Warburg Blog

I have received updates from many of my agents about their current experience of the real estate market. Here is what they are telling me:

* The rental market is unusually hot. With a vacancy rate under 1%, there is almost no inventory. Rents are therefore high and opportunities scarce. There is a big backlog of rental customers waiting for appropriate properties.

* As is often the case, sales are the yin to rentals’ yang. The sales market is especially slow for smaller units, with substantial inventory build up in the studio, one, and two bedroom markets. Many of my agents reported negligible or no traffic at their week-end Open Houses for these properties, especially in midtown, Murray Hill, Kips Bay, and along the Second Avenue corridor on the Upper East Side.

* Over all, the agents continue to report that condition is a vital factor to making quick deals. Buyers throughout the market really want mint condition. And a well priced mint apartment is the only one likely to receive several bids today. Urgency has pretty much vanished from the buyer lexicon; they take their time. And nothing goes smoothly. It takes attorneys weeks to hammer out contract details. Deals still founder because of low appraisals. There have been many Board turndowns. As one of my agents put it, referring to colleagues, buyers and sellers, banks, closing department personnel: “Everyone is difficult and cranky.”

* There is little new inventory in the higher price points. Many buyers are waiting for the fall in the hopes that a number of new units will come to market. While no doubt some will, the last few seasons have NOT produced a big uptick in listings, and I doubt that we will see the market flooded with new properties come September. When new things DO come on, buyers are in no hurry to see them unless they perceive them to be priced right. But a large, well priced, well located apartment will attract a flurry of activity.

* If a new listing does not sell in the first month, it needs a price reduction. And generally a price reduction must be 5% or more to be impactful. Sellers reluctant to lower their prices ask “Why don’t they just make offers?” Well, they don’t! All my agents agree that buyers want to see a reasonable asking price before they will make an offer or even schedule an appointment.

* Condos are performing better than co-ops. There is still substantial demand from foreign investors, although some are holding back because of apprehension about the Eurozone crisis. Condos tend to sell faster and for more money than co-ops on a price per square foot basis, even when the common charges and taxes are high, because the buyer pool is so much deeper.

* In Brooklyn, everyone wants a townhouse for a million dollars or less. Houses needing renovation come onto the market below a million in Windsor Terrace, in Prospect-Lefferts Gardens or Prospect Heights, even in Midwood and they get snapped up. There are always multiple offers on these properties. This part of the market is hot.

The market continues to behave very differently in different segments. The ultra luxury market remains strong, with a number of deals being signed in the last six weeks in excess of $20 million. The small co-op market is awash in inventory. The condo market, dependent on foreign investors, remains brisk for units of all sizes, even in the less gentrified sections of Harlem and Greenpoint. Inventory is thin for the six to ten room co-op market, or the 2,000 to 3,000 square foot loft market, but the buyers in this segment are still cautious and price sensitive. In fact, buyer price and condition sensitivity, a slow pace of negotiation and contract signings, and ongoing intense deal scrutiny on the part of Boards and banks are the trifecta of dominant realities in today’s New York real estate marketplace.

Meet Haroldynne Rannels. A long-time business owner in Chelsea, Haroldynne, co-owner and manager of Olde Good Things, has an eye for beauty and a knack for uncovering treasures even in the unlikeliest of places. It seems quite fitting that Haroldynne, who breathes life into unwanted objects and materials, has been front and center of this neighborhood’s own incredible transformation.

Interview with Haroldynne Rannels

Co-owner/Manager Olde Good Things

124 West 24^th St. (between 6^th and 7^th Avenues)

Tell me about yourself and Olde Good Things.

I’m Haroldynne Rannels, co-owner/manager at Olde Good Things. We buy and sell architectural and altered antiques. The store has been open for about 15 years.

What are some of the items you sell?

Marble mantles, stain glass, chandeliers, lamps, statues, hardware and windows. We also make things with salvaged items such as tables with reclaimed wood, or mirrors with our ceiling panels.

How do you usually find your pieces?

People come to us, but most often, we buy and sell to antique dealers. We also do our own salvaging and often work with demolition companies. And we travel quite far, actually. We’ve been to Texas, Tennessee, Massachusetts, Ohio, Canada… all over.

What are some exceptional pieces you’ve come across?

We got marble mantels from the Plaza Hotel a few years ago, when they were renovating. We received all the windows from the Flat Iron building, as well as from Cooper Union. Right now, we have stained glass windows from the American Airlines Terminal at JFK.

How many locations do you have?

We have two other locations in New York: 5 East 16^th Street (Union Square) and 450 Columbus Avenue on the West Side. We also do wholesale. In addition, we have a truck –which looks like a circus truck –with all sorts of antiques on display. We have someone driving the truck all over the city, which also helps advertise the business. Our warehouse in Scranton is also open to the public.

What kind of space was this before becoming Olde Good Things?

It used to be a warehouse space, a real disaster when we first got it. We tore out the walls; and the skylights were sealed, so we opened them up. We also added another floor.

What is your favorite café/ restaurant/ after work place in the area?

I get my black coffee every morning from Corner Café (on 24^th Street and 6^th Avenue.) I love Italian food, so Bella Napoli (on 7^th Avenue and 25^th Street) is great! I often get the Chicken Margherita.

What was the area like 15 years ago?

It’s changed tremendously in the past 10 years. It used to be mostly manufacturing companies. Slowly but surely, it’s evolving. Now there are boutiques, Whole Foods across the street… and great condominium buildings!

For more information on Carriage House or to set up a site visit, please feel free to contact me at JTurken@warburgrealty.com, call 212.24 House (4-6873) or visit the website at www.Carriagehouse24.com

In mid July, Fred Peters posted a blog about the complexities inherent in a broker’s job “as well as the multiple pleasures.”  He mused, “Our business involves strategizing . . . relationship management . . . aesthetics . . . negotiating skill, and it often involves being a strong hand within the softest velvet glove,” concluding, “There is no other work quite like it.”

I love my work.  It’s meaningful, challenging and satisfying.  Over the years, I’ve had the privilege of providing service to hundreds of buyers and sellers with whom I’ve developed many very special connections.  I’d like to tell you about one of my recent clients—a very special lady I’ll call Helena (not her real name) because it reads like a lovely love story. 

Helena is an elegant, gutsy octogenarian who was referred to me by our mutual investment manager.  She’s petite, small framed, but no pushover.  Her blue eyes sparkle when she speaks, so you barely notice the lines on her silky cheeks and brow.  She’s a lover of the arts, especially ballet.  A widow for 29 years, she was interested in exploring purchasing options and also selling her Sutton Place South apartment that had been her home for 33 years.   Her needs were very specific:  she required a 2 Bedroom/2 Bath apartment close to her Club on East 66^th Street with a washer/dryer, central air conditioning, a view of trees, monthly charges under $2000 for a budget of about $2 Million. 

I was heading for a 10 day trip to Amsterdam and Prague so we set a first meeting for when I returned.  She was clear, nearly apologetic.  She said she didn’t want to waste my time and was not really sure she was either a buyer or a seller, and that she was “shopping around”—which I took to mean that she was interviewing other brokers also.  When we met, it was love at first sight, and I made her a promise.  If we could find her next home and sell her current one, I would do everything in my power to make the process easy for her. 

Helena was adept at the computer and could easily navigate the listings I forwarded and evaluate their potential.  Once we identified the building that matched all her conditions, I suggested that we bring in her designer to see how her traditional furnishings would translate in the modern light-filled space. 

The new space had everything on Helena’s wish list, but the closets were not as generous as those she would be leaving, though there was ample space where more could be added.  I measured in linear feet all the hanging, shelf and drawer areas in Helena’s current home so we would know how much more she would need to build in the new place. 

Helena asked for an attorney referral, and I chose one who had previous experience at the condo where we were buying with the caveat that she would need kid glove treatment every step of the way, including personal trips to her apartment for contract review and signing.

Once contract negotiations were underway on the new place, I tackled preparing Helena’s apartment to show.  She was a very willing participant in the process, and accepted nearly all my suggestions.  Although at first averse to removing an old fashioned dark wood trellis in the kitchen’s dinette, she quickly understood how repainting the area would brighten the space.  With the help of a building porter, I removed several accent tables and scatter rugs to her basement storage, repositioned a number of other pieces, and pulled out some pretty accessories from her cupboard.  I bought new cabinet knobs to freshen the overall look of a kitchen that a new purchaser would probably gut anyway. 

Helena was reluctant to hire a professional declutterer, so we started together to purge her closets of 33 years of accumulating belongings.  For three days, we worked side by side tackling one deep closet at a time, creating separate piles for discards and give-aways.  I repositioned the items on her built-in library shelves which were crammed with books and knick knacks to display them more artfully.  Once she was on a roll and confident that she could continue on her own, she was quite industrious to complete the task by herself.  She bought decorative baskets and matching hangers for her closets.  Her daughter-in-law came to pack up the Minton china which was shipped off to a granddaughter.  USA Shred collected three industrial size garbage bags stuffed with business papers, financial statements and tax returns.  The handy man lifted one of the linoleum tiles in the Living Room to reveal gorgeous herring bone wood floors beneath.  The windows were washed.

At the eleventh hour before closing on the new place, Helena panicked.  Her late night email was fraught with jitters:  “There’s no rest for the foolish people who decide to move. . . I’m not sure what I am doing.”  I picked up the phone, and we talked through her anxieties which were legitimate—she needed guidance on moving her funds to close, and where would she put the wet mop when I showed her apartment.

We’ve closed on her new place, and are negotiating now on the sale of her Sutton Place South apartment.  We’re close on that, but no cigar yet.  “I’d like nice people to live here,” she told me.  I’ve shared with her tips on moving and taken her shopping at Gracious Home where with my 10% discount, she purchased an assortment of door stops, bathroom and closet accessories, and new Bona products for her wood floors.  She and I have a very strong mutual admiration society going.  She calls me her “incredible special angel,” and to me, she’s an incredible model of courage.  I so admire the strength of will it took to embark on this move at this stage in her life.  At one point she reflected, “This is so much better than going to a retirement home.”  At our celebration dinner after closing, I discovered that she was a foodie, and we shared a love of fine dining and wine pairing.  What a joy to make a new friend and close two deals in the process.   

It has always been true that borrowing was easiest for people who did not need the money. Of course since the Lehman collapse even rich people have not had such an easy time borrowing money. And since Dodd-Frank (the bill which Congress enacted post-meltdown to more closely regulate the banking and mortgage industries) became law it is also becoming harder and harder for mortgage brokers to help buyers FIND money, both because more and more capital sources want to do their own loans and because the provisions of Dodd-Frank make it harder than ever for mortgage brokers to get paid. So here we are, in an environment in which money is hard to come by, mortgage brokers are more challenged than ever, and most funding sources want to be approached directly. Who can get a mortgage, and how?

At Warburg, we are increasingly working with direct sources. Met Life, with whom we now have an affiliation, has worked closely with us and our buyers on new development deals. They are smart and proactive in their strategizing to get loans made. Many buyers are going to Wells Fargo or to Chase or Citibank. We also like many of the local banks, which make the loans for their own portfolios.

If you are looking for a loan, it is worth finding out from your agent or the building’s managing agent what banks have recently financed in the building. While this can be a Catch-22, since banks are only willing to make a certain number of loans in a building before they reach their maximum, the advantage is that the bank must have previously approved the building in order to have loaned there. And bank approval of a building is no small thing. Until 2009 we never had a situation in which a buyer’s credit was approved and then the bank wouldn’t lend in the building. After the recession began, that became commonplace. Did the co-op have adequate reserves in their annual budget for capital projects? No? No loan. Did the building have adequate insurance in the opinion of the lender? No? No loan. And so it goes. Things are a little easier now, but make no mistake about it – the lending environment has changed forever.

And credit scores? Another absolute Catch-22 situation. Do you have TOO MANY cards? Uh oh – bad for your score! Do you have too few? Uh oh – bad for your score! Do you have cards you don’t use? Uh oh-bad for your score! And, my personal favorite, has your credit score been checked too often? Uh oh – bad for your score! Thank God they now have credit brokers who can help you scrub your score when you discover that, even though you pay your bills regularly, your credit isn’t so hot for reasons you absolutely can’t understand.

Finally, if your credit is good enough, and your bank actually has money which it is willing to lend, and your building passes muster, then the actual appraisal has to come in at the right number. New York is a specialized marketplace, but in the wake of the real estate meltdown and the subsequent regulatory intervention, banks have been forced to relinquished control over which appraisers assess the properties on which they are offering loans. So appraisers from outside New York, who sometimes don’t even know what a co-op is, much less how to distinguish the qualities of one from another, show up and completely misjudge our properties.  When the appraisals come in low (and they NEVER come in too high) either the lender reduces the amount of the loan or the buyer wants to renegotiate the deal. That is another reason we like MetLife: they work with a panel of local appraisers who actually know the buildings we work in!

Luckily all these steps are a little easier than they were in 2009, so if you are trying today you probably WILL get a loan. There now, that wasn’t so bad, was it…?

This is my 105th blog. I had no idea I had written so many. I started writing the blogs because I wanted to create points of entry for lay people and colleagues alike into what real estate agents do, how we think, and how consumers can more effectively advocate for themselves within the broker/client relationship. I wanted to demonstrate some of the complexity inherent in our jobs as well as the multiple pleasures. Our business involves strategizing, it involves relationship management, it involves aesthetics, it involves negotiating skill, and it often involves being a strong hand within the softest velvet glove. There is no other work quite like it.

So who are the people who succeed at this work? Recently Warburg’s management team has tried to standardize the way our three Sales Directors interview broker candidates. Certain things are givens – we need a resume, we need a list of sales broken down by year for anyone with a history in the business, and we require a DISC test, which is a remarkably accurate 7 minute online personality assessment. We have found over the years that a certain type tends to do well in brokerage: good people skills and enough backbone to be a closer. The timid, or those excessively interested in people pleasing, rarely close deals.

As the group discussed what we are looking for in candidates, a number of things became clear to us. Like every business, we want people who are at ease with technology. The world of the broker revolves around computers, the more sophisticated the better. Good math skills are important; not only the ability to quickly calculate 5% or 6% in your head, but also the ability to understand complex financial statements and organize them clearly for Board review. A great Rolodex helps, but it provides no guarantee that its possessor knows what to do with it. It needs to be accompanied by a tight business plan. And we try to never hire anyone who says they want to become an agent because they “like people” or “like architecture!” That’s fine, but it simply isn’t enough.

As I have noted before in these blogs, the changes in the information superhighway have transformed our business. As we have moved out of the information business and into the expertise business our core competencies have had to evolve. Negotiating is more fast paced and much of the background information is now transmitted by e-mail. But it is a foolish agent who conducts negotiations on the computer. They require the nuanced understanding only voice to voice communication can provide. In fact one of today’s core skills is knowing when NOT to use technology! A good broker does much more research than he or she did 15 years ago – on the market comps, closed sales, prices per square foot, scalability of pricing by floor, by view, by condition. But interpreting the mass of data available to both us and our clients is more important and complex than ever before. Hence the expertise!

So this is why I blog: I want to underline the professionalism which agents acquire but for which they are rarely recognized and the skills which the work demands. I want consumers to be aware of what we do and of what they need to do to make sure their real estate transactions run as smoothly as I can. I want to provide real time information about the market and how it reflects and counters economic trends. And I hope those with the skills described above will consider a career in the residential sales business. It’s rewarding, it’s endlessly interesting and various, and it’s fun. True, it eats your life, but I suspect almost every engaging job does that. Warburg and the other top firms employ ex-bankers, lawyers, teachers, performers, actors, and, increasingly, ambitious young men and women just out of college who see residential as their lifetime career. Do YOU love what YOU do?

Meet Kyle Garcia. As sales associate and manager at parke & ronen, a trendy boutique catering to fashion-conscious men, Kyle knows a thing or two about style. The store, which opened 14 years ago, offers all the latest fashion essentials – and is particularly well known for its private-label swim collection.

Interview with Kyle Garcia

SALES ASSOCIATE and MANAGER at

PARKE & RONEN

176 9th Avenue (between 20th and 21st St)

Tell us a little about yourself.

I’m Kyle Garcia, a sales associate and manager at parke & ronen, a New York-based clothing store featuring men’s fashions by two exciting designers – Parke Lutter and Ronen Jehezkel. The store has its own collection, parke & ronen, which is particularly known for its swimwear.

Can you tell me more about the store: How long has it been open? What items are you known for?

The store has been open for 14 years at this same location. We have a wide range of swimwear: from bikini-style to long shorts in a variety of colors, styles, patterns and fabrics. The parke & ronen line also features other items such as slacks and t-shirts. Plus, we do carry a lot of cashmere, and hats for fall/winter collections.

Do you have a typical clientele?

We get a lot of neighborhood customers – regulars who stop by to see our new collections. But people from all over the city come shop here. It is our only location in New York.

Do you carry any other brands in the store?

We do: New Balance shoes, Retro-brand shirts, Tretorn shoes, Levi’s jeans.

Is the parke & ronen line designed in New York?

Yes, everything is designed and made in New York. In addition to being business partners, Parke and Ronen are also a couple. They have a showroom in the city and a boutique in Los Angeles. We also sell our clothing wholesale to different boutiques in New York and Miami – including Barneys New York .

What’s your favorite neighborhood place? Any favorite morning coffee? lunch spot?

The food at Buddakan is really good; I like Asian-fusion cuisine. And I’ll always die for a chocolate cookie from Billy’s Bakery!

For more information on Carriage House or to set up a site visit, please feel free to contact me at JTurken@warburgrealty.com, call 212.24 House (4-6873) or visit the website at www.Carriagehouse24.com

Here’s my next “Manhattan Market Watch” to appear in the August issue of Mann Report. Despite economic uncertainties, the New York residential market continues to remain an anomaly.  While the rest of the nation is plagued with foreclosures and short sales, New York real estate is enjoying relative stability. 
 

This spring, as the real estate market rebooted, there were signs of recovery and stability everywhere in Manhattan.  A little over three and a half years after the worst financial tailspin in recent memory, activity and sales were robust again. As buyers and sellers grew more in sync, the spread between asking and closing prices narrowed, and the numbers of signed contracts and closings increased.  Confidence was up in Manhattan during the second quarter of 2011. 

When the year began, the pace of trading started tentatively picking up steam towards the end of February.  By March, April and May, competitive bidding had surfaced again, and some deals were being made as much as 5% over ask.  For much of spring 2011, brokers were humming in rhythm with buyers and sellers as renewed optimism spread.

For the most part, Manhattan is a need driven market, and sales are accomplished when buyers make quality of life choices.  This spring, prices were driven up for properties over $2 million primarily because of limited supplies and pent up demand.  High end sales were particularly strong with 28 recorded closings over $10 million between April and June.  Previously the highest number of recorded sales over $10 million was 38 in the second quarter of 2008. 

It’s instructive to review the stats offered by Noah Rosenblatt at UrbanDigs.com in an analysis of the numbers of pending sales (signed contracts) according to submarkets by price.  Using real time statistics, his figures not only confirm that activity in the second quarter was significantly higher than in the first quarter, but that the market tilted up favoring sales of higher priced properties and percentage increases rose proportionately with price:

• Pending Sales <$1M market— +8.9%
• Pending Sales $1M-$2M market— +15.1%
• Pending Sales $2M-$5M market— +27.8%
• Pending Sales $5M+ market— +50%

This year the rental market has also shown significant strength with the lowest vacancy rate in years.  Rents are up, and landlords are no longer offering incentives to tenants with free month concessions, perks or give-aways.  More renters are considering purchasing options since the edge today is to buy and not to lease. For the high end tenant, fifteen thousand dollar and up properties are proliferating, and the pool of tenants is widening to include high income earners who want to hold onto their liquid assets.  Condition and amenities are driving this particular segment of the market.

At the same time, foreign buyers have returned in increasing numbers to New York.  Seeking residential as well as commercial properties for their mostly all cash investments, foreign nationals continue to view Manhattan as a relative safe haven and the US as a stable government with a recovering economy when compared to their own. 

On the other hand…

The pace of deal making in June decelerated from April and May—perhaps more the result of European economic instability and the caution it engenders than because of a seasonal summer slowdown. As of this writing, Greece is averting default, as European finance ministers prepare a complicated $17.4 billion first installment bailout. 

Challenges in the US economy remain despite the rebound in manufacturing and the seesaw stock market where the Dow closed at 12,582.77 on the first of July at a two year high.  With unemployment hovering at 9%, however, reports continue to describe limited job growth and more expected layoffs.  Many financial institutions are again announcing broad cutbacks in staffing amid worries about how banking regulations will affect earnings and profits.  The widespread industry job cuts, not seen since early 2009, will streamline bottom line operations.  Anticipated pink slips before the end of this year have already been announced by Goldman Sachs (230), HSBC (700), Morgan Stanley (300), and Credit Suisse (600).

Uncertainty can cause volatility, but it can also uncover opportunity.  Credit has eased, and banks and other financial institutions are lending again.  Interest rates remain historically low and may go even lower before 2012.  While it’s still taking longer to vet borrower applications, the good news is that loans have become obtainable again.  In the next several months, there will be a flurry of sales activity in properties priced under $1.5 Million as principals rush to close before October when new limits for Fannie Mae and Freddy Mac government backed lending will fall from $725,750 to $625,500 in New York. 

Overconfidence is certainly not to be encouraged—it’s what got us into trouble in the first place.  However, there are solid reasons to stay positive moving forward.  We’re in a stable period—sellers who are wise are not overpricing, buyers who are prudent are not overleveraging, and brokers who are astute are making deals happen.  Happy summer!

Meet Matthew Malin and Andrew Goetz. The fabulous duo are owners of the world renowned apothecary and lab, Malin + Goetz. Their combined expertise in cosmetic design and architecture led to the store’s immediate success. Between the beautifully designed, effective products and the store’s stunning interior décor, Malin + Goetz has become a skin care haven for people far and wide, ranging from neighborhood locals to loyal customers world-wide.

Interview with MATTHEW MALIN AND ANDREW GOETZ

Malin + Goetz

177 Seventh Avenue (between 20th and 21st St)

Tell me about the history of Malin + Goetz.

AG: We launched our first location in Chelsea seven years ago in March of 2004. The idea was that the store would be a mix of my world and Matthew’s world; my background is from working with the design manufacturer Vitra and Matthew specializes in cosmetics—he previously worked for Kiehl’s and Helmut Lang Perfumes.

What kind of products do you sell in your store?

AG: Products for skin care, body care, hair care, perfume and apothecary instruments.

How did you two meet and start this company together?

AG: We met seventeen years ago at a bar in the East Village. We’ve been living together for sixteen years and working with each other for seven.

What’s the most popular product?

AG: Our grapefruit face cleanser followed by our vitamin E face moisturizer. What’s interesting about the brand is that we have four categories: face, body, hair and then we do candles and fragrances as a separate category. While we’re known for our skin care line, every category does really well.

Where are other Malin + Goetz store locations?

MM: We have stores in the US in San Francisco, Santa Monica and the Upper West Side. Then we have a store in Osaka, Japan and Taipei, Taiwan. We love Japanese food!

What type of clientele do your products cater to?

MM: Our clientele is 50-50 women to men. Couples come here and shop together. Or maybe they just steal from one another!

Tell me about the graphic design of your products.

AG: We work with a really great design firm by the name of 2 x 4. We brought them an old apothecary bottle and told them our idea: to modernize the apothecary bottle. We loved the design of the old apothecary bottle but the glass shape was impractical.

What sets your cosmetics apart from other products?

AG: We aim to make our products modern both in terms of packaging and formulation. We don’t use unnecessary dyes, perfumes, and fragrances because our line caters to those with sensitive skin. Our skin care products are simple and irritation free.

Do you also live in the area?

MM: Yes, we live right around the corner.

What’s the best thing about Chelsea?

AG: The galleries and the High Line. In terms of convenience, Chelsea is extraordinarily accessible.

MM: It’s a real, thriving neighborhood and has remained very diverse.

What is the best kept secret about Chelsea?

MM: The gardens at the General Theological Seminary are really special and beautiful. Many people don’t realize it’s actually open to the public.

Does a Chelsea customer differ from someone from another part of the city?

AG: Yes. They are a little bit more laid back, educated, sophisticated and they like to shop. In New York, the neighborhood chooses you, you don’t choose the neighborhood.

For more information on Carriage House or to set up a site visit, please feel free to contact me at JTurken@warburgrealty.com, call 212.24 House (4-6873) or visit the website at www.Carriagehouse24.com

Like the national economy, the New York City real estate marketplace keeps moving two steps forward and one step back. Of course, since the national real estate market takes one step forward followed by TWO steps back, this is not so bad! Nonetheless, the local market’s gyrations can confuse veteran and novice alike, so I will try to deconstruct it, from a high altitude, to the best of my ability.

First, at all price levels and in most neighborhoods, the trajectories of the co-op and condo markets continue to diverge. As the world economy lurches from anxious moment to anxious moment, foreign investors continue to pour their money into real estate in Manhattan. From Latin America, from Asia, from Europe – we are seeing buyers from all over the globe eager to park their cash in the relative safety of condominiums in New York. And with vacancies in the rental market at historic lows, and rents therefore at historic highs, properties of all sizes are easily and profitably rentable. Well located condos from one to four bedrooms, from the Financial District to Harlem, trade briskly provided they are appropriately priced, with the vast majority of buyers (especially south of 110^th Street) coming from out of town or out of the country.

Of course, some local buyers purchase condos too, frequently because everything is new. Condition has emerged as a key factor in determining what sells and what doesn’t. The time, expense, and uncertainty of renovation appeal to buyers less and less, and many have been willing to pay a premium to buy older properties in mint condition. Since the beginning of June, however, the resurging problems with Greece and the poor national employment numbers suggest a slowing recovery, which has given pause to domestic buyers even as foreigners remain willing to purchase promptly. The co-op market, always more oriented to domestic and usually local buyers, has shown the effects of this increased anxiety. Most agents I speak with confirm that they are showing their exclusives less, and that properties which they expected to trade quickly are not receiving offers or even frequent requests to show. This phenomenon can be seen at all price levels, although it is particularly noticeable at the top of the market, for which the second quarter of 2011 was the strongest in many years.

While there have been several trophy trades in June, there is a definite feeling of slowdown in the $5,000,000 to $10,000,000 co-op market, which had been both quick and hot leading into Memorial Day. And for units trading between $1,000,000 and $5,000,000, a similar dynamic applies.  Under $1,000,000 the market remains sluggish, as it has been for most of 2011 outside the new condo sector. The relative strength and high pricing in the rental market reflect, as they so often do, a reluctance to purchase on the part of studio, one, and two bedroom clients.

More than at any time in the past several years, condition and pricing dictate the speed with which transactions take place. For very well priced units with fabulous views or unique features or perfect condition (not to mention some combination of the above), multiple offers and competitive bids over the asking price still occur. But the frequency of even those occurrences has diminished markedly in the past five weeks. 

Looking ahead, our economic realities remain uncertain. Nationally and internationally, deleveraging has a long way to go before debt subsides to manageable levels. Luckily that is probably good news for New York. As America’s most international city we will continue to be a hub for global business and its practitioners both foreign and domestic.  Their presence and the deep wells of capital which they have injected into our real estate environment have lent it a stability which has insulated us against the worst of the ongoing real estate crisis, in which foreclosed homes and short sales (of which we have had few) have been the backbone of real estate sales activity throughout most of the nation.  And stability is just what we are hoping for as we segue into summer.