Showing posts with label market. Show all posts
Showing posts with label market. Show all posts

Sep 1, 2010

New York is Rebounding

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We are continuing to witness a major shift in thinking, with the Federal Reserve, economists and stock and bond investors all reducing their expectations for economic growth, which in turn has pushed mortgage rates back down to record low levels. Contributing to that mind shift was last week's 27. 2% drop in July for existing home sales, which was the lowest pace in 15 years.

However, keep in mind that real estate and economies are local. In fact, yesterdays New York Times  and the Wall Street Journal coincidentally both have bullish articles on New York City's economy and housing market

They go on to say that by almost all measures, Manhattan in particular and to a lesser extent the 4 boroughs, have experienced a milder recession, quicker recovery, lower unemployment and a stronger housing market than the rest of the country. No doubt Wall Street's resurgence this year has contributed greatly to NYC's recovery, which also trickles out (to a lesser extent) to the surrounding suburbs. NYC's housing market in particular has held up very well, with Manhattan's median prices for real estate rising 18.5% in the 3rd Quarter!

Another reason NYC may be doing better is because the NY Metro area's average and median home prices and mortgage amounts are higher than the national average, which benefits from lower jumbo mortgage rates. Recently, the National Association of Realtors (NAR) said, "Sales volume for homes worth more than $1mm across the country are up more than 35% from last year at this time." They go on to say "Homes priced between $700,000 and a million are also on the rise by some 29% over last year. There's no question that's because of the historic low jumbo rates."

Wells Fargo and other lenders have recently dropped their jumbo rates as they get more comfortable with jumbo borrowers, who have higher cash reserves and a higher employment rate. Jumbo underwriting guidelines are still conservative, but for the right borrower, jumbo mortgage rates are at record lows. Jumbo refinancings have also increased, as you don't need as big a drop in rates to break even with closing costs, as many of them are fixed, no matter the size of the mortgage.

The mortgage rate most often quoted in newspapers and on the news is a rate released weekly by Freddie Mac for conforming 30 year fixed rate mortgages. But keep in mind, this rate is with .70 points, so a 0 point rate is .125 to .25 higher. Conforming rates continue to drift down as we get multiple weaker economic releases and mild inflation.

The Federal Reserve's announcement that they plan on continued "quantitative" easing by reinvesting maturing mortgage backed securities (MBS) into 2 - 10 year treasury notes also helped push rates down. The bond markets were hoping for the Fed to also announce they would purchase more MBS, but this would increase their balance sheet which would receive its share of criticism.

The Fed will likely wait till after the November elections before they revise downwards their economic forecast. By then, they will have a clearer picture of the housing market and economy and may institute more aggressive measures then. But Chairman Bernanke has told Congress that more fiscal stimulus would be welcome, but don't expect any progress on that front till after the elections.

All eyes will be on this Friday's employment number, with the consensus for non farm payroll to drop 105,000 which typically sets the market's tone for the following 4 weeks.

Have a safe and enjoyable Labor Day Weekend!

Sep 16, 2008

Wall Street Sneezes: Manhattan Catches Cold

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It is estimated that about 12,000 Lehman Brothers employees live in NYC. It's generally believed that one Wall Street job helps create two or three other jobs. This multiplier effect will have an impact not only on the financial sector employees who lose jobs, but also on many New Yorkers who are indirectly affected by those job losses... and on the city's tax revenues..

According to Mayor Bloomberg "Even though Wall Street has been struggling for months, the city's unemployment rate is only 5 percent, well below the national average of 6.1 percent. The vacancy rate for Manhattan office space is 5.4 percent, less than half the national average. Tourism, which has declined nationally, is still growing to record levels here in New York City. Real estate values, which have plummeted nationwide, have held fairly steady here".
The real estate market in Manhattan has already been soft. Wall Street bonuses help fuel the Manhattan real estate market every winter. There will be less buyers with bonus money this year. Inventory will most likely increase as some financial workers might have to sell.
Although the financial sector is very important to NYC's economy Manhattan is by no means a 1 industry or company town. We have a diversified economy. Many industries, such as advertising, film, fashion, tourism, media, health care, higher education, bio-science and the arts are based in New York.
The city's economy should remain strong - a lot stronger than in much of the rest of the nation. NYC has prepared for declining revenues by saving surplus revenues in years when revenues exceeded expenses, the city saved as much as possible for the years when it would really need it.
New Yorkers have gotten through the ups and downs of Wall Street before, and we will get through this one too. Our economy is resilient and markets go in cycles. I've lived in Manhattan for 25 years. Real estate has been expensive as long as I've been living here. We've had market down turns but never bargain basement prices. There has always been a demand for housing in Manhattan. Manhattan is a world class city. People from around the country and the world want to live here.
There are many great buying opportunities and for those that can afford too - Now is a great time to buy.

Aug 18, 2008

It is Best to Buy and Sell in the Same Market

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This is a repost from August, 18, 2006. I wrote it exactly two years ago from today and I think it is just as appropriate in today's market.
The best time to buy and sell real estate is when you need to!'BULL'
In real estate it is very difficult to time the market. Markets go in cycles there are tops and bottoms. Bottoms are usually created by pessimism and negativity. Tops are created by “irrational exuberance"
To quote Jim Cramer on CNBC's Mad Money “Bears make money – Bulls make money but Pigs get slaughtered." The Fed created the boom in housing by lowering interest rates then they ended it by raising interest rates to take “the froth” out of the housing market. Maybe they will change their mind again.
When everyone is bearish based on sentiment rather than the facts, that is an indication not to listen to everyone and a great strategy would be to BUY! When everyone is bullish and buying in a frenzy that is an indication to SELL! However, the only real reason to Buy or Sell real estate is when you need to or want to not because of the market.
Real estate is local. The local economy effects the market. No matter what the market condition it still makes sense to Buy and Sell in the same market.
If you Buy and Sell in a sellers market, you sold high and bought high it equals out. If you Buy and Sell in a buyers market, you might get less for your home than your neighbor who sold a year ago but you will get your new home for less than If you bought it last year.
If you are selling a $700,000 home and the market is down 10% you will lose $70,000. If you are upgrading to a $1,000,000 home you will save $100,000.
It all equals out. Over the long haul real estate is not only a great investment but a wonderful place to live and enjoy.

Aug 24, 2007

Manhattan Real Estate Market and Mortgage Update

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It has been a busy year and summer. The busiest August I can remember. Manhattan has been very fortunate this year compared to the rest of the country. Our market continues to be very strong.

The fall out from the sub prime mortgage meltdown during the last several weeks is now affecting the mortgage, credit and financial services industries. The stock market has been volatile the feds added liquidity to the markets and lowered the prime rate.

It remains to be seen what affect this will have on the real estate market in Manhattan. We still have low inventory. Most of the inventory is in new construction and there seems to be plenty of buyers interested in new development condos.

However, borrowing will become harder for many buyers as lenders are tightening their criteria for loans. The mortgage industry will have layoffs, consolidation, mergers, take-overs and bankruptcies.

It is now more important than ever for buyers to be pre-approved and to have a commitment from a lender before they start apartment hunting. The first step in the home buying process involves a good lender who will determine how much the buyer is qualified to purchase.

My preferred lender is Wells Fargo Private Mortgage Banking. For a free consultation, pre-approval and commitment contact Glen Pedersen.

All CASH and large down payments will become more important terms for sellers. A couple of weeks ago when I told a sales agent for a new development that my buyer is ALL CASH the response was "they're all cash to us" I think that attitude will change on the part of sponsors selling pre-construction.

Eighteen months from now anything can happen. Someone qualified today might not qualify eighteen months from now. Wells Fargo has a loan product specifically for new construction that will lock in a rate for a year.

When I bought in a new development on the Upper West Side back in 1989 I had to be approved by citi bank the developers lender that financed the construction. I was able to get financing from any lender as long as I was approved by citi and if I couldn't get financing from another lender I had to go through with the citi loan. I shopped around and went with the Bowery Savings they later became Home Savings of America and then it ended up with Washington Mutual.

I think we will be seeing more of this type of requirement again from sponsors and perhaps listing agents. When I list a property I have Wells Fargo pre-appove the property and provide a financial analysis for potential buyers.

If major mortgage brokers are in trouble and will not be able to fund or close on loans, I will require buyers of my listings to at least be pre-approved by Wells just in case.

Feb 17, 2007

Manhattan Neighborhood: Morningside Heights

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Morningside Heights is the academic quarter of New York City. It stretches irregularly from north of 96th Street to about 123rd Street between Morningside Park and Riverside Park on the Upper West Side of Manhattan.

From the top of a 135-foot bluff, it overlooks the Hudson River on one side and Harlem on the other. It is about 15 minutes from midtown Manhattan by subway. With apartments on the "Gold Coast" of Riverside Drive selling for well over $1,000,000, Morningside Heights is one of th granted scenic landmark status toe more desirable residential neighborhoods in Manhattan.

The area that is now Morningside park was described as "inconvenient for use" by a city surveyor in 1867, meaning difficult to build property on, so it was made into a park, which was called "Morning-side park" because its east facing slope catches the morning sun.

The neighborhood that developed around the park became Morningside Heights.


Morninside Park is located on a long a rocky ledge extending from 110th to 123rd streets and between Morningside Drive and Manhattan Avenues and Morningside Avene is comprised of approximately 30 acres that were excluded from the street grid under a proposal

Built on a steep incline, multiple playgrounds nestle at the bottom of its cliff-like hillside, and visitors pause along its heights to take in a unique view. Winding paths bordered with flowers and trees lead to a cascading waterfall, across from which local teams play on its baseball fields. Parents bring their children to play in its playgrounds and learn in its after-school program, and on Saturdays local farmers sell their goods in an outdoor market.

For many years, the Cathedral of Saint John the Divine, tried to get people to call the area Cathedral Heights, but was unsuccessful. The Cathedral, built before the impact of skyscrapers was intended to tower over the city. It does not, but West 110th Street is called Cathedral Parkway.


Morningside Heights is currently home to about 35,000 people, and over the years has housed a long list of famous individuals, intellectuals and students, charming bookstores, cafes and bars as well as world-renowned institutions, including: 
  • Columbia University            
  • Grant's Tomb
  • Barnard College
  • Union Theological Seminary                                                                            
  • Jewish Theological Seminary                 
  • Bank St. College of Education
  • Manhattan School of Music
  • Cathedral of Saint John the Divine
  • Riverside Church

Aug 18, 2006

It is Best to Buy and Sell in the Same Market

0 comments
The best time to buy and sell real estate is when you need to!'BULL'
In real estate it is very difficult to time the market. Markets go in cycles there are tops and bottoms. Bottoms are usually created by pessimism and negativity. Tops are created by “irrational exuberance"
To quote Jim Cramer on CNBC's Mad Money “Bears make money – Bulls make money but Pigs get slaughtered." The Fed created the boom in housing by lowering interest rates then they ended it by raising interest rates to take “the froth” out of the housing market. Maybe they will change their mind again.
When everyone is bearish based on sentiment rather than the facts, that is an indication not to listen to everyone and a great strategy would be to BUY! When everyone is bullish and buying in a frenzy that is an indication to SELL! However, the only real reason to Buy or Sell real estate is when you need to or want to not because of the market.
Real estate is local. The local economy effects the market. No matter what the market condition it still makes sense to Buy and Sell in the same market.
If you Buy and Sell in a sellers market, you sold high and bought high it equals out. If you Buy and Sell in a buyers market, you might get less for your home than your neighbor who sold a year ago but you will get your new home for less than If you bought it last year.
If you are selling a $400,000 home and the market is down 10% you will lose $40,000. If you are upgrading to a $600,000 home you will save $60,000.
It all equals out. Over the long haul real estate is not only a great investment but a wonderful place to live and enjoy.
 
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