LuxuryBlurb
Posts Tagged ‘Real Estate’
Saturday, January 21st, 2012
 Posted by Leonard Steinberg on January 21st, 2012
This week reminded us all about contracts when the architect of THE CONTRACT WITH AMERICA, Newt Gingrich, was exposed for allegedly attempting to re-negotiate his marriage contract with one of his ex-wives. Has the meaning of a contract changed over the years?
A contract is defined as an agreement between two or more parties, especially one that is written and enforceable by law. Now we all know that the law is a rather maleable thing, even more so this week when we learned that even the king of the moral majority seemed eager to re-negotiate his contract with his wife. No-one was shocked about the Newt revelation: what was most telling was how even the ultra-conservative audience at this weeks CNN presidential debate applauded Newt for his contract breaking, even in the most holiest of contracts, a marriage. Surely this is the biggest flip-flop? Newt was actually ousted for his fixation on punishing President Clinton for his extra-marital dalliances (while in the midst of his own affair).
Now back to real estate: the question I ask to-day is that if the (supposed)most moral of people are quite comfortable re-negotiating contracts, practically changing the very nature of its intent, surely all contracts are very, very fragile…..at best? I have found recently that more buyers and sellers seem to view contracts more lightly, and often arrive pre-closing or as late as the closing table itself and attempt to re-negotiate. A friend reminded me at dinner this week how at her closing, her buyers arrived and smuggly demanded a whole host of items (and money) that had never been discussed before. Of course, a contract does govern legal obligation, and often the only recourse to a conflict is a lawsuit. Most times the issues at hand are relatively minor and resolution is negotiated knowing the legal route would be more costly.
Minor contracts, the regular day-to-day promises and agreements we make seem to be under greater attack in my opinion. I am finiding more and more that some people hide behind the premise of the concept that ‘oh well, things change’ as a weak attempt to justify truly bad behaviour. The bad behaviour of individuals is always made worse by those around them who don’t voice their outrage at this bad behaviour. Its a slippery slope towards a really decayed society when a promise, contract or statement are always open to re-negotiation and re-interpretatio, especially when the initial intent is to allow this. Some may call this lying, deception or even fraud. Breaking contracts is nothing new…..it has happened all through time….that still doesn’t make it the kind of behaviour we should endorse.
Lets remember that we are all better served when contracts are respected and honored.
Monday, December 5th, 2011
 Posted by Leonard Steinberg on December 5, 2011
Richard Le Frak, one of New York/New Jersey’s great developers and owner of some 16million square feet of property, not to mention his company’s stellar and consistent ranking in the Forbes Top 400 privately held companies, said to-day on CNBC with some conviction:
“As of to-day the future looks brighter than the past.”
Words like these coming from a guy who obviously sees the bigger picture sooner should be encouraging to all. This sentiment seems to be rising, with employment figures improving slightly, on-line retail sales surging last week to new records, and post Thanksgiving retail rising dramatically too. Consumer confidence spiked in the past few weeks, and in an economy fueled by consumer spending, these indicators should not be ignored. more importantly, Europe seems to be working on big solutions to their big problems, and even Italy, notorious for push-back on any form of spending cuts, has not experienced and riots or craziness since its new prime minister instituted some rather severe adjustments since the departure of soap-opera-worthy Berlusconi. Maybe the end of this embarrassing politics-turned-reality-show in Italy signals a shift for all other countries to follow?
LeFrak is a big proponent of Senator Chuck Schumer’s push for the ‘BUY-REAL-ESTATE-FOR-A-VISA’ legislation….in fact it was his idea. This may be perceived by some as a easy immigration policy for the rich, but in reality it is legislation that would have positive practical consequences: Wealthy people buying up real estate, staying in the country for 180 days per year, spending, investing and being taxed here can certainly not do anything but benefit all. It appears their is bi-partisan support for this even from the Tea-partiers. Yikes! Could this mean some practical thinking is coming to Washington? Next should be automatic US citizenship to foreign students graduating with master’s and doctorates in maths and sciences! Its time for real, practical, smart solutions.
The importance of LeFrak’s comments are significant to the housing/real estate market especially: Remember that construction employed millions of Americans before the GREAT RECESSION. Returning just half of those jobs would create a significant dent in the still dismal unemployment figures, reduce the burden on states and the fed for support, boost consumer’s ability to spend, boost growth and tax revenues, and so on and so on…..
Fingers crossed Europe follows through on their plans and the local US politiking does not derail what could be the beginnings of a real recovery.
Monday, November 28th, 2011
 Posted by Leonard Steinberg on November 28th, 2011
Retail insanity was the order of the day starting mere seconds after the turkey and stuffing had been digested. Reports of fist fights, pepper spraying, gun-shots, etc highlighted American’s intense desire for a bargain. Retail sales were up over 8% over last year, setting new records. These are my questions:
1) Were Americans more desperate to buy the bargains this year because for many the economy is so bad they cannot afford anything less than a bargain?
2) With over 100 million Americans out shopping, maybe those isolated incidents of violence were actually low compared to a normal day, inspiring the press to make it a story as it provides great imagery?
3) Is this a sign of a retail/economic recovery? The US economy is mostly based on consumption that has remained pretty stagnant during the recovery……have American consumers grown tired of the gloom and doom, holding back to the point of a breakdown? Is this a resurgence of consumer confidence? Remember US consumers increased their savings rate from 0% in 2008 to about 5% in recent years….that’s quite a bit of money saved waiting on the sidelines…..earning next to nothing in saving’s accounts, and shrinking in value in the equity markets.
4) Is this a flight towards hard, tangible assets, steering away from cash? Many of the wealthy have been buying Manhattan real estate (as witnesed by the Luxuryloft team)and gold for this exact reason.
5) Have Americans come to the conclusion that yes, Kim Kardashian is actually right: it’s all about STUFF, not that other stuff no-one can see and covet?
6) If sales were up over 8%, did buyers actually buy more, or did the merchandise simply cost more because of …….inflation?
Tuesday, November 22nd, 2011
 Posted by Leonard Steinberg on November 22nd, 2011
The news is out: Wall Street is shrinking with more than 200,000 jobs lost in the global financial-services industry this year, eclipsing 174,000 in 2009, according to a report by Max Abelson of Bloomberg. (That’s a lot of potential real estate buyers and renters). Wall Street rebounded from the financial crisis of 2008 with the help of unprecedented government support, including loans from the U.S, but this is very different and may indicate a structural change in the banking industry: with higher capital requirements, the failure of exotic financial products and diminished proprietary trading, the industry may just be undergoing a significant paradigm shift.
Banks, insurers and asset managers in Western Europe have been hardest hit, announcing about 105,000 lay-offs this year, 66 percent more than the region’s losses in 2008 at the depths of the financial crisis. The 50,000 job cuts in North America this year are more than twice last year’s yet less than a third of the 175,000 in 2008. Will this affect the New York luxury real estate market?
I hear repeatedly a very depressed tone on Wall Street: there is tremendous anger at those angry at Wall Street, a true amazement how the world sees Wall Streeters as the only culprits in the financial meltdown, when obviously there is a lot of blame to go around. A common theme is the anger against new regulation: one has to wonder how effective this regulation will be when John Corzine spoke so eloquently 3 years ago about the need for regulation, and then just a few months later revealed his MF GLOBAL was leveraged at 40 : 1 …..as opposed to Lehman’s 32 : 1……
The culture on Wall Street has been a breeding ground for excessive greed in the past few years: the intense demands on bankers and corporations to produce acute profits and better-than-forecast results EVERY SINGLE quarter is obviously not sustainable. And bankers are not alone in the blame for this greed: all of us who own stocks, including pension funds and those receiving escalating benefits, were used to never-ending stock price escalations, huge profits, etc. It is the perfect example of extremism. And the press thrives on extremism: its always a much more colorful story, right?
Extremism has failed the banking industry. Extremism has failed entitlement programs. Extremism is failing our political system on the left and the right. Extremism in home pricing helped topple the economy. The problem with extremism is that it is not grounded in reality. Extreme appraisals resulted in over-valued real estate and extreme pricing escalations. Extremism on the left and the right killed the super-committee’s ability to formulate a simple plan for debt reduction. Extremism produces news that is sensationalist, not substantial. Extremism of labor unions produces jobs……outside of the USA. Extremism in technology replaces the need for human jobs.
As we watch the year come to a close, what will be interesting to see is whether those fired were fired to maintain the quality of income for those remaining. Is 2011 the year where we all become aware of extremism in all areas of life and decide its not working?
Saturday, November 19th, 2011
 Posted by Leonard Steinberg on November 19, 2011
Republican presidential candidate Newt Gingrich, certainly one of the most eloquent, informed and intelligent of all the Republican candidates, is now embroiled in a rather major embarrassment: After consistently and repeatedly blaming Freddie Mac and Fannie Mae for the Housing Bust that still wreaks havoc on our economy, it has been revealed that he and his firm acted as an advisor to both entities, raking in fees estimated to be somewhere between $ 1,5 and 1,8million. Oops!
Before Gingrich was hired, Freddie Mac paid $2 million to a Republican consulting firm in the hopes of killing legislation that would have regulated and
trimmed both companies. The legislation died without coming to a vote in the Senate. But the danger of regulation wasn’t dead, so Freddie Mac hired more consultants, Gingrich among them. Fannie Mae and Freddie Mac had traditionally purchased a small number of subprime mortgage loans, which involved borrowers with credit problems who could not qualify for cheaper prime loans. But starting in the late 1990s many firms started purchasing subprime loans, and Fannie and Freddie followed suit.
Some argue that it wasn’t Fannie’s and Freddie’s fault that a bubble formed around mortgage values, then burst; some even argue that it wasn’t the banks’ fault either…..although that is extremely hard to believe. Many lay the biggest blame on the U.S. Congress, both sides of the aisle, that pressured these and other institutions to make credit easily available to anybody for purposes of purchasing a home, regardless of actual credit worthiness. This availability of absurdly easy credit inflated markets and property values to bubble proportions, indebted a large proportion of American households beyond their capacity to ever recover, and set the stage for the inevitable explosion. It also allowed the politicians to claim to their constituencies that they were actually doing something besides collecting a paycheck, and thereby increased their chances of re-election.
It is not and never was the legitimate role of government to manipulate credit markets to increase home ownership levels. I will however say that the blame for the housing crisis is shared by many: Freddie Mac, Fannie Mae, the US Congress (all of them!), the banks that encouraged loans to highly unqualified buyers, the banks that made loans that were designed to make buyers default by excessive rising interest rates, the bankers that sold loans knowing they were junk and betting against them then, the Federal reserve, presidents Clinton, Bush and Obama, mortgage brokers for forcing up the purchasing power of buyers, appraisers for over-valueing properties artificially, real estate brokers for encouraging buyers to over-extend themselves, buyers who speculated, buyers who used their homes as ATM machines drawing funds from their home equity for vacations and Ferrari’s, buyers who knew they could not afford what they were buying but bet they would earn more in a few years, our education system (and parents)for not educating people to be more responsible with their money…..the list goes on. And now back to Newt….
Mr. Gingrich, for someone as intelligent and informed as you are, it is simply not believeable that you were unaware of what you were doing as part of this meltdown, and worse, it’s really hypocritical of you to lambast all the other guilty parties while not admitting your share of the blame. Unlike some of your couterparts, we simply don’t believe the facts are twirling around in your head…..you are smart, and have an outstanding memory. The US voters don’t (which could work to your benefit considering Conservatism does not only apply to fiscal policy).
During the 2008 campaign, Gingrich suggested in a Fox News interview that presidential candidate Obama should return contributions he had received from executives of Fannie and Freddie……that was good advice then, and its good advice now. Just come clean: admit you thrived off this dirty ‘system’ too and repent. The truth may set you free and maybe you can inspire all other guilty parties, and there are many, to do the same. Lord knows the world has forgiven you of a host of worse sins, although self righteousness is way up there.
Thursday, October 20th, 2011
Posted on October 20th, 2011
Senators Charles Schumer of New York and Mike Lee of Utah are proposing a Bill that would provide foreign buyers a residence visa if they buy a US home worth $ 500,000.00 or more. Now that’s a REAL incentive for foreign buyers! I think this is a brilliant idea, and could be exceptionally valuable to the New York real estate market.
I also think anything to encourage foreign investment is a good thing, and this seems practical and good for all. For those who will gripe that this is unfair, allowing the wealthy an unfair advantage in the immigration game, they should consider the following:
1) Foreign buyers bringing foreign currency to the country helps the economy…that helps all.
2) Selling off real estate to new buyers promotes the need for more inventory……building….that fuels US construction jobs.
3) With New York’s average pricing above $ 500k and the City being the biggest draw for foreigners, we could benefit the most compard to other US cities. It will also help Miami considerably, and lets face it Florida’s housing market needs all th help it can get!
4) Every time a $ 500k real estate sale occurs in Manhattan, taxes of about $ 9,000.00 are collected for the City and State….that benefits all.
5) If the apartments require painting, renovation, management, etc…..that creates jobs too.
6) Foreign buyers buying property here will visit more frequently, spending on US soil at retail stores, restaurants, theatre, etc. The US economy suffers most from lack of demand right now. This can only help.
7) Wealthy buyers who can afford a property in a foreign country for over $ 500k may also want to invest more in the USA. And New York.
For foreigners, getting this VISA will mean an easier time with financing, as well as a good reason to bring their currencies to the US.
Now comes the bigger question: Is the USA still so highly desired by foreigners? The answer in my opinion is a resounding YES. I remember driving in a cab in London at the time the US invaded Iraq and the world fell seethed with anger towards us and the cab driver said that with all the anger towards the US, every day as he did his rounds, it was only the US embassy that had long lines outside with crowds waiting their turn to get into the Great American Dream. Right now we are being swayed by the political and media forces to believe its all gone and lost forever, but I believe they are simply wrong.
Thursday, October 6th, 2011
 Posted by Leonard Steinberg on October 6, 2011
With Steve Job’s passing, certainly one of the greatest losses of 2011, it may be a good time to look at his company as a case study for the future of other companies in the USA. I write this on a MAC, own an I-pad, I-pod and love them all. These inventions have revolutionized our lives and have especially made life as a real estate broker better. Does the answer to the USA’s horrible unemployment rate lie in the name Steve Jobs?
Lets be blunt about Apple’s success, a huge success, and one of America’s greatest: Genius product is designed in the United States….The company employs about 35,000 people in the USA. Most of its products are manufactured (cheaply) in China. About 300,000 jobs are in China. Yes, 35,000 in the USA, 300,000 in China. The super-low cost of production translates to a super-profitable company. Apple sits on $ 76 billion in cash reserves. The questions we should be asking now are:
1) If Apple manufactured its products in the USA, would it be the success it is to-day?
2) If Apple had half its cash reserves because it sacrificed some of its profits to produce some of its goods domestically would these employed Americans have the capacity to consume more (thereby creating more consumers for Apple products….and real estate!) and maybe lifting Apple’s sales (and profits) pretty close to where they are to-day?
3)Would Apple be the success it is to-day if its profits were lower? Would Wall Street have abandoned the company?
4) Why does Apple not pay a dividend to its shareholders?
5) $ 76 billion would pay for over 300,000 US jobs paying $ 50,000/year for five years. Those 300,000 jobs in China do not result in many Apple product consumers as they are mostly low paying jobs. Which jobs would serve Apple AND the USA best?
My big picture question about Apple is the same question I ask about many other highly successful US companies that manufacture most of their goods in China: Had we kept most of these jobs in the USA, would the additional manufacturing costs with reduced profits have produced less of a return than a much lower unemployment rate with a much healthier and stronger (consuming) middle class that may indeed have compensated for the loss in profits by being in a position to spend more?
The lesson from Apple is that it, like many other companies, have indeed been creating hundreds of thousands of jobs, but not in the USA. These jobs were shipped off to China to boost profits. It has worked. The only problem is it has left some companies super-profitable, and their owners super-rich, but it has left the US economy in deep trouble. What has happened is the same as what happened to the small retailer: Large retailers with huge buying power buying directly from manufactures, could cut pricing dramatically while retaining profitability…..thereby driving small retailers out of business. Think of the middle class as a small retailer. The sooner we resolve the unemployment crisis, the sooner foreclosure sales will slow and Americans will be in a better position to own a home…..and start consuming without government assistance. The more people are earning, the more taxes are collected…..is it time for some trickle up economics?
There has to be a happy compromise somewhere. But it will require some honesty.
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.
Saturday, July 23rd, 2011
Posted by Leonard Steinberg on July 23rd, 2011
Are we all too quick to pass judgement without taking a long hard look in the mirror?
This week saw two amazing instances of mass judgement: Firstly, everyone everywhere, especially in the press, voiced their OUTRAGE at Rupert Murdoch and his organization’s hacking misdeeds….of course, NONE of these organizations passing judgement have participated in any form of ‘questionable practices’ to obtain their stories, and of course NONE of the people who read (and often believe the trash) these newspapers are in any way complicit by having supported these papers for so long by buying and reading them….hmmmm…..
Last night fair and balanced FOX’s Bill O’ Reilly highlighted what most people were thinking: that the Norwegian extremist who killed dozens yesterday in Oslo was a Muslim or Muslim sympathizer. Bill automatically assumed something as heinous as this crime against society could only be perpetrated by a Muslim. Well, he was wrong, and so were many (most?)of us who assumed the same thing. We had all forgotten the Oklahoma bombing. We had all forgotten just how violent all religious fanatics are, or have been, throughout history. Hopefully this horrible incident reminds us all that we as a society need to fight off all extremists, on the left and on the right: Muslim, Christian, Jewish, Aetheist, whatever. Extremists are the cancer of our planet.
Here are some other ironic, often stupid, examples I have been pondering of our natural leaning towards passing judgement on others:
The LEFT is keen on raising taxes on the rich. They have classified the rich as those earning above $ 250,000.00 without any regard of where they live and the cost of living in that city. Wait till these same judges see the effects of these “rich people” losing their mortgage tax deduction which looks like it will either be removed or sharply reduced.
The RIGHT runs on fiscal conservatism, yet operates like the most disfunctional corporation on the planet: Would a good CEO only focus on cutting costs without raising income? Would any smart CEO continue to allow some corporations to benefit by huge tax breaks that don’t need them? If the right was so outraged about the ‘bailing out of Wall Street’, why are they not as concerned about the add-huge-profits-to-the-bottom-line for the most profitable companies on the planet such as EXXON and GE?
On GOOD MORNING AMERICA on Wednesday, a segment showcased twins wearing very similar outfits, one inexpensive, and the other the ‘designer’, expenisve version….we had to guess which was which…..everyone cheered loudly for the inexpensive version: why would anyone not want those $ 30 jeans? …..the ones made in China…..the ones that took a job away from an American….the profit from those jeans will stay outside of the US so they will not get taxed….the tax dollars that may have helped pay down our debt….
New York liberals complain bitterly about the rising costs of renting in the City. These are often the same people that demand more benefits from the City and State, earlier retirement ages, etc. So real estate taxes are raised to pay for these benefits on those who own the real estate…. who are then compelled to raise the rents. How DARE they?
Christian Conservatives are outraged by abortion (and often any form of birth control)…..yet they seem quite comfortable with wars. Who chooses what life is precious and what life is not? These same Christian conservatives know well that once you ban abortions, the least educated, poorest will produce even more welfare recipients……the benefits the Christian conservatives want to cut the most…..
Many Sellers who earn millions of dollars each year are outraged by brokers fees. Why can’t brokers work for free?
Condominiums pride themselves at being the ‘un-co-op’, the sane alternative to revelaing your life to your neighbors, yet now demand disclosure from buyers on a very similar level to that of the craziest co-op boards.
New York City cyclists DEMANDED respect from the awful car-driving masses, so they were given miles of biker lanes…..have you noticed how many of them (the vast majority?) disobey any form of the law? Running lights, going up streets the wrong way…..and avoiding the bike lanes?
Last week all applauded (myself included)the new computer-system to control mid-town traffic in New York. That computer will replace the need for several low skilled workers with a few high-skilled workers, thus eliminating more jobs. Yes, technology is wonderful, but it does eliminate jobs. And if we do not educate the unemployed to thrive in the new high-tech world, they will remain unemployed…..and cost the States and Federal governement lots….and they won’t produce any tax revenues….and they won’t be in a position to consume in the same manner as if they were employed. Thankfully Mayor Bloomberg announced in the same week plans for bidding on a new high-tech college campus: We need more Bloomberg’s in government. Smart. (not perfect either, who is?)
And lasty, the poor consumer. For the last two years everyone has been deriding them for their irresposible, evil and wreckless spending habits, charging up those credit cards (that benefit the bankers and all their shareholders most with those crazy interest rates), getting mortgages they could not afford on homes they did not need, spending out of control, landing us in the GREAT RECESSION. Now those same fiscal conservatives are stunned by the slow growth in GDP, realizing (what a shock!) that the USA’s economy is driven by the consumer….who is being so much more responsible now…..but it is their fault the economy is not growing, because they are not spending as extravegantly.
My verdict: we are all guilty. There is only one way to clean up the mess, and that is to start in our own back yards.
Wednesday, June 29th, 2011
Posted by Leonard Steinberg on June 29th, 2011
Some banks are being like governments right now: stupid. When banks do not want to lend to highly qualified, super-reliable, well educated, credit worthy clients, we should conclude that we have a MAJOR problem. When these same banks make everything in the application process so difficult, cumbersome, illogical and painful, they cease being real banks in my opinion.
When banks willfully hire inept appraisors that appraise property stupidly (without a detailed understanding of the market, often citing comparable sales that have little or no bearing on the property at hand) we all lose. The economy loses. The taxpayer loses. Governments lose. Job growth stalls. The process grinds. Transfer tax revenue slows. Income tax revenue slows. Home improvement and renovation stalls. The list goes on.
Another bank stupidity: Why would banks wait endlessly (in the hopes of a default that would lead to foreclosure?)and not renegotiate the rate of a loan to make the monthly payment manageable for a property owner experiencing difficulty?
When you hear about some banks reliance on excessive punitive fees to create the bulk of their profits, one cannot be surprised at their inability to create smart profits through real banking practices.
Obviously this stupidity does not apply to all banks: there are exceptions. One has to hope that banks that are acting prudently now destroy those banks that are not and rid our society of this dirty, stupid element of society.
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Herve Senequier 
Mike 
There are no apparent rewards for me to being crushed, elbowed, and abused by desperate shoppers clawing their way through doors for not so rare and elusive gift items. I will spend my Thanksgiving weekends enjoying the beauty of our area and quality time with my family and friends!