Rich Bouchner New York City Real Estate

Significant findings in Q3 2009

Streeteasy.com as always, does a solid job of summarizing the New York City real estate market. To view the full report, click here.

So what does the report mean? From my little corner of the NYC real estate world, I am seeing much more activity. Units that are coming to the market priced correctly are selling. Buyers that are realistic with their offers (ie: doing their research and making offers that are based on reality, not on pie in the sky hopes and dreams), are getting accepted offers. High end apartments that require jumbo mortgages are taking longer to sell as result of the tight mortgage market. New developments that still have inventory are offering major incentives to move units. New condos that have received FHA approval are moving units.

Please see below for a recap of Streeteasy's report.

CLOSING PRICES CONTINUE TO DECLINE FROM A YEAR AGO. Condo and co-op resale median prices have declined since last quarter and are still significantly down from a year ago. The overall average Manhattan sale price (which includes: condo resales, co-op resales, and new development closings) decreased by 2.3% to $1.254M since last quarter, and by 16.4% since last year. Similarly, the overall median Manhattan sale price declined by 0.3% since last quarter to $760K, and by 11.6% since last year.

• Condo resale median prices increased by 5.3% since last quarter to $937,500, but decreased by 14.6% since last year. Average price ($1.471M) is up 11.1% for the quarter but down 26.2% since last year.
• Co-op resale median prices decreased by 2.1% to $575K compared to last quarter and by 11.5% since last year. Average sales price ($878K) decreased by 4.3% since last quarter and by 21.3% since the prior year.
• New Developments median sales price increased by 1.8% since last quarter to $1.212M and by 24.3% since last year. Average sales price ($1.77M) also increased by 1.8% since last quarter and by 23.1% since last year.

VOLUME OF RESALE CLOSINGS INCREASE SIGNIFICANTLY. The number of closings has increased by 68.4%, from the 2,040 closings of last quarter, but is down by 21.7% from a year ago. Co-op resales have increased by 85% since last quarter and condo resales have increased by 75% since last quarter. The number of new development closings increased by 31% since last quarter but is still down by 65.3% since a year ago. New development closings made up 18.8% of the closings while co-op resales dominated activity at 54.9%.

INVENTORY STEADILY DECLINES. Inventory of available listings in Manhattan declined steadily since it peaked around 11,800 units in mid-May. At the time of this report, inventory is currently at 10,163 units. According to our listings database, an average of 314 new listings came onto market every week in this quarter, a decrease of 13.5% since last quarter, which averaged 363 new listings per week. Condos made up 52.1% of all available listings on market this quarter (co-ops 47.3%, townhouses 0.6%). Inventory levels this quarter are 24.6% higher than they were a year ago.

CONTINUED INCREASE IN NEW CONTRACTS. This quarter, there were 2,632 listings that went into contract, a 6.3% increase from last quarter’s number of new contracts (2,477). Additionally, there were 142 broken contracts, a 7.6% increase compared to last quarter’s 132.

FEWER PRICE CUTS. This quarter, 36.1% of all Manhattan listings had price cuts, a total of 5,363. Of all available listings for condos this quarter, there were about 2,400 condo listings with price cuts, a 1.9% decrease since last quarter but 72.4% more cuts since last year. Co-ops had about 2,900 cuts, a 4.4% decrease in the number of price cuts since last quarter but 77.2% more cuts than a year ago. The average price cut this quarter for condos was 8.4%, and for co-ops, the average cut was 8.1%.

LISTINGS SPEND A LONGER TIME ON MARKET FROM A YEAR AGO. The average time on market for condo resale listings decreased by 3.7% since last quarter but increased by 9.1% since last year, while co-ops sat on the market for 1.7% longer than last quarter, and 19.4% longer than the prior year. This quarter, condo resales stayed on the market for an average of 126 days, while co-op resales were on the market for an average of 120 days.

Anybody who knows me knows these two things to be true: I love good coffee (a taste I picked up from years of living in New Orleans and drinking PJs iced coffee), and I shop at locally owned businesses when ever possible.

As I was walking around Harlem yesterday looking for a brownstone for a client, I saw coffee shop called Muddy Waters that appears to be close to opening. It is located at 130th and ACP.

I hope that the coffee is good and that it is owned by New Yorkers.

During my Harlem brownstone walk about, I also met a man named George who runs a deli and news stand at 78 West 131 Street, between Lenox and Fifth Avenue called Tasty News. George's aunt owns the place and he runs it. He and I chatted for 30 minutes about the challenges of owning and running a small business, the lack of good customer service in Harlem and the lack of variety in Harlem when it comes to fast and healthy eating. Tasty News needs more customers. It is located just of off Lenox, which means that if you don't know it is there, it is easy to miss it. George had a sign that he put on the corner, which helped draw in customers, but he was fined by the city for having it placed where it was blocking a ramp. Harlem needs more people like George: He grew up in Harlem, he and his wife (she is a nurse) want to own a business and want do right by the people in Harlem, and he cares about customers. Now the people of Harlem need to support a local business. Skip McDonalds and Dunkin Donuts for a change....give Tasty News a try Muddy Waters a try.

This page does a good job of explaining various FHA fees. If you are looking to buy a New York City condo with very little cash down, FHA is one of the few available options.

Borrowers who have decision credit scores below 500 must have loan-to-value ratios less than 90 percent to qualify for an FHA-insured mortgage.

Cancellation of Annual MIP

For mortgages with terms greater than 15 years, the annual MIP will be cancelled when the LTV reaches 78% based on the original value of the loan, provided the borrower has paid the annual MIP for at least five years.

For mortgages with terms of 15 years of less, the annual MIP will be cancelled with the LTV reaches 78%.

The borrower cannot request that it be removed once they feel they have reached 20% equity.

The borrower would have to refinance to have it removed before then.

The Annual MIP of .50% will be collected the entire duration of the loan for Condo’s and 203k loans closed prior to January 1, 2006, regardless of the term or LTV.

Maximum LTV Chart until January 1, 2009

Loan Amount Calculations

The following applies to the Mortgage Calculation

FHA has two different loan amounts

Base Mortgage is the calculated loan amount without the financed MIP

MIP chart is following

FHA MIP (Mortgage Insurance Premium) is done as a Split Premium with part added to the loan amount and part monthly

Monthly MIP is based on the Base Mortgage Amount

Total Mortgage Amount is the Base Mortage plus FHA required repairs or allowable improvements plus the financed MIP

Total Mortgage Amount cannot exceed the county maximum listed at www.hud.gov