Prices have fallen significantly, but given the lingering uncertainty in the economy, is now a smart time to buy a second home? asks the New York Times.
A look at some of the second-home markets near New York suggests that it might be a very promising moment. From Columbia County to the Jersey Shore, many properties are selling for significantly below their asking prices (which were already a good 20 percent lower than during the market’s peak) and sellers are accepting low offers — in some cases, very low.
EVEN WITH SLACK PRICES, TAX BILLS CONTINUE TO INFLATE
Through all the turmoil that erased billions of dollars from the value of U.S. homes, owners in New York City are seeing their property tax continue to rise without skipping a beat.
The latest bills sent out by the city in June were an average of 5.8 percent higher than a year earlier for most homeowners, 4.8 percent higher for condo owners and 4.3 percent higher for co-op owners.
INTEREST IN NEW CONDOS IS GROWING
It’s an odd time for new condo development to be making a comeback. The national economy is still in shambles, unemployment is high and getting a mortgage is still no picnic.
And yet, industry experts are reporting unmistakable glimmers of life in New York’s long-suffering new condo market, which has struggled mightily since the financial crisis of 2008 and lagged behind the resale market on the recovery front. Buyers are showing a renewed interest in new developments, brokers say.
Suddenly, units in newly built projects — with prices marked down substantially from the boom — are moving faster than expected.
AND DEVELOPERS ARE PUSHED TO DISCLOSE MORE ACCURATE INFORMATION
These days, buyers of condos in new developments and their lawyers are demanding far more information than they did in the past, often in the form of legally binding clauses in sales contracts.
In the hot old days, new condo buyers struggled to uncover some of the most basic information about their new buildings: How many apartments had been sold? What percentage of units are owner-occupied? What kind of refrigerator will they have?
Now, however, many new buildings are being forced to be more forthright as they find themselves under scrutiny from anxious buyers and their attorneys, websites that track how many units are sold, the attorney general, and even the courts. But the downturn spawned several high-profile lawsuits over whether developers properly disclosed information about their projects.
BUYERS ARE SHOWING LESS RESISTANCE TO TOUGH LENDING STANDARDS
Lawyers, sponsors and brokers have stopped resisting the new, stringent lending standards.
“It appears the industry en masse has grown accustomed to the inconsistent lending environment,” Luigi Rosabianca, the principal attorney of real estate law firm Rosabianca & Associates, told the Real Deal.
“Last year, we were all a bit resistant to what appeared as unreasonable lending underwriting requirements. This year, we are all aware the lunatics have taken over the asylum; thus, we merely acquiesce to their terms for the sake of the client’s prospective loan.”
SOME CO-OPS HAVE BEEN A LITTLE MORE LENIENT ABOUT APPROVING CORPORATE BUYERS
High-end buyers think they’ve found a new way to be discreet. They are asking co-ops to break a long-standing rule and allow them to buy under corporate entities, typically LLCs, to maintain their privacy.
Co-ops don’t love this, and they don’t often allow it, but some do—typically on a case-by-case basis.
Lawyer Stuart Saft says the next best thing is buying through a trust, an option that boards have been more willing to countenance.
QUESTION: WHAT CAN YOU DO IF A CO-OP BOARD DOESN’T ACT ON YOUR APPLICATION?
Answer: not much, according to lawyer Ron Gitter. Says he:
There is nothing the seller or buyer can do to compel the Board to make a decision on an application at a pace faster than the particular Board chooses to adopt. That being said, Paragraph 6.3 of the standard printed portion of the contract does provide the following remedy:
“…If the Corporation has not made a decision on or before the Scheduled Closing Date, the Closing shall be adjourned for 30 business days for the purpose of obtaining such consent. If such consent is not given by such adjourned date, either Party may cancel this Contract by Notice, provided that the Corporation’s consent is not issued before such Notice of cancellation is given…”
Having to wait an additional 30 business days from the scheduled closing date in order to cancel the contract will no doubt seem like an eternity, Gitter adds, saying that “at least there is a way out of the transaction if the board is uncooperative.”
In most cases, however, the Board will finally make a decision before this time period elapses.
A GROUND-LEASE ISSUE CAME WITHIN DAYS OF TURNING SHAREHOLDERS INTO TENANTS
The 132-unit co-op at 150 E. 61st St. on the Upper East Side, one of approximately 100 buildings in the city with a ground lease, came close to becoming a rental building, according to an account in Habitat magazine.
In a saga lasting months, the owner of the land proposed to rain the annual ground rent from $135,000 to $5 million with unspecified increases every 10 years.
Even though a number of lawyers had advised the board of the co-op that it had no legal recourse, but the shareholders prevailed in a game of chicken.
DECLINE IN JULY CONDO SALES WAS THE BIGGEST FOR THE MONTH SINCE 2000
Manhattan’s condominium sales cooled over the summer, backtracking in July from a June surge that was boosted by a tax credit for home buyers.
Condo sales declined 34 percent from the end of June to the end of July, according to Radar Logic’s RPX Index. It was the largest decline for July since Radar Logic began collecting such data in 2000, the firm said.
As sales declined, prices increased by 3 percent from June to July and 5.4 percent from a year earlier to an average of $1,019 per square foot.
FEUDING BROTHERS RESORT TO AUCTION OF TOWNHOUSE OFF ‘GOLD COAST’ IN THE VILLAGE
Behind the stone lintel and bay window of a 19th-century townhouse just off Fifth Avenue in the heart of Greenwich Village, a bitter dispute between two middle-aged brothers has forced the rush sale of the property at auction in a matter of weeks.
The wide Romanesque townhouse at 3 East 10th St., a few blocks away from the Washington Square Arch, was recently listed for nearly $10 million.
Now, the 25-foot wide townhouse, partitioned into medical offices and apartments, is due to be auctioned off on Oct. 21 by Paramount Realty USA with a minimum bid of $3.5 million at a time and place yet to be determined.
The rush auction was scheduled after a recent court order gave Willard Baldwin’s younger brother, Ned, a 52-year-old building inspector in Stockbridge, Mass., control of the property last week, and barred Willard Baldwin from interfering.
“It is a New York tragedy,” said Christopher G. Conway, a lawyer who negotiated a settlement on behalf of Willard Baldwin during the spring, “that such a great building in such a great location that had 120 years of history” had to be disposed of at auction.
But Conway added “the real tragedy” was that “the brothers didn’t have the relation that their father wanted them to have” and the family “has been torn apart for no better reason than money.”
SUPPLY OF RENTAL UNITS PLUNGES IN MANHATTAN, DISCOUNTING DROPS AND PRICE INDICATORS ARE MIXED IN Q3
A third-quarter survey of Manhattan residential rentals by the Miller Samuel appraisal firm finds that the listing discount–the percentage difference between original rental listing price to contract rental price–fell to the lowest level in four years. The change was 1.7 percent, falling to the lowest amount since the third quarter of 2006.
Days on the market fell from 77 days in the second quarter to 38 days, and a surge in new rentals caused inventory to drop by 28.1 percent from the same period in 2009.
The median rental price was unchanged from the previous quarter at $3,000 versus $2,950 one year earlier.
STATE COMPTROLLER FORESEES SLOW RECOVERY
New York State Comptroller Thomas P DiNapoli’s reported that Wall Street’s recent return to profitability led to higher bonuses and higher average compensation in 2009 but that job losses are continuing. The securities industry in New York City lost 4,200 jobs during the first eight months of 2010, bringing the total job loss since January 2008 to 31,300 jobs, a decline of 16.6 percent.
Although employment fell 4.8 percent in New York City between April 2008 and December 2009, it gained 1.9 percent from December to August.
Average compensation at the six largest bank holding companies rose by 12.5 percent in 2009, but weakening profitability in 2010 will slow the growth in compensation, the comptroller’s report said. It continued:
While the securities industry added jobs in New York City in early 2010, job losses have resumed. On a net basis, Wall Street lost 4,200 jobs during the first eight months of 2010 (seasonally adjusted), bringing the loss since January 2008 to 31,300 jobs.
Although overall employment fell 4.8 percent in New York City between April 2008 and December 2009, it gained 1.9 percent from December to August.
THE FIVE BOROUGHS ARE GREENER THAN YOU MAY THINK
Residential yards make up 27 percent of the city’s total area, not counting parks or the greenery found adjacent to sidewalks or on street medians. That finding comes from the work of a group called Sustainable Yards, the founder of which, Evan Mason, used satellite images to tally the yard space in all five boroughs.
DEVELOPERS IN A PANEL DISCUSSION SAY HOUSING’S RECOVERY REMAINS NASCENT
A number of developers said that the real estate industry is still suffering but that there are opportunities in niche areas, as the overall market starts recover.
Licensed Associate Real Estate Broker
Senior Vice President
Charles Rutenberg Realty
127 E. 56th Street
New York, NY 10022
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