Oct 1, 2014

Manhattan Market Report |Third Quarter 2014

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Manhattan registered a solid Third Quarter 2014 performance as strong sales and persistently low inventory continued to drive prices ever-higher. But while price per square foot continues to rise across the market, other market dynamics are starting to shift.

The number of closed sales was the second highest figure seen in over five years. Because only Third Quarter 2013 was higher, Third Quarter 2014 registered a 10% year-over-year drop in sales. The number of sales is highly affected by two trends: limited inventory at low price points and the strength of the new development pre-sale market. Only 6% of closed sales this quarter were new development sponsor sales, a remarkably low market share, as most new developments today are still under construction.

Inventory is rising. Third Quarter 2014 was the third consecutive quarter to see a gain in active listings, the firstsustained, non-seasonal upward trend in inventory since 2008. With 10% more listings available now versus the same time last year, buyers are finally seeing more options on the market. However, the shift in inventory is not consistent, as co-op listings are actually still down 2% year-over-year. It’s condo inventory that’s growing—up 22% year-over-year—driven by new developments entering the market. A rule to remember: a market in equilibrium  has two times the number of available listings as quarterly sales.

Average price per square foot continued to climb, up 12% annually to $1,305 market-wide (condo and co-op, new and resale combined). Average price per square foot has now risen year-over-year for eleven consecutive quarters. Resale price per square foot performed strongly year-over-year with co-ops increasing 12% and resale condos increasing 7%. But new development far outpaced the rest of the market, with a 30% rise year-over year in price per square foot. The new developments closing this quarter tended to be larger residences, in more luxurious buildings and in prime locations.


Pied-A-Terre Tax Proposal

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A new pied-a-terre tax proposal
 
A new tax proposal being evaluated by Mayor de Blasio is a property tax surcharge on pied-a-terre residences valued at more than $5million owned by buyers from across the country and around the world.

The tax of up to 4% a year would apply to all apartments and homes with a current market value of more than $5 million, and would exempt the primary residences of New Yorkers.

People who have a primary residence in the city would still have to pay the higher tax if they own a second home valued at more than $5 million.

The proposal would impose the tax surcharge for homes valued at more than $5 million with a .5% surcharge which would rise gradually to 4% for home values above $25 million.

Though New York must follow complex rules in making regular property assessment, that keeps many tax bills low, the legislation would base the surcharge on an estimate of the current value of each apartment based on comparable sales.

This proposal has strong opposition from the real estate industry and at this point is nothing more than a draft.

Sep 25, 2014

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Sep 15, 2014

Location Affordability by Household Type

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The Citizen’s Budget Commission (CBC) has issued a series of reports comparing New York City’s affordability to that of the 21 largest cities in the country using a concept of “location affordability” developed by the U.S. Department of Housing and Urban Development (HUD). 

Location affordability includes the cost of transportation as well as housing, usually the two largest items in a household’s budget.  According to HUD’s Location Affordability Index (LAI) that measures these two costs, a household paying more than 45 percent of their income for these costs is overburdened. 

The CBC found that the combination of New York City’s high rent and extremely low transportation costs brought it to the third most affordable city of the 22 measured.  The CBC then measured the location affordability of 7 different rental household types in New York City.  The 7 household types were categorized into two groups, moderate-and middle-income households, and low-income households.  

For household types in the moderate- and middle-income group, location costs ranged from 27 to 37 percent of income, which are all below the 45 percent affordability threshold.  This ranks New York in the top 6 most affordable cities for each moderate- and middle-income household type.  

For household types in the low-income group, location costs were much higher, with all three household types exceeding the affordability threshold.  Location costs ranged from 47 percent of income for a “Low-Income Family”, to 101 percent of income for a “Very Low-Income Single Worker”, or a single person earning a wage at the national poverty line. 

Despite these high percentages, New York City still ranks relatively high compared to the other 21 cities in affordability for low-income rental households, with all three household types ranking within the top 6 most affordable.





 source: Mike Slattery, Senior Vice President
 REBNY Research Department



Sep 14, 2014

498 West End Avenue | Rentals to Condos

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498 West End Avenue
498 West End Avenue

A century-old handsome limestone and brick rental building located between West 83rd and West 84th streets on West End Avenuue is converting from rental units to three to five-bedroom condominium residences designed by CetraRuddy.

West 84th Street | Edgar Allen Poe Ct
  
















Approximate asking prices will start around $3 million and go up to more than $10 million. Sales are expected to launch this month. The building is expected to be completed by spring of 2015.

Included in the conversion will be a 4,000-square-foot rooftop addition that the Landmarks Preservation Commission approved. Developer Samson Management acquired the 12-story rental property in 2012 for $52.5 million.

Manhattan New Developments and Conversions 


Sep 12, 2014

New Construction: UWS | 210 West 77th Street

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210 West 77th Street
 210 West 77th Street

An 18 story, 25 unit 1/2 floor and full floor condominium residences are being designed by Thomas Juul-Hansen for developer The Naftali Group.

Units range in price from $4.9 million to $12 million from 2,058 square feet, for 1/2 floor unit to a  4,919-square-foot 5BR/5.5BA "townhouse" duplex with a 1,280-square-foot terrace. 

There will also be a $10 million full-floor 4BR and a $7.05 million half-floor unit on the 10th floor. 

Building amenities will include a 24-hour doorman, roof terrace, fitness center, party room, and bike storage. The kitchen features Miele appliances, Everest Grey quartzite countertops and backsplashes, white lacquer cabinetry, 2 sinks, a separate wine cooler and a vented overhead fan. All units also have Whirlpool washer/dryers and 5" white oak floors.



Sep 11, 2014

"People Fleeing Lower Manhattan Faster than the Titanic"

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 "People fleeing lower Manhattan faster than the Titanic"

Headlines I remember during the fall of 2001. I will always remember that sunny September day 13 years ago, all the innocent lives lost and all the heroes who sacrificed their lives to save others.

Tribute in Lights | Remembering 9/11

I remember getting a call the night before from my friend Richard Hack informing me that his bestseller Hughes: The Private Diaries, Memos and Letters was being released on September 11, and he was being interviewed with Matt Lauer at 8:36 AM tommorow on the Today show. I should watch the interview and meet later for lunch. While he was being interviewed live on the Today show the first plane crashed into the World Trade Center.  I went up to my roof and saw the horrendous horror with my own eyes.

Today there will be videos all over the internet and broadcast and cable networks with images and videos of the former World Trade Center Towers exploding and collapsing. I will not post them here. The images and the smell in the air are still vivid in my memory as if it was yesterday. Instead this post is about New York's Comeback.

I also remember the spirit of the fellowship and unity that brought New York together in the wake of the September 11 attacks. The resilience of all New Yorkers who were determined to come back from this unthinkable event stronger than ever. And we did!

Since September 11, 2001, the number of people living in Lower Manhattan has nearly doubled. In fact, Lower Manhattan has added more people over the past ten years than Atlanta, Dallas and Philadelphia combined.
New World Trade Center | Lower Manhattan
In re- sponse to the attacks, New York City has been a national leader in implementing more stringent building safety requirements. These include wider emergency exit stairs to make evacuations quicker, the installation of photoluminescent strips to make building evacuations safer and the full sprinklerization of office buildings to better safeguard property and protect lives.

Today Lower Manhattan is full of new housing, restaurants, hotels, bars, parks, schools, open spaces and new businesses big and small.

We Remember - We Never Forget - We Rebuild-  We're Stronger - We're Better - We Live in an Age of Terror - We Help Each Other - We Look Out For Our Neighbors -  For or Fellow New Yorkers and Fellow Americans. - Prayers and Thoughts to Those Who Lost Their Lives and Loved Ones.

God Bless New York and God Bless America!

photos/911-museum

Sep 10, 2014

Manhattan Monthly Market Report | August 2014

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Sep 8, 2014

Affordable Housing More Complex than a "Poor Door"

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To understand "affordable housing" in Manhattan, you must understand our housing market.  Manhattan is a unique place in the real estate universe. Not only does it have a large rental market (approximately 75% of the available housing units vs. about 5 - 10% in other markets), but it has  housing ownership and other important differences that are unique often puzzling and peculiar.

Approximately 70% of the housing inventory available for ownership in Manhattan are in coop apartments that converted from rental buildings. Coops are private corporations governed by a board of directors that can pick and choose who can live in their building. The coop board has the right to reject any potential purchaser for any reason other than housing discrimination although they are not required to give a reason for rejecting a purchaser. The rest are condos, and townhouses. 

Most new construction developments are condos or rental buildings. It's important to understand our peculiar housing market to understand the complexity, history and politics of "affordable housing" in NYC.

 Low income rental section
Mayor De Blasio’s Housing Plan
Housing New York: A Five Borough, Ten Year Plan 
defines Affordable housing in NYC by the Area Median Income (AMI) as follows: 

Extremely Low Income (0-30% of AMI)
Very Low Income (31-50% of AMI)
Low Income (51-80% of AMI)
Moderate Income (81-120% of AMI)
Middle Income (121-165% of AMI)
    
The NYC Department of Housing Preservation & Development (HPD) is the City’s lead housing agency.
HPD does not market rent or sell apartments but HPD requires that subsidized apartments be rented through an Open Lottery System to ensure fair and equitable distribution of housing to eligible applicants.
 



With so few affordable apartments even qualified applicants still have to win a lottery. Some "affordable" buildings such as Penn South a limited-equity housing cooperative development located between Eighth and Ninth Avenues and West 23rd and 29th Streets, in Chelsea opens it's 14 to 15 year waiting list with a new lottery every ten years or so. You need to win the lottery to get on their 14 year waiting list. 
West 62nd Street entrance to rental building segment

The NY POST, who's owner billionaire Rupert Murdoch recently paid $57.25 million for a new Manhattan condo with  a separate private "ULTRA RICH elevator separated from "RICH" elevator never the less is the local NYC Madame Defarge selling papers by channeling populist rage with the headline and artist renderings of a luxury new building on Riverside Boulevard with captions: “RICH DOOR on Riverside Blvd.” and “POOR DOOR in back alley.”

The NY Post article has been picked up and mimicked all over the world. "The rich and poor residents of a building on Manhattan’s Upper West Side, in a high-end development called Riverside South, will have to use separate entrances to their homes."

The "affordable" rental section of the development will have an entrance on West 62nd Street.

It was interesting hearing the term used by local politicians since they know the game. They play the game. They make the rules. The city and state give out tax incentives to developers in exchange for building affordable housing units, parks even subways stations.  NY state is running a $multimillion ad campaign "NY State Open for Business" promoting tax incentives to businesses offered by the state.

NYC property taxes are complicated and difficult to figure out but owner's of condos and coops pay a much higher tax rate than owner's of houses. The co-op tax abatement was created in 1996 to help eliminate the significant disparity in taxation between co-op and condo apartments, which are generally assessed and taxed at 45 percent of market value, and single, two- and three-family homes (mostly in the outer boroughs) which are assessed at 6 percent a year.

While most coops and condo owner's have been receiving a 17.5% tax abatement since 1996 the law was changed last year.  The new law only allows the tax break only on a primary residence. Pied-à-terre, or units held solely in a trust or by a limited-liability company, no longer qualify.
The tax benefit (421A) bestows property tax breaks for up to 25 years on new multifamily buildings.  It was put in place in the 1970s to spur development. The idea was that developers received a tax abatement passed on to owners in new developments in exchange the developers gave back to the city by building a public space and/or affordable housing units.

To be eligible for 421-A in prime Manhattan neighborhoods, developers had to include affordable housing, at least 20%. The 80/20 model has been used by developers primarily on rental buildings for decades.  A developer could build a luxury building on Upper West Side and build affordable housing in the Bronx to get the tax abatement. Prior to 2007 421-A tax abatement's were given to practically all new construction. 

In 2007, Mayor Bloomberg cracked down on 421-A. The tax breaks were applied to more NYC neighborhoods, including upper Manhattan and the outer boroughs. Developers could no longer build affordable housing in outer boroughs but had to build in same community as the luxury building.  The inclusionary housing mandates that the affordable units be in a separate building, in the same community or they can be clustered in what the city calls a building “segment,” which then has to have a separate entrance. Hence "Poor Door" 


The Ashley Market Rental building



The Ashley 400 West 63rd Street
Regardless of income renters and owners are often separated by a different door, separate building or segment of a building when a development has both a rental component and condominium. Hotel condos have separate entrances for condo owners and hotel guests. 

In fact right next door north of 50 Riverside Boulevard is The Alden at 60 Riverside Boulevard built by the same developer Extell. Right behind the Alden is it's sister rental building, The Ashley with a separate entrance at 400 West 63rd Street "the so-called back alley" The market rate rental apartments in the Ashley primarily have north, south and east views. The Alden condominium with the entrance on Riverside Boulevard features many units with west facing direct Hudson river views.






In the 1940's 50's and 60's the government built affordable public housing called "Housing projects".  NYCHA was created in 1934. There are deteriorating housing projects all over the city. The Riverside south project is located between Riverside Boulevard and West End Avenue. An exciting new neighborhood that didn't exist 15 years ago.

One block east of West End Avenue is Amsterdam Avenue. Amsterdam Houses a NYCHA housing project has 13 buildings, some 6 and some 13-stories high on 9.49 -acres. The 1,080 apartment complex houses an estimated 2,382 persons. It was completed in1948 located across Amsterdam Avenue from Lincoln Center and is bordered by West 61st and West 64th Streets, from Amsterdam Avenue to West End Avenue in Manhattan.

13 building housing project | Amsterdam Houses

Amsterdam Houses

















Amsterdam Houses were built more than a decade before the vast urban renewal program in the 1960's that included the new Lincoln Center for the Performing Arts and the eight Lincoln Towers buildings on 20 acres in the west 60's between West End Avenue and Amsterdam.

A separate door for the low income subsidized rental section of a brand new luxury condo located in a prime location or the alternative a door to a NYC Housing Authority project. In my opinion inclusionary housing with mixed incomes in new developments from the private sector in a new neighborhood is the future of affordable housing and a better option for new generations of low income New Yorkers than public housing projects from a bygone era. 

Bottom line 55 brand new affordable units available for low income households previously not available. I applaud Mayor Bill De Blasio's ambitious plan Housing New York:  A Five Borough, Ten Year Plan, to build and preserve 200,000 housing units, including 50,000 new affordable housing units. I hope he accomplishes this goal.

I hope more affordable housing becomes available for Moderate Income (81-120% of AMI) and Middle Income (121-165% of AMI) A "Middle/Moderate Door" and more affordable housing programs for  home ownership. 

Photos courtesy of: ©Mitchell Hall

More reading about affordable housing home owner opportunities:

HDFC Coops | Affordable Home Ownership
HDFC Coops | Facts vs Myths
HDFC Coop Income Standards
NY Tax Abatement's for Going Green
421-A Tax Abatement
HDC Affordable Condos & Coops


Aug 28, 2014

NYC - Location Affordability

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Mike Slattery, Senior Vice President, REBNY Research Department published very interesting numbers in the REBNY Reaserch newsletter. The Citizen’s Budget Commission has issued a series of reports comparing New York City's affordability to that of the 21 largest cities in the country.  
They also compared the competitiveness of New York City using a concept of “location affordability” developed by the U. S, Department of Housing and Urban Development (HUD) which includes the cost of transportation as well as housing, usually the two largest items in a household’s budget.  According to HUD’s Location Affordability Index (LAI) that measures these two costs, a household paying more than 45 percent of their income for these costs is overburdened.

New York City has the sixth highest housing costs of the 21 major cities (See Figure 2 below).  However, New York City has the lowest annual transportation costs of the cities surveyed, primarily the result of the majority of commuters using public transportation (See figure 3 below). 


 



















As a result, based on HUD’s LAI New Yorkers devote 32 percent of their income to housing and transportation, well below the 45 percent level established by HUD to signify an affordability problem.  Of the 21 cities surveyed by the Citizens Budget Commission, New York City was the third most affordable location according to the HUD LAI (See Figure 6).
 
 
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