Archive for May, 2011
Monday, May 30th, 2011
Posted by Leonard Steinberg on May 30th, 2011
Bloomberg reports that homes priced at $10 million and above are accumulating on the market in Greenwich, Connecticut, a town about 30 miles (48 kilometers) north of Manhattan that’s known as the U.S. hedge fund capital. They’re moving so slowly that it would take more than four years to sell them all, the biggest backlog since at least 2004, according to Mark Pruner, an agent with Prudential Connecticut Realty. Wall Street’s greater emphasis on deferred compensation, in which a portion of an annual bonus will be paid in the future, has stifled demand, he said. I think that’s only part of the problem.
“Our market moves very closely with the financial markets,” Pruner, based in Greenwich, said in an interview. “Deferred compensation has totally hammered the over-$10 million market because people just aren’t getting large amounts of cash, and that market has traditionally been a cash market.”
Fifty-two houses in that price range were listed for sale as of May 19, according to Pruner. Four have sold this year and two are in contract. At that pace, it would take 52 months to sell the inventory, he said. If that backlog remains through the end of the year, it would be the biggest in his data going back to 2004.
I think another component thats driving this market trend is the large number of wealthy homeowners in Greenwich moving back to Manhattan: Now there is definitely a shortage of large apartments in Manhattan, with many developers scrambling to cater to this need. Many who moved out to Greenwich to escape New York are learning that a good volume of business still remains focused in Manhattan, requiring lengthy, time-consuming commutes. Owners of super-large homes (lets face it, if you want to look rich in Greenwich, you need a 10,000sf+ home!) are finding many rooms un-used, and the cost and aggravation of maintaining them more than they had bargained for. Couple that with the fact that most of these homeowners usually own a second or third home. We constantly hear Greenwich homeowners looking in Manhattan griping about:
1) SUBURBAN BOREDOM….they miss the stimulation and variety of options for entertainment and socializing in the City.
2) LENGTHY COMMUTES/CAR CULTURE…..there is something infinitely appealing to take an elevator ride down to the street to buy pint of Ice Cream, walk 2 blocks to your favorite restaurant, or take a 5 minute cab ride to see a movie or a play. All these activities require at least a 20-30 minute drive.
3) SUBURBAN CULTURE….Social living in Greenwich is different: not better or worse, but certainly more insular. The peace and tranquility of suburban life can be achieved at a weekend home in the Hampton’s or Upstate, combined with the stimulation of big city living during the week.
4) EMPTY NESTERS…..a huge garden and lots of rooms is wonderful with kids and their friends using them. Not so wonderful when they move on to college.
5) ENVIRONMENTAL RESPONSIBILITY….we all have to share in our efforts to conserve energy and cut back on needless energy consumption. A large house in Greenwich leaves an enormous carbon footprint in its wake. City living is significantly less damaging to this planet, even in very large apartments or townhouses.
6) CONVENIENCE: Owning a large home presents large maintenance issues. Living in a condo in the City requires a call to the Super to get those pesky lightbulbs changed: That $ 100 tip is a bargain next to the cost and aggravation of full time maintenance staffing.
7) SIMPLIFICATION: There is a large trend right now towards efficiencies. More compacted, efficient and engineered spaces are just easier to live with. A well designed 4,000sf apartment can deliver most of the needs of a 10,000sf house.
8) COST: The suburbs really aren’t that much cheaper. Yes, you get lots more house for your money, and it looks more impressive when your peers drive by. Now throw in the cost of 2 or more cars, yard, pool and house maintenance/staffing, additional energy costs, infrastructure re-building (eg roof, facade, windows, etc). Yes, all these items are required for a swell City existence, but many of these costs are shared. One roof shared by 50 owners….
“Previously, if you got a $10 million bonus, buying a $5 million house wasn’t that big a deal” said Pruner, who estimates that about half of all homebuyers in Greenwich work in the financial industry.
“If you get $20 million — $3 million in cash and 17 in deferred compensation — are you going to borrow another $2 million in cash to buy a house? I don’t think so,” he said.
Cash bonuses on Wall Street declined 8 percent last year as financial firms raised base salaries and deferred some earnings, New York State Comptroller Thomas DiNapoli said on Feb. 23. Companies disbursed $20.8 billion in 2010, down from $22.5 billion a year earlier.
The average Wall Street employee took home a cash bonus of $128,530 in 2010, a drop of 9 percent that was greater than the total decline because the pool was shared among more workers, DiNapoli’s office calculated in a report based on personal income-tax collections.
The smaller payouts reflect changes adopted by the industry after the credit crisis, in response to criticism that soaring incentives pushed traders to disregard risk. About 56 percent of financial firms incorporated risk management into performance measures for top executives by the end of 2010, and 37 percent have also done so for lower-level staff, according to a February study by Deloitte Touche Tohmatsu Ltd.
“Pay for performance and incorporating risk measures is making its way through more and more of the ranks of Wall Street, and that is going to have an impact because people have less liquidity at bonus time than they used to,” said Constance Melrose, managing director ofeFinancialCareers North America, a network of websites for finance industry professionals.
A smaller cash component of bonuses may translate to fewer high-dollar property sales in Greenwich, where the median household income was about $122,000 in 2009, more than twice the national average, according to the U.S. Census Bureau. The town is home to about 90hedge funds, data compiled by Bloomberg show.
Saturday, May 28th, 2011
Posted by Leonard Steinberg on May 28th, 2011
One of the worst forms of pollution in a city like Manhattan is noise pollution: Because of the very nature of the city, noise affects individuals more acutely than in other parts of the country where noise can carry and be spread out more.
It is time for Manhattan to institute new laws governing noise AND police/enforce these laws. Why does one individual have the ‘right’ to make a tremendous amount of noise at the expense of hundred of individuals. Not only is it unfair, it is completely ridiculous and absurd. The other day I witnessed a loud motorcycle roar past my apartment. One individual on a lousy bike, making the lives of HUNDREDS uncomfortable. Then there are those antiquated garbage trucks, busses, vans, AC equipment, etc. Not to mention construction crews out of control. If I were to sit in my apartment and make the exact same level of sound, I would probably be arrested and jailed. Why does the law not apply to all, equally?
I have heard that noise complaints are one of the primary issues reported on 311 calls: who is listening to this? In other civilized cities and towns, noise ordinances are enforced regularly. If Manhattan is seeking additional tax revenues, there are enough noise offenders that could probably LOWER our taxes…..surely that would be motivation for those questioning me?
Noise is also bad for your health in many ways, not only your ear drums. Noise pollution can cause annoyance and aggression, hypertension, high stress levels, tinnitus, hearing loss, sleep disturbances, and other harmful effects. Furthermore, stress and hypertension are the leading causes to health problems, whereas tinnitus can lead to forgetfulness, severe depression and at times panic attacks. Surely it does not require a lawsuit to realize that a change in this arena is long overdue?
And by the way, cities and towns with strong noise ordinances offer a better quality of life for all and therefore produce better real estate valuations…..surely another motivator to make some changes?
Something is wrong and it has to change. How much noise do I have to make to be heard on this subject?
Thursday, May 26th, 2011
Posted by Leonard Steinberg on May 26th, 2011
I just went over the stats analysis and noticed an interesting factoid: The vast majority of studios that have traded in Manhattan in the past months are co-ops not condos, which leads me to believe developers are avoiding building them.
I don’t think the day of the studio has ended, and I believe there is a potent market for the LUXE STUDIO, that exquisitely engineered space that caters to all the needs a larger apartment delivers, often rather inefficiently. We have not seen well designed studios, and I firmly believe this is unwise. With many homeowners becoming increasingly nomadic, and even the less wealthy desiring a weekend house (now with many more affordable options) I think the need for small, super-efficient apartments with uncompromised esthetics and quality is alive and well and largely ignored… and I have a very clear vision of an innovative, magnificent version that I truly believe the market would LOVE.
Hello there developers and bankers, not everyone is looking for those 3-4 bedroom apartments everyone seems so focused on right now….we need both!
Thursday, May 19th, 2011
Posted by Leonard Steinberg on May 19, 2011
The real estate market in Manhattan is absolutely exhausted…..brokers, buyers, sellers, mortgage brokers, managing agents, you name it.
During the recession, while everything moved at a slower pace, the industry became accustomed to a longer, more protracted marketing and searching process and then slower negotiation. Now the pace has picked up noticeably: Many real estate companies and managing agents who probably laid off staff due to decreased volume are now caught under-staffed with the temptation for higher profits….they are learning the hard way. There are new players in town, and lesser service will be met with lost, dissatisfied clients and key personell who are left to pick up the slack.
The recession is over: its time to beef up staffing. Now is still a good time to find good people. Unemployment needs to drop for the sake of the entire country, so hiring now is not only self serving, its patriotic and good for all. And investing in updated technologies to help streamline the process wouldn’t hurt either.
Saturday, May 14th, 2011
Posted by Leonard Steinberg on May 14, 2011
Everyone seems to be pointing fingers these days with horrible double standards…..here are some examples:
1) Pakistan is OUTRAGED that the USA ‘invaded’ their land to kill the world’s worst terrorist and the government now demands that these outrageous breaches of their borders end immediately…. even though they housed this monster for years in their back yard, a monster who is responsible for killing more Muslims than any single person in the past 10 years. His little clan just killed another 80 Pakistanis this week. Hmmmmmm……
2) The Picard attorneys going after the Madoff stolen funds, have just requested approval for their fees….. David Sheehan, one of the lead attorney’s billings equate to him working 9 hours a day, 7 days a week, every single day on the case, at over $ 800.00 per hour…..hmmmmmm….. They have recovered almost $ 10 billion, but of that 70% was recovered from one person alone. Paralegals and library staff are being paid $ 250/hour……do they really earn $ 500k per year? Hmmmmmm…….
3) US Bankers who borrowed billions of taxpayer dollars to clean up their financials, often blaming lax lawmakers for their woes and are now requiring intense scrutiny for borrowers (a good thing, although some rules are silly) have in many instances delayed the sale of un-sold units and repayment of construction loans……to collect more interest payments. Hmmmmmm……
4) Some New York City developers are asking how they can get higher than pre-2008 pricing while delivering a lesser product….Hmmmmmm….
Thursday, May 12th, 2011
Posted by Leonard Steinberg on May 12, 2011
New banking laws prevent a buyer from having an appraisal ordered prior to a fully executed contract: I think this is just stupid. Here is what I propose and why:
With many Sellers reluctant to provide financing contingencies, and certainly appraisal contingencies, the ability to have an appraisal prior to signing a contract is critical. Right now if you have that appraisal, the bank will not use it and order another one. Would it not be smarter for all parties to know whether a property will or will not appraise BEFORE entering into a contract? Of course it makes all the sense in the world, yet the new banking laws just don’t like common sense. I propose the following: Banks should provide a list of ‘approved appraisers’, those they deem sufficiently qualified to do an accurate appraisal. Buyers would then have the option to pay for a ‘pre- appraisal’ (the banks don’t pay for the appraisal anyway….the cost is passed onto the buyer anyway) and once in contract and securing the financing, the bank could either use that appraisal, or as a minimum, charge a minor additional fee for a second appraiser visit or ‘quick appraisal audit’ prior to signing off on the ‘final appraisal’.
There is no doubt appraisal abuse in the New York real estate market madness of a few years ago required reigning in……appraisers had a gun to their heads to meet certain pricing…..but these days, banks in their never ending plight to raise profits are seeking out the cheapest, least educated appraisers, often delivering appraisals that are a pure disgrace. (I have caught an appraiser mis-measuring a room by 20 feet!). Appraisals are more of a science than an art: It’s pretty black and white stuff.
Waiting to be in contract…..then ordering an appraisal….then assessing the ‘results’ is quite simply STUPID. Change is essential. Now.
Wednesday, May 11th, 2011
Posted by Leonard Steinberg on May 11, 2011
We have heard a rumor through the grapevine that Jamestown, who is seeking funding for the rather grotesque, monstrously scaled Chelsea Market Addition, may not be doing exactly as they say…. as part of the due diligence the lender supposedly asked if Jamestown planned to actually build this addition or just seek approvals and then sell the project…. Supposedly their response was that they want to sell project…..not exactly what they told the community board or are we mistaken?
Wow, this is really, really bad architecture! Or is it just me? YIKES
Tuesday, May 10th, 2011
Posted by Leonard Steinberg on May 10, 2011
I received an e-mail to-day from a broker at NESTSEEKERS showcasing a very attractive property in a strong location that was quite well priced…..the only problem is the photos would give even the most astute eye a hard time identifying that this is indeed a good apartment. The photographs were hideous!
What the announcement does say is that the owner is very open to ‘making a deal’….. Well, dear Mr. or Mrs. Seller, you had better be ready to make a deal, because your real estate looks dreadful and is probably worth less because of this lazy or incompetent exposure. In an age where first impressions are critical, where the world, especially the New York real estate world has become an extremely visual place, where buyers seeking real estate on line have a super-short attention span, this type of imagery is counter-productive to your mission, unless of course your mission is to discount your property as much as possible.
So, dear Sellers: please look at the photo’s your broker is displaying to the world: Many of these photos are truly horrendous! And no, its not just smaller agencies that are posting vile photos….culprits exist everywhere. Above is a picture I took of a listing a few years ago: the perfect example of a dreadful real estate marketing photo.
And to my fellow brokers: really, honestly, truly…..does it really take that much to hire a decent photographer? For all our sakes, buyers, sellers and fellow brokers….PLEASE post good, accurate photos. It’s not that difficult.
Sunday, May 8th, 2011
Posted by Leonard Steinberg on May 8, 2011
We live in new times, which requires adjusting. All of us are doing it. Some Democrats are talking about deficits, some Republicans are talking about energy savings and green energy. Condominiums are talking about reserve funds and closer scrutiny of buyers. Yet many co-ops appear to be stuck in a time warp, and very clearly impact the value of the real estate they own.
I was chatting to a broker the other day about a co-op apartment she is trying to sell on the Upper East Side. It is a large one bedroom, over 1,000sf in size in a doorman building. It is asking a little over $ 650/sf. It is not in the most desirable location, but certainly a good one, moments from a Park. Maybe its time for buildings like this one to re-evaluate its co-op policies. Maybe co-ops that are under-valued could take on new life by adopting new rules such as a more liberal sub-leasing policy, installing a slick gym in the basement, updating the lobby, not just through a design comittee of owners, but through a serious comparison to other buildings that are valued at more than double. I often see apartments in these tired co-ops and marvel at the scale of the rooms, although ceiling heights in some are horrible. I wonder why a co-op would think that AC window-units were either economical or esthetically pleasing to anyone anymore: they are neither.
Another good idea would be to specify more clearly what board requirements these co-ops have, and maybe align them more with the real world.
Condo’s have adopted many ‘co-op-style’ rules to improve the quality of life in their buildings.
Yes, it is true the co-op structure has kept the New York market very stable and that should continue, but maybe the time has come to re-invent the co-op, keeping all that is good and eliminating all the bad, counter-productive stuff that hurts the prospects of future owners, but worse, de-values the homes of many un-necessarily.
It is time for all of us, condo’s and co-ops, Democrats and Republicans, parents and kids, husbands and wives, corporations and employees, unions and governments, to stike a fair balance and meet in the middle…..do whats best, not focusing exclusively on what is purely self-serving and counter productive to the big picture.
Wednesday, May 4th, 2011
Posted by Leonard Steinberg on May 4, 2011
New York has been searching for a suitable cab replacement. And the winner is….NISSAN: Nissan will be the manufacturer supplying the replacement to the antiquated Crown Victoria cabs that have made New Yorkers commutes rather awful over the years.
Not only will this replacement be twice as fuel efficient (about 24mpg), but they will also provide more comfort for passengers…..more space, legroom, easier entry/access. They will also be equipped with passenger side airbags and phone chargers (miracle!). Soon the tips of your shoes will not have to be sliced off by the cramped rear quarters of a cab, and getting in and out will not require Cirque du Soleil acrobatic training. The 13,000 plus New york cabs will be all replaced by the end of this decade. This vehicle is specifically designed for cab usage.
Now lets also hope that someone in our beloved government and the Taxi and Limousine Commission consider the following:
1) Cleaning the cabs on a regular basis. A little bit of Windex goes a long way.
2) Easy-to-use payment computers for credit card usage.
3) A schedule that does not eliminate cabs from the streets of New York around 3-4pm. HELLOOOO???
4) A clear OFF button for those annoying TV’s…..or at least a large MUTE button. Visually the TV’s are less annoying than the sound they produce. And this must add to the average cab drivers border-line insanity.
5) GPS systems to help those drivers who are never trained to know the streets of our city navigate the most effective routes also highlighting traffic areas.
After this tirade, lets just summarize to say we are EXTREMELY grateful for this very welcomed change.