New York Sees Its Last Rental Conversions After Passage Of Tenant Protection Law


It’s a common situation for New York City renters – their rental building is going condo (or, as was the case a couple of decades ago, co-op). But after the passage of the Housing Stability and Tenant Protection Act of 2019 last summer, that scenario has been likely been relegated to the city’s history books. 

One of the extensive law’s provisions increases the required percentage of existing tenants willing to buy their apartments from 15% to 51% before a non-eviction conversion can move forward. Previously, the percentage could also include non-tenants who were purchasing the apartment to use as their primary residence. The new 51% requirement includes current tenants only.

Some developers were able to squeak their conversions in under the wire, including The Broad Exchange Building, which filed its plans before the regulations went into effect last June. This past July, the developers announced that they had met the 15% threshold to achieve declaration of effectiveness for the condominium conversion in Manhattan’s Financial District. 

Angela Ferrara, executive vice president of The Marketing Directors, which is heading up sales at The Broad Exchange Building, built in 1902, said it was likely one of the last conversions to go forward. 

Of the building’s 308 units, 56 sold as primary homes and 12 of those purchasers were already residents, according to Ferrara. 

Ferrara and others contend that the regulations will have the opposite effect of its intentions to provide affordable housing and encourage homeownership. 

“The regulations had the right intentions – to make properties more affordable,” Ferrara says. “But this particular aspect of the law has done the opposite, allowing less people to be able to buy in Manhattan.”

The Avant, located in The East Village, also converted from a rental into 26 condominium residences, submitting the plan ahead of the deadline.

“Given that this is a conversion, the team was able to completely gut the interiors and recreate larger-than-average units at still very attainable price points,” says Candice Milano, an agent with Brown Harris Stevens representing the property. “Due to Manhattan’s lack of affordable, new units, The Avant is able to meet this demand in a prime downtown neighborhood with starting prices below $1 million.”

The change is a larger issue because of the lack of developable land.

“Right now, a very good course of action would be for the developer to convert and let renters be homeowners,” Ferrara says. “This is really the only play that a developer has. New developments are not really attainable for a lot of New Yorkers. I would love the regulations to change because there will be a glut of new construction, but there won’t be something in the middle range.”

Jonathan Canter, a partner with real estate law firm Kramer Levin, said conversions are effectively dead.

“The threshold is so high,” Canter says. “It’s nearly impossible to do it on any economic terms.”

Additionally, developers received less than a week’s notice as the law went into effect immediately. 

“I think it was a knee-jerk response that condominiums are bad because people are making money off them, and because conversions would take away rental units,” Canter says. 

State Assemblyman Harvey Epstein, co-author of the tenant protection law, says the reasoning behind raising the threshold for conversions was to allow tenants to have more say in how their building is run. Financing also becomes more difficult for buildings that are not majority owner occupied.

“The goal was to help people who want to become homeowners so they have a voice on the board,” said Epstein, who’s lived in a co-op on Manhattan’s Lower East Side for more than 20 years. “If the majority of the building is owned by the sponsor, the sponsor maintains total control and tenants have no say in how the building is run.”

Epstein disagrees that the law has killed conversions.

“It makes more appropriate conversions,” Epstein says. “I don’t think a conversion at 15% is an appropriate conversion. If they can’t get 51%, maybe they shouldn’t have a conversion at all.”

Francis Greenburger, chairman and chief executive officer of developer Time Equities, says he has an idea to amend the current conversion law that would still provide support for affordable housing, allowing developers to convert a rental building under the previous terms if they contribute to an affordable housing fund.

“The specific amounts would need to be determined but our initial thought was that a contribution of 3% of the purchase price would be split equally by both the sponsor and purchasers, and that upon resale purchasers would also pay 1.5% of the purchase price at closing,” Greenburger says. “I believe this is an inherently just and equitable way to generate funding from sponsors/developers in the private sector for-profit housing market and those purchasers fortunate enough to be able to afford to buy a condominium, while targeting the funds to specifically benefit those who have demonstrated the need for affordable housing.”



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Actor Anthony Edwards Of ‘Top Gun’ And ‘ER’ Fame Lists Manhattan Penthouse


Actor Anthony Edwards, best known for roles in the movie Top Gun and TV series ER, is selling his prewar penthouse on Manhattan’s Upper East Side.

Edwards, who played Goose to Tom Cruise’s Maverick in the 1986 Air Force movie and Dr. Mark Greene on the first eight seasons of the NBC medical drama, recently listed the three-bedroom, 3 ½-bathroom unit at Philip House for $7.65 million. 

The duplex features interiors by AD100 designer Victoria Hagan, with a 32-foot-long living and dining area with 16-foot ceilings and a wood-burning fireplace. It also has three terraces, including one with an outdoor grilling area.

The eat-in kitchen features custom high-gloss lacquer cabinets, Belgian Bluestone countertops, a Sub-Zero fridge and wine fridge, six-burner Wolf range and two wood-paneled Miele dishwashers.

Philip House was built in 1927 and designed by Sugarman & Berger. It was converted to a condominium in 2013, with ARCT Architecture P.C. designing the conversion.

Building amenities include a rooftop lounge and landscaped rooftop terrace, fitness center, game room, children’s playroom and music practice room.

Elizabeth Van Hiel and Aaron Allen of Elegran have the listing.



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New York And Four Other States’ Economies Are Faring Worst During The Pandemic


New York’s economy is suffering the most due to the coronavirus pandemic, according to an analysis by personal finance publication Bankrate. 

To measure the fallout, and also to determine which real estate markets could be most impacted by the pandemic in the coming years, the company determined a Housing Hardship Index based on July mortgage delinquency rates from Black Knight and July unemployment rates from the U.S. Department of Labor.

New York’s July mortgage delinquency was 8.38%, the 11th highest (though a decline from 10.01% in May) and its unemployment rate was at 15.9%, the second highest, increasing from 14.5% in May. That increased its overall Housing Hardship reading to 24.28.

Nevada, New Jersey, Mississippi and Massachusetts joined New York in the top five. 

Nevada, however, seemed to be in better shape, with casinos reopening and its jobless rate falling to 14% in July, down from 15% in June and a high of 25.3% in May. The state’s mortgage delinquency rate also fell to 8.77% in July, down from 9.71% in June and 9.99% in May

“New York and New Jersey are suffering economic slowdowns because they were the epicenter of the coronavirus pandemic in the spring,” says Bankrate.com analyst Jeff Ostrowski. “As a result, those states have been especially slow to reopen their economies. Nevada has been hit hard because its economy relies heavily on tourism, and travel has slowed dramatically since March.”

Mississippi was a new entrant in the top five based on its real estate market. 

“Mississippi had an unusually high mortgage delinquency rate even before the recession, and it continues to have the nation’s highest share of homeowners late on their mortgage payments,” Ostrowski says. 

Massachusetts had the nation’s highest unemployment rate in July, at 17.4%, though its mortgage delinquency rate was comparatively low at 5.81%.

“State and local officials remained cautious about reopening the economy, Ostrowski says, with the report noting that there were nearly 9,000 deaths from COVID-19 as of Aug. 25 in the New England state.

The five states where the economies are in the best shape are Idaho, with a mortgage delinquency rate of 3.71% and an unemployment rate of 5%, along with Utah, Montana, South Dakota and Nebraska.

Bankrate.com analysts determined that while this year may be the worst for unemployment, mortgage delinquencies and defaults will increase significantly in 2021.

The report noted that a rush of foreclosures have been staved off by the Coronavirus Aid, Relief and Security (CARES) Act, which requires government-backed lenders to forgive up to a year of missed payments without penalty, while other lenders have also voluntarily extended forbearance to more than a million borrowers.



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Manhattan Real Estate Market Stronger Now Than During The Great Recession, But Future Is Uncertain


The Manhattan real estate market is currently in better shape now than it was during the peak of the Great Recession, according to a recent analysis by real estate market data firm UrbanDigs, though it remains to be seen how far it has to fall. 

The report, commissioned by Forbes, found that there were more sellers than buyers during the Great Recession compared to now, during the COVID-19 pandemic. 

“This is partly because the impetus of the Great Recession was economic, affecting buyers as well as sellers,” write UrbanDigs cofounders Noah Rosenblatt and John Walkup. “COVID, on the other hand, appears to be more of an emotional motivator. While certainly there are some sellers who need to sell, the lack of a sharp spike in supply and a corresponding drop in demand suggests the market is not as one-side as the Great Recession, although lingering virus fears will keep a lid on demand for the time being.”

The report compared supply and pending sales, as well as “market pulse,” which is the ratio of pending sales to supply. A lower number reflects more sellers than buyers. 

In September 2007, supply jumped by 10% on a quarterly basis and pending sales dropped nearly 30%, according to the analysis. Over the next 15 quarters or so, supply continued to increase and pending sales dropped nearly 50%, while the market pulse fell from 1 to 0.16.

After the pandemic shut down the real estate market entirely, the abrupt drop in pending sales boosted supply, but not at the pace seen in 2007 during the Great Recession. The market pulse is currently at 0.22, according to the report. 

This comes after a market slowdown from 2015 to 2020, compared to the buying frenzy of 2013 to 2015, with the market pulse declining from 0.5 to 0.3, though by late 2019 and early 2020 the market was seen as possibly rebounding.

“Clearly, the economic impact of the pandemic has yet to be fully tallied, but in the meantime, it appears that the market for Manhattan real estate is functional, just fearful,” Rosenblatt and Walkup write. 

Rosenblatt and Walkup note that today’s sellers are still facing the most competition in nearly a decade, giving buyers increased options and stronger negotiating leverage. 

At the same time that Manhattan looks to be entering its strongest buyer’s market since the Great Recession, with mortgage rates at historic lows, rents are also falling sharply, according to a recent report by StreetEasy.

It’s likely, however, that the Manhattan market has not reached the bottom, agents say.

“We are currently in a buyer’s market and for sure there are great deals to be made,” says Arlene Reed, a broker with Warburg Realty. “Interest rates are low and the longer the developers sit with the product the more negotiable they will become. However with COVID-19 still very much on everyone’s mind, an economy that is doing poorly, many jobs not coming back and rising delinquencies, people are fearful. Many prefer to wait and see. The amount of delinquent or understated assets is understated because of all the stimulus packages and deferred loans. There has to be a trickle-down effect. Banks are preparing for a much worse scenario.

“I believe that because of all this we have not reached the bottom,” Reed says. “Though you can make great deals now, there is no downside to waiting and reevaluating in six months. It is not likely that interest rates will go up anytime soon so there really isn’t any downside to waiting.”



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Missouri Home With Working Jail Is Latest Real Estate Listing To Go Viral On Social Media


Do you want to buy a house with a jail attached? Or view a home with a highly unusual ceiling? Or maybe you can appreciate the legendary Bigfoot making an appearance in your potential abode?

Social media has been responsible for making real estate listings go viral. The latest is a two-bedroom, 1 1/2-bathroom home in Fayette, Missouri, that looks like the usual mid-aughts renovation, until you get to the 30th listing photo, which begins to show a passageway from the center-island kitchen to… a jail?

The home, which recently came on the market for $350,000, was built in 1875 and was used as the Howard County Sheriff’s house, according to the father-and-son listing agents, Jeff and Justin Radel of House of Brokers Realty.

Howard County sold the home on the auction site eBay

EBAY
in 2005, and the new owner extensively renovated it, though kept the nine jail cells, with operational cell door lock throws, the agents say.

The listing was shared on the Lab Coat Agents Facebook group, Justin Radel said, and then made the rounds by being shared further on Facebook and Twitter.

“It was kind of crazy to see my listing there,” he said.

Earlier this year, a listing in Felton, California was similarly shared. The agent, Daniel Oster, took photos of himself in a Sasquatch costume doing various tasks around the five-bedroom home to market the $999,000 listing, which is located near the Bigfoot Discovery Museum. It sold for $1.1 million in July, thanks to its viral fate.

Also in Fayette, Missouri, this $259,900 listing has been making the rounds on social media for its spooky decor.

Justin Radel says that beyond his listing’s viral fame, potential buyers have floated the idea that the historic former jail could make an excellent themed Airbnb.



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With Unemployment Twice As High As The Great Recession’s Peak, New York City Rents Have Further To Fall


It’s no secret that rents in New York City are falling, but a new report predicts that they could fall much further over the next year, prompted by a combination of job losses and rising inventory.

Manhattan rents declined more than 3% last month, the largest year-over-year drop since the Great Recession, when rents in Manhattan fell nearly 10% over the course of a year, according to a report by listing site StreetEasy. During July, total rental inventory was 52% higher than last year.

The Zillow-owned site recently predicted that the city’s rents would fall by at least that much, if not more, by next March.

The economic impact of the pandemic is already worse than what New Yorkers faced in 2008 and 2009, said StreetEasy economist Nancy Wu. New York City’s unemployment rate rose from 18.3% in May to 20.4% in June 2020, according to the Bureau of Labor Statistics, which is twice as high as the Great Recession’s peak unemployment rate of 10.4% in December 2009.

At least 520,000 jobs have already been lost from the small business sector alone, according to data from the Partnership for New York City referenced in the report.

“High unemployment leads to higher vacancy rates, as the New Yorkers who can no longer afford to live in the city or who moved to the city for work increasingly move away,” Wu wrote in the report. “Higher vacancy rates translate into lower demand for the rental inventory piling onto the market as leases expire throughout the summer. As demand continues to decrease while supply increases — and there are many reasons to believe these trends will continue — rents are likely to fall more than they did during the Great Recession.”

Summer is peak time for expired leases, and the market has already been flooded by inventory. Rental inventory increased last month in Manhattan by 65% and citywide by 52% compared to the same time last year. 

“Many more rentals are set to pile onto the market throughout the summer, as August is typically the month with the second-highest volume of rentals coming onto the market, after July,” Wu wrote.

The citywide rental report released today by Douglas Elliman Real Estate, compiled by real estate appraisal form Miller Samuel, seemed to reflect this, showing that last month saw a new record Manhattan vacancy in 14 years of recording.

The rental market will also be compounded by city residents who are taking the opportunity to move to the suburbs and, unlike before, they won’t be replaced by new hires or students, who will be able to work remotely.

“New York’s rentals market will not return to normal for the foreseeable future, and those considering moving or who have expiring leases will need to make decisions they did not anticipate a year ago,” Wu wrote. “For the lucky few who have jobs, there are going to be deals like never before. Manhattan neighborhoods that were off limits to those on more modest budgets may once again become accessible.”



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New York Law Would Revoke Licenses Of Real Estate Agents Who Engage In Discrimination


After a newspaper investigation uncovered widespread race-based discrimination in the Long Island housing market, New York has passed a bill that puts a real estate agent or broker’s license on the line if they are found to engage in discriminatory behavior. 

The bill, introduced by James Gaughran, a state senator for the 5th district, which covers the North Shore of Long Island, is on its way to Governor Andrew Cuomo for his signature. 

The new law would revoke the license of any real estate broker, agent or salesperson who is found to have violated the state’s human rights law. It stems from a 2019 investigation by Newsday that revealed agents were steering buyers to certain neighborhoods based on their race and requiring non-white buyers to produce mortgage documentation before showing them homes while not requiring the same of white customers. 

Michael Romer, a real estate attorney with Romer Debbas LLP, said the legislation provides the “missing teeth” to New York’s existing human rights laws as they pertain to real estate discrimination. 

“Currently, the State does not have the power to suspend or termination a license based upon a violation of the Human Rights Law,” Romer said. “The State’s ability to suspend, fine or terminate was limited to other infractions such as misrepresentations and fraud. This legislation would make fair housing related regulations very real in real estate circles”

 Many groups in the real estate industry said they support the legislation. 

The New York Residential Agent Continuum (NYRAC) a broker advocacy group, lobbied in favor of the bill during a trip to Albany in February. 

 “NYRAC is an association of real estate agents founded on ethics and greater transparency for the consumer in the New York City real estate market,” the organization said in a statement. “We strongly support legislation that safeguards the consumer and prohibits discrimination in the real estate industry.”

Cathy Taub, a broker with Sotheby’s International Realty and the founding chairperson of NYRAC along with Heather McDonough Domi of Compass, said Sotheby’s has been “proactive in educating its agents.” 

“Agents are required to take a fair housing course and update on the anti-discrimination laws of New York State, which now specifically includes the changes reflected in this amended fair housing law,” Taub said. “This course is in addition to the continuing education required by the State of New York. This is a mandatory course and reflects Sotheby’s International Realty’s commitment to its agents and clients as to the importance of these issues in today’s world.”

Real Estate Board of New York (REBNY) President James Whelan called the bill “an important step in fighting discrimination and disparate treatment which people of diverse backgrounds may experience because of a small fraction of individuals within the industry who flout the law.”

 “All New Yorkers must have equal access and opportunity when searching for housing or commercial real estate,”  Whelan said.



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Manhattan Rents Drop To Record Lows As Demand Plummets


With demand falling during the coronavirus pandemic, rents in Manhattan fell for the first time since the Great Recession during the last quarter, according to an analysis from New York City listing site StreetEasy.

Nearly 35% of Manhattan rentals were discounted, with the median rent falling nearly 7%, or $221 per month, the report found. The Zillow

Z
-owned company’s Manhattan Rent Index fell 0.9% to $3,236, the first year-over-year drop in more than a decade.

“The sizable rental discounts seen during the second quarter are a very strong indication that demand for rentals in NYC is declining overall,” says StreetEasy economist Nancy Wu. “This demand will continue to remain low as new hires, interns and students start their jobs and school remotely rather than in NYC, and as many New Yorkers escape the city temporarily for the summer, or permanently due to job loss or interest in relocating. These factors will all lead to inventory piling up, and landlords will need to make more markdowns to meet demand.”

Manhattan’s priciest real estate fared the worst, with rents in the most expensive segment of the market falling 1.4% to $6,325.

At the same time, online searches for rental apartments were on the uptick, especially in the outer boroughs. StreetEasy searches for rentals in Brooklyn rose 26% year-over-year, and searches in Queens rose 24%. 

Wu noted that the interest in the outer boroughs was likely fueled by being close to the office becoming less of a priority for people who have adapted to working from home.

“Remote work has given many renters the option to live anywhere they please, making it too soon to predict when rents will rebound,” Wu said. 

Rents in Brooklyn and Queens did rise by 2.6% and 1.2% respectively, but the pace of the increases slowed, according to the report. Brooklyn, for example, saw the slowest pace of growth since the fourth quarter of 2018.

Home prices also dropped or remained flat, falling 4.1% from last year to $1.06 million in Manhattan and 1.6% to $687,160 in Brooklyn, which was the largest year-over-year drop in seven years.



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‘Golden Girls’ Home In Los Angeles Lists For Nearly $3M


Get out the cheesecake: a mid-century home in Los Angeles that served as the exterior for cherished 1980s TV sitcom The Golden Girls has hit the market for the first time in 65 years, asking $2.999 million. 

The Brentwood home dates back to 1955, when David Noble Barry III and his wife, Margaret Carr Barry, hired a notable Hawaiian architecture firm to model it after his father’s home in Honolulu. 

A location scout for the show thought the home belonged in Miami and approached the family about shooting the exterior. The Barrys’ home was used in the show’s first season — interior scenes were filmed on a sound stage — and then the production used the architectural plans to rebuild the façade on a studio lot. 

“They were happy to have their house used,” says the late couple’s son, James Barry.

Barry recalls how a man once asked permission to propose to his girlfriend, a Golden Girls fan, in the home’s driveway. After she accepted, Margaret Carr Barry brought out champagne. The couple later sent the family holiday cards (that presumably said, “Thank you for being a friend”). 

People still mail letters addressed to Rue McClanahan, Betty White, Beatrice Arthur and Estelle Getty, the actresses who portrayed the title characters of Blanche Devereaux, Rose Nylund, Dorothy Zbornak and Sophia Petrillo, four older women living together in Miami.

“Mail just came recently to three of the actors saying how much they enjoy the show and how in a down moment it made them very happy,” Barry says. 

The home, which is being sold in a trust, has its original kitchen, with turquoise Formica and turquoise and avocado cabinets.

Listing agent Rachelle Rosten of Douglas Elliman says the listing and its Miami style, with high beamed ceilings, oak hardwood floors and walls of glass that open to a covered patio that you could call a lanai, has generated lots of interest.

And just as the show has fans of all generations, “the architecture still resonates today,” Rosten says. 

“It’s a listing trifecta,” Rosten says. “It’s pristine mid-century architecture, it’s an excellent location and it’s a piece of Hollywood history.”



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My Celebrity Neighbor’s Brooklyn Home Features Pandemic Poetry


As the COVID-19 pandemic brought New York City to a near standstill three months ago, my world, like that of many of my neighbors in Brooklyn, shrank to the several walls of my apartment and about as many blocks.

On the days when the weather cooperated — when it was nice enough to be outdoors, but not so springlike that I worried about socially distancing from throngs of people also trying to cure their cabin fever — my husband and I enjoyed taking long walks, admiring the area’s architecture. We had moved to Ditmas Park, a leafy suburb-in-the-city, in 2016, and part of what drew us here was the abundance of grand turn-of-the-last-century Colonials, turreted Queen Anne homes and charming bungalows.

The architecture doesn’t get any more impressive than it does on Albemarle Road, in what’s officially known as Prospect Park South. In 2015, a year before we made the move to Brooklyn, actress Michelle Williams purchased an iconic eight-bedroom Colonial Revival home here with fluted Ionic columns that had been listed for $2.45 million, and set about making extensive renovations.

During our pandemic walks, my husband and I discovered that not only had Williams replaced the dark asphalt shingles with bright clapboard siding, but that she — or whoever has been living in the home these last few months — has been placing sandwich boards of poetry at the foot of the walkway for neighbors to enjoy.

The poems, which appeared to be selected to fit the mood of the day, have stopped me in my tracks and prompted me to think metaphorically about the surreal situation we’ve found ourselves in.

The first one we encountered at the end of April was Keeping Things Whole by Mark Strand, in which the author expresses his desire for wholeness in a fragmented world.

On May 24, there was Things by Lisel Mueller, which references our propensity to apply human characteristics to everyday objects, giving us a feeling of familiarity amidst uncertainty.

Two weeks ago, as grief and anger over the death of George Floyd and too many other black lives compelled people here, and across the country, to fill the streets demanding change, the sandwich board held more concrete commentary. Ross Gay’s A Small Needful Fact referenced the parallel fate of our fellow New Yorker, Eric Garner, after an NYPD officer put him in a chokehold. Gay’s poem branches off of Garner’s work as a horticulturist at the New York City Department of Parks and Recreation.

Also over the last few weeks, nearby apartment dwellers have used the street’s wide grassy median to relax in the sun, with one homeowner even encouraging neighbors to spread out on their lawn.

Poetry is certainly no cure for a pandemic, let alone for the disease of systemic racism that’s been circulating for centuries, but the use of real estate to provide a much-needed escape from our daily anxieties has been a balm, and has only cemented the reasons why I decided to put down roots here.



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