Terry Henry

New York City’s vacancy rate continued to fall in May, going below 1% for the first time in 2.5 years, (to .98% from ~3.5% in 2009). National vacancy rates however average ~7%, according the National Multi-Housing Council.

Economics could explain the shift:

What’s behind the uptick? Locally, the Manhattan economy seems to be recovering, evidenced by improvement in technology & healthcare hiring reported by the NYS Budget Office. The city’s unemployment rate fell to 9.8% from 10% in April, though many expect more financial sector job losses.

Manhattan renters not only face monthly rate increases, but many of the big landlords including Lefrak, Related Cos. & Rockrose are no longer picking up brokers’ fees, which can amount to ~1 month’s rent.

Resale prices could follow suit:

Average rents for 1 bedrooms (about 40% of the NY rental inventory) are in the $2,600-$3,100 range, and posting ~2%-3% monthly increases.

On the resale side, a recent Wall St. Journal article reported that median prices of Manhattan co-ops & condos rose 13%-14% in May, vs. spring season in 2009- recognized as one of the worst market bottoms in 15 years.

Bottom line: Is the uptick sustainable?

Here’s why we skeptics abound:

- average price gains didn’t occur for all apartments types;

- there’s still a glut of unsold condo units (“shadow inventory”) that still hasn’t been absorbed;

- we lack a broad-based employment recovery;

- the risk of a stronger dollar putting-off foreign buyers (caused by European market instability) is higher than ever;

- interest rates are near historical lows but financing requirements haven’t yet returned to rational levels, which could temper demand.

That said, the Manhattan market tends to tends to be the last major U.S. submarket to fall and the first to rebound after a recession. So we’ll be looking really closely at Q2 numbers to see if the trend is our friend!

Manhattan, New York City: Is Manhattan the Greenest Town on Earth?

Earth Week 2010 is officially over, but many of us are still in the environmental consciousness swing-of-things. And with the green movement more popular than ever, you may consider Manhattan an environmentalist’s nightmare. After all, it’s a classic concrete jungle, super crowded, with seemingly epic traffic jams, right?

As you know, the "green movement" is a catch-all term for people or organizations that promote protecting the environment. Ironically, compared to many suburbs throughout America, New York City is a model of environmental leadership, and it may actually be one of the greenest cities on earth!

Fact is, how many Manhattanites do you know that drive to work and add to already worrisome air pollution levels? Also many residents are unlikely to live in an apartment that greatly exceeds a few hundred square feet per person. Manhattan has a lot of notoriously energy inefficient buildings, but there’s a lot of momentum to change that.

Moreover, environmentalists typically focus on population density, and by that measure, with 1.6 million people, Manhattan definitely makes up for its shortcomings. So on a per-capita basis, it may be one the U.S.’s most energy efficient places to live.

With that in mind, if you’re a Manhattan resident or prospective real estate buyer, as we head into the final days of Earth Week, below is a summary of Tenant Tips from a local New York City environmentally conscious organization named GreenHomeNYC.org.

They’re a terrific volunteer group whose goal is to increase New Yorkers City's sustainable living, and responsible use of real estate building methods & materials. Enjoy!

1. Understand your energy usage: Dig out old utility bills & familiarize yourself with how much energy you use each month. Understand which appliances use the most energy. Replace those with Energy Star-labeled models (www.energystar.gov). Turn off the one’s you don’t use when you’re not at home or not using it;

2. Use non-toxic materials and products: If it’s poisonous, carcinogenic, triggers asthma, or wreaks havoc on your nervous system, you probably don’t want it in your building, like most of the products we use to build and maintain our buildings - including paints, cleaners, insulation, cabinetry, and carpets. Keeping out toxins is relatively easy Our website has more info and tips on how to do it;

3. Use high quality, energy efficiency compact fluorescent lighting and Energy Star appliances: Just because it saves energy doesn’t mean fluorescent lighting looks good. Know what to look for when shopping for fluorescent lighting. See the following article: Understanding Lighting: The Good, The Bad, and the Environmental.

4. Use materials and products with post-consumer recycled content: Search for products that state the percentage of post-consumer recycled content. Paper is a biggie. So are plastic and paper packaging (essentially, anything you can recycle should be made from recycled materials to keep the cycle going). And if you’re buying wood, tiles, countertops, carpet, or insulation there are options recycled and resource minimizing options for these as well.

5. Increase your comfort and reduce your energy consumption by controlling the indoor temperature: If you have a radiator, and control the heat in your apartment by getting up and adjusting the valves all winter long, or even worse, opening the windows, then having just the right temperature is probably a rare event. The same goes for cooling with AC — turning it off and on is a pretty crude way to control temperature. Erratic temperature is not only uncomfortable, but it wastes lots of energy, especially if the radiator’s kicking out heat or the AC’s keeping things nice and cool when nobody’s home. Install low cost, easy to use, thermostats and automatic radiator controls, simultaneously saving energy and increasing comfort.

6. Switch to Green Power: Two utility companies now offer “green power,” — electricity made from in-state wind and small, low impact hydro (no dams) — for utility customers in New York City. That means that city residents now have a low-cost, no-hassle renewable energy option. It costs a few bucks more a month, but that money helps grow the local renewable energy industry. The two companies are 1st Rochdale Cooperative (http://www.1strochdalenyc.net/cleanerElectricity.html), and Consolodated Edison Solutions (a subsidiary of the namesake parent: http://www.conedsolutions.com/Residential/GreenPowerMain.htm.Read more about green power options for New York City.

7. Reuse and Recycle: Every building in New York City is required by law to recycle. Check with your super or building management to find out how your building recycles. Get information on what and how to recycle, along with composting and waste prevention tips, at www.nyc.gov/recycle.

8. Support Community Gardens: New York needs more greenspace and vegetation. It filters the air and the noise, reduces the summer heat, and cleans the water.

Happy New Year everyone, I hope your 2010 is off to a good start! An eventful 2009 is behind us, so let’s catch up on Manhattan’s residential real estate market’s performance and explore what 2010 may bring.

Manhattan Real Estate Market 2010 Outlook: A Bumpy Road to Recovery?

A sustainable surge?

Manhattan residential real estate average prices closed down about 13% in 2009 vs. 2008, despite a fall-season volume surge that still seems to have legs. The average price of an apartment fell to ~ $1.3 million at year-end.

Pesky job losses still a concern

Persistent unemployment is weighing down our market: NYC unemployment rose to 10.6% from November’s 10% rate, pushing 425,000+ out of work across retail, legal & publishing sectors, mirroring financial sector job losses.

It’s unlikely we’ll have a robust real estate market recovery in the face of worrisome economic headwinds. Not to mention that credit availability hasn’t returned to completely rational levels. The expiring Homebuyer Tax Credit may also put a crimp in what’s been a key source of buying.

Market convergence & higher rates are drawing focus

Meanwhile the Dow surged 60% in 2009, in the aftermath of gargantuan global government monetary stimulus packages. With interest rates set to rise this year, market participants are watching closely for revenue-driven earnings growth, not just the cost-cutting-type. The impact of rate hikes on prospective real estate buyers is yet to be seen.

Is the Manhattan market cut from a different cloth?

The Mortgage Bankers Association says delinquencies on 1-4 unit residential property loans rose to nearly 10% of all U.S. loans. Manhattan’s foreclosure rates are unlikely to skyrocket like other parts of the Midwest, West and Southeast, partly due to the stringent financial controls imposed by co-op boards.

But the flood of resetting “prime option-ARM’s” could certainly upset the applecart for those who financed their purchase of co-op shares, as payment increases for some could top 60%, according to Fitch ratings agency.

That said, Manhattan real estate’s supply/demand imbalance has always provided good price support: we now have less than 7000 active “listed properties” for a population of ~1.6 million.

However, a stronger dollar trend (it’s up nearly 3% vs. the euro this year) could temper foreign demand for our real estate, which has been a significant source of demand in recent years.

Bottom line:

All eyes are on U.S. job-growth prospects since consumer spending drives 70% of Gross Domestic Product (GDP) & housing demand. Of concern is that the Fed’s reversal of stimulus measures may put a damper on a burgeoning recovery (Q4/2009 GDP was +5.7%).

We’re looking at a mixed bag of possibilities no doubt. But don’t be surprised if in the short-term, despite our recent uptick, we see erratic real estate prices with a downward bias, until we get a clearer picture on job-creation. Meanwhile we’ll continue to help our owners and buyers navigate any oncoming bumps in the road. Feel free to share your feedback!

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BODY { FONT-FAMILY:Times New Roman; FONT-SIZE:12pt } P { FONT-FAMILY:Times New Roman; FONT-SIZE:12pt } DIV { FONT-FAMILY:Times New Roman; FONT-SIZE:12pt } TD { FONT-FAMILY:Times New Roman; FONT-SIZE:12pt } Terry Henry, Realtor®, M.B.A.
Keller Williams Prestige Properties
(917) 828-0804
terryhenry@kw.com
website: www.henryhomesandproperties.com

One of my clients observed, after our day of Manhattan apartment tours, that living in a New York City co-op (cooperative apartment building), as opposed to a condo or condominium, is a little like choosing to swim in a pool, rather than the ocean!

t's an analogy worth considering if you're trying to decide which of these two Manhattan apartment-types best fits your lifestyle and pocketbook:

Pools have plenty of restrictions governing their use and enjoyment (diving limits, water treatment procedures, etc.). But like co-op living, a pool can be ideal if you prefer a more exclusive or controlled environment than a dip in the ocean, which clearly has much freer access & fewer restrictions.

Swimming analogies aside, both co-ops and condos offer equally great lifestyle benefits. Let's dive in & explore the 5 key differences between them:

1) Parting legal waves: The "Form of Ownership" difference

The first major difference between a Manhattan co-op apartment and a condo is in their "Form of Ownership":

Buying a condo means buying "real property". Comparable to buying a single family home, you own it outright and pay real estate taxes to the local municipality. After purchase, the "deed" you receive (which conveys title) entitles you to occupy, sublet or transfer (sell) it as you wish.

Co-op ownership however, involves owning shares in a private corporation that owns the building. Co-op "tenant-shareholders" must abide by the terms of a "proprietary lease", enforced by the Board of Directors, which strictly controls apartment use & shareholders' responsibilities.

Co-op residents also receive a stock certificate that represents the number of shares proportionate to the apartment's size (keep it in a safe place!!).

2) Different strokes: Lifestyle & governance issues

A co-op or condo Board of Directors governs day-to-day building operations. But a co-op's exercises far more control, and must approve apartment occupancy, renovations & transfers of shares. Many co-ops forbid or limit subleasing, though in tough economic times, some Boards have allowed shareholders to sublet, to help them avoid risk of selling shares at a loss.

Co-op Boards' extensive (critics say onerous) control dates back to the late 1800's, when they were first started as social clubs by the affluent who wanted to live in town. By co-owning buildings with those of similar means, they were able to have a say in how the building was administered, who their neighbors were, and what those neighbors could/could not do in the building.

Co-ops are organized as private corporations, governed by the New York State Business Corporation Law, so decisions can be made for any reason-or for no reason- as long as they serve the best interests of the corporation & tenant-shareholders, & provided that anti-discrimination laws aren't violated.

3) Opposite Tides: Ownership & liquidation

A co-op Board must approve a prospective shareholder's or sub-tenant's application as part of a detailed "board package" containing her/his financials & personal information, followed by an interview to determine final acceptance. If you're uncomfortable with disclosing a lot of personal & financial information, then co-op living may not be the best option for you.

The co-op review process may frustrate prospective buyers given the boards' intense scrutiny of applicants, but co-op supporters contend that these stringent rules largely fire-walled them from Wall Street meltdown aftershocks, and errant residents that could disrupt their quality of life.

On the other hand, condo's trade more freely & don't typically require Board approval. But condo boards can exclude a prospective owner by exercising a "First Right of Refusal": when board derails an impending sale by buying the apartment from its current owner at the agreed contract price, though this option is rarely exercised.

4) Sea of numbers: Pricing, carry charges & closing costs

Co-ops make up about 70% of Manhattan apartment resales. Their greater supply & more stringent requirements make them less costly than condos, accounting for the ~15%-20% discount. Their monthly "maintenance" consists of each owner's allocable share of the building's underlying mortgage, real estate taxes & operating expenses. Figure-in a non-cash buyer's mortgage, and a co-op's carry costs (however tax deductible) could exceed those of a comparable condo.

Condo's closing costs, however tend to exceed those of co-ops because as real property, condo closings require payment for title searches and of pre-paid expenses for monthly common charges & tax escrows.

5) Taking on water: Risk of foreclosure

If a condo's monthly common charges go unpaid, those obligations typically are subordinate to the first mortgage lien, which could send the condo Association to the back of the line in terms of debt satisfaction. Conversely, a co-op's "proprietary lease" claims on unpaid maintenance charges are likely to supersede a bank's claim against "financed" (mortgaged) shares.

Clear sailing:

All-in-all, condos & co-ops both offer terrific lifestyle options. Each choice has benefits & tradeoffs in terms of how they can meet your ownership needs within a community of likeminded individuals, so choose carefully and as always, let me know if you have any comments or questions!

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What Options May a Person Facing Foreclosure Consider?

The financial crisis has taken a huge toll on American families: among U.S. homeowners with mortgages, a record 7.58% were at least 30 days late on payments in August according to Reuters, the latest available data. So far in 2009 more than 1.5 million properties have received a foreclosure filing or were seized by banks according to RealtyTrac..

If you're facing foreclosure in there are several options for you to consider. In Manhattan, New York City, one needs to consider how the co-op or condo form of ownership and the board of directors, or in the case of a co-op, the proprietary lease, impacts your decision.

As a Certified Distressed Property Expert ® I may be able to help you or someone you know think through what your next best steps are. Here are some options to think about:

Reinstatement


A reinstatement is the simplest solution for a foreclosure, however it is often the most difficult. The homeowner simply requests the total amount owed to the mortgage company to date and pays it. This solution does not require the lender's approval and will 'reinstate' a mortgage up to the day before the final foreclosure sale.

Forbearance or Repayment Plan


A forbearance or repayment plan involves the homeowner negotiating with the mortgage company to allow them to repay back payments over a period of time. The homeowner typically makes their current mortgage payment in addition to a portion of the back payments they owe.

Mortgage Modification


A mortgage modification involves the reduction of one of the following: the interest rate on the loan, the principal balance of the loan, the term of the loan, or any combination of these. These typically result in a lower payment to the homeowner and a more affordable mortgage.

Rent the Property


A homeowner who has a mortgage payment low enough that market rent will allow it to be paid, can convert their property to a rental and use the rental income to pay the mortgage.

Deed in Lieu of Foreclosure


Also known as a 'friendly foreclosure,' a deed in lieu allows the homeowner to return the property to the lender rather than go through the foreclosure process. Lender approval is required for this option, and the homeowner must also vacate the property.

Bankruptcy


Many have considered and marketed bankruptcy as a 'foreclosure solution,' but this is only true in some states and situations. If the homeowner has non-mortgage debts that cause a shortfall of paying their mortgage payments and a personal bankruptcy will eliminate these debts, this may be a viable solution.

Refinance


If a homeowner has sufficient equity in their property and their credit is still in good standing, they may be able to refinance their mortgage.

Servicemembers Civil Relief Act (military personnel only)


If a member of the military is experiencing financial distress due to deployment, and that person can show that their debt was entered into prior to deployment, they may qualify for relief under the Servicemembers Civil Relief Act. The American Bar Association has a network of attorneys that will work with servicemembers in relation to qualifying for this relief.

Sell the Property


Homeowners with sufficient equity can list their property with a qualified agent that understands the foreclosure process in their area.

Short Sale


If a homeowner owes more on their property than it is currently worth, then they can hire a qualified real estate agent to market and sell their property through the negotiation of a short sale with their lender. This typically requires the property to be on the market and the homeowner must have a financial hardship to qualify. Hardship can be simply defined as a material change in the financial stability of the homeowner between the date of the home purchase and the date of the short sale negotiation. Acceptable hardships include but are not limited to: mortgage payment increase, job loss, divorce, excessive debt, forced or unplanned relocation, and more.