LuxuryBlurb
Posts Tagged ‘luxuryletter’
Tuesday, July 24th, 2012
 Posted by Leonard Steinberg on July 24th, 2012
Today a report to be released by Zillow indicates that home prices in the second quarter rose from the year-ago period for the first time since 2007, according to a closely watched index, the latest indication the housing market is starting to recover. In the quarter ending in June, home values were up 0.2% from the same period in 2011.
Like most other reports, this report is too a reflection of closed sales, hence a bit of a time delay on what is really happening in the markets right now. In Manhattan we are seeing a very unusually busy July, traditionally a slower Summer month. We are seeing multiple bids everywhere. Properties that once sat idle are in contract. The inventory shortage is worsened by the fact that fewer people will list a new property in the Summer. And the fear of the new construction inventory coming to market being priced around $ 2,000/sf and up is (wisely) scaring buyers into committing to a property now before an inevitable further escalation occurs…..while they can still commit to the low interest rates.
In my opinion Zillow’s data is not a great reflection for the Manhattan market because the time it takes for a property to get signed to closing is unusually long here: the best reflection of what is going on in the market in real time is a report on signed contracts: while not 100% accurate, it is much more reflective of current market conditions. That is why LUXURYLETTER is so widely read, the only monthly report on signed contracts AND closed sales.
We have been hearing of vastly improved activity in pricing in many other markets around the country for some time now. In my building alone, an apartment sold for $ 1 million less a year ago…..and indicator of price escalation over 15%. This is unusual, although the very high end of the market appears to still be experiencing LUXOFLATION, the inflation that applies to the super-luxury market and can be witnessed in art, car, and other luxury goods pricing, field by a growing international wealthy community.
I feel certain that once this new wave of inventory hots the market, priced higher than where many apartments are trading to-day, the averages will rise in Manhattan again, and a new ‘normal’ will set in.
Saturday, April 14th, 2012
 Posted by Leonard Steinberg on April 14th, 2012
After we reported for several months on the extremely busy New York real estate market, this morning the New York Times featured this story…..on the front cover! You know it serious if its on the front cover….
They talked about the lines of people outside 422 West 20th Street…..about 4 weeks after we reported it here (with a photo!). They talked about the return of many multiple bids on strong properties, about 6 weeks after we reported this in LUXURYLETTER, our monthly market report. I could continue to badger The Times for not being as on top of the market as it should be, but I think they have redeemed themselves by placing the story on the front cover. That certainly indicates a level of certainty that should erase any doubts in the minds of all that we are now in a very, very active, strong market.
For the first time in years we are selling un-built condo units off floorplans (WITHOUT A SALES OFFICE) with only a raw concrete shell of a building (482 Greenwich Street, THE ARMAN), and several contracts are out with 3 units already spoken for. Having a reputable developer and builder (and broker!) helps.
Again the subject of how long this will last arose, and the answer is definite: just like really bad markets, really good markets never last forever. We are in a lower inventory period, with super-low interest rates, few new buildings that are deliverable soon, and lots of new global cash seeking a refuge from uncertainty as well as fears of inflation. These factors combined always fuel robust activity.
Any smart buyer to-day would know that buying now with interest rates as low as they are would cover a dip in pricing, although that seems highly unlikely. In fact, the opposite is ture: we see price escalation. I spoke about this a few weeks ago……read it in the Times soon!
Tuesday, March 13th, 2012
 Posted by Leonard Steinberg on March 12th 2012
Everyone keeps asking and e-mailing why on earth I keep posting all these blurbs about how the real estate market is doing so well right now….in March’s LUXURYLETTER I called New York MULTIPLE BID CITY…. Last night I received e-mails about an article talking about how bad bonus season was and how poorly those in the financial markets are doing (which is definitely not true for all!). Maybe one reason is that when it comes to being competitive, New York is No. 1!
New York emerged on top again in a new survey of the 120 most economically competitive cities in the world. London came in second, followed by Singapore, with Paris and Hong Kong tied for fourth.
Leo Abruzzese, of the Economist Intelligence Unit, which conducted the survey on behalf of Citigroup, said New York’s strengths extended beyond its powerhouse financial sector to its long-established infrastructure, social and cultural amenities, record number of tourists and improving educational system. “This is not just about having the fastest growth rate,” said Abruzzese. “If it was, the index would be dominated almost entirely by cities in Asia, cities in China. One of the conclusions we came to was for a city to be competitive, it does need to have a strong economy, but it needs to have other dimensions as well.” Not only does New York have an economic, diversified powerhouse, it also has the soul and culture that makes a city great.
Bloomberg has pushed for investment in many of the same areas where the city scored big points in the study. his focus on the tech sector is bound to produce strong results years from now, and the effects are being felt already.
The two categories where the city fell short were both well beyond the mayor’s control — a talent pool constricted by national immigration policies, and a potential “environmental hazard” in the form of rising water levels that could one day endanger Manhattan.
Bloomberg was naturally very pleased with this survey, but like the smart businessman he is, he cautioned that the city had to maintain its momentum. “The instant you let down your guard or stop innovating, you will see a change in the big mo, and changing the big mo is hard to do,” he said.
Dominance of Western cities will be challenged by Asian cities in coming years, according to Abruzzese. Till then, we may have discovered an important answer to an on-going debate….
Sunday, February 12th, 2012
 Posted by Leonard Steinberg on February 12th, 2012
I just read an article in the New York Times that confirms domestic First Class on airlines is just a slightly bigger, wider version of the horrific Coach class airlines offer to fliers, regardless that they are spending triple or more for their seat. In fact, the perks for flying first class have shrunken more and more as each year goes by. I see the same trend happening in the new buildings coming to Manhattan.
It used to be that delivering a doorman with a nice lobby, a workout room/gym and a kitchen with a Sub Zero fridge, Viking oven and granite counters qualified as first class luxury real estate in New York: That has changed rather dramatically, and will change even further going forward. I am fortunate in that I see many of the plans for new buildings well before they come to market. And with many developers focusing their attention on the MEGALUXE market (a term we coined in Luxuryletter), the flying equivalent of the private jet commuter, a doorman and fancy kitchen are the expected basics. Now with a more educated and demanding buyer who has been seduced and spoiled internationally not only by very super-luxe residential buildings, but also some exceptional hotels, the bar has been raised even further.
The MEGALUXE building has to deliver on many levels. It has to develop a very prolific personality, with something exceptional about its entirety. Strong ceiling heights, views, solid windows, superior finishes throughout are expected. Beyond that, systems have to be discretely installed. In fact, everything has to be installed with a level of quality that New York is not accustomed to. If I hear a London-based or Beijing-based buyer say it one more time, I could lose my mind: quite frankly, they are appalled by the quality of craftsmanship in the majority of new buildings….APPALLED! Yes, this is not your first class cabin flyer……they are used to the customized cabin of a Gulfstream. Often their interior designers have designed the interiors of their jets as well as their homes, and they demand a consistency. Developers in Manhattan have not yet catered to this buyer properly: Candy & Candy of One Hyde Park have certainly done so, even though I find their taste level very Nouveau-BRIC-chic….if you know what I mean. One Fifty Seven, the new condominium/Park Hyatt hotel tower on 57th Street epitomizes New York’s version of this market.
A nice gym is not good enough: a gym has to cater to the hyper-demands of a client who has a personal trainer commissioned to deliver their subject with an Olympic athlete’s body. The gym has to adjust to the changing styles of workouts. Personally I cannot think of a high end client who wants to share their gym with hotel guests, although in some of these new buildings they will be forced to do so. Hotels have been exceptionally demanding on condominiums in the conveniences they deliver…..and the MEGA CLASS has become spoiled. Finding a balance between home and hotel will be tough, although maybe a good chunk of this new wealth from BRIC countries knows no other life.
I personally believe the MEGA CLASS will demand security and privacy more than ever, although the trend to wealthy-display-discretion appears to be fading.
This MEGA CLASS of building will set new pricing records everywhere, and unfortunately if it is not separated from the commercial/coach/business/first-class-traveller-style real estate, it will distort pricing across the board. For those not eager for this extreme of lifestyle, the savings will be large. It will be important for all to recognize the vast difference in these buildings and understand that their value will be driven mostly by scarcity. Just like domestic first class, take a closer look at that pillow: if it’s not significantly better than the pillow in coach…..
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…..
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That was an important publish! Individuals underestimate how a lot you want relaxation! Everybody sleeps. Few are lucky to relaxation and rejuvenate overnight. Every thing you do in life you do higher with a greater nights rest, I imagine!