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Real Estate Trends

Pied-a-Terre Tax Looms Over New York City Luxury Real Estate Market

Thought taxes in New York City couldn’t get any higher? Think again. The Pied-a-terre tax is back on the docket, and it has recently gotten some major support that pushed it further along than what it was last a topic of discussion in 2014.

Ken Griffin made headlines when he purchased a penthouse at 220 Central Park South for $238 million, making it the most expensive home in the country. He plans to use the home when he visits his New York office. This headline also caught the attention of City Council who started discussion on the Pied-a-terre tax once again.

So, what is a Pied-a-terre and the proposed tax?

A pied-a-terre is a part-time second home occupied for less than half of the year. Often times, it is an investment for the owner and may not be occupied. Given that the owner’s primary address is elsewhere, owners of a pied-a-terre in New York are not subject to state or local income tax.

The current proposal has a sliding tax surcharge and fee for homes priced $5 million and over, with higher priced homes incurring higher fees. City and State officials cited that they feel this additional tax is necessary to fund the failing mass transit system in New York City.

 Cause for Concern

Regardless of whether you think it is fair to tax the rich disproportionately or not, a proposed tax plan should be assessed in regard to economic impact before being implemented. From a real estate perspective, there is cause for concern based on the proposal of a pied-a-terre tax in New York City.

International Buyers: International Buyers have already been on the decline in recent years, and the implementation of a pied-a-terre tax would likely prevent some would-be foreign buyers from investing in New York.

 Luxury Condos and Co-Ops: We would likely expect to see some sort of downtick in the luxury segment of the market. Just because a buyer can afford a $5 million apartment, does not mean they spend frivolously and love taxes. Why would they invest in New York when they could invest in another viable city that does not impose a pied-a-terre tax?

The luxury segment of the market has already been under pressure in recent years, so another tax could additional pressure that is not needed in this sector.

 New Development: An adverse impact on the Luxury Market would likely spill over to the New Development pipeline for luxury properties. If there is a decreased demand overall for properties $5 million and up, why would Developers be incentivized to build properties that may not sell? This, of course, would then have an impact on all the employment created within the construction sector when development is booming.

High Costs to Transact: New York City is one of the most expensive places to transact on property without the additional pied-a-terre tax. Costs associated with a real estate transaction in New York City include Transfer Tax, State Transfer Tax, Mortgage Recording Tax, Mansion Tax, and Real Property Taxes. Not to mention, under the new Federal Tax Code, the deduction of SALT has been eliminated.

 Overall, if the tax were to have an adverse impact on the real estate market for properties $5 million and up, we would likely see a reduction in value at the high end of the market. This may especially may be the case for properties that are already valued/priced near the $5 million threshold as Buyers will submit bids under $5 million to avoid the tax.

Image via Getty Images

Why You Should Re-Consider Gary Vaynerchuck's Homeownership Comments

In a recent Podcast, Gary Vaynerchuck, known for his influential role in the media and advertising space as a leading entrepreneur, made strong remarks regarding homeownership that we would urge many to think carefully about. While there are certainly use cases that make sense for favoring renting a home, most individuals benefit greatly from homeownership.

What were his remarks, and why should you reconsider? Vaynerchuck stated that he feels buying a home is not an effective use of capital. He went so far as to state that he would rent for the rest of his life and never buy a home again.  

What You Should Consider

This is obviously a very strong statement made by Vaynerchuck as many view homeownership as part of the American Dream. When thinking about both his position and homeownership here is what you should consider:

Vaynerchuck’s Industry: Gary Vaynerchuck garnered most of his success as a tech entrepreneur. Starting companies, being an investor, etc. requires upfront capital needs that someone outside of this type of profession would not need. Thus, tying up a large portion of cash in the form of a down payment may not make sense for an investor that needs to remain more liquid. Additionally, one would reasonably expect that a tech entrepreneur would require one to be quite mobile in terms of traveling, so they would be less inclined to want to be tied down than the average person.

Equity: When you purchase a home, you are building equity in the home. Your monthly mortgage payments are going towards ownership, an asset that will be yours. When you rent, you pay your monthly rent which goes in your Landlord’s pocket – you are not working towards owning anything. Over the long term, homeownership has been the most influential vehicle for driving wealth accumulation. We have seen that, over a long time horizon, home values tend to increase, thus increasing the owner’s wealth.

Homeownership Is Not Dead: Most Americans still want to buy a home, and homeownership does make sense for a lot of people. However, the Millennial generation is struggling with homeownership because this generation is burdened with exorbitantly high student debt, coupled with high rents and costs of living in most job-hub city which makes saving for a down payment challenging for this group. As a result, Millennials are buying homes at a slower rate which leads some to believe that homeownership is dead.


That is not to say that some of Gary V’s points are not valid when put into perspective. When thinking about liquidity, we would not recommend someone purchase a home that they cannot afford. If the down payment of a home will put you in a bad financial situation, you should likely reassess your budget to ensure you are buying a property that makes sense for you financially.  

Additionally, there are use cases for renting homes that also make sense for a lot of individuals. We can conduct rent vs. buy analysis that can help clients decide what makes the most sense for them. One of the biggest things to consider when thinking about renting vs. buying is time – are you planning to only be in this location for, say, 5 years? If so, taking on a 30-year mortgage to buy a home, etc. may not make sense and renting would be more suitable if you know you are going to be changing locations relatively soon.

Best Activities & Buildings for an Active Lifestyle In New York

Active Lifestyle in NYC

Fresh Start to Active Living Around New York in 2019

New year, new you? Whether you have grand ambitions for 2019 or just want to be a little more active, there’s an outdoor or active living option for you in New York City. From group fitness classes in the warmth and comfort of a studio to exercising while enjoying the city’s outdoor spaces, here’s some inspiration for making a fresh start with active living around New York in 2019. Plus, can’t get outside? Read down to find out about the buildings offering the best amenities for living an active lifestyle without having to leave home.

Join a yoga class

Whether you’re already flexible or are wanting to become more so, there’s a yoga studio on practically every street corner in NYC. Meditative yoga, hot yoga, restorative yoga, laughter yoga, and naked yoga (yes, really) are just a few of the varieties you can check out. Plus, in the summer you can join an outdoor yoga class--strike a tree pose while being surrounded by the real thing. Bryant Park, Prospect Park, Astoria Park, and Hudson River Park offer large open spaces as well as beautiful views, and rooftop yoga is also an option. The great thing about yoga is that you can practice at home without any special equipment, so fitting active living into your daily routine is super easy.

Kayak or canoe on a waterway

Kayaking or canoeing on the water is a great way to get in shape while admiring city skyline views. The New York City Water Trail links 160 square miles of waterways across New York’s boroughs, offering almost endless options for exploring. Plus, in the summer, some free kayaking and canoeing sessions are offered on the Hudson River, East River, and New York Harbor. You can hire kayaks/canoes and gear if you don’t have your own or want to see whether the sport is for you before making a larger investment. Kayaking and canoeing can be as solitary or sociable as you like, with tandem and single boats available, making it easy to combine your workout with an accountability buddy.

Cycle the city

While the dense urban environment of New York City might not seem to offer ideal cycling conditions, cycling is growing in popularity in the city. Many New Yorkers are now cycling to work, joining cycle clubs, and making use of bicycle sharing and hiring facilities. If zipping through the city traffic doesn’t appeal, Central Park and Prospect Park encourage cycling at the weekends by limiting or prohibiting motor vehicles, so you can enjoy a ride without the worry. Plus, you can always join a spinning studio for stationary cycle fun in conjunction with loud, up-tempo music. Expect to sweat.

Hike a trail

Hiking trails surrounded by nature may be closer to the central city than you think. Just an hour or two outside the city you can find woodland, rolling hills, streams, and lakes to explore. Bronx’s Pelham Bay Park, Arden Point-Hudson Highlands State Park, Staten Island’s Green Belt, and Franny Reese State Park are just a few of the easily accessible spots within a couple of hours of NYC that offer fun day hikes suitable for the whole family. To step up the activity level if you’re an experienced runner, try trail running. Some trails can be reached via public transport, while others do require your own set of wheels.  

Dance, dance, dance

New York is famous for its vibrant dance, from Broadway to Latin to hip hop to classical. Whether you dance like no one's watching or just want to try on some dancing shoes for a while, New York is the place to get active to the beat. For group dance classes in a gym setting, try Zumba. For something a little more risque but very good for your body, pole fitness will teach you some slinky moves. To combine dance moves with yoga and Pilates exercises, head to a barre studio. Plus, you can always practice what you learn in class during a night out on the town (go easy on the alcohol if you’re trying to get or stay in shape).

Cross-country skiing

If you have your own cross-country ski gear and there’s at least 6 inches of snow on the ground (which, let’s face it, is most winters now), head to Central Park to warm up. There’s flat and gentle hilly terrain that’s suitable for a range of levels of experience. The Sheep Meadow, Great Lawn, and North Meadow areas of the park are especially good for skiing. And of course, there are great cross-country skiing destinations a little further afield upstate, if you want to make a day or weekend trip of it. Rockland Lake State Park, Fahnestock State Park, and Minnewaska State Park Preserve are all fun destinations for cross-country skiing.

Buildings with Amenities to Live an Active Lifestyle

50 Riverside Boulevard

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50 Riverside Boulevard is home to 50,000 square feet of lifestyle amenities by LA PALESTRA. 40,000 square feet of the amenities is the athletic and spa club which offers every activity you could imagine - swimming, rock climbing, gym, basketball, and 2 squash courts.

One Manhattan Square

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No one does amenities quite like Extell Development. One Manhattan Square garnered attention when it was dubbed as a “City within a City” because of the very extensive amenity offering - spanning 100,000 square feet total! To stay active and healthy, One Manhattan Square will be offering residents a full size basketball court, fitness center, hammam with cold plunge, 75-ft 3 lane pool, and more.

American Copper Building

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SHoP Architects has created a unique amenity space in the American Copper Building in the floating bridge that connects the two towers. Perhaps the most unique aspect? The pool that allows residents to swim from one tower to another 300 feet in the air. In addition to a pool, residents can enjoy a double-height fitness center, rock climbing, and a yoga studio.

Interested in which Buildings will allow you to live the lifestyle that you enjoy? Contact Us! We know the best amenities around the City.

Luxury Amenities are Going to the Dogs - In the Best Way Possible

Owning Pets in NYC

Owning a pet in New York City can be challenging – Will they get enough outdoor space? Who is going to walk them when you are putting in long work days? Will the building I want to live in even allow pets? As more and more New Yorkers get pets, these questions have become ever more important for Developers looking to attract well-off city dwellers. So, are the amenities going to the dogs? Yes – but in the best way possible! 

If you are looking to ensure your dog is living its best life, there are buildings across Manhattan that are offering your canine companion the best of the best when it comes to amenities and services. The buildings below, of course, allow residents to have pets, but the first step in searching for a home in New York when you have a pet is letting your Broker know. Some buildings do not allow pets at all, while some only allow cats, or have some restrictions related to size and breed.

We’ve rounded up some of the buildings with the best Pet Amenities across town-

Waterline Square

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The Starchitect-designed Waterline Square project features a host of amenities, of which lavish pet amenities are included. The good news is, whether you choose to live in One, Two, or Three Waterline Square (perhaps based on your preference for architects including Richard Meier, Kohn Pederson Fox, or Raphael Vinoly), you will have access to the Waterline Club which includes over 100,000 square feet of amenities.

For your four-legged friend, the Waterline Club will offer an indoor playroom for dogs to socialize as well as a dog washing salon and dog training studio. 

50 West Street

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Rising tall above lower Manhattan at 778 feet, 50 West Street is a new development glass tower that arrived with the wave of revitalization happening Downtown. While residents will enjoy stunning River and Harbor views from the homes as well as luxe amenities for themselves, pets will be able to enjoy a dedicated amenity space as well – 200 square feet for the pets to be exact.

Additionally, 50 West has partnered with a top-notch Vet and Groomer so you don’t have to worry about where to take your pet. They will make house calls right to the building. Rumor has it the Groomer is the same one that fashion designer Isaac Mizrahi uses.

 

15 Hudson Yards

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Hudson Yards has a lot of buzz surrounding it – from it being the biggest development project to more intricate details of businesses and stores moving into the area, this project is seriously transforming the Far West side of Manhattan. Part of the project includes both Rental and luxury Condominiums. 15 Hudson Yards has received a lot of attention as a condo within the project.

The luxurious building from Realted Companies will offer Residents access to services from Dog City. Related Companies founded Dog City in 2011 when it launched inside MiMa in Midtown Manhattan. The company offers onsite boutique pet services for building residents ranging from everything from grooming and walking to play dates. Annual membership starts around $250 with services such as Grooming being an additional premium at time of service.

555 Ten

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This Midtown Rental building from Extell offers, perhaps, some of the best pet amenities that can be found in the city. 555Ten is an Extell building, and Extell is known for their extensive and over-the-top amenity offerings throughout their buildings – think One Manhattan Square!

If you want your pets to be able to live their best life, 555Ten offers everything to help make that possible. Amenities for pets include a Pet Spa and Veterinary Clinic by Throw Me a Bone. There is also a daycare facility and covered outdoor play space to ensure your dog gets the outdoor time it deserves.

Throw Me a Bone offers services including walking, training sessions, 2-hour play sessions, house call vet visits, and “Yappy Hour” where your dog can meet its fellow neighbors.

252 East 57th Street 

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Worldwide’s 252 East 57th Street may be located conveniently to the Second Avenue Promenade, but the building is also ensuring your pet can get pampered without having to leave the building. 252 East 57th Street is home to Spot 57 Play Space and Grooming Bar.

Spot 57 offers residents and their pets an array of services from walking to daycare. Additionally, there is an interactive play space for dogs to mingle and play on those rainy or snowy days when getting outside is difficult. In need of grooming? That’s also possible at the grooming station which included convenient sitting so you can wait while your pet gets pampered.

2019 Outlook: What to Expect for the New York City Real Estate Market

New York City Skline

As we enter a new year, we welcome new expectations for the housing market as we think about the year ahead. Briefly looking back at 2018, the year started off on a different note than it ended, namely rates rose to their highest levels in decades by year’s end, and the market fully transitioned to a Buyer’s Market. How do we expect 2019 to pan out?

The year ahead is likely to be a bit tougher than 2018 and remain soft overall as a result of the Fed. Prices remaining at minimum stable would be a positive, and a small rate of price appreciation would be even better. When people see their home rise in value, they feel wealthier whereas declining home values can spark a feeling of an impending recession. Thinking about 2019, we identified 4 areas of focus 1) Interest Rates, 2) Millennials, 3) Inventory, and 4) Rentals.

Interest Rates

We anticipate that interest rates will continue to rise in 2019 given the strong economic fundamentals and low unemployment rate in the US economy. Rates may begin to approach levels that finally squeeze some folks out of the market and into a smaller home than originally planned. Rising rates may also encourage some would be “Trade Ups” to stay put. Increasing rates is likely to impact first-time buyers most heavily as increased rates means less buying power. From a larger, national housing market perspective, this could also contribute to slowing sales as Buyers grapples with higher mortgage rates and recent rapid price increases over the past few years. 

Millennials

Millennials may be more at the forefront of the 2019 market than they were in 2018. This group could be a large driving force on the buy side of the market, especially for entry-level priced properties in New York City. The largest portion of Millennials will be ages 29-30 in 2019, a prime age for first-time homeownership. In a market such as New York, Millennials tend to be more affluent and savvy consumers, understanding the value in buying a property versus paying New York rent prices over the long term. Successful Millennials who have worked in industries such as Finance and Tech are likely armed with enough cash for a down payment.  Studio-1-bedroom properties priced below $2M are appealing to this group of Buyers. 

Inventory

Inventory is likely to remain elevated in NYC in 2019. New Developments continue to come to market and close, projects remain in the pipeline, and resale inventory will continue to come to market as well. This will be especially evident in the luxury sector of the market ($4M+) which has been experiencing a glut of inventory versus demand, a factor resulting in the shift to a Buyer’s Market. Average asking prices were inflated approximately 10% throughout 2018, and we expect the same to hold true throughout 2019. This means that Sellers had to take a significant reduction from Ask in order to get deals done. It is important to remember that deals get done when the price is right!

Rentals

Rent prices could likely see an uptick in 2019, attributed to the arrival of Amazon and increased demand. Amazon will bring with it a large number of high paying jobs, and thus increased demand from their employees as well as peripheral interest generated when a company such as Amazon picks a city as their home base. Google has also been discussing bringing a large number of net new jobs to NYC. Whether we see an increase in rent asking prices with concessions available or the dropping of concessions with asking prices remaining consistent resulting in a net effective increase in rent remains to be seen. We feel the latter is a probable scenario as landlords tend to drop concessions with demands increases as there is more competition for units. Additional rental inventory is something to watch in 2019 as it relates to pricing as this could be a factor that keeps a lid on rising rental prices.

What Does Amazon's New Headquarters Mean for NYC Real Estate

Amazon Long Island City

Amazon made a big announcement this week, officially stating they New York City would be one of two locations for their HQ2, naming Long Island City as the location. When headlines broke, everyone in the real estate industry began thinking – how will this impact NYC real estate, particularly Long Island City?

The arrival of Amazon will continue the development of Long Island City and should encourage the city to invest dollars into infrastructure such as the subway system which is in dire need and buses. With the arrival of the new Amazon headquarters comes and anticipated 25,000 new, high earning employees.

Prices Likely to Rise

Long Island City has had a housing development boom in recent years with the neighborhood continually becoming more residential and less industrial. We continue to expect new units to come to market in the neighborhood in the near term. Prices have been on the up, and in fact, LIC is the priciest neighborhood within Queens.

Amazon’s announcement means there will be inherent increased interest in the neighborhood which could push prices slightly higher rather quickly, especially in terms of rent demand. It is important to note that rents in LIC luxury brands somewhat mirror that of Manhattan rents, so prices may not skyrocket in the short term, however, increased demand may motivate landlords to remove concessions that are being found on many luxury rentals. There has been an absorption issue in Long Island City given the sheer amount of inventory that has come on the market in the neighborhood in recent years.  

Impact Not Confined to Long Island City 

Anticipate price impacts to be felt in other neighborhoods as well. The influx of employees may look to other neighborhoods that still allow for easy access to LIC such as Midtown East and the Upper East Side where they may find more bang for their buck.

Being priced out of the market is still a very large issue for the NYC housing market as wages cannot keep up with cost of living for many. Because of that, we expect that the largest increase in pricing may be seen in peripheral neighborhoods that are still up and coming such as Greenpoint, Brooklyn. A new influx of residents in neighborhoods such as this could push pricing higher.

 

More Players than Just Amazon

While Amazon is garnering much press and attention about the location of their second US headquarters, it is important to remember that there are other plays that can contribute to this as well. Google has stated they expect to nearly double their workforce in coming years. The arrival of Amazon could further establish New York as a tech center and attract everything from Amazon competitors to start ups. What does that mean? The influx of people as a result of high paying jobs could be greater than what will be from Amazon on its own.

Inside Holiday House NYC 2018

Holiday House has returned to New York City, and the 2018 rendition has transformed a townhouse on the Upper East Side. Located at 118 East 76th Street, this year’s Holiday House features the work of more than 20 interior designers including Interior Market Group, Melanie Roy, Timothy Brown Studio, and The Studio at One King’s Lane to name a few.

Holiday House was started in 2008 by interior designer and breast cancer survivor Iris Dankner. Holiday House has been raising money for the Breast Cancer Research Foundation for over a decade, allowing visitors to get inspiration from top interior designers and experiencing products first-hand from leading brands.

The project has expanded to The Hamptons, and even globally with Holiday House London. We are happy to see the return to NYC, and we went inside. Talk about serious inspiration!

Step Inside…

Holiday House NYC 2018

Kitchen - Designed by Melanie Roy

After 15 years in the television industry, Melanie Roy pivoted and began her career in interior design. She focusing on designing family-friendly residences.

Melanie Roy Kitchen Holiday House
Melanie Roy Kitchen
Holiday House NYC
Holiday House NYC 2018
New York Holiday House Showhouse

Master Bedroom - Designed by Natalie Kraiem Interiors

Natalie Kraiem Interiors is a Brooklyn based interior design firm that places emphasis on strategically incorporating different styles. She aims to create sophisticated, glamorous, and timeless spaces. For her Master Bedroom at the 2018 Holiday House, she transforms visitors to a “Getaway in Paris”

Holiday House Master Bedroom
Holiday House 2018 NYC Details
Holiday House Master Bath


This is simply a glimpse into the inside of the 2018 Holiday House. We highly encourage you pay a visit, and take in the myriad rooms and inspiration sources. The house is open to visitors through December 2nd, 2018. All ticket proceeds benefit the Breast Cancer Research Foundation.

Hours:

Tuesday-Sunday: 11:00am – 5:00pm

Until 8:00pm on Thursdays

Tickets can be purchased online.

What Do Rising Interest Rate Mean for the Housing Market?

rising mortgage rates

Mortgage rates of been on the rise lately, with the most recent tear higher garnering quite a bit of attention. The 30-year fixed rate is approaching 5%, a number that hasn’t been seen since around 2011. Remember, while rates are high relatively speaking, rates are still lower than what was observed in the 70s, 80s, and 90s.

The expectation is that rates will continue to rise with economists forecasting we will see 5% by the end of 2018 and could possibly see 6% by the end of 2019. Why are rates rising so rapidly? The most recent jobs report was indicative a strong economy with unemployment the lowest it has been in decades. A strong job market translates to a strong economy, and a strong economy means rising interest rates. 

So, what do rising rates mean for home buyers and the housing market? Remember the following

You Have Mortgage Options 

When headlines and the press speak to mortgage “rates” they are referring to the 30-year fixed rate. This is the most expensive mortgage product as it has the longest built in protection period. But what if you do not plan to be in the home for that long…why pay a premium for time protection that you may not need?

Many buyers are shocked to see all the various mortgage products that exist when they sit down and discuss their needs and options with a Mortgage Broker. A qualified Mortgage Broker will be able to advise on which product makes the most sense given your qualifications and time horizon. 

Control What You Can 

There are aspects that you can control when it comes to financing your home and getting the best rate possible. Two of the biggest influencing factors are 1) down payment and 2) credit score. 

Down payment:

The amount of money you put down on a home is one of the biggest tools you can use to lower your monthly payment because the more you put down, the less money you are borrowing. We understand getting a substantial down payment can be challenging, especially for first-time homebuyers who may be younger and faced with high student debt.

It is also important to remember that any down payment 20% or greater will remove the need for Private Mortgage Insurance (PMI) which can be a substantial savings on your monthly payment.

Credit Score:

If you have ever borrowed money, you know the importance of a strong credit score as it relates to getting the most favorable rates. Yes, you do not need the best credit score out there to qualify for a mortgage, however, the better your score the better the rate you will receive which means the lower your monthly payment will be. Turning a credit score around can take some time, so if purchasing a home with financing is in your future and your credit is damaged, start working hard now to get it on the rebound.

Tax Benefits

There are tax benefits to having a mortgage which are something to consider. While many do not know exactly where they stand in terms of tax liability given the new changes to tax code, we expect to get more clarity after filing 2018 returns.  

With that said, interest paid on a mortgage is generally tax deductible. Under the new tax laws, if you take out a new mortgage, you can deduct up to $750,000 in mortgage interest from your taxes.  In a sense, this makes your effective mortgage payment lower as you are getting benefits when you file your taxes…something to keep in mind.

Questions about taxes? We are not tax advisors and would defer you to your qualified tax advisor who has a full picture of your tax liabilities.

If You Are a Seller

Rising mortgage rates may not only impact buyers, those actually taking on a mortgage, but could also have an impact if you are a seller, so it is important to say abreast of market trends. 

Sellers – enlist the advice of your broker in regard to pricing. Your broker will be attuned to trends in the neighborhood and know if impacts are being felt as a result of rising rates. This is especially important for sellers who are selling property that is more likely to appeal to first-time home buyers who are more pressed for cash and concerned with monthly payments. Will a reduction in price make your property more attainable for them?

It is important for sellers to understand the buyer’s perspective given we are currently in a Buyer’s Market. Buyers are faced with a one-two punch of rising rates plus increased home prices over the past few years. Price your property according to what the market is dictating if you want to sell.

What does it all mean? We feel rising rates will certainly have impact on some home buyers that are on the cusp of affordability, however, we do not feel that rates are at a point where it could completely stall the market and put large downward pressure on pricing. In fact, some pent-up demand may be spurred to “jump” in to the market as affordability (of monthly payments) becomes a concern. People see the pace at which rates are rising and do not want to be priced out because of higher rates in a few months.

What You Need to Consider When Investing in Manhattan Real Estate

Have you been considering investing in real estate? Headlines and news stories may have some home owners concerned about their property purchase, or investors second guessing a decision to invest in Manhattan real estate. Like any investing, it is important to take a disciplined approach to investing in real estate guided by the advice of an expert. Analysis of over a decade of Manhattan housing data exhibited the strength of the borough to remain a sound investment compared to many of the global markets out there.

So, is all of Manhattan the same? Considering the following things when approaching Manhattan Real Estate from an investment standpoint.

Manhattan is a Resilient Market

Manhattan is somewhat a world of its own when it comes to the market and its driving factors in comparison to the larger macroeconomic landscape. The Manhattan market moves at its own pace during economic downturns as a result. We, of course, observed a large anomaly to this during the Global Financial Crisis of 2008. The crisis took down the entire global economy and impacted Manhattan housing. However, recovery in Manhattan was much quicker than that of other global centers.

During this crisis time, Entry-level luxury bounced back most rapidly. UBS Wealth Management publishes a Global Real Estate Bubble Index annually, and New York City was rated “fair value,” especially in comparison to hot markets such as San Francisco, Hong Kong, and Toronto.

Entry-Level Luxury

We have talked about entry-level price points as being key in the current market throughout many issues of Victoria’s View. In the case of Manhattan, some could argue that entry-level pricing could stretch as far as $5-6M. These are the properties that have shown exceptional price resilience over recent years in a market that some argue is slow.

Sub $3M has been especially busy the last few years. Open houses are getting a lot of foot traffic at this price point, and some properties are even experiencing bidding wars, especially those priced in the $1M range.

Why has entry level luxury faired so well? Demand is strongest at this price point in Manhattan. At this price, demand is fueled by working urbanites that are looking for their first-time home purchase, or are, perhaps, upgrading from a 1 bedroom to a 2 or 3 bedroom as they start a family.

Compared to ultra-luxury, or properties priced $10M+, entry-level luxury in Manhattan has remained more stable, largely a result of this demand from working professionals who need a place to live that we just discussed. Entry-level luxury likely has a higher buyer based composed of individuals seeking their primary residences rather than a second or third home which is often the case with buyers at ultra-luxury price points.

Volatility Factors

When you invest in stocks, you assess funds/companies/ETFs that match your identified risk profile. Risk may be assessed on things such as sector – Utilities may be considered more risk averse and less prone to price swings than a sector such as Biotech.

So, when thinking about real estate, what factors should you use to assess risk and volatility when considering your investment? Bedroom count plays a big part of real estate price movement. As a result, bedroom count can be a contributing factor to price volatility of real estate assets. One and Two-bedroom apartments are more common while 4+ bedroom apartments and large townhomes are more unique and rare, thus there is an inherent pricing question when it comes to large apartments as there is simply less historical data and comparables to which to defer.

While more bedrooms may mean more risk, more risk is often associated with the possibility of more reward. Prices of large apartments have risen dramatically since the 1980s and 1990s, however, in similar fashion, they were largely impacted during the great recession with pricing on large properties still under pressure.

via     Price swings in YoY rents by bedroom count. Notice the swings in 3 bedroom rents compared to Studios and 1 Bedrooms

via Price swings in YoY rents by bedroom count. Notice the swings in 3 bedroom rents compared to Studios and 1 Bedrooms

Pricing on one-bedroom properties have recovered from recession lows, largely fueled by the consistent demand in this space.

Intrinsic Value

Just as a company or stock has intrinsic value, so, too, does real estate. When considering investing in real estate, partner with your broker so you can identify properties that have more intrinsic value than others.

Contributing Factors

  • Natural Light

  • Neighborhood Stature – are there good schools nearby? Is the area established, up-and-coming, or on a decline?

  • Quality Construction and Materials – your broker knows new development and construction better than you. Lean on them to advise which buildings are constructed from the best materials and workmanship

If your investment is for the purchase of generating income, we have you covered! Check out our article on What to Expect When Investing in Real Estate. If you are purchasing real estate as investment with the goal of renting out, discuss what rents look like in the builder with your broker, and how that estimated figure would stack up against anticipated mortgage and carrying costs. There are ways to extract additional value out of your investment:

Ways to Extract Additional Value out of Your Investment:

There are additional ways to squeeze a bit more rent out of your unit and also have an increased likelihood to win over a prospective tenant as they are shopping around. While some of them are an expense upfront, they are some of the most common requests we see from prospective renters. Thus, you will most likely recoup the cost of these investments into your property.

  • Consider building out the closets to maximize storage with systems such as California Closets

  • Install Electric Shades/Window Treatments

  • Ensure the washer/dryer are good machines. It may be worth it to upgrade the machines from the base units that came with the apartment

Hiring a broker will be crucial to maximize the rent received. They are able to position your apartment on the market to appeal to the right audience and spend the time to understand the intricacies of the board package and fees.

  • Price correctly! Rely on your broker’s expertise to price correctly so you can rent sooner rather than later.

  • Get the condo leasing application to review the fees. That way, your broker can speak to prospective tenants about all fees associated with the unit. Additionally, this is important to understand in case you need to offer concessions to remain competitive

  • Good photos matter!

  • Get a floorplan of the unit to place online with the listing



Condos with a Luxe Perk: Residents-Only Dining

We’ve written about the lavish amenity offerings that have changed luxury real estate in a landscape where high-end inventory is up and competition among new developments is tough. Some of the most exclusive buildings offer residents a unique experience, one that will cost you even more than a SoHo House membership since admission will require the purchase of a unit in the building…residents-only dining.

Amenities are an extension of the residents’ homes, and restaurants take this to a new level with sophisticated private dining by top chefs only available to residents and their guests. These types of buyers look for convenience, but do not want to sacrifice quality to achieve that. These restaurants allow busy people with demanding careers to come home and not worry about cooking, hosting business lunches, or catering a dinner party.

432 Park Avenue

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432 Park Avenue made a name for itself as the tallest residential building in the Western hemisphere as well as for its tall prices for units in the building. The building amenity package is unrivaled, with the exclusive restaurant occupying the entire 12th floor. The restaurant is headed by Michelin-starred chef, Shaun Hergatt. In addition to the interior dining room, the space also has a 5,000 square foot terrace overlooking 57th Street which can be reserved for private events. If you aren’t in the mood to eat in the restaurant on the 12th floor, in-residence dining is also available.

15 Central Park West

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15 Central Park West made a splash among the world’s elite as it quickly became an “it” address recognized across the globe upon completion. It set the bar high in terms of luxury offerings, including a private restaurant for residents and their guests. The restaurant at 15 CPW debuted before that of 432 Park Avenue. The building describes the dining offering as a “private dining service with an in-house chef provides full catering for Fifteen Central Park West residents desiring anything from a four-course custom menu for 80 guests to an at-home romantic dinner for two.”  The restaurant is known to host special meals year-round including women’s lunches with speakers covering varying topics and a special brunch on Mother’s Day each year.

Jade Signature

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The trend of resident-only dining is not confined to New York. One of the latest luxury high-rise to hit the shores of Sunny Isles Beach, just north of Miami, has embraced the exclusive trend as well. Jade Signature, designed by famed architects Herzog & De Meuron, offers a truly luxurious amenities package which allows residents to experience resort-style living on the shores of South Florida. The Jade Signature Beach Bar & Grill so residents can dine pool and beach side without having to head back their residences. The experience is similar to that of many beachfront hotels.

Featured Listing: Jade Signature - 16901 Collins Avenue, #4905

16901 Collins Avenue

3 BED | 4.5 Bath | $4,495,000

Stunning high floor north east corner residence with breathtaking direct ocean, Intracoastal and city views. This home in the sky features 2,929 square feet of interiors and 806 square feet of terraces, 3 bedrooms, 4.5 bathrooms, study plus maids quarter, private elevator entry.  Residence comes fully finished with white marble floors and finished closets, gourmet kitchen with European designer cabinetry by Snaidero, top-of-the-line appliances by Gaggenau. Jade Signature, designed by Pritzker Prize-winning architects Herzog and de Meuron with interiors by French design firm PYR led by Pierre-Yves Rochon, offers five-star amenities with full-service spa and fitness center, concierge services, resort style swimming pool, library, resident lounges, chef's kitchen, full-service restaurant and much more

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