The Big Apple: Rents up, condo owners sinking

Luxury markets pulls up Q2 average price, though volume declines

Overall sales volume of condominiums and cooperative apartments in Manhattan has been off about 11 percent so far in the second quarter compared with same period last year, according to a Wall Street Journal analysis of the city’s data.

A year ago, the market was bouncing back strongly from the after-effects of the financial crisis.

Prices have remained flat. Data on closings show that median prices in the second quarter were 1.2 percent below prices during the year-earlier period, while average prices rose by 1.5 percent.

The average price for a Manhattan apartment was about $1.39 million in the latest period. The figures are based on closings filed with the city as of 15 days before the end of each quarter.

Russians are invading the East End of Long Island

High-flying Russian money men are abandoning the splashy French Riviera and sizzling Mediterranean shores for the East End — at prices that blow most local fat cats out of the water.

They’re tired of their usual hotspots, several brokers to the Russians told the New York Post, and they’ve all targeted the Hamptons and Montauk as the newly chic summer getaways.

Hey, folks, how about an apartment as my graduation present?

Parents increasingly have been shopping for apartments for their grown children, hoping to take advantage of low mortgage rates and apartment prices that are still about 20 percent down from the market’s peak.

In many cases, brokers say, the parents do not live in the New York area and view the apartment as a potential pied-à-terre for themselves when their offspring decide to move on.

Some buy it as a straight-out gift, a gesture of profound affection sweetened by the current generous tax exclusion. Others buy it as an investment and retain ownership, and still others acquire it through a family trust for joint ownership.

These purchases raise a number of financial and estate planning questions, and lawyers and building managers advise parents to structure the arrangement carefully.

Surprisingly, lawyers with political connections get foreclosure assignments

The foreclosure crisis has caused a surge in the number of court-appointed receivers for distressed properties in New York, and the New York Times says that politically connected lawyers are benefiting.

Yet even as the fees mount, totaling millions of dollars, it remains unclear why judges are selecting some of these lawyers and whether the fees are being well spent.

May rents continue to increase in Manhattan, up 6 percent in a year

Rents are up in many Manhattan neighborhoods, according to the MNS monthly report, and prices are showing strong gains this month.

Month-to-month changes show increases of 1.82 percent overall — 2.10 percent in doorman units and 1.54 percent in non-doorman units. Rents are 6 percent higher than they were in May of last year.

Broklyn real estate lawyer gets 46 months for mortgage fraud

A former Brooklyn-based real estate lawyer and owner of a title insurance firm has been sentenced to 46 months in prison on his conviction for taking part in a multi-million-dollar mortgage fraud scheme, the U.S. Attorney’s office announced.

Alexander Kaplan and 26 co-conspirators, most of whom pleaded guilty, defrauded lenders by simultaneously representing banks, buyers and sellers in transactions.

Kaplan’s main involvement was with the purchase of 10 rent-regulated condominium apartments at 243 West 98th St.

City’s employment is steady in May

New York City had almost no job growth in May, according to a revised monthly employment report released by Eastern Consolidated. The revised gain for May was 10,200 jobs, putting the year-to-date gain at 42,300, up from 38,900 jobs a month earlier.

In the last 20 months, New York City has added 75,100 jobs, keeping employment 1.7 percent below its August 2008 peak.

Manhattan homeowners, except co-op residents, are deeper underwater than other counties in the tri-state region

Owners of Manhattan condominiums and single-family homes have the largest average amount of negative equity in the metropolitan area, $1.35 million, according to CoreLogic.

The numbers don’t include co-ops, which are more widespread in Manhattan and typically are far less underwater than condos.

The Manhattan number is strikingly high, CoreLogic says, because in addition to high condo prices during the boom and fairly steep price declines during the crash, many New Yorkers loaded up on debt by taking out second mortgages. The state has the highest average number of mortgages per property, at 1.47, of any state in the country.

The Manhattan number also may be skewed by a small number of very high-end properties that lost millions of dollars in value.

“Generally speaking, if you’re upside down, the higher the value of the geography, the deeper underwater you are,” Sam Khater, an economist with CoreLogic, told the Wall Street Journal. “When someone’s upside down, they’re upside down by a lot—they tended to over-leverage.”

Condo makes deadbeat resident climb stairs, ridicules him in wall poster

A SoHo condo board has not only severely restricted the elevator privileges of a high-profile penthouse owner who owes more than $125,000 in common charges, it also apparently upped the ante by hanging the equivalent of a Wanted poster in the lobby.

Condo board attorney Robert Braverman confirms that the board recently erected an 8.5″x11″ framed poster in the lobby of 95 Greene Street bearing a photograph of the unit owner, Ken Nahoum, and his companion wearing superhero outfits at a costume party.

“Why aren’t these ‘caped crusaders’ paying their common charges?” the poster demands.

Terraces generally have made up 10-12 percent of the market

Apartments with terraces have an average sales price that has been roughly $600k more than sales without terraces over the past five years, according to appraisal executive Jonathan Miller, who adds, “Of course this premium includes other amenities that go along with the terrace package.”

The average size of a terrace has hovered around 500 square feet for the past 20 years.

Market share for apartments with terraces generally has been 10-12 percent for the last 15 years, and condo sales with terraces have tended to rise, suggesting that new development activity added more terraces to the housing stock.

Co-ops were inexplicably much more erratic, having sustained a sharp drop in 2011.

Albany lands a soft blow to landlords

For years, the quickest way for landlords to unshackle their apartments from rent regulation has been to renovate units as soon as the tenants moved out, allowing them to raise rents significantly to free-market rates.

Details are still being hammered out, but under a deal reached in Albany this week, landlords soon will have more difficulty using this strategy, potentially saving many apartments from deregulation.

Existing state law allows landlords to increase rents by one-fortieth of the value of the improvements they make to an empty apartment.

So a landlord who spends $20,000 installing a kitchen can raise the rent by $500 before the next tenant moves in. If the increase raises the total above $2,000, that apartment can be removed from rent stabilization.

Tenant advocates have called that provision a loophole.

Lower rent is not the only benefit of a rent-stabilized apartment

The major advantage of stabilized apartments is the protection they offer from sharply rising rents and the guarantee of continuing tenancy in the apartment.

Over time, the rent will become low compared with similar apartments that are not stabilized, assuming that market prices steadily increase, columnist Bruce Feldman writes in BrickUnderground.

The rent in a stabilized unit will go up every year but no more than the Rent Guidelines Board establishes annually as the increase percentage for the coming year (after public hearings are held and votes are taken).

“The best part of stabilization is not so much the stability of the price as the stability of the occupancy,” Feldman contends.

Auction chief says bidders snag bargains more in New York than elsewhere

John J. Cuticelli Jr., 60,  chief executive of Sheldon Good & Co., one of the country’s oldest real estate auction houses, tells the New York Times that his company stages fewer sales in Manhattan than in the outer boroughs and New Jersey because “it’s just not as overbuilt.”

Following residential auctions in Washington Heights and in Queens, an interview with him appeared on this blog earlier this year.

“Nationwide, we’re seeing people buy things at about 65 percent of the former asking price,” Cuticelli told the Times.  “In the New York area it’s closer to 75 to 80 percent.”  Whether it was the original or reduced asking price was not indicated.

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Malcolm Carter
Licensed Associate Real Estate Broker
Senior Vice President
Charles Rutenberg Realty
127 E. 56th Street
New York, NY 10022

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