LuxuryBlurb
Posts Tagged ‘luxuryletter’
Sunday, December 18th, 2011
 Posted by Leonard Steinberg on December 18th, 2011
I have been ranting about the inaccuracy and inconsistencies of residential real estate sales reporting for years, and now the ultimate embarrassment: Unsurprisingly, this week the National Association of Realtors announced that the data they’ve been releasing on home sales has been flawed – mainly understated – by possibly as much as 20% lower than previously reported. They said they will recalculate the data going back to 2007. The national news/business TV shows have reported on this because it will mean the national housing decline will be much worse than earlier thought.
The question needs to be asked: How is this humanly possible without some fraudulent activity? Surely a sale is publicly recorded, and that sale becomes the basis of data? The NAR is claiming a host of somewhat plausible reasons for the errors, but I don’t buy them. Yes, these large organizations, just like governments, are notoriously inefficient and slow (lets not forget how our government revises figures all the time and lets us know we are in a recession many months after it has started!). BUt the reporting of sales is actually quite simple. The problem is that often large organizations and some real estate companies (just like governments and large corporations) report WITH AN AGENDA. Agenda’s drive inaccurate reporting more than anything else. This is about to change with the merger of globalization and the Information Technology revolution.
Both have achieved a critical mass in the first decade of the 21st century that has resulted in the democratization — all at once — of so many things that neither weak states nor weak companies can stand up against. We’ve seen the democratization of information, where everyone is now a publisher; the democratization of war-fighting, where individuals became superempowered (as in the case of Al Qaeda to take on a superpower); the democratization of innovation, wherein start-ups using free open-source software and “the cloud” can challenge global companies. And now we will see the democratization of real estate sales information, and it will be much more localized.
In my opinion, the national aspect of reporting on housing sales is the problem (even though its essential for a country to operate well). I would propose to regionalize the reporting much more. Averages are practically useless to most in real estate world as real estate is a very, very localized business. There should be a network of smaller reporting mechanisms (preferably electronic, not human) based on pure fact. This network should then feed into a national network.
Unfortunately, the bulk of residential real estate sales close weeks and months after the actual transactional terms are solidified. With new construction, these closings can take place 1 – 3 years after a contract is signed. It is at that moment of contract signing that the true insight to the market is relevant and meaningful. I would much prefer two reports: a ‘signed contract’ report and a ‘closed sales’ report. I do a monthly report in LUXURYLETTER: it is a blending of both, so while not 100% accurate (regrettably) it is a much better indication of what is happening my very specialized market right now. Would you want to buy Apple stock based on trades that happened 6 weeks ago?
I speak with bankers on a regular basis, and they too are shocked at the lack of accurate, solid information. Much of what is out there is distorted. And the complexity of some of the data is surprising. The ENRON-ess of it all is somewhat disturbing. There are other ‘industry organizations’ that collect large fees from brokers to spew out reports that are mostly inaccurate and meaningless, often timed to be some sort of historic reference book. The large fees usually support large salaries of the organization’s leaders……Washington-style.
Bad data breeds bad decision making: The bigger problem with the democratization of information is that there is so much of it out there, often un-verified, mostly inaccurate and mostly averaged so broadly that it has virtually no value to the consumer.
Monday, November 7th, 2011
 Posted on November 7, 2011
So you thought the world’s luxury market was in trouble? Think again. French luxury group Hermes raised its full-year sales forecast on Friday after third-quarter growth beat its initial target, pulled by buoyant demand for the 174-year-old brand in Europe, the Americas and Asia.
The maker of 10,000-euro leather bags and 1-million-euro ($1.4 million) crocodile leather jackets said it expected full-year sales growth at constant exchange rates to reach 15-16 percent this year, against a previous forecast of 12-14 percent.
The upgrade was expected by many analysts, and some said the new forecast was still conservative. Hermes sales rose 18.2 percent at constant exchange rates to 683.2 million euros in the three months to Sept. 30, while analysts expected growth of 17 percent.
The upbeat outlook from Hermes comes after luxury peers such as Burberry , LVMH and PPR posted forecast-beating quarterly figures and said they saw no slowdown in spite of global economic concerns.
Of course, more middle class barnds have not fared as well. Abercromvie and Fitch and The Gap which are brands more reflective of lower income consumers have produced weaker results and discouraging outlooks. In November’s LUXURYLETTER, the monthly New York luxury real estate report produced by Leonard Steinberg and his team, it was the high end super-luxury properties that were reported to be seling best, even showing price escalations. Another reflection of how the world’s traditional 3 class system is drifting towards a 2 class system: rich and poor.
Sunday, July 31st, 2011
 Posted by Leonard Steinberg on July 30th, 2011
We have covered this subject before in LUXURYLETTER: Manhattan and New York City sidewalks are constantly covered with hideous, unsightly construction sheds and scaffolding. Always dark, somewhat sketchy, and often covered with graffiti, the sheds leave much to be desired, which is why the Department of Buildings hosted the UrbanSHED Competition, asking designers to create a more aesthetically pleasing design for these sidewalk canopies. A prototype of the winning design has just been unveiled: the arched steel structure with a transparent top is a breath of fresh air. Designed by winner Young-Hwan Choi with architect Andrés Cortés and engineer Sarrah Khan of New York-based Agencie Group, the new canopy is a huge improvement from the standard pipe and plywood shed.
It is time to really evaluate this ugly scaffolding once and for all: While I love the concept of re-designing the scaffolding and making it more attractive, personally I see permanent sidewalk covers as the solution. The cost to building owners to rent these structures is prohibitive. With the sun a lot less desirable these days, why not cover sidewalks (a la Meatpacking District and Tribeca) with permanent canopies. These (attractive) canopies could be made of solar panels to generate power and also transmit light. Something needs to change.
Friday, April 1st, 2011
 Posted by Leonard Steinberg on April 1, 2011
First Quarter reports released to-day embarassingly distort the Manhattan real estate market statistics: They talk about a sharp drop in average pricing (like there is such a thing as average in Manhattan) but fail to mention that the reason for this is the low inventory of new construction condominiums that would automatically distort “AVERAGES”. Yes, more co-ops sold this quarter, not because they were more desirable, but because there is a shortage of new condo’s. To any buyer, I would say beware: averages are dangerously misleading.
For a more accurate reflection of what is happening in the market right now, not the reports that reflect CLOSED sales, most of which happened in the market 2-4 months ago, read LUXURYLETTER. its not perfect at all but it definitely is a better insight into the market as it is happening, not the market of yesteryear…. Click here for the latest LUXURYLETTER: :http://www.luxuryloft.com/files/luxuryletters/LUXURYLETTER_April_2011.pdf
Wednesday, March 30th, 2011
 Posted by Leonard Steinberg on March 30th, 2011
OIl companies scream DRILL BABY DRILL, as it will be good for the USA, create jobs, generate tax revenues, yet Transocean denounces their USA ownership status, moves to Switzerland, and avoids $ 2 billion in taxes. 35% corporate tax rates are amongst the highest in the world, yet large corporations, flooded with enough cash to virtually wipe out the country’s debt, don’t pay anything close to that. Smaller companies on the other hand who do not have the means or wherewithall to create foreign tax shelters are the ones paying for all the things taxes pay for…..
While the super-wealthy complain about the USA’s tax rates, a strong majority of them have numerous tax savings schemes, off shore trusts, etc that take their effective tax rates to well below 50% of what they claim them to be.
As reported earlier this month, owners at 740 Park Avenue, arguably the most prestigious building in New York, housing some of the city’s very wealthiest, pay lower real estate taxes than similar sized, much less prestigious properties elsewhere in Manhattan. At 40 Fifth Avenue, the real estate taxes are about 25% lower than a building a few doors down on 11th Street, off 5th Avenue, without a doorman (reported earlier in 2010 by Leonard Steinberg in Luxuryletter).
One in four US corporations pay no taxes to the IRS. ZERO. GE and EXXON two of the largest corporations included.
So who are the ‘little people’? No they are not the poor, although they pay with diss-proportionally lower wages, fewer jobs, etc. It is the MASS WEALTHY that suffer the most (Those worth $ 1- 10 million). The middle to upper middle class and mass wealthy are the ones who will be footing the bills. They are the NOUVEAU LITTLE PEOPLE.
And now you ask why we have such a huge deficit? We certainly spend much too much. Often on things that qualify as horrible waste. But if we pay off this national debt, if we keep our roads and maintain our police and armed forces, know that Leona Helmsley will be proud: the NOUVEAU little people will be footing the biggest chunk of the bill.
Tuesday, December 21st, 2010
 Posted by Leonard Steinberg on December 21, 2010
Before the recession hit hard, MULTIPLE BIDS were the norm on many real estate listings. Those two words virtually disappeared from the vocabulary of New York real estate brokers: they are ba-ack!
I have recently experienced a few of my own listings with more than one bidder, and I am hearing chatter throughout the industry of the same thing happening. While most multiple bids are not over the asking prices, they are shifting selling prices upwards. This may be a short lived phenomenon, but with shrinking inventories, and 2 years of virtually zero new construction, I think multiple bids will be with us for quite a while. We predicted this several months ago in LUXURYLETTER.
TIme will tell…..
Friday, November 19th, 2010
 The penthouse at the Superior Ink building in Greenwich Village, New York, owned by Houston Rockets owner, Leslie Alexander, has sold for a record $ 31,5million according to the Wall Street Journal. But is it a record for Downtown? Yes and no.
The quadruplex combination penthouse at 200 Eleventh Avenue sold for around $ 33 million, also raw, in 2009, and while larger, hence a lower $$$/sf price, that selling price does beat this sale. The sale of the penthouse at 145 Hudson Street is another notable exception.
“It is nevertheless a testament to the ressiliancy of the Greenwich Village real estate market in New York, a zip code named one of the Top 5 by FORBES recently,” says Leonard Steinberg publisher of LUXURYLETTER and a managing director with Prudential Douglas Elliman. “The Robert A. M. Stern designed building boasts superb sunset views over the Hudson River, and is one of very few full service buildings in the area. It commands a premium for many reasons, but most notably are the views, services, quality of space and the Stern-cachet. I do believe the price could have been significantly higher if the space had been beautifully finished out, as there is always a market for SUPER-TROPHY-PENTHOUSES in Manhattan.”
Friday, November 19th, 2010
 Did you know that the waste produced from burning coal can be re-used to create portland cement?
Did you know that a incandescent light fixture replaced with a LED light fixture saves about 80% of energy consumption.
So while the world seeks some miraculous new source of energy, the rest of the world has discovered that ENERGY TECHNOLOGY is the new INFORMATION TECHNOLOGY. Yes, the ability to use the energy resource we already have, but create efficiencies within these resources is where significant strides can be made to reduce consumption and ultimately benefit the quality of life on earth.
I have friends currently in NEPAL where the air pollution is chronic: A visit to this part of the world would convince anyone that we have a responsibility to clean up our environment, and FAST. We have addressed this issue before in LUXURYLETTER, so what can owners of New York real estate do to incorporate ET into their world to individually and collectively make a difference? Here is out list:
1) Refine your heating and cooling systems: Converting a building from oil to natural gas to supply heating is a big one. Balance distribution throughout the building so that some aren’t cold and others aren’t opening their windows in the middle of winter to release excessive heating. Window AC units are grossly inefficient…..yes, someone at Historical Landmarks thinks these antiquated systems are good for facades (are they blind, or do the rest of us agree window unit are HIDEOUS!) but they are wrong, wrong, wrong. Units that go through the wall can be better, or best is a central system for efficiency. Thermostats timed to reduce useage when not at home can make a huge difference too.
2) Soon the cost benefits of Solar and wind generated systems will become meaningful. Already SOLAR GLASS is on the horizon: Imagine replacing all the glass in a building so that it generates about 50% of the electrical consumption? Yes the costs to do this will be high, but what is the cost of air quality that is so foul it kills us? What is the cost of treating lung cancer or asthma?
3) Replace incandescent lightbulbs with LED lightbulbs: yes, they are expensive to buy, but in Manhattan lots of us can afford this, and the longterm benefits are huge. They last 25,000 to 50,000 hours while regular incandescent bulbs last 1,000-2,000 hours. We don’t want to even mention fluorescent bulbs because they emit a vile quality of light, although for utility closets or laundry rooms they are super-efficient and with a decent tint, somewhat acceptable for humans. Regular fluorescent makes humans look ugly and we should boycott them in living spaces.
4) As electrical vehicles hit the streets, our needs for more electricity will rise rapidly: we had better be prepared before the next ‘brown outs’….. We have clean nuclear, wind, solar, gas, etc: lets use it wisely.
5) Insulation: properly insulated windows are a huge energy saver. New York real estate is notorious for cheap, bad windows: its time to replace them and insulate them properly when installed. Additional insulation throughout apartments can double energy savings. Anything that is leaky or drafty is no longer charming: it is damaging.
6) Use what you need when you need it: leaving a host of appliances running while away or not in use consume electricity: new technology will help you manage this better, but simple fixes are easy too. Un-plug that appliance with the bright green light that runs regardless of whether its being used!
7) New construction that ignores green building technology will probably sell for less than those developed by smart developers who see that energy efficiency is not only good common sense, but also REALLY GOOD BUSINESS.
In New York we do have the wealth advantage: remember, its not about the cost of money, its about the cost to our health and the health of future generations. Big buildings are much more energy efficient than individual suburban homes, so in that regard we are ahead of the game, but many older buildings, or cheaply constructed buildings have to do their part. Stop talking, and start doing. LEONARD STEINBERG
Monday, November 15th, 2010
 News headlines are overwhelmed with talk about how to cut the deficit. The tone before the election is noticeably different to the tone after the election as the practical realities of balancing the budget surface. On of the very biggest areas of spending is entitlements, and right now we are entering a significant milestone: The first BABY BOOMERS turn 65 on January 1, 2011. Raised in affluent times with high expectations, the first Boomers now face the prospect of longer, yet more crimped lives. Most of their homes and savings are worth less than a few years ago, and health care and energy cost more. Although many will need (or want) to work past 65, there’s less work to be had. And the longer they work, the less chance for younger citizens seeking employment.
But the biggest question raised by the Boomers’ senior moment is how it will affect the politics of Social Security and Medicare, and the nature of retirement.
Boomers’ sheer numbers (one will be turning 65 every 8 seconds) threaten to overwhelm the federal budget with rising costs for the entitlement programs.
Are New York Baby Boomers different? In many ways, yes. At a recent discussion about the development of a significant new luxury condominium, wealthy Baby Boomers were identified as an important demographic and prospective audience for super-luxe apartments, centrally located, that either remove the stress and complexities of owning a large suburban home, or provide a secondary residence for Boomers to enjoy all the City delivers.
“While there is lots of talk about the Boomers that will drain the countries budgets and suffer through more austere times, there is a small but significant group of Boomers who have accumulated significant wealth in unprecedented times,” says Leonard Steinberg, publisher of LUXURYLETTER. “There is the couple who just sold their business for $ 50million, the kids have moved out of their (much too) large house in Greenwich, Connecticut, and they want to simplify their lives: they also don’t consider themselves old, and want the vibrance, energy and options only a city like New York can offer, not to mention close and quick proximity to the best medical facilities.”
The BILLIONAIRE BOOMERS are a different breed altogether, not to be confused with the majority, and thankfully they love Manhattan.
Wednesday, November 10th, 2010
 The elusive $ 10,000/square foot price has been reached in Manhattan with the sale of the Zeckendorf’s penthouse at 15 Central Park West. The $ 40million sale of their penthouse marks a turning point in the history of New York real estate pricing.
“We have by-passed The Gilded Age, and entered THE PLATINUM AGE,” says Leonard Steinberg, managing director of Prudential Douglas Elliman and publisher of LUXURYLETTER, the authority on luxury New York real estate.
The sale of this penthouse at $ 10,259.00/sf marks a new milestone in pricing. 15 Central Park West has broken all records, delivering the pre-war look with new construction advantages craved by so many buyers: it’s magnificent Limestone facade and larger windows framing superb Central Park views combined with an incredible package of services and amenities has huge appeal to the ultra-wealthy seeking the combination of status as well as safety.
On US standards, this pricing is historic, but then we are in historic times: Translate this price into Euro’s and the picture is quite different. On international standards, this pricing is still on the lower side when compared to other major cities, especially London, where super-prime real estate sells for considerably more than this.
This pricing sets a new bar for luxury real estate in Manhattan: it is a result of inventory shortages of the ‘best of the best’. And this won’t change quickly with the current slump in construction. Quality new inventory is at least 3 years away, the perfect environment to fuel even more impressive price gains on trophy properties.
Does this sale fuel the argument that the divide between the super-rich and everyone else will continue to grow?
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We see a strong luxury market in Seattle. No surprise that luxury homes and items are selling well to above average here!