Warburg Blog

Is there another real estate bubble? I am reading and hearing this question all that, in the last few months, the market has grown extremely hot in certain areas, the differences between what is happening today and what happened six years ago are substantial. While no one can predict the future, my sense is that neither the national nor the local New York markets are in a bubble, although it certainly can feel like one if you are a buyer competing against seven others for a two bedroom apartment on Third Avenue or a house in Fort Greene. Here is my thinking:

    • The economy is expanding gradually. There is no talk of a “new paradigm” or a “new economy” in which unlimited
      expansion is possible. Improvement is cyclical, and real economic growth continues to be slow. Part of the interest in real
      estate actually hearkens back to one of its fundamental benefits: bricks and mortar. In spite of the stock market’s
      precipitous rise, most people are still fundamentally cautious about their longer term future. In such an environment,
      hard assets like real estate have a particular appeal.

    • Inventory in Manhattan and Brooklyn is at a historic low. Over the decades of the 20th century, America became
      increasingly urbanized. Jobs and quality of life both drew more and more people into cities. New York has always been
      a particular magnet for transplants from around the country and around the world. Because of the recession,
      and changes in tax development, few buildings were begun over the last five years (although there is certainly more
      of a mini-boom in building today). So we are a city with an expanding population and a relative paucity of
      newly constructed places to live.
      Add to that the changes in the capital gains tax laws enacted in the beginning of this year, dis-incentivizing
      long time owners from selling their highly appreciated homes, and you have a perfect storm of scarcity. As people
      become more accustomed to the new tax laws, and as more mid-range properties reach the marketplace,
      I believe much of the urgency will become tempered and a more balanced market will resume.

    • There are three different market dynamics in the New York real estate scene, and each is created by differing
      realities of supply and demand. They are the internationally driven high-end new condominium market,
      the market for older co-ops and condominiums priced below about $5 million, and the higher end co-op market.
      Each of these is behaving quite distinctly.

        1.The high end new condominium market continues to set records, albeit at price levels considerably lower than
            the world’s other most international cities such as London, Paris, and Hong Kong. The U.S. remains a safe
            haven into which flight capital continues to flow. I don’t foresee major changes in this dynamic in the years ahead.

        2. Lack of inventory continues to drive the market for properties under $5 million. The two-bedroom markets in both
            Manhattan and Brooklyn remain the most competitive, particularly for units costing less than $1.5 million or those in
            mint condition. Affluent singles, young couples, and empty nesters returning to the city all vie for these properties.
            As one gets to the upper end of this market segment, condition and location become increasingly significant factors.
            It is actually still possible to pick up excellent buys on beautiful six and seven room apartments if they need work and
            lie outside conventional neighborhood boundaries.

        3. The higher end co-op market is uneven. While park views and top addresses continue to draw buyers,
            this market shows price sensitivity not at all characteristic of its counterpart in 2007. There is no longer an army of
            mid-level investment bankers flush with bonus cash snapping these units up. The buyers of today, whatever
            the origin of their funds, pay close attention to relative value. Many of these units, if not correctly priced,
            linger for months on the market.

    • Finally, a market which is driven from the bottom up feels healthier to me than which is driven from the top down.
      Young professionals all over the city, from the Upper West Side to Prospect Heights to Long Island City,
      are investing in homes and making a long term commitment to New York. They are, for the most part, fiscally cautious.
      They qualify for financing in today’s much more restrictive mortgage environment (or they get help from the
      Bank of Mom and Dad), they send their kids (when they have them) to local public schools in which they become
      activist parents, and they build their neighborhoods with like-minded colleagues. Today’s buyers in the critical $1 million
      to $3 million dollar marketplace are generally not investors. They are not looking for a quick profit. Their purchases reflect
      not froth, not a fantasy of real estate as a get-rich-quick vehicle, but a decision to participate in and continually
      re-activate New York as a series of vibrant, inclusive, multi-generational communities.

As everyone who lives here knows, anyone who wishes to buy in a co-op building in New York must follow an admissions process akin to that for a private club. Reference letters and detailed financial disclosure are required. What people don’t know is that sometimes, when a Board is not enthusiastic about an applicant, they express this lack of enthusiasm through delay. Two months, three months go by without either a rejection or a request for an interview. Maybe additional documentation is requested at some point. But it can be a period during which both buyer and seller are held captive. In a rising market like this one, it is a terrible disadvantage to the buyer, for whom similar apartments may soar out of reach while he is waiting for a Board decision. In a declining market like the one we were in four years ago, it is the seller who loses out. If the buyer is not approved, the apartment has diminished in value during the process. And the longer the time, the greater the loss.

Early last week I testified before the City Council about this issue. My colleagues Pam Liebman from Corcoran and Michael Bisordi from Tungsten Properties joined me in addressing issues pertaining to Intro 188, the recently re-introduced bill which would both create timing deadlines for co-op Board deliberations regarding prospective buyers and compel Board members to attest that they practiced no illegal discrimination in the process. Our testimony went entirely to the first issue: timing. We all three think some timing parameters are a good idea.

Creating intelligent time parameters for co-op Boards (and condo Boards, which are at least as guilty if using delay to signal displeasure) hurts no one. Instead, it creates clarity for all parties. Buyers, sellers, and Boards would all know exactly what the parameters are. The requirements would be clear, and the amount of time the Board would have to deliberate after receiving a complete package would also be clear. Intro 188 suggests 45 days, which sounds like plenty of time to me. And I was a co-op Board president for many years, so I know that time frame is not onerous. And the time period would be longer in the summer.

The illegal discrimination part of the bill seems more problematic to me. First, New York City has the broadest fair housing laws in the country, with a long list of protected categories. I am certain the majority of co-op Board members do not even know what the protected categories are, or that co-ops are subject to the same fair housing rules as every other type of residence. Second, why discriminate against co-op Boards? Surely if the Council is concerned about adherence to fair housing guidelines, landlords are the place to start, since the vast majority of New Yorkers live in rental housing, and there are no such requirements for landlords.

While I understand that ignorance of the law is no defense, I think education is more likely to be effective for co-op Board members than legislation. Mandating that every Board member must receive, at least annually, a list of fair housing protected categories and anti-discrimination information seems like a far more effective solution to me.

I do not believe the proposed anti-discrimination requirements would actually lead to greater transparency. But it would certainly make people a lot more reluctant to serve on co-op Boards!

In my first quarter market report a few weeks ago, I noted the almost unprecedented lack of inventory in the Manhattan and Brooklyn real estate markets, and the havoc that shortage has been wreaking in the lives of buyers in particular. In the April 22 issue of New York Magazine, Jhoanna Robledo’s “Intelligencer” article reports on the same phenomenon. (To read my report and Jhoanna’s article, see links below.) She notes, accurately, that high six and low seven figure two bedroom apartments from Fort Greene to Bed-Stuy to the Upper West Side all attract vast crowds and command multiple offers, often above the asking price. What Jhoanna does not write about, however, is those areas of the market which are NOT so hot. Increasingly we agents see a market segmented by price and location, but not in the way most buyers and sellers might anticipate.

Michael Vargas, the head of Vanderbilt Appraisal Company, recently circulated a most interesting chart about Manhattan inventory absorption rates for the first quarter of 2013. (Click on image to enlarge.)

The absorption rate is determined by taking the average number of units closing per month (today in Manhattan it is about 900) and dividing that into the total number of units on the market (today that is about 4600.) That means you have just a little more than five months’ worth of inventory currently available. In most markets six to eight months is considered equilibrium, so there is no question but that, as Jhoanna points out and any real estate agent in New York or Brooklyn can tell you, demand exceeds supply.

The chart becomes interesting, however, when you look at the different price points. As you can see, demand exceed supply all the way from 0 to $3 million dollars. This gibes precisely with what we are seeing in the marketplace. In particular, the 2 bedroom apartment market all over Manhattan and brownstone Brooklyn is on fire. Fifty buyers are lined up at the entrance to a building waiting for an Open House to begin. Offers pour in after only a couple of days on the market. And the same holds true for the less expensive three bedroom units. We have had several of these on the market in the past few weeks: pretty, modestly sized at 2000 square feet or less, available for under $3,500,000, which also generated a frenzy of activity.

But then something interesting happens. At $3 to $6 million, demand and supply are pretty much in equilibrium. What we see in the marketplace gives some color to this statistic: The top prewar apartments in this price point remain very much in demand, assuming the pricing is not too crazy. But if you head too far east, or too far north on the Upper East Side, suddenly there is inventory hanging around which seems reasonably priced but just does not move. This category of buyer, it seems, does not have too much location flexibility at these prices.

At $6 to $10 million, there is a fourteen month supply. One interesting fact: the higher you get in price, the clearer the divide becomes between the co-op and condo markets. Condo buyers, those from overseas in particular, do not seem to balk at the enormous numbers they are paying for the newest, snappiest condominiums. So that inventory continues to move quite briskly. At the same time, similarly priced co-ops often languish on the market; sellers often base their price expectations on condo sales but the co-op buyer, usually a local and almost always an American individual, tends to be more careful with her money. Thus many of the very highly priced units, especially those needing renovation, sit for months. So it is that the top price category in the Vargas report, $10 million and up, shows inventory supply of just under 20 months. It’s not that there are not buyers out there for these units. They just don’t want to pay what the sellers want.

I recently had lunch with a colleague who is a top agent at another firm. He tends to represent only the snappiest properties, and he was lamenting to me the fact that no one is coming to see or bid on them. To me it did not seem so surprising. They are big, they are by his admission a little overpriced, and they need some updating. I joked with him that if he could carve each of them up into a few two bedrooms units priced at $1,595,000 he could probably get 12 bids on each in the space of 72 hours. Empty nesters, young families, pied-a-terre purchasers, single professionals – they all seem to want two bedroom units. And there are just not enough to go around.

Link to my first quarter market report: http://www.warburgrealty.com/blog/?p=1041

Link to Jhoanna’s New York Magazine article: http://nymag.com/news/intelligencer/real-estate-boom-2013-4/

Without fail, I have the same conversation with every new Warburg agent after they have spent about a year in the business.  They say to me, “I had no idea it would be so hard.”  Well, I knew it would be hard! When I interview prospective hires, I try to warn them. Success in residential real estate requires a multi-faceted approach. A number of skill sets must be developed simultaneously.  Nonetheless, newbies tend to project their own romantic notions onto the business: they will be earning six figures in no time; they will show fabulous properties and collect big checks. And all the while, they will be making their own schedule.

The reality they discover is substantially different. Despite our extensive internal training, there is still a very steep learning curve. New agents must get to know the inventory, which is extensive, diverse, and filled with subtle yet significant distinguishing characteristics. They must learn (and they can only learn by experience) the processes involved in shepherding a sale from its inception to its closing. Their first deal falls through. Their second deal falls through. Maybe they are fortunate enough to assist a senior broker, thus accelerating their experience and receiving some mentoring.  And all the while they are trying to figure out how to generate a steady stream of their own clients and customers.

For all agents (and for everyone in sales everywhere) success at creating a pipeline of future business determines the arc of your career. Your skills, important as they are, are only meaningful if you have someone on whom to deploy them. Successfully developing your sphere of influence, and making that sphere work for you, are the critical elements to building a sales career. Like charm, if you have it, nothing else matters. And if you don’t have it, nothing else matters!

In every interview, I say to the eager person across the desk from me, “Everyone you know knows someone else in real estate. So why are they going to hire you?” Mostly I am met with a blank stare. But this is the crux of the matter. Who do you know, and how can they help you generate leads?

Here’s what I have learned about creating business: you have to ask for it. You have to overcome your feeling that it is crass, or embarrassing, or too aggressive. You have to cultivate people everywhere you go. You have to know the business well enough so that you can talk about it knowledgeably whenever it comes up (and in New York, it ALWAYS comes up.) You have to have cards with you at all times. You need a broad enough economic perspective so you can help prospective clients put their contemplated transaction into a larger financial and global context.

You have to accept that, more often than not, the people closest to you will break your heart. Your brother, or your stepmother, will buy through someone other than you. Your best friend will hire you, then complain about everything you do. I figured out early on that people in my second circle of influence, the friends of friends, the referrals I knew slightly, were going to be the ones whose recommendations built my business. And I stay in touch with everyone, because only when I am top of mind and putting myself regularly before them are they likely to remember me when the moment to make a purchase or sale arrives. Best of all, over the years many of them have become friends.

Real estate in New York State has a very low bar for entry. But there is a high bar for success, and many people don’t make it. It takes years of cultivation, of dedication, often of frustration.  You do make your own schedule: often 12 hours a day, 7 days a week.

When it works, it’s the best job on earth. It’s no surprise to me that Forbes recently noted, based on interviewing thousands of Americans, that real estate agents are the happiest of any workers. As an agent, your fate is in your own hands. After 5 or 6 years, you have the skills in your fingertips – at a certain point, pricing and Board package prep and financial review becomes like muscle memory. But no matter what, you always have to be out in the world, meeting people, making connections. Till the day you retire you are always feeding the pipeline.

I grew up in Manhattan, and many of my early memories involve Central Park. We played every day in the Mother Goose playground (now a concert venue!) in the days when the playgrounds were nothing but concrete. We rode the carousel on Sundays, my brother and I nattily attired in wool coats bought by my mother in London. We posed by Balto, the sled dog whose statue rises on a little hill above the East 66th Street gate.  And then, not too many years later, in the early 60s, there was the first time someone tried to steal our sled.

The history of the Park is the history of the city. In my lifetime, that history has been a wild ride to the extraordinarily beautiful conclusion we all enjoy today. It started as an idyllic environment, one to which we went every day as kids. This was in the 50s, when the city was safe and essentially law-abiding. Street crime was not familiar to us on the Upper East Side and our slice of Central Park felt as safe as the streets of our little village. The day of the attempted sled theft (my brother and I successfully fled) that all changed for me. Fear gradually became a reality associated with the Park, first after dark and then, increasingly, at any time. The grass and bushes died as money for their maintenance dried up. By the mid-70s, when bankruptcy loomed for the city, the Park was desiccated and grim, filled with roving bands of young thugs who were shaking down other kids and intimidating women. Real estate prices plummeted, and living near the Park seemed, for a time, like a questionable benefit. Apartments in the San Remo on 74th and Central Park West, which now sell for $12,000,000 or more, changed hands for $50,000.

The Park remained in this sad state for a decade or more. Crime was rampant everywhere in the city, but in the Park, where there were no lights at night and many hiding places, fewer people ventured. I remember in the 80s that the Great Lawn was a dust bowl, and no one with an ounce of sense ventured into the Ramble at any hour (well, some people did, but that is another story…)

And then, little by little, the Park came back to life. The public/private partnership of the Central Park Conservancy has been largely responsible for that (the Conservancy has been one of New York’s major success stories), but it also mirrors the rebirth of every other part of the city. At about the same time that one could once again park one’s car on the street without putting a sign in the window saying “No Radio” (and probably having the window broken anyway), at about the same time as every phone booth in our neighborhood ceased to be surrounded by a litter of crack vials, the Park came back to life. Reseeding, repaving, replanting – little by little over the past two and a half decades we New Yorkers have been given again the extraordinary landscape of this huge, unique oasis.

This past Sunday my wife, my grandson and I went to the zoo. Crowds of all ages joined us in enjoying a day outdoors in Central Park: the most democratic of all city entertainments.  Daffodils and forsythia are everywhere in bloom.  The grass is lush on the Great Lawn, which is ringed by flowering trees. The ponds are filled with ducks and geese and turtles; hawks soar overhead. Like me, the Park has matured. It is more sophisticated and diverse in its flora than at any time I can remember. As the city has shed its nimbus of crime, the Park too has shed its old skin and emerged reborn – the most important real estate in Manhattan and, most importantly, belonging to us all.

Looking back over the first quarter of 2013, the real estate recession seems a distant memory. Prices have escalated to near, at, and even above their 2007/2008 highs, and demand relentlessly outstrips supply all over town.  It is hard to imagine that, only four years ago, buyers were sitting on the sidelines, agents could not move the inventory we had on the books unless we aggressively reduced prices (usually anywhere from 25% to 40% below the high only a year earlier) and extraordinary deals were available to those with the fortitude to act. Ironically, many of those buyers who for years had claimed they were awaiting a drop in prices were themselves too apprehensive about the future to act when the opportunity DID present itself.  It compelled many buyers to re-assess their willingness to really BE contrarian rather than simply claiming to be so. For most of us, doing what others are doing feels a lot more comfortable, even when we have to pay for the privilege.

There are few such opportunities in 2013. Nonetheless, today everyone with money wants to participate in our real estate market. Foreigners, be they from Russia, South America, or the Euro zone, continue to be drawn to the relative stability of New York and our bargain pricing compared to other international cities. They particularly like the luxurious Midtown condos: old favorites like 15 CPW and the Plaza now vying with newer additions such as One FiftySeven, 432 Park Avenue, and the Carleton House. Further uptown, the elegant new building at 135 East 79th, an updated version of the glamorous prewar buildings which surround it, sold out – with the exception of the penthouse – in a matter of months.  And at the Macklowe conversions at 737 Park Avenue and 150 East 72nd, trading is brisk.

In the high end co-op market pricing remains the key. Since the post-2009 fade-out of the investment banker as our primary customer, a diverse group of careful, value-driven purchasers have inhabited this marketplace. They do their homework, and being mostly local people (as co-op buyers usually are) they are highly conscious of recent prices and how they vary from building to building. And often those willing to overpay are not acceptable to these highly demanding Boards.

The weakest marketplace in Manhattan remains smaller apartments east of Third between 96th and 23rd Streets. There is no inventory shortage in the studio and one bedroom marketplace, and prices remain somewhat depressed in response to the excess. But move into the two bedroom arena and suddenly everything is different. Two bedroom open houses have been mobbed with 40, 50, 60 visitors on a Sunday afternoon, followed within 24 hours by multiple offers and competitive bidding. The same remains true with reasonably priced larger apartments: one of my agents told me today that her mint condition, but small, seven room duplex exclusive received 100 visitors at this past Sunday’s open house. When buyers sense value, especially in desirable areas, they descend like locusts.

Only a few years ago the Harlem market looked to be oversaturated with new condos, many of which were converted to rental by developers eager to generate some income from these empty, seemingly unsalable properties. In the last 18 months West Harlem has done a complete about face. All those condominium units, and more besides, have been snapped up, leaving a shortage of inventory and escalating prices where buyers could still  take their pick in 2010 and 2011.

Brooklyn seems the most frantic market of all. In Williamsburg, Park Slope, Prospect Heights, Fort Greene and Windsor Terrace, virtually everything with a somewhat reasonable price tag receives bids from a minimum of five people within days of appearing on the market. It is not uncommon to speak to buyers who have been outbid five or six times in their search for property, leading them to either drop out and rent or aggressively offer 10 or 15% over the asking price after one quick visit. These are the realities of today’s marketplace.

Barring unforeseen events, I predict that the balance of 2013 will offer more of the same. There are few signs of abatement in either buyer interest or inventory shortage. Depending on how much the rental market eases (and there has been a bit of easing in the first quarter), the small apartment market will either limp along (if the vacancy rate does not drop again) or firm up if buying once again becomes a better alternative than renting for younger people. Throughout the market the interest rate environment will continue to motivate buyers who know that these historic lows will likely soon disappear as the economy continues to improve.  And asking price increases, which have been modest during the last three months even as competitive bidding has driven sales prices up, are becoming commonplace. A property which receives a Board turndown at price A will now come back to the market at A plus 10%, and often obtain that new price, or more! It’s a brave new world, again.

Combining apartments to create larger residential spaces is not a new concept, but it’s also not an everyday occurrence. Despite Mayor Bloomberg’s advancement of affordable pint sized micro units, the demand for large properties continues as does the practice of putting together multiple units. Even developers of new condo products are going back to their drawing boards to combine apartments to capture higher price yields per square foot. Given the current shortage of sizeable properties, one wonders whether we will be seeing more combinations.

Two purchasing scenarios exist for joining apartments. Buyer A buys the apartment of the neighbor(s) to the right, left, above and/or below the apartment he already owns to combine them. Buyer B buys two separate apartments to join them. Occasionally, buyers have the enviable opportunity to recombine apartments that had been separated previously (probably during the Great Depression) to restore them to their original footprint. Always, the procedure comes with challenges and often higher than typical maintenance fees. Done well, however, the process is definitely worth undertaking.

I’ve seen some fine examples of joined apartments where the combination is seamless, all the floors and baseboards have been redone, and the space flows gracefully in well laid out proportionate rooms. I’ve also seen disasters with mismatched floors and uneven ceiling heights, disconnected hallways and a patchwork of unrelated chambers. Not all contiguous apartments are worthy of being joined. The main problem with combinations, particularly in postwar buildings, is their tendency to stretch out horizontally so the result feels ‘railroady.’ It’s the wise homeowner who enlists the aid of a professional designer or architect upfront to determine whether combining will create a satisfactory end product.

Since November 1997, when the NYC Department of Buildings changed Building Code, the approval process for combining residential units has been streamlined. For combinations from 1968 to 1997, it was necessary to obtain an amended building Certificate of Occupancy because the combination reduced the total number of units. Today, the process is less arduous: the job can be self certified by a licensed architect after which the DOB issues a Letter of Completion to acknowledge the units have been combined legally.

“Whenever the opportunity arises,” says Attorney Neil Garfinkel of Abrams Garfinkel Margolis Bergson, “most owners, if they can afford it, will look to expand their residences.” Neil cites the example of a current client who slipped a note of inquiry under a neighbor’s door. In the contract Neil is preparing, he will acknowledge the buyer’s intention to combine the units, but won’t include a contingency that the co-op board approve the combination since the board must first approve the purchaser and only after that, the buyer will submit full architect’s drawings for board review.

Before entering into an agreement to purchase a “knock thru,” it’s critical to consult with a loan specialist to determine any special requirements. “It’s a greater risk to make a loan on two separate properties that are yet to be combined,” explains Melissa Cohn, EVP Manhattan Division of Guaranteed Rate. “If one apartment is already owned and the other is to be purchased, any existing loan will need to be refinanced so that the financing is secured against both apartments.” When two separate apartments are purchased, some banks will require borrowers to put money in escrow ($10,000 or .5% of the cost of the project, whichever is higher) which is released either upon completion or once the bank sees that the second kitchen has been removed.

With condominium apartments, the process is more complicated since condo units have separate tax lots. It’s best to consult with counsel to determine whether a new lot number from the Department of Finance is necessary for the newly created unit prior to filing the combination and whether amendments to the condominium declaration and offering plan are also required. If the units are not combined into one tax lot, a higher commercial tax rate may apply when the apartment is either financed or sold.

Attorney Craig L. Price of Belkin Burden Wenig & Goldman sees a problem when either the buyer or seller inherits an improperly filed preexisting combination. “Questions arise,” he explains, “about who will deal with the lack of certification.” He estimates it can take upwards of 6 months to remedy and as much as $10,000 to draw new plans and expedite DOB paperwork. “If this is not done,” he warns, “there will be problems with financing and closing up the road.”

Susan Zises Green, owner of the eponymous Susan Zises Green Inc. Interior Design, describes a recent Upper West Side project as “double the trouble, a third of the cost of purchasing new and triple the investment!” When an adjoining two bedroom apartment came up for sale next door to the owners of a three bedroom, Susan’s clients grabbed it. “It was easy to see how rooms could be repurposed,” she observes. “The second kitchen became an elaborate storage/laundry room. We were able to cordon off the second apartment where the contractors contained their work areas while the clients remained in their original home. They have since had offers extraordinarily above what it cost to buy and renovate.”

In real estate parlance, the whole is worth more than the sum of the individual parts. If you’re a two bedroom owner and thinking about selling, knock on your neighbor’s one bedroom door and call in an experienced real estate professional for advice on joining forces to present the possibility of a 7 room combination. If the opportunity arises, there’s clear economic advantage to doubling down in the current market.

In 1980 there was no such thing, as far as I knew, as a personal brand. There was, for that matter, nothing much known as marketing, at least in residential real estate. What we did was advertise. We got a listing, and we advertised it in the Sunday New York Times classified section. A number of other people probably also had the listing, and the chances were good they were advertising it too. There were no exclusives in those days. Hopefully, people called you on these ads, and you were able to sell them an apartment. Probably not the apartment they had called you about, more likely another apartment.

The classified real estate ads in the Sunday Times went on for page after page. The major firms vied for placement. I remember the pride I felt on the weeks that L.B.Kaye, the firm for which I worked as an agent at that time, had three full columns of ads and appeared at the head of the Sunday section. And on Mondays, we would huddle together in the office, comparing the ads we had circled: we tended to circle anything we did not recognize. Then we would try to use the language in the ad to decipher a location, and use our knowledge of layouts to narrow down the possibilities of what it could be. Then, once we had some idea, one of us would head out to canvass the doormen of the likely buildings; usually, with the exchange of a five or a ten, one could get the information about the owner, whom we would contact to get the listing for our company.

Then the world changed. The advent of exclusives completely changed the ad process: only one firm had the right to advertise the property. And since they were likely co-broking it with us, we did not have to figure out what it was. More information fell into our laps. As the Internet developed in the 90s, buyers began little by little to do their own searches and figure out what listings they might be interested in on their own. So even MORE information fell into our laps. As this evolution took place, the notion of advertising, in the sense of classifieds and display ads in the New York Times Magazine, or Quest, or Avenue, also changed. Many in our industry clung to the classifieds for years after their usefulness had clearly waned, but in the end even the die-hards had to admit that really, our business was no longer about advertising listings. Buyers had begun to find listings on their own, doing their own searches, refining their own criteria. We had entered the age of marketing. And what is it we are marketing? To some degree, it is still the listings, but I think that, more then ever, we are marketing our firms and ourselves. In other words, a brand.

Marketing a brand is very different from advertising a listing. Although both depend on creating an impression of uniqueness, the latter tends to rely on formulaic descriptions of qualities and benefits, long on adjectives, adverbs, and brand names.  “Stunning”, “spacious”, “bright”, “mint”, “Viking”, “Sub Zero” –you get the picture! But creating a brand – either for a firm or a person – requires some thought. How do you want the entity perceived? Do you want to be cutting edge or traditional? Is integrity an important part of the image, or do you simply want to make sure everyone knows you are the 800 lb. gorilla? And once you determine the parameters of your desired perception, how best to do outreach to make it stick? Mailings? If so, what’s the message? A basic tenet of mailings is that in order to be successful they require a call to action? What will it be? Are you going to promote your personal brand on Facebook? If so, how will you curate it, given that too much personal information feels inappropriate, but too much business information tends to be a turn off. How do you build up a Twitter following? What Linked In groups should you join?

A fascinating part of the new marketing/branding culture is that it is additive. Warburg agents still have to write ad copy about their exclusives, even though now it goes onto the web or our full page ads rather than into the classifieds. We need personal profiles on our webpages. We need to do personal brand building on the social media sites. Mailings with a branding message are still popular, especially for those agents who do a lot of work in a particular neighborhood or group of buildings. Some of us even blog, week after week, year after year!

This is how the change looks to me: thirty years ago, we advertised for the purpose of selling apartments. We knew where (The Times), we knew when (Sunday), and we knew how. Today, we market for the purpose of selling ourselves. And the options are endless.

Recently one of my newer agents commented to me that she had no idea making it as a residential real estate agent would be so hard. It often takes a year, sometimes closer to two, before agents start making sales deals.  Some never really get started. Because there is a low bar for entry (getting a real estate license is almost embarrassingly easy in New York State) people seem to imagine that there is also a low bar for success. Nothing could be further from the truth.

At the time I entered the business, residential real estate agency was primarily a women’s business, as commercial was primarily a man’s business. Nonetheless, the successful residential agents of the generation above mine, at least here in Manhattan, were smart, tough, and unsentimental. Being successful businesswomen in their generation had made them more relentless as agents; most of them had to fight so hard to be successful that they had adopted many of the male traits associated at that time with major earning power: ruthlessness, competitiveness, and acute ambition. Within our “women’s business”, the most successful women were often aping masculine traits in order to make a name for themselves.

Over the years, the situation has changed. In our industry, as in most others, there has been a growing awareness of the value of emotional intelligence. Society increasingly rewards sensitivity mixed with strength. Being thoughtful or considerate in professional situations is no longer seen as a sign of weakness.  Interestingly, this has taken place even as more young men enter the residential sales business as a first career. Both sexes have benefited from the change towards a more feminized version of professional behavior. And today, it is not just women who value the flexibility of an independent contractor’s life. New agents increasingly understand that, while you can make your own hours, no one succeeds in the New York market who regards brokerage as a part time job. Flexible time simply means that we are working or on call ALL the time.

When I entered the business in 1980 the prevailing image of the New York residential real estate agent was still a woman in mink who unlocked a few doors, then collected a large check. While that has never been an accurate view of our business, it has taken time for the stereotype to die. Now (I hope) that image is on the wane. Today’s successful agents are well informed, strategic, hungry for knowledge,  driven, and client-centered. They must be closers, direct and firm, while always remembering that ours is a service business. They are collegial in their relationships with peers and helpful to, not threatened by, the next generation of up and comers.

Who is attracted to brokerage, and why, has changed substantially since I first entered the business (believing I could do it part time) years ago. Today, liberated by technology, people in every walk of life are increasingly interested in flex time and the ability to work from non-office locations. Real estate has always offered the benefits of mobility, excitement, and flexibility. But, as I tell every aspiring agent who comes to me for advice, those benefits come at a price. You have to create your own business every day, every month, every year. Most people can’t do it; this is an extremely difficult career in which to achieve real success.

On the DISC personality assessment we administer to our interviewees, we have learned that high D (Dominance) and I (Influencer) scores tend to be the best predictors of brokerage success. That seems to me to be the perfect pairing of traditionally masculine and feminine traits. You have to be both tough and gentle to make it in the brokerage industry.

Here in Jamaica, where I arrived yesterday for a week with my family, the contrast between the American vacationers and the local people is stark. The former are housed in various levels of luxurious accommodation, while the latter live primarily in small houses made of cement block and salvage. Today Rose, the nanny we have hired to look after my grandson and great-nephew (for $5 an hour!) was talking to me about her interest in working in America. She cannot get a visa without the sponsorship of a family, and those are hard to come by. As the immigration debate continues to rage at home, my visit forces me, again, to contemplate the extraordinary importance of immigration to our city, and our country.

I walk around New York continually distracted by the beauty of the architectural masterpieces which surround us. Almost every older building is decorated, be it with gargoyles, classical friezes, busts seen head on or in half profile. And the vast majority of that work was done by recent immigrants who learned their craft elsewhere and brought it to our shores.

Of course, we are all immigrants, except for the few Native Americans among us. The great real estate families of New York tend to descend from an immigrant patriarch from Germany, or Central or Eastern Europe, with the foresight and strength of will to build and acquire property. Those buildings, one after another, were worked on and embellished by stonemasons from Italy or Greece. Rosario Candela, whose beautifully proportioned apartments are sought after by rich New Yorkers of every variety, was born in Sicily. The beautifully executed Deco towers of the San Remo and the Beresford were created by Emery Roth, born Imre Roth in Hungary.

I am not suggesting that our nanny Rose is destined to become a great American architect (though who knows?). But it does seem profoundly significant to me that the designers and fabricators of so many of New York’s most elegant architectural icons were born in other countries and were drawn to America because of the opportunity it affords.

Throughout our history the United States has represented opportunity, the possibility of realized ambitions, to Sicilians like Candela, Hungarian Jews like Roth, and millions of others of countless nationalities going back to the Pilgrims. These immigrants have enriched our country in a way unique in world history – there has been no other nation in which the ferment of nationalities has contributed so greatly to innovation and progress. What would New York look like without Candela, or Roth, or the iconic Seagram Building designed by Mies van der Rohe (born in Germany)? We never know who we are keeping out with our increasingly xenophobic immigration policies, but we DO know that our city depends on immigrants in a thousand ways. And we forget that truth at the cost of impoverishing our architecture, our culture, and our inclusive urban and national identity.