U.S. mortgage rates rise at last
Mortgages on the rise
Mortgage rates are rising nationwide, leaving the historically low rates of the last three weeks behind, according to the weekly Freddie Mac’s Primary Mortgage Market Survey released today.
For 30-year, fixed-rate mortgages, the average rate was 3.95 percent in the week ending Feb. 23, up week-over-week from 3.87 percent. Last year at same time, 30-year fixed-rate mortgages averaged 4.95 percent. The data shows a similar increase for 15-year, fixed-rate mortgages, which were up to 3.16 percent from 3.19 percent the week prior, and from 4.22 percent year-over-year.
For treasury-indexed hybrid adjustable-rate mortgages with a five-year term the average rate was 2.8 percent this week, down from 2.82 percent last week, and from 3.8 percent last year at this time. One-year treasury-indexed ARM mortgages averaged 2.73 percent, down from last week’s 2.84 percent. For the same week last year, one-year ARMs averaged a rate of 3.4 percent.
This bodes well for the housing recovery generally, according to Frank Nothaft, chief economist at Freddie Mac. “The data… suggest the housing market is continuing to gradually improve,” he said. “Loans that were seriously delinquent (90 days or more past due plus the foreclosure inventory) fell to 5.3 percent of prime mortgages at the end of 2011, representing the lowest quarterly share since the start of 2009,” he added. – Guelda Voien
Feb 23, 2012
Feb 20, 2012
Brazil's Flourishing Economy means....
....Great News for Manhattan's Real Estate Market.
DOMINIQUE BENZ and her husband are looking forward to hosting a Brazilian barbecue on their downtown Manhattan deck sometime later this year.
Their ambitions for the affair won’t be constrained by space. Last year, the São Paulo couple bought two adjoining apartments at the Caledonia in Chelsea. They plan to combine them, creating a 2,800-square-foot deck — one of the largest private outdoor spaces downtown, brokers said.
Nor will they have any trouble finding fellow Brazilians to invite.
Already, 8 of the 181 condo units in their building have been bought by fellow countrymen, part of a Brazilian buying spree in New York that shows no sign of slowing. The city is already teeming with Brazilian tourists, and many of them, flush with cash from a booming economy back home, are snapping up their own pieces of Manhattan.
While Russians like Dmitry Rybolovlev, the buyer of an $88 million penthouse at 15 Central Park West, boast in press releases about their trophy properties, Brazilians have quietly become steady clients for higher-end brokers in New York and Miami.
When I was living in São Paulo and Rio de Janeiro the past five years, well-to-do locals talked incessantly about New York as the ultimate status symbol. Walk into a trendy restaurant in either city and the words “Nova Iorque” seem to be spoken more slowly and loudly than any other (just in case, hopefully, somebody is eavesdropping). Even with soaring fares for flights from the Brazilian cities to the Big Apple, everyone, it seemed, was either going or coming from New York.
“For many, Manhattan is their dream town,” said Marcos Cohen, a Brazilian broker at Prudential Douglas Elliman who said he had closed more than 15 deals over the past two years for Brazilians paying from $5 million to more than $15 million for Manhattan apartments. For Ms. Benz’s husband, a native of Rio de Janeiro who works at a São Paulo investment fund, buying a New York apartment was a passion project.
“Having an apartment in New York was a dream of my husband since he was a little boy,” said Ms. Benz, 35. “It is his gift at the end of working so hard to be able to buy.”
With three children, the couple were willing to pay more than market value for the second of their two apartments in order to create one of the larger spaces in the building, said their broker, Fredrik Eklund of Prudential Douglas Elliman. They paid a combined $4.1 million for the apartments, with 2,133 square feet of interior space in all.
Ms. Benz said she and her husband were looking to the future, hoping that their children could someday use the apartment for internships or to work in the city. For now, she is happy to have a place to take them a few months out of the year where they can visit Chelsea Piers and ride bicycles without the fear of kidnappings many Brazilians feel back home.
Many of the Brazilian buyers in New York are professionals in their 30s and 40s, often tied to commodities or the finance sector, which has made many Brazilians rich from a flurry of I.P.O.’s in recent years.
Brazilians favor addresses along Central Park on the Upper East Side or in Midtown near Lincoln Center, where many have season tickets, brokers say. Many also look downtown at full-service buildings with concierge services, Mr. Eklund said.
After they close on an apartment, Brazilians often bring in their own architects and interior designers. Fernanda Marques, a São Paulo-based architect who is well known in Brazil, is currently doing two projects for Brazilians in New York and one in Miami.
Brazilians are also scooping up hundreds of units in high-end developments in Miami, helping to prop up a moribund market wracked by the 2008 financial crisis, brokers and developers there say.
At the W South Beach Hotel & Residences, about one-fifth of the buyers since 2010 have been Brazilians; they have purchased 31 units totaling nearly $50 million, said David Edelstein, a co-owner of the project. At Paramount Bay, whose lender had previously foreclosed on the project, about one-third of the buyers over the last six months have been Brazilian, said Anthony Burns, a senior vice president at iStar Residential, which co-owns the development.
Alan Araujo, a broker in Miami with Worldwide Development Services, said he sold 12 units in the Epic development to a single Brazilian client who works in the oil industry. He bought an additional 17 in another building, Infinity, about a month later. His total spent on Miami property last year: about $20 million.
“Brazilians have been waiting like 100 years for this opportunity,” Mr. Araujo said. “They are in invasion mode.”
DOMINIQUE BENZ and her husband are looking forward to hosting a Brazilian barbecue on their downtown Manhattan deck sometime later this year.
Their ambitions for the affair won’t be constrained by space. Last year, the São Paulo couple bought two adjoining apartments at the Caledonia in Chelsea. They plan to combine them, creating a 2,800-square-foot deck — one of the largest private outdoor spaces downtown, brokers said.
Nor will they have any trouble finding fellow Brazilians to invite.
Already, 8 of the 181 condo units in their building have been bought by fellow countrymen, part of a Brazilian buying spree in New York that shows no sign of slowing. The city is already teeming with Brazilian tourists, and many of them, flush with cash from a booming economy back home, are snapping up their own pieces of Manhattan.
While Russians like Dmitry Rybolovlev, the buyer of an $88 million penthouse at 15 Central Park West, boast in press releases about their trophy properties, Brazilians have quietly become steady clients for higher-end brokers in New York and Miami.
When I was living in São Paulo and Rio de Janeiro the past five years, well-to-do locals talked incessantly about New York as the ultimate status symbol. Walk into a trendy restaurant in either city and the words “Nova Iorque” seem to be spoken more slowly and loudly than any other (just in case, hopefully, somebody is eavesdropping). Even with soaring fares for flights from the Brazilian cities to the Big Apple, everyone, it seemed, was either going or coming from New York.
“For many, Manhattan is their dream town,” said Marcos Cohen, a Brazilian broker at Prudential Douglas Elliman who said he had closed more than 15 deals over the past two years for Brazilians paying from $5 million to more than $15 million for Manhattan apartments. For Ms. Benz’s husband, a native of Rio de Janeiro who works at a São Paulo investment fund, buying a New York apartment was a passion project.
“Having an apartment in New York was a dream of my husband since he was a little boy,” said Ms. Benz, 35. “It is his gift at the end of working so hard to be able to buy.”
With three children, the couple were willing to pay more than market value for the second of their two apartments in order to create one of the larger spaces in the building, said their broker, Fredrik Eklund of Prudential Douglas Elliman. They paid a combined $4.1 million for the apartments, with 2,133 square feet of interior space in all.
Ms. Benz said she and her husband were looking to the future, hoping that their children could someday use the apartment for internships or to work in the city. For now, she is happy to have a place to take them a few months out of the year where they can visit Chelsea Piers and ride bicycles without the fear of kidnappings many Brazilians feel back home.
Many of the Brazilian buyers in New York are professionals in their 30s and 40s, often tied to commodities or the finance sector, which has made many Brazilians rich from a flurry of I.P.O.’s in recent years.
Brazilians favor addresses along Central Park on the Upper East Side or in Midtown near Lincoln Center, where many have season tickets, brokers say. Many also look downtown at full-service buildings with concierge services, Mr. Eklund said.
After they close on an apartment, Brazilians often bring in their own architects and interior designers. Fernanda Marques, a São Paulo-based architect who is well known in Brazil, is currently doing two projects for Brazilians in New York and one in Miami.
Brazilians are also scooping up hundreds of units in high-end developments in Miami, helping to prop up a moribund market wracked by the 2008 financial crisis, brokers and developers there say.
At the W South Beach Hotel & Residences, about one-fifth of the buyers since 2010 have been Brazilians; they have purchased 31 units totaling nearly $50 million, said David Edelstein, a co-owner of the project. At Paramount Bay, whose lender had previously foreclosed on the project, about one-third of the buyers over the last six months have been Brazilian, said Anthony Burns, a senior vice president at iStar Residential, which co-owns the development.
Alan Araujo, a broker in Miami with Worldwide Development Services, said he sold 12 units in the Epic development to a single Brazilian client who works in the oil industry. He bought an additional 17 in another building, Infinity, about a month later. His total spent on Miami property last year: about $20 million.
“Brazilians have been waiting like 100 years for this opportunity,” Mr. Araujo said. “They are in invasion mode.”
Feb 16, 2012
Renovate with Taste not Bling
When it comes to a renovation — be it a kitchen, bathroom or an entire apartment — it’s natural to want it to reflect your needs and tastes. But you should also take the long view: In terms of resale, which renovations will hold their value and, more important, which might help or hinder a sale?
Having worked with both New York City buyers and sellers, broker Christian Rogers of Core observes, “It’s less about the bling than about quality work. Assume that everything you put in, you aren’t going to get back — but using high-quality materials that aren’t taste-specific can only improve the apartment and increase its value.”
There’s no definitive formula for calculating the value you get from specific renovations. But the 2010-11 Remodeling Cost vs. Value report from Remodeling magazine notes that even with a minor kitchen reno — which in NYC averages $24,000 and includes replacing cabinet fronts and counters and installing a midpriced sink and energy-efficient stove — one can recoup nearly 87 percent of the costs.
“I can say from my discussions with brokers that it’s certainly worth it to renovate and modernize the kitchen and bathroom and use better-quality appliances,” architect David Katz says.
In fact, an artfully done renovation can make the difference between something selling quickly — and, in some cases, for a hefty profit — or languishing on the market.
Rogers gives an example of a three-bedroom West Village combination, where the owner did a number of things right, including adding lots of storage in the kitchen, going with modern fixtures in the bathrooms, installing white oak floors that were “elegant, very neutral” and skim-coating the walls.
“In a building where a typical three-bedroom went for around $2 million, this apartment sold for $3.14 million,” says Rogers.
Another renovation that will pay off?
“Creating storage gives you a lot of bang for your buck,” says Doug Perlson, co-founder and CEO of RealDirect brokerage. “New York apartments always have less closet space than you want. And it’s relatively easy and inexpensive.”
And experts are in agreement: When in doubt, opt for functional over frills. Says Martin Horner, principal of interior design and architecture firm Soucie Horner, “Trends come and go, but simple detailing and a neutral palette are timeless.”
Feb 13, 2012
New Development Condos are Great But....
...Read the Fine Print
If you’re considering buying a new condo, you may be familiar with some of the risks, such as construction defects, sponsor control of the board, warranty and punch-list issues because there are a few more potential time bombs that may take you by surpriseL
1. The developer has the right to convert the building into a rental—and hang onto your deposit for months until the switch is official
Under the New York Code of Rules and Regulations (the Martin Act) and in BOLD print on the front cover of the Offering Plan, it reads:
BECAUSE SPONSOR IS RETAINING THE UNCONDITIONAL RIGHT TO RENT RATHER THAN SELL UNIT, THIS PLAN MAY NOT RESULT IN THE CREATION OF A CONDOMINIUM IN WHICH A MAJORITY OF THE UNITS ARE OWNED BY OWNER-OCCUPANTS OR INVESTORS UNRELATED TO THE SPONSOR.
Accordingly, your deposit can be held hostage indefinitely until the sponsor files the appropriate paperwork with the Attorney General’s office to effectively abandon the plan.
I have three clients in this limbo situation—two in Brooklyn, one in Manhattan—and unfortunately there is nothing they can do but wait for their money back, then start their apartment hunt again.
Not much can be done here as it is never the sponsor’s intention to rent units and this decision is made after hard deposits are delivered.
2. The offering plan is laced with hidden costs
With offering plans clocking in at several hundred pages, developers rely on the fatigue-and-fine-print factor to camouflage a battery of hidden costs that they intend to pass on to you at the closing table.
Recently, perhaps because buyers have come to expect concessions like payment of transfer taxes and sponsor's legal fees, I have seen sponsors raise these costs and attempt to pass along new ones, including:
•Reimbursement to the sponsor’s attorney for ‘offering plan expenses’ of up to $2,000.
•Payment of the sponsor’s broker’s fee. This is a hefty sum ranging from 1% to 3% of the purchase price. That’s $10k-$30k on a $1 million condo. This is rare, but we have seen this.
•Tax abatement filing reimbursement
It is important to work with an attorney who not only knows new development, but can use this knowledge to attempt to reduce these fees.
For example, fees that go to the condominium (e.g., working capital and reserve fund contributions, and insurance premiums for the first year) are generally non-negotiable, while fees that help the sponsor reduce its own costs (like legal fees and transfer taxes) can easily be negotiated. Remember, sponsors have carrying costs, and for the time it takes to negotiate these things and get a client to close, the sponsor may be better off agreeing and closing.
3. Your property taxes will be significantly higher than the offering plan says when that abatement wears off
Most tax abatement programs and the offering plan summary and opinion relating to these programs are complicated and some attorneys don’t even understand them. Most importantly, buyers should be aware that programs such as the 421-A tax abatement program (which is being phased out) do not take increases in the tax rate into consideration or increases in the assessed value of your home. If you expect either of those to go down over the long haul, think again.
Make sure that you are confident that you will be able to afford an annual tax bill that climbs steeply as that abatement wears off. Also make sure you consider the depressing effect this will have on your apartment’s resale value. Is the apartment still competitively priced if you factor in unabated property taxes?
Buying new is great. It is just crucial that you have accurate advice and that you are going into the transaction with your eyes open.
If you’re considering buying a new condo, you may be familiar with some of the risks, such as construction defects, sponsor control of the board, warranty and punch-list issues because there are a few more potential time bombs that may take you by surpriseL
1. The developer has the right to convert the building into a rental—and hang onto your deposit for months until the switch is official
Under the New York Code of Rules and Regulations (the Martin Act) and in BOLD print on the front cover of the Offering Plan, it reads:
BECAUSE SPONSOR IS RETAINING THE UNCONDITIONAL RIGHT TO RENT RATHER THAN SELL UNIT, THIS PLAN MAY NOT RESULT IN THE CREATION OF A CONDOMINIUM IN WHICH A MAJORITY OF THE UNITS ARE OWNED BY OWNER-OCCUPANTS OR INVESTORS UNRELATED TO THE SPONSOR.
Accordingly, your deposit can be held hostage indefinitely until the sponsor files the appropriate paperwork with the Attorney General’s office to effectively abandon the plan.
I have three clients in this limbo situation—two in Brooklyn, one in Manhattan—and unfortunately there is nothing they can do but wait for their money back, then start their apartment hunt again.
Not much can be done here as it is never the sponsor’s intention to rent units and this decision is made after hard deposits are delivered.
2. The offering plan is laced with hidden costs
With offering plans clocking in at several hundred pages, developers rely on the fatigue-and-fine-print factor to camouflage a battery of hidden costs that they intend to pass on to you at the closing table.
Recently, perhaps because buyers have come to expect concessions like payment of transfer taxes and sponsor's legal fees, I have seen sponsors raise these costs and attempt to pass along new ones, including:
•Reimbursement to the sponsor’s attorney for ‘offering plan expenses’ of up to $2,000.
•Payment of the sponsor’s broker’s fee. This is a hefty sum ranging from 1% to 3% of the purchase price. That’s $10k-$30k on a $1 million condo. This is rare, but we have seen this.
•Tax abatement filing reimbursement
It is important to work with an attorney who not only knows new development, but can use this knowledge to attempt to reduce these fees.
For example, fees that go to the condominium (e.g., working capital and reserve fund contributions, and insurance premiums for the first year) are generally non-negotiable, while fees that help the sponsor reduce its own costs (like legal fees and transfer taxes) can easily be negotiated. Remember, sponsors have carrying costs, and for the time it takes to negotiate these things and get a client to close, the sponsor may be better off agreeing and closing.
3. Your property taxes will be significantly higher than the offering plan says when that abatement wears off
Most tax abatement programs and the offering plan summary and opinion relating to these programs are complicated and some attorneys don’t even understand them. Most importantly, buyers should be aware that programs such as the 421-A tax abatement program (which is being phased out) do not take increases in the tax rate into consideration or increases in the assessed value of your home. If you expect either of those to go down over the long haul, think again.
Make sure that you are confident that you will be able to afford an annual tax bill that climbs steeply as that abatement wears off. Also make sure you consider the depressing effect this will have on your apartment’s resale value. Is the apartment still competitively priced if you factor in unabated property taxes?
Buying new is great. It is just crucial that you have accurate advice and that you are going into the transaction with your eyes open.
Feb 6, 2012
The 10 Signs of a Desperate Seller
1.There are four open houses a week. . . 10 weeks in a row.
2.Telling you the price is very negotiable, the broker winks so hard her contact lens pops out.
3.The show sheet says you’ll receive all new furniture, a home theater system or a Vespa after closing. A week later, you return and discover that “or” has been changed to “and.”
4.A brand new unassembled crib is propped against the living room wall next to a huge box from Babies R Us.
5.When you remove your shoes at the door, the listing agent gives you a foot massage.
6.Framed photos have been torn in half, one of two closets in the bedroom is empty, and the fridge is stocked with take-out containers of half-consumed food.
7.You ride up the elevator with a guy from Moishe’s Movers delivering three dozen packing boxes.
8.The kitchen counter is laden with caviar, champagne and sweets from Maison du Chocolat just for potential buyers.
9.Idly opening a kitchen drawer, you discover mounds of discarded lottery tickets and torn betting receipts.
10.All the furniture legs are sitting in special coasters designed to intercept bed bugs, and the broker, who seems a bit fidgety, brought her own stool to sit on.
--------------------------------------------------------------------------------
2.Telling you the price is very negotiable, the broker winks so hard her contact lens pops out.
3.The show sheet says you’ll receive all new furniture, a home theater system or a Vespa after closing. A week later, you return and discover that “or” has been changed to “and.”
4.A brand new unassembled crib is propped against the living room wall next to a huge box from Babies R Us.
5.When you remove your shoes at the door, the listing agent gives you a foot massage.
6.Framed photos have been torn in half, one of two closets in the bedroom is empty, and the fridge is stocked with take-out containers of half-consumed food.
7.You ride up the elevator with a guy from Moishe’s Movers delivering three dozen packing boxes.
8.The kitchen counter is laden with caviar, champagne and sweets from Maison du Chocolat just for potential buyers.
9.Idly opening a kitchen drawer, you discover mounds of discarded lottery tickets and torn betting receipts.
10.All the furniture legs are sitting in special coasters designed to intercept bed bugs, and the broker, who seems a bit fidgety, brought her own stool to sit on.
--------------------------------------------------------------------------------
Feb 3, 2012
Real Estate Mkts are happy about Jobs Report
The U.S. Labor Department announced that 243,000 jobs were added in January, sending the unemployment rate to 8.3%, its lowest point since Feburary 2009.
The announcement was better than expected: The Wall Street Journal reports, "Both figures contradicted expectations of a slowdown in job growth to start the year. Economists surveyed by Dow Jones Newswires had forecast a gain of 125,000 in payrolls and that the jobless rate would remain at 8.5%. The report also indicated that job growth was stronger in previous months than initially reported, with the economy gaining 60,000 jobs beyond the government's preliminary figures for November and December."
The NY Times notes, "The Labor Department’s monthly snapshot of the job market uses a different survey, of households rather than employers, to calculate the unemployment rate. As measured by both the unemployment rate and the number of jobless — which fell to 12.7 million — it was the strongest signal yet that an economic recovery was spreading to the jobs market. The last time the figures were as good was February 2009, President Obama’s first full month in office." However, home prices are still falling and consumer spending is still "restrained"—a Royal Bank of Scotland economist told the Times, "It’s a steady grind in the right direction, but it’s a grind. You’re going to have a situation where you take a couple steps forward and a step backward."
The bad news, according is Bloomberg News, is now there's "doubt on whether the Federal Reserve can wait until 2014 before raising interest rates." Oh, and then there's Europe.
The announcement was better than expected: The Wall Street Journal reports, "Both figures contradicted expectations of a slowdown in job growth to start the year. Economists surveyed by Dow Jones Newswires had forecast a gain of 125,000 in payrolls and that the jobless rate would remain at 8.5%. The report also indicated that job growth was stronger in previous months than initially reported, with the economy gaining 60,000 jobs beyond the government's preliminary figures for November and December."
The NY Times notes, "The Labor Department’s monthly snapshot of the job market uses a different survey, of households rather than employers, to calculate the unemployment rate. As measured by both the unemployment rate and the number of jobless — which fell to 12.7 million — it was the strongest signal yet that an economic recovery was spreading to the jobs market. The last time the figures were as good was February 2009, President Obama’s first full month in office." However, home prices are still falling and consumer spending is still "restrained"—a Royal Bank of Scotland economist told the Times, "It’s a steady grind in the right direction, but it’s a grind. You’re going to have a situation where you take a couple steps forward and a step backward."
The bad news, according is Bloomberg News, is now there's "doubt on whether the Federal Reserve can wait until 2014 before raising interest rates." Oh, and then there's Europe.
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