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Thursday, October 9, 2008

Terrace envy at the Chelsea Stratus

click floor plan to enlarge

for rentWho wouldn't covet this brand new apartment with outdoor space that's bigger on its own than a large one bedroom apartment! This is a one of a kind, two bedroom at the new Chelsea Stratus. It's got an absolutely stunning, private, 844 square foot terrace. A brand new 1272 square foot, two bedroom, two bath apartment, with extra tall ceilings, floor to ceiling glass windows— feels like a downtown penthouse loft, but with all the amenities of a white glove, concierge building. You'll have access to the residents' health club and there is private storage included in the deal. You will be the first person to live here, in this newly developed (2008), full service building.


Monday, October 6, 2008

Corcoran's Manhattan Real Estate report shows price increases, but a more challenging market ahead

have we seen a peak in the manhattan real estate market?
download the latest corcoran report on the Manhattan real estate marketcorcoran reportIt's the question on peoples' minds as the current economic climate puts Wall Street in the national spotlight and the global economy lacks confidence that things will improve quickly. Interestingly enough, the third quarter Corcoran Report on the Manhattan Real Estate Market shows that the overall median price of Manhattan apartments are up 10% since a year ago. Manhattan real estate continued to out perform the national housing and capital markets. Yet, the report also tells us about rising inventory and slowing property sales, giving us important information to adjust buying and selling strategies to meet what clearly seems to be a changing economic landscape. The report looks at new developments and re-sale as different categories, which gives it a bit more clarity about the state of the market in different parts of town. New developments may have gone to contract over a year or more ago and reflect a market which existed then. These were 43% of total sales volume in the quarter; whereas re-sale prices reflect transactions that have sold and closed in a much shorter time frame. Re-sales provide a more accurate picture of current activity. The full picture is broken down by East Side, West Side, Uptown, Downtown, Lofts, Townhouse, and Luxury sub-markets. property shark interactive map of Manhattan salesThe report was once again published in collaboration with using the most accurate data set available. They have published a great interactive map plotting Manhattan sales by location, volume and price per square foot. Download your copy of the third quarter 2008 Corcoran Report here, and read on for my take on how to best use this data.
prices hold steady, sales are fewer
In the third quarter of 2008 the city's overall market held steady on prices. It did so with a significant dip in the number of transactions; down by a third from a year earlier. The sales which took place were generally at higher price points in both re-sale and new developments. Manhattan apartments reached an average sale price of $1.45M, a median price of $975K, and a price per square foot of $1,180; all substantially up. When taking the new developments out of the third quarter metrics, it shows that individual homeowners, hiring agents like me to represent their properties, did very well— with an average selling price of climbing to $1.394M, and the price per square foot rising to $1,152. The median price for re-sales was flat at $850K.

click any chart to enlarge

all sales (re-sales + new developments) market wide

re-sales only, market wide

housing inventory rises, economic uncertainty slows the market
The news in this report is not really the fact that Manhattan has continued to outperform the national housing market, but that the marketplace is less active. It's not really all that surprising considering the economic news. Many people have decided to wait on the sidelines to see what will happen next. It also takes a larger down payment to buy an apartment today due to tighter credit standards, 20% to 25% down is again the norm. This affects the co-op resale market a lot less since that standard has always been required. Co-op board oversight is one reason why the types of exotic, no documentation, mortgages which have gotten other parts of the country into trouble, are non-existent in the vast majority of Manhattan transactions.

In the charts below we see that sales activity has slowed down steadily since last year, and that apartment inventory is on the rise. Appraiser Jonathan Miller was quoted in the Wall Street Journal as saying that it's a "roughly 8 month supply". So moving forward, we will be seeing a smaller pool of buyers chasing a better selection of apartments.

click any chart to enlarge

manhattan absorption vs. new & total listings

five year trend of sales activity (number of sales)

Sales activity dropped off in the third quarter and inventory has built up to an eight year high. It increased 26% in Q3 2008 ending the quarter above 10,000 units of housing for sale. As mentioned above, this has not yet put downward pressure on prices, but it is clear that serious sellers need to price properly and bring on effective broker representation. There will be few winners in this sort of sales environment where every opportunity is not fully vetted, and creative marketing counts more than ever.

It is notable that unlike other national housing markets, Manhattan has a limited supply of land. Housing is expensive and complex to develop. The pipeline of new developments we've seen coming to market, have a couple of significant valves closing to restrict supply. First the credit crisis itself has slowed the pace of development since October 2007. Fewer projects have been started. Second, the amending of the 421 Tax Abatement program earlier this year has given developers less of an incentive to start new projects in prime areas of Manhattan. Sellers who do not need to sell, will take their homes off the market until the confidence in the economy comes back. So far asking prices are dropping past people's expectations, but in most cases not the most recent comparable sales. While I do see short term rising of supply, I would suggest that market forces are already working to restrict supply just a little further out.

so it's a buyers market?

Well not exactly, the Q3 numbers don't say that, but it would be fair to say that it is trending that way. It is the best opportunity in a few years for buyers to negotiate a great deal on a home. I remember people saying to me just a couple of years ago that there was hardly anything on the market that they wanted. Well they have a good selection now, and I've noticed that people are not shy about making offers below asking prices anymore. Inevitably, buyers and sellers will have different opinions as to value, and my recent experience is that buyers are cautious and trying to price in a safety net for themselves. While understandable, it is important to offer in a realistic range. Everyone thinks that they are overpaying when they buy, and getting too little when they sell— its human nature. It may be that an unprecedented global economic crisis will start to put downward pressure on prices in NYC; but the smart buyer will use this as an opportunity to actually secure a property at a good price, rather than talk themselves into inaction. We have a crisis in confidence right now that is largely perception, we polled consumer sentiment recently and found that 66% of the respondents thought that short term, the Manhattan market would be down; not surprising during a week in which the biggest financial crisis in recent memory was unfolding. Confidence is highly malleable. I think that the landscape fundamentally changes after the U.S. elections on November 4th; and whoever gets in, it will be an improvement over the current administration, and a begin a swing toward more certainty and optimism moving forward. It might seem counter intuitive to some, but I'd be out there looking right now.
how should a seller respond to the changing market?

You might be a seller with a truly unique home— a fabulous one of a kind penthouse with panoramic views, or a historic brownstone restored to mint condition— but if the scarcity of your product is not what makes it special, then you are going to need to compete on price. Sellers need to shake up the inertia in the market and get interest moving. Serious buyers will respond to a price that buyers will see as "attractive" and want to deal with a seller they regard as realistic. You will get offers when there is a perception of fair value. Sellers are competing with more, similar homes, on the market. Make sure that you price yours to stand out from the crowd. There is definitely buyer demand; but it is taking a greater effort from sellers to tap into it.

Look at the truly comparable sold and closed data and use that as your benchmark, not what people are asking. Get ahead of the curve, you'd be better off coming in a bit lower than your competition. Set a very fair price that will get a deal done quickly. I don't see the market conditions improving drastically in the next six months, so seize the moment, and get your property out in front of the crowd. Capture the attention of buyers now before they buy your neighbor's property.

download the third quarter 2008 corcoran report »

Thursday, October 2, 2008

Who are the key advisors in buying a Manhattan home?

buying a manahattan co-op or condoThis week real estate Attorney Keith Schuman talks about the core team that you'll need to accomplish your purchase of a Manhattan condo, co-op or townhouse. He lists them in pretty much the order in which they will be involved in the process. My customers often ask me for referrals to mortgage and legal professionals, and I usually provide two or three candidates for them to interview (Keith is often on the list). Asking friends and family is a good way to go too. With respect to legal counsel, make sure that real estate in New York City specifically, is the main focus of their practice, not an occasional sideline. The transactions are extremely complex and different than those in New Jersey or even just north of Manhattan, especially when a cooperative unit is involved. A missing piece of paperwork could cause a closing to be adjourned, creating ripples of problems that would be best avoided. I might add that you will likely rely on the advice of your accountant and other financial professionals, as you evaluate the tax benefits of your purchase of a home.

Successfully placed in contract is 9 West 19th Street
an $8.4 Million loft building in Chelsea/Flatiron

Getting started— key personnel
To begin, you should assemble a team of real estate professionals that includes a real estate broker, a mortgage broker, and a real estate attorney. As with most teams, the stronger the individual players, the more successful you will be in achieving your goal. So choose the individuals who will make up your winning team carefully and thoughtfully.
Real Estate Broker
To find an effective real estate broker who can steer you through the complex maze of home buying, get referrals from neighbors, friends, and colleagues (including your lawyer or financial advisor). You should look for someone with whom you feel comfortable, not anxious and pressured. The broker should specialize in neighborhoods where you want to live, return calls promptly, answer questions readily, and inform you about new listings. Not only will your real estate broker be your conduit to available properties and your aide in negotiation, he or she also will coordinate the activities of the other team members, such as the home inspector and the real estate attorney. By doing your homework to find an experienced broker, you will have someone in your corner that can assist you at almost every step of the transaction— particularly with the selection and comparison of properties and the negotiation of the purchase price or with the preparation of your board package when purchasing a coop or condo apartment. Best of all, there is no cost to you since the brokerage commission is paid by the seller.
Mortgage Broker
To obtain a home loan, most purchasers enlist the help of a mortgage broker rather than going to a bank. There are many advantages to using a mortgage broker rather than applying directly to a bank for a loan. In addition to processing your loan application, the mortgage broker will evaluate your financial situation, pre-qualify you for the loan amount that you can afford, and calculate your monthly loan payments. Mortgage brokers are not lenders (although in some instances, they can act as the lender), rather they arrange and negotiate the conditions and terms of loans from lenders on your behalf. Your satisfaction in the process of buying a home may greatly depend on your relationship with, and the competency of your mortgage broker. If the application, processing and underwriting go smoothly, it can be a simple process. If you encounter problems with your loan, it can turn into a stressful nightmare. A mortgage broker will provide you with a choice of loan programs offered by different banks on a competitive basis. In fact, a mortgage broker can simultaneously submit a loan application to several lenders with only one application fee. This greatly improves the likelihood that you will find the best rate and terms available in the marketplace. Many purchasers have found that going directly to their bank, even if they have a long-standing banking relationship, affords them no better terms and conditions than those offered by a mortgage broker. In addition, a mortgage broker will assist you in preparing and submitting a loan application to a lender (generally more quickly than if you were to apply directly to a bank) and will explain all aspects of the loan process. The mortgage broker’s service is free to the purchaser since the mortgage broker’s fee is paid by the bank lending the funds.
Real Estate Attorney
You should always retain the services of a real estate attorney who is licensed to practice in the State of New York and is experienced in representing home buyers. You need a lawyer because there are inherent conflicts of interest between purchasers and sellers. Once a contract is signed, the rights and obligations of the parties are fixed. The time to consult with an attorney is before you sign any papers.

Prior to signing a contract to purchase a home, your lawyer will perform a due diligence review of the underlying documents relating to the home. For a house purchase, your lawyer will examine the deed, the seller’s title insurance policy and survey (if available), the certificate of occupancy, and any documents that may be recorded against the property, such as easements and restrictive covenants. For a condo purchase, your lawyer will examine the offering plan and amendments, the bylaws, the rules and regulations of the building (sometimes called the house rules) regarding pets, guests, alterations, repairs, noise, nuisance, sublet policies and home occupations, the board’s meeting minutes, and the financial statements of the condominium for at least the last two years. For coops, your lawyer will review the proprietary lease as well as the same documents previously mentioned. Only a thorough investigation and analysis of a house’s underlying documents or a coop’s or condominium’s physical and financial status and history (e.g., number of owner-residents, number of investment apartments, assessments history, construction and repair and major capital improvements, underlying mortgage, lawsuits) will identify any serious problems with the building.

The real estate sales process

Once a seller has accepted your offer to purchase, the seller’s attorney will prepare a contract and send it to your attorney. Your attorney will review the contract with you, explain the conditions and terms contained in the agreement, and give you an estimate of the closing costs. Most attorneys will negotiate with the seller’s attorney to include an additional rider to the contract containing terms that further protect your interests in connection with the purchase. Once all of the terms of the contract are agreed to, you and the seller will sign the contract. Your attorney should send a copy of the signed contract to your mortgage broker who needs the document to process your loan application. After you receive a commitment from a lender to make a loan to you (the loan commitment letter), your attorney will review its terms and will explain any conditions contained in the commitment letter. Your attorney also will order a title report (for a condo or house purchase) or a lien search (for a coop purchase) after the contract is signed in order to examine the title to the property and to ensure that any liens or encumbrances against the property are removed at, or prior to, closing. If you are purchasing a house, your attorney will schedule the closing as soon as all title conditions have been cleared and you have obtained clearance from your lender to close the loan. If you are purchasing a coop or a condo unit, you also will have to wait until you have obtained approval of your purchase application from the coop corporation or condominium board. As soon as all the necessary approvals have been obtained, your attorney can schedule the closing with the seller’s attorney, the lender’s attorney, and the building’s managing agent. Your attorney will prepare a preliminary closing statement containing a breakdown of checks required for the closing and will attend the closing with you to explain all loan and closing documents that you will be required to sign. After the closing, your attorney will provide you with a final closing statement and copies of all documents that you signed at the closing.

About the author: Keith A. Schuman, Esq. is the founder of Schuman & Associates, LLC, a full service real estate firm that provides legal services to its clients, through all aspects of their transactions. Keith is a frequent contributor to Contact him at or phone 212.490.0100.

related posts:
tips on shopping for a home
What are the actual differences between townhouses, coops, condos and cond-ops?
What are the income tax benefits of owning a home
When should I buy a home?

Friday, September 26, 2008

New exclusive at the Cielo


for saleI'm pleased to announce this new exclusive at the Cielo, which is an outstanding value in a recently developed (delivered in 2006), full-service, Upper East Side, condominium. This apartment is the best two bedroom layout in the building, with open views to the south and east. Its a amply sized two bedroom apartment, with floor to ceiling glass walls and 10 foot ceilings that make it feel even larger. This has the best luxury features including a chef's kitchen and two beautifully designed baths which are en-suite to the bedrooms, plus a powder room for guests. It is steps away from the East Riverfront's Carl Schurz Park, and a short stroll to Central Park. Building features include a gracious reception area with concierge, resident's health club and a kid's play room. Its pet friendly, with on-site parking available too.

» see the complete listing info
» download a fact sheet

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