30 Year Fixed are at HIstoric Lows But.....

...ARMs may save you money.

With interest rates remaining near historical lows, it’s no wonder that many buyers are looking to lock in a 30-year fixed rate mortgage for their property. What’s there not to love, right? The guarantee of cheap money for the next three decades: hooray! However, if you think your likely ownership of the property will last no more than 5-10 years, it may be worth considering a shorter product like a 5 or 7 ARM (Adjustable Rate Mortgage). Why? First of all, the rates are even lower. Unless you’re looking to keep the property for investment purposes after you move out, why pay more in interest for a 30-year term that you won’t use? Second, an ARM is still amortized over 30 years just at a lower rate, fixed for a shorter term.


Further, if you happen to be among those who still receive chunky year-end bonuses, it behooves you to consider interest-only ARMS. Not only do you get to pay only the interest portion of the loan (you already pay mostly interest for the first years of a 30-year mortgage anyway) but your payments readjust each time you use that bonus to pay off a portion of the principal. Most buyers’ cost of ownership could be cut almost in half by opting for an interest-only ARM versus a 30-year fixed product. On a $1 million mortgage, monthly payments for a 3.5% 7/1 IO ARM would be $2916 versus $5066 for a 4.5% 30-fixed. While this doesn’t make sense for everyone, it pays to consider all options before landing on one product.

No More Smoking at Home

Smokers looking for an apartment rental that doesn’t require them to leave the comfort of their unit to enjoy a cigarette are finding fewer and fewer options. A recent Craigslist.org search conducted by the New York Times found just four apartments in the five boroughs that advertise that smoking is permitted.
Ahead of legislation introduced by Mayor Michael Bloomberg that would require property owners to disclose their smoking policy, many landlords are banning the practice as it doesn’t affect demand in the tight rental market and alleviates headaches — including stenches, neighbor complaints and possible fire damages — that come with the habit.
At the same time, many renters simply choose not to search for that particular criteria and instead keep their affinity for a smoke more discreet. They smoke on balconies, roofs, the sidewalk or into an open window. With more landlords, and even co-op and condominium boards, prohibiting the practice, those who swim against the current and specifically target that subset of renters are finding some success.
“When I post that smoking is allowed, I get more calls, I can tell you that,” said Lori Alvarez, a smoker, a landlord and an agent at Joanne Costa Realty. [NYT]

We've hit bottom and prices are on the rise

Apartment prices and sales jump in Manhattan

At April's pace, the supply of new units in the borough would be exhausted in 6.7 months. The median listing price is up 19.5% in Brooklyn and 9.6% in Queens from a year earlier.

April was a hot month for new condos across Manhattan, Brooklyn and Queens, according to a monthly report released Tuesday.


In Manhattan, 127 units in new developments went into contract, up 21% from the same time a year ago, according to the report by StreetEasy.com, a popular real estate website. Based on current inventory and activity in the borough, at April's sales pace, it would only take just over six months to absorb the current supply of apartments on the market. The monthly report tracks sales by developers of newly constructed apartments in the three boroughs.

“We are in peak selling season,” said Sofia Song, vice president of research at Streeteasy.com. “Developers aren't offering the concessions that they used to and prices are more difficult to negotiate.”

In fact, the median price of Manhattan listings in April hit $1.5 million, up 10.1% from year-earlier levels. Meanwhile, only 147 apartment listings recorded price cuts last month, compared to 205 a year earlier. Last month, two neighborhoods saw the heaviest activity in terms of number of contracts signed.

In downtown, 67 apartments went into contract in April, up 52.3% from the same month in 2011, while on the Upper East Side 18 apartments went into contract—more than double the total in April 2011.

“There is more product in those neighborhoods than elsewhere in the city,” said Ms. Song. In areas where there is less inventory, like the Upper West Side, there was little activity with just four deals signed. Inventory across Manhattan continued to be tight, dropping 12.4% to 1,246 apartments listed for sale.

The Brooklyn and Queens market also recorded significant increases in contract signings. In Brooklyn, there were 54 contracts signed last month, up 10.2% from the same time last year. In Queens, there was a significant boost in activity with 18 apartments going into contract last month, more than triple the year-earlier figure.

In both boroughs inventory remained tight, which helped to push up prices. The total number of apartment listings dropped 8.3% to 209 in Queens, and fell 27.5% to 463 in Brooklyn. Meanwhile, the median listing price in Brooklyn jumped 19.5% to $735,000 in Brooklyn, and rose 9.6% to $625,000 in Queens.

“Developers are acutely aware of the tight inventory and it is becoming more difficult for buyers to negotiate,” said Ms. Song. “It is a sellers market again in terms of new development.”