http://www.millersamuel.com/reports/pdf-reports/BMO1Q09.pdf
Condos:
Avg sales price $531,889, -7% vs 1yr ago
Avg price per Sf $475, -11% vs 1yr ago
Number of sales -57% vs 1yr ago
Thursday, April 23, 2009
Manhattan Market Report 1Q'09
Miller Samuel's 1Q'09 Manhattan Market Report
Condo 1Q'09:
Median sales price $1.227 million, + 5.8% vs 1yr ago,
Price per SF $1,413, -0.2% vs 1yr ago
Number of sales -39% vs 1yr ago
Coop 1Q'09
Median sales price $587,500, -22% vs 1yr ago,
Price per SF $968, -14% vs 1yr ago
Number of sales -59% vs 1yr ago
http://www.millersamuel.com/reports/pdf-reports/MMO1Q09.pdf
Condo 1Q'09:
Median sales price $1.227 million, + 5.8% vs 1yr ago,
Price per SF $1,413, -0.2% vs 1yr ago
Number of sales -39% vs 1yr ago
Coop 1Q'09
Median sales price $587,500, -22% vs 1yr ago,
Price per SF $968, -14% vs 1yr ago
Number of sales -59% vs 1yr ago
http://www.millersamuel.com/reports/pdf-reports/MMO1Q09.pdf
Saturday, April 4, 2009
Manhattan Real Estate Declines
The 1Q’09 Manhattan real estate numbers were published last week. Overall, number of transactions declined by 48 percent compared to a year ago, accordingly to Miller Samuel Appraisers. Median price increased 3 percent to $975,000. However, this is largely influenced by the sales of new developments. Excluding new developments, the median price declined 21 percent to $675,000. Recall that this was my prediction back in 4Q’08 and the media is now all over about Manhattan’s real estate downturn.
The median price of a coop apartment was $587,000, 22 percent lower than a year ago. The median price of a condo increased by 5.8% to $1.23 million but this is influenced by the new developments. Number of transactions for coops decreased 59 percent while transactions for condos decreased 39 percent.
Prices will continue to go down because the data we are seeing now are from contracts signed 6-9 months ago. The data for current transactions is very likely to be even lower given the overall pessimism in the economy over the past several months. In 2009, the Dow went to the 6000s and the debate about taxing bonuses of bankers does not increase enthusiasm.
The number of transactions shows the dramatic decrease in activity in the Manhattan real estate market. While the rest of the country started their real estate downturn reports a year or more ago, Manhattan’s turn is just starting now.
Based on the average price of housing relative to household income, prices in Manhattan are still much higher than the historical average. But the key point from the released data is that the official downturn has started in Manhattan.
Brokers are now turning into “buyer brokers” because there are virtually no sellers or sellers with realistic asking prices. The brokers and brokerage firms are now telling clients it is a good time to buy. During the bubble, it was a good time to buy because prices kept going up. Now, it is a good time to buy because prices are coming down. Obviously, the interest of the broker is with the commission and not the buyer. However, sellers are still not bringing their prices down enough for buyers to bid.
Sellers are still adamant with their asking prices, unwilling to accept the fact that prices in Manhattan has declined. Buyers obviously do not want to offer anywhere close to the asking prices. As result, a lot is on a stand still.
The buyers are the market because they represent the demand side of the equation. They are the ones forking out the money to make a transaction happen. Without buyers, there is no market because sellers will be left asking their non realistic prices.
Hence to make the market move again, the buyers need to see prices they think are reasonable. This basically means asking prices have to come down further. There are buyers whose current strategy is to offer at 20 to 40 percent lower than asking price. However, not all buyers choose to do this given the time and resources involved in making offers.
To buyers, I would advise starting the search process and tracking data closely. Sellers will get more flexible over the months. The correction period may take another 1 year but at least the market has acknowledged that prices do come down in Manhattan.
This is the time for buyers to be demanding. This includes asking for the seller to pay for closing costs, cash at closing to make renovations and asking for escrow reserves to be paid by the seller.
The median price of a coop apartment was $587,000, 22 percent lower than a year ago. The median price of a condo increased by 5.8% to $1.23 million but this is influenced by the new developments. Number of transactions for coops decreased 59 percent while transactions for condos decreased 39 percent.
Prices will continue to go down because the data we are seeing now are from contracts signed 6-9 months ago. The data for current transactions is very likely to be even lower given the overall pessimism in the economy over the past several months. In 2009, the Dow went to the 6000s and the debate about taxing bonuses of bankers does not increase enthusiasm.
The number of transactions shows the dramatic decrease in activity in the Manhattan real estate market. While the rest of the country started their real estate downturn reports a year or more ago, Manhattan’s turn is just starting now.
Based on the average price of housing relative to household income, prices in Manhattan are still much higher than the historical average. But the key point from the released data is that the official downturn has started in Manhattan.
Brokers are now turning into “buyer brokers” because there are virtually no sellers or sellers with realistic asking prices. The brokers and brokerage firms are now telling clients it is a good time to buy. During the bubble, it was a good time to buy because prices kept going up. Now, it is a good time to buy because prices are coming down. Obviously, the interest of the broker is with the commission and not the buyer. However, sellers are still not bringing their prices down enough for buyers to bid.
Sellers are still adamant with their asking prices, unwilling to accept the fact that prices in Manhattan has declined. Buyers obviously do not want to offer anywhere close to the asking prices. As result, a lot is on a stand still.
The buyers are the market because they represent the demand side of the equation. They are the ones forking out the money to make a transaction happen. Without buyers, there is no market because sellers will be left asking their non realistic prices.
Hence to make the market move again, the buyers need to see prices they think are reasonable. This basically means asking prices have to come down further. There are buyers whose current strategy is to offer at 20 to 40 percent lower than asking price. However, not all buyers choose to do this given the time and resources involved in making offers.
To buyers, I would advise starting the search process and tracking data closely. Sellers will get more flexible over the months. The correction period may take another 1 year but at least the market has acknowledged that prices do come down in Manhattan.
This is the time for buyers to be demanding. This includes asking for the seller to pay for closing costs, cash at closing to make renovations and asking for escrow reserves to be paid by the seller.
Friday, April 3, 2009
My views on 90% bonus tax
The 90% bonus tax is RIDICULOUS. High bonus is the market rate for bankers. Bankers have a choice of London, Hong Kong etc. With this tax, New York (hence the US) will lose talent to other countries and the US would no longer be the financial capital of the world.
Hong Kong's tax rate is 15%. New York's tax is 40%+. Add that crazy 90% bonus tax, who wants to work here?! On bailouts, the government should let banks fail and start over. Bailouts will result in major inflation and weakening of the US dollar. The 90% bonus tax was annouced AFTER the bailouts were received. it shudl have been announced as a criteria BEFORE the bailouts were handed out. Recall that some companies did not want the bailouts.
Finally, who owns the Federal Reserve? It's owned by the consortium of banks that make up the board of directors. These are the same banks getting the bailouts. Hence, the bailouts were given by the Fed to it's own owners. Of course the banks would take the bailouts in the first place. But the employees get penalized after the fact.
Hong Kong's tax rate is 15%. New York's tax is 40%+. Add that crazy 90% bonus tax, who wants to work here?! On bailouts, the government should let banks fail and start over. Bailouts will result in major inflation and weakening of the US dollar. The 90% bonus tax was annouced AFTER the bailouts were received. it shudl have been announced as a criteria BEFORE the bailouts were handed out. Recall that some companies did not want the bailouts.
Finally, who owns the Federal Reserve? It's owned by the consortium of banks that make up the board of directors. These are the same banks getting the bailouts. Hence, the bailouts were given by the Fed to it's own owners. Of course the banks would take the bailouts in the first place. But the employees get penalized after the fact.
Wednesday, March 25, 2009
2009 First Time Home Buyer Tax Credit
The 2009 First Time Home Buyer Tax Credit is part of the American Recovery and Reinvestment Act signed by President Obama into law on February 17, 2009 to revive the housing market. By providing a $8000 tax credit to first time home buyers, this credit aims to increase the number of buyers and consequently stimulate the slumped housing market in the US.
This 2009 Tax Credit differs form the 2008 Tax Credit in two major ways.
(i) The 2009 Tax Credit allows for a credit of up to $8000 while the 2008 credit allows for only up to $7500
(ii) The 2008 credit has to be repaid over 15 years, effectively making it a loan. The 2009 credit does not have to be repaid
Essentially, there was a tax credit introduced in 2008 but the 2009 version of the tax credit is even better. The key points for the 2009 Tax Credit are below:
Credit Amount:
The 2009 Tax Credit allows for a credit of 10 percent of the home value to a maximum of $8000. For example, if the property value is $75,000, the credit is only $7500. But if the property is $200,000, then the credit is the $8000 maximum.
First Time Home Buyer:
The credit is for First Time Home Buyers, which is defined as someone who has not owned a primary residence the past 3 years. The home has to be purchased between January 1, 2009 and November 30, 2009, inclusive. The home buyer has to live in the home for 3 years or the credit will have to be repaid.
How to Claim the Credit
The credit is claimed along with filing your tax return. This is a refundable credit which means that if your total tax liability is less than $8000, the IRS will send you a refund for the difference. For example, if you purchase a home that qualifies you for the total $8000 but your tax liability is only $7000, then the IRS will refund you $1000.
Who is Not Eligible
The following categories of buyers are not eligible:
(i) Your Modified Adjusted Gross Income exceeds $170,000 for joint filers and $95,000 for single filer. The credit phase out starts at $150,000 for couples and $75,000 for single filers.
(ii) You buy your home from a close relative
(iii) You stop using your home as your main home
(iv) You sell the home before the end of three years
(v) You are a non-resident alien
For those who bought their home in 2008, the old $7500 tax credit applies which means it has to be repaid.
Since the average price of a home in the US is about $200,000, this means that the US government is contributing $8000 or 4 percent of the purchase for the home buyer. In the New York City metro area where the average price is around $500,000, it means buyers get a 2 percent contribution from the government.
This 2009 Tax Credit differs form the 2008 Tax Credit in two major ways.
(i) The 2009 Tax Credit allows for a credit of up to $8000 while the 2008 credit allows for only up to $7500
(ii) The 2008 credit has to be repaid over 15 years, effectively making it a loan. The 2009 credit does not have to be repaid
Essentially, there was a tax credit introduced in 2008 but the 2009 version of the tax credit is even better. The key points for the 2009 Tax Credit are below:
Credit Amount:
The 2009 Tax Credit allows for a credit of 10 percent of the home value to a maximum of $8000. For example, if the property value is $75,000, the credit is only $7500. But if the property is $200,000, then the credit is the $8000 maximum.
First Time Home Buyer:
The credit is for First Time Home Buyers, which is defined as someone who has not owned a primary residence the past 3 years. The home has to be purchased between January 1, 2009 and November 30, 2009, inclusive. The home buyer has to live in the home for 3 years or the credit will have to be repaid.
How to Claim the Credit
The credit is claimed along with filing your tax return. This is a refundable credit which means that if your total tax liability is less than $8000, the IRS will send you a refund for the difference. For example, if you purchase a home that qualifies you for the total $8000 but your tax liability is only $7000, then the IRS will refund you $1000.
Who is Not Eligible
The following categories of buyers are not eligible:
(i) Your Modified Adjusted Gross Income exceeds $170,000 for joint filers and $95,000 for single filer. The credit phase out starts at $150,000 for couples and $75,000 for single filers.
(ii) You buy your home from a close relative
(iii) You stop using your home as your main home
(iv) You sell the home before the end of three years
(v) You are a non-resident alien
For those who bought their home in 2008, the old $7500 tax credit applies which means it has to be repaid.
Since the average price of a home in the US is about $200,000, this means that the US government is contributing $8000 or 4 percent of the purchase for the home buyer. In the New York City metro area where the average price is around $500,000, it means buyers get a 2 percent contribution from the government.
Friday, March 20, 2009
Dubai Real Estate Burst
CNN video talks about Dubai real estate bursting, declined 25% recently. People losing jobs, more For Rent signs...
http://www.youtube.com/watch?v=SI8fuI2pYZ4&feature=related
http://www.youtube.com/watch?v=SI8fuI2pYZ4&feature=related
Thursday, February 19, 2009
Am I a real estate agent?
When I started buying property, I'd make appointments with real estate agents who will be take us on tours to view properties. They'd spend a lot of time and effort to answer questions and hope to get a sale. When viewing with these agents, I'd think to myself that I would never want to be a real estate agent. Simply because majority of the people they bring around are not serious buyers and that means 90 percent of their time is wasted. In simple statistics, they have to show as many as possible because the conversion rate is only 10%. This is why you see real estate agents running around all the time.
But a few years later, I found myself taking the real estate broker test! The reason is so I can represent myself on my own deals and make the buyer commission that would otherwise go to the buyer broker. If I knew a market better than the broker, my reasoning goes, then I may as well represent myself. Consequently, I spent 1 week to study for and to take the Salesperson exam. And another 2 weeks studying for and taking the Broker's exam. That was in November 2007. I became a Broker after 3 weeks of exams and test taking.
The difference between a Salesperson and Broker is that a newbie needs to take the Salesperson exam and work under the supervision of a Broker. After the Salesperson has completed about 10 transactions, he could take the Broker exam and become a Broker. Being a Broker means he can work for himself or start his own firm. Hence, the Broker license is the higher level license.
In my case, I could take the Broker's license without first becoming a Salesperson and selling X number of properties because New York State allows experienced developers and investors to go directly for the Broker's license. Less than 5 percent of Brokers get their license this way.
This is why I never see myself as a real estate agent. I don't like showing properties to strangers and have never done it. I don't like wasting time with people who are not serious. I don't like talking about granite countertop kitchens or marble bathrooms. I hate being viewed as a salesperson because I'm not one.
However, what I enjoy is buying property as investment. I enjoy bringing friends to view property and giving them an honest opinion about whether I think their long term net worth will increase as a result of buying a property. I enjoy looking at price per square foot. At potential rent increases. At whether real estate prices increase with inflation and to what extend. I enjoyed speaking to investors about investing in real estate compared to gold, both tangible assets with different attributes. I enjoy looking at cashflow projections of real estate and comparing the yield to Johnson&Johnson's dividend yield. And of course, I enjoy the high end show rooms of luxury Manhattan condos. I enjoy working with my international connections, going to country clubs and having a good time.
Based on the above, then why not become a commercial broker? Well, it's because I am not a salesperson. And commercial brokers, all very financially savvy, are even more sales-like than residential brokers. They just push numbers while their residential counterparts push granite countertops. Most commercial brokers make 50-100 cold calls a day to solicit business. This is something I can never do.
Hence, using the extra free time available now that the market has slowed down, I've narrowed the focus of my real estate advisory business. Note that I called it an advisory business instead of a brokerage business.
1. Help clients grow wealth through real estate
2. Only accept referrals
3. Leverage my financial analysis strength
4. Focus on my international clientele
These will be guiding principles as I re-brand and reposition my firm for the next phase of growth. My good friend told me yesterday that the key is to speak as if you've already achieved your dreams. In the present tense. By doing this, one's brain becomes wired to make the dream a reality. Hence, I now have a firm that is focused on real estate advisory and that caters to an international clientele.
Best,
Wei min
But a few years later, I found myself taking the real estate broker test! The reason is so I can represent myself on my own deals and make the buyer commission that would otherwise go to the buyer broker. If I knew a market better than the broker, my reasoning goes, then I may as well represent myself. Consequently, I spent 1 week to study for and to take the Salesperson exam. And another 2 weeks studying for and taking the Broker's exam. That was in November 2007. I became a Broker after 3 weeks of exams and test taking.
The difference between a Salesperson and Broker is that a newbie needs to take the Salesperson exam and work under the supervision of a Broker. After the Salesperson has completed about 10 transactions, he could take the Broker exam and become a Broker. Being a Broker means he can work for himself or start his own firm. Hence, the Broker license is the higher level license.
In my case, I could take the Broker's license without first becoming a Salesperson and selling X number of properties because New York State allows experienced developers and investors to go directly for the Broker's license. Less than 5 percent of Brokers get their license this way.
This is why I never see myself as a real estate agent. I don't like showing properties to strangers and have never done it. I don't like wasting time with people who are not serious. I don't like talking about granite countertop kitchens or marble bathrooms. I hate being viewed as a salesperson because I'm not one.
However, what I enjoy is buying property as investment. I enjoy bringing friends to view property and giving them an honest opinion about whether I think their long term net worth will increase as a result of buying a property. I enjoy looking at price per square foot. At potential rent increases. At whether real estate prices increase with inflation and to what extend. I enjoyed speaking to investors about investing in real estate compared to gold, both tangible assets with different attributes. I enjoy looking at cashflow projections of real estate and comparing the yield to Johnson&Johnson's dividend yield. And of course, I enjoy the high end show rooms of luxury Manhattan condos. I enjoy working with my international connections, going to country clubs and having a good time.
Based on the above, then why not become a commercial broker? Well, it's because I am not a salesperson. And commercial brokers, all very financially savvy, are even more sales-like than residential brokers. They just push numbers while their residential counterparts push granite countertops. Most commercial brokers make 50-100 cold calls a day to solicit business. This is something I can never do.
Hence, using the extra free time available now that the market has slowed down, I've narrowed the focus of my real estate advisory business. Note that I called it an advisory business instead of a brokerage business.
1. Help clients grow wealth through real estate
2. Only accept referrals
3. Leverage my financial analysis strength
4. Focus on my international clientele
These will be guiding principles as I re-brand and reposition my firm for the next phase of growth. My good friend told me yesterday that the key is to speak as if you've already achieved your dreams. In the present tense. By doing this, one's brain becomes wired to make the dream a reality. Hence, I now have a firm that is focused on real estate advisory and that caters to an international clientele.
Best,
Wei min
Subscribe to:
Posts (Atom)