the cities near Los Angeles, has an ample supply of builder-ready land—about two years’ worth—owned by banks, developers, investors, the government and the builders themselves, which are starting construction in earnest.
Irvine Co., a large land developer and master planner in the coastal region, said it presold 570 homes in the northern portion of its Irvine Ranch project in the first six months of the year, and the $300 million construction will begin soon. The company also has plans to start 700 to 800 additional homes in the coming months, using builders both public and private, including KB Home Inc., TRI Pointe Homes Inc., Van Daele Homes and Brookfield Homes.
“We’re doubling down,” said Dan Young, who heads Irvine Co.’s community-development and home-building division. “While the national home builder is probably still right to say things are still weak, and the mass market is not back, we are seeing improvements in local markets.”
But as inventories grow, it could put further downward pressure on home prices. The median price of a new single-family home has been falling steadily since its 2007 peak of $247,000. Monday’s numbers put the median price in June at $213,400.
Credit Suisse analyst Dan Oppenheim wrote in a note Monday that sales are probably worse than the Commerce Department’s initial report and predicted further declines in home prices, based on continued weak demand.
“The low level of activity [even with the reported increase] is well below desired absorption levels of builders and will lead to additional pressure on home prices,” he wrote.