Faced with only 24 hours in the day, I've been focusing on my core brokerage business and blogging a bit more lightly recently. I expect that the pace of posts will pick up again moving forward. I'm a real estate broker who blogs, not a blogger interested in real estate. Let's dive right in with today's report on the fickle first quarter of 2008. —Peter

download the complete Q1.2008 corcoran report
The Manhattan market has been interesting recently. It is hard to characterize it as either a buyer's market, or a seller's market. Its just a real estate market, and a more balanced one than in the last few years. People are considering their purchases carefully. We are seeing more offers starting below asking prices, yet well priced apartments are selling briskly, even with multiple offers. There is substantial buyer demand out there, but it's being tempered for the moment by uncertainty in the economy.

Customers are acting more cautiously since the Bear Sterns buyout last month. Whether the hesitation is justified depends on if you feel the fundamentals have actually eroded or not. How much damage to the global economy was caused by the sub-prime crisis is a matter of continuing debate. I've heard it described by some industry leaders as if you had a choice of 10 bottles of water to drink, but you knew that one was poisoned — you wouldn't drink any. The whole thing needs to unwind. However let me point out that the availability of credit for residential purchases has not been affected as much. Most people willing to put 20% down (less in some cases) and who have good credit ratings are still able to get mortgages at historically low rates. It's just a real estate market.

Additionally, developers now faced with putting more equity into their deals may put some of their plans on hold, restricting supply in the construction pipeline, and setting the stage for lower inventory a couple of years out. The available inventory of apartments in Q1 2008 rose to about 6% higher than in Q1 2007, mostly during the second half of the year as economic uncertainty began to cause some people to "wait and see". The number of apartments available to buyers in Manhattan bounced around 9000 units, but is trending higher, with more new developments coming online, and a buyers taking longer to decide.

The good news is that for buyers, this hesitation may have created the best opportunity to buy Manhattan real estate in the past 10 years, unless you feel that long term, New York City is spiraling downward into an abyss (a point of view that I haven't come across very much). There is a good selection of apartments available, and an environment more receptive to negotiating. No one is giving anything away, but fair deals are being struck every day.

mixed messages: what do the numbers say?

The hesitation has not translated into lower prices. The corcoran report showed that first quarter sales figures from 2008 looked pretty decent overall, but also showed that the number of co-op transactions has dropped 22% compared with a year earlier. Condo closings rose by 36%, and 60% of the condos were in new developments which have a greater lag time to being reported since they go usually go into contract during pre-construction, often many months before closing. They therefore don't actually reflect the current market activity as well as co-op transactions do.

click chart to enlarge

People still seem genuinely interested in real estate. 'New York Luxury Living' was an event hosted recently by the New York Observer at the Puck Building, which featured 40 new developments in a trade show style showcase. My agent friends were overwhelmed by the public response: 2,256 people paid ten bucks a head, to walk into a bazaar of developer's sales teams, hawking their products. That's way more than the expected attendance; "sorry we ran out of brochures", was the catch-phrase of the day. Newly developed condo sales accounted for a disproportionate amount of sales activity in the first quarter. This is sexy new product, with slick presentation. Could it be that older co-ops may need to consider doing that long put off lobby renovation or other upgrades, to help keep up with the market and hold value? Open houses for correctly priced properties under a million are busy, as are any where the perception of value exists. We price properties based on good research as to what has actually sold and closed, which always fare better than those based on competitive properties in this market. The marketing and sales management has to really kick in now, more than ever. It takes more than a few postcards and a web site to deliver results. Differentiating your home by graphic design, staging, a record of obtaining publicity, and an outstanding luxury broker network creates a more compelling proposition to help our clients achieve their goals.

I'll be focusing on sales in the downtown market in an upcoming post.

» download the complete Q1.2008 corcoran report

I recently sent a first time buyer that I'm working with, a purchase application for a co-op apartment that we have an accepted offer on. The buyer asked for clarification about the difference between the purchase agreement and the co-op's purchase application. It served as a reminder to me that every individual's real estate transaction is a very unique, important, and sometimes confusing experience. As a broker it is important to relay the basics for those who may have never been through it before. I took the time to explain in probably greater than necessary detail, and thought an excerpt of my response might be useful for those contemplating their first co-op purchase:

In effect, in buying a Manhattan co-op there are two hurdles, first to reach agreement with the sellers; then to reach an approval by the Board of Directors of the co-op corporation.

"The 'purchase agreement' is commonly referred to as the 'contract' of sale with the sellers, and is an element included in the Board package. It controls the process by which you and the sellers have agreed to transfer the shares of the corporation in their name. It dictates the essential terms of the sale including price, closing date, inclusions, exclusions, contingencies, etc... It is not binding on the co-op and its Board of Directors. Purchasers of Manhattan cooperatives must seek the approval of the Board to buy-in, and complete the transaction. The Board has the final say in accepting or rejecting an applicant. That process begins with the purchase application.

The 'purchase application' is made with the co-op corporation, to become a shareholder of a company that owns the building, and issues you a proprietary lease to occupy the apartment; in much the same way as a landlord does in a rental building. In this case the rent is called 'maintenance'. The Purchase Application outlines the documentation that the Board requires for review, to transfer the stock and lease to a new shareholder. It contains the required forms and disclosures by the co-op corporation and is the beginning of your prospective relationship as a shareholder in the company. As your broker, it is my job to assemble the documents that are asked for in the purchase application into an easy to understand 'Board package' that I'll then submit to the building's manager for distribution to the members of the Board. The process usually leads up to a face to face interview; and ends with an approval, or rejection, of the applicant. An approval is a green light to schedule a closing where the stock and lease will be transferred, after reviewing and signing a mind-numbing amount of legal papers."

In effect, in buying a Manhattan co-op there are two hurdles, first to reach agreement with the sellers; then to reach an approval by the Board of Directors of the co-op corporation. The process is rigorous, but the extra layer of oversight that co-op boards have imposed in NYC is one of the reasons why we still have a stable housing market here. It has created fiscal scrutiny and owner equity requirements that exceed most lender's underwriting guidelines. Many co-op owners come to really appreciate the control, along with their neighbors, over their common interest in their buildings, which this form of ownership governs.

Q. My wife and I are selling our home and relocating to another area. Can we roll the money over into the next house without paying capital gains?

A. Get a load of this: I checked with tax expert Robert Hoberman of Hoberman, Miller, Goldstein & Lesser, P.C. in New York City. He advised that if you own the home jointly and you’ve lived there for two of the past five years, you can exclude up to $500,000 of your gain when you sell (for singles, the exclusion is $250,000) and you don’t have to roll the money into another house to enjoy the tax benefit.

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"co-ops, condominiums and town houses are flying off the shelves in brokerage firms across the city"

After looking at The London property echo last week, we've landed back in Manhattan today and looking at another reverberation in the echo of these vigorous real estate markets. Josh Barbanel wrote in the New York Times about the most recent indication that the Manhattan marketplace is still alive and well in a piece simply titled Manhattan Market Remains Stable. He writes, "Last month, the number of closed sales just about matched the number closed in November 2006, and prices were considerably higher, but roughly flat compared with the prices in the previous quarter, according to a review of sales records filed with the city." That sounds about right to what I'm experiencing and hearing from my colleagues. There has been a fairly consistent number of deals being made and inventory in any particular property size is pretty slim in any one neighborhood, causing a modest, but equally steady rise in prices.

how to price a home right now

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The Robb Report is publishing a new magazine, that has its premiere issue on newsstands, called Vertical Living. It covers super-luxury, high rise, developments in global destinations like London, Mexico, Singapore, Australia, and of course, New York City. Contributing editor Kim Fredricks interviewed me about buying into a new development. That interview follows here in its entirety and has some good advice in it; as does the very nicely crafted piece she wrote for the first issue called Small Promises (tear sheet pdf 320 kb) in which I'm quoted. Buying new construction is a place where even the most savvy buyers will benefit from their brokers' depth and breadth of knowledge. I'm pleased indeed to have been asked to comment on a subject that I've written about before. In fact, I learned a couple of weeks ago that my post about closing costs in new developments, is being excerpted and included in the next edition of New York Real Estate for Salespersons, one of the textbooks for the NY State Real Estate licensing exam; it was also a selection in the Carnival of Real Estate which is a sort of traveling show of the best real estate blog posts that Zillow blog's Drew Meyers started up. These are a few nice and unexpected validations, of the connection with the audience and the growth of my blog, which has been public for just shy of a year now.

the Robb Report Vertical Living interview

Vertical Living: Buyers are lured by the benefits of getting a good deal on pricing when buying pre-construction, but what are some red-flags that the buyer should look for before placing a down payment?

Comitini: I don't think that buyers in our market in Manhattan think they are getting a break on price. They are willing to pay well for a premium product. Sometimes with a year or two lead time to delivery, the market accelerates past the contract price and seems a bit better. New construction is generally higher priced than are re-sales, on a price per square foot basis, with higher out of pocket closing costs. Have your broker identify a couple of previous projects of the developer so you can understand if they have performed as expected.

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