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US home prices are up the most in 7 years

This year, the US real estate prices rose by the most compared with the previous seven years. The S&P/Case-Shiller index of US property prices (the most widely followed home price index in the USA) climbed 12.2 percent from May 2012. This is the largest 12-month gain since March 2006, after it advanced 12.1 percent a month earlier.
All 20 cities that are in the index showed an increase in year-over-year prices, led by gains of 24.5 percent in San Francisco and 23.3 percent in Las Vegas.
Reasons for this increase in prices are the low interest rates, low inventory of houses and overall improving economy and job market in the USA.
"We continue to look forward to upward momentum" in the US housing market, said Anika Khan who is a senior economist at Wells Fargo, one of the largest U.S. mortgage lenders.
The increase in the Case-Shiller index is supported by many other sources that have indicated price appreciation in the US real estate market. Furthermore, the home builder index (National Association of Home Builders/Wells Fargo) also increased to highest level since January 2006 indicating strong confidence from US home builders that prices might continue to go up.
Based on the Commerce Department, the median sale price of a new home is now 7.4 percent higher than 12 months – it currently is around 249,700 USD.

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Source: Bloomberg, July 31 2013

State of US real estate market

Overall:
- Prices across the USA have increased over last 12 months. However, some experts believe that the rate price appreciation might slow down as interest rates are trending upwards.
As of June 2013, the S&P/Case-Shiller Home Price Index (a composite index for real estate prices in 20 cities in the USA) rose 12% over the last 12 months.

Local information:
As you know, real estate trends should be reviewed on a local level. As such, here are some key points:
- Below are the price increases over the last 12 months (as of June 2013)
o Boston: price increase of 6.7%
o Los Angeles: price increase of 19.9%
o New York: price increase of 3.3%
o San Diego: price increase of 19.3%
o San Francisco: price increase of 24.5%
It should be noted that these price increases are based on data from the entire metropolitan area of each city. As such, it does not cover only the city but also the neighborhoods around that city center. As a result, certain cities with a wide range of different neighborhoods (such as New York) have a wide range of price differential among the neighborhoods of the city.

- Places such as New York, Miami, San Francisco… are facing a lack of supply of new units: as such, buyers have been buying condo apartments based on floorplans (=before the building is completed), bidding wars for property is increasing and many buyers have to wait longer to find a property that they like and pay a higher price than they expected.

- Las Vegas noticed a price increase of 24.9%, the highest annual gain of any major metropolitan area. This is particularly due to the fact that many hedge funds and other investors have been buying up property in bulk, and due to the fact that a recent legal bill makes it harder for banks to foreclose (thus limiting the number of units on the market)

New York, Miami and San Francisco are experiencing hot condo buying

In New York, Miami and San Francisco, real estate buyers are back into purchasing luxury condo apartments based on floorplans and are not waiting for completion of the apartments. For example, sales at the planned luxury tower 56 Leonard in Manhattan have gone through the roof – more than 80% of all its units were sold since the sales office opened in April this year.
Based on the real estate firm Douglas Elliman, this demand has increased the average price per square foot with 30% over the last 12 months to USD1,425 per square foot.

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Not only the new condo buildings in Manhattan are getting all the attention. Condo buildings just across the river in Brooklyn and New Jersey are experiencing more interest. New condos proposed across the rivers from Manhattan in Brooklyn and New Jersey are in high demand too. For example, since sales have started two months ago at 1100 Maxwell place, more than 30% of all apartments have been sold.
Miami is experiencing a similar situation with buyers targeting high-end luxury condo buildings such as the Philippe Starck-designed SLS Hotel & Residences close to Miami.
The San Francisco bay area also starts seeing new condo developments and preconstruction sales in certain neighbhourhoods. For example, developers Tishman Speyer and China Vanke started constructing two condo buildings in a trendy district in San Francisco. Sales have not started yet and prices (expected to be high) will be announced later.

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Source: Investor Business Daily, July 3 2013

Luxury New York real estate market booming

In New York City, the real estate market is back to normal with buyers from all over the world chasing luxury condo apartments before they are even finished.
One57 is one the most spoken about luxury condo buildings in Manhattan. Seventy percent of the apartments in the building have been sold while the building is still under construction. Another example is 56 Leonard in lower Manhattan that sold fifty percent of all its unit in just 2 months of pre-sales.
As a result of this demand for high-end luxury property, property developers are scrambling to offer more apartments in the most expensive price range. The number of Manhattan condo apartments with sales price of more than 15 million USD has increased from 33 units in 2009 to 49 units in 2013.

Source: Straight Times

Ultra-High-Net-Worth-Individuals continue to buy trophy properties

The rich are getting even more wealthy and New York is one of the safe havens where the global billionaires will be putting their fortunes in the next few years.
Candy & Candy, Savills and Deutsche Bank compiled a study on the Ultra-High-Net-Worth-Individuals (UHNWIs). Based on this survey, the UHNWI population found that the UHNWI population is expected to increase with 20 percent and their wealth with 30 percent by 2017. Clearly, UHNWIs have not been affected much by the global financial turmoil as evidenced by their recent appetite for trophy properties.
“A trophy ‘safe haven’ property in a global city is typically at the top of the shopping list for wealthy individuals,” says Nick Candy, CEO of ultra-prime London developer Candy & Candy. “Their continuing appetite for such investments is expected to exert even greater influence over global property markets in the next few years.”
In 2012, the four financial centers (London, New York, Singapore and Hong Kong) recorded 300 sales over USD15.4 million. By 2017, the number of trophy transactions is expected to increase to 400 per year.
According to the study, the quest of UHNWIs for trophy properties will drive up the overall real estate markets especially in New York, which has the largest share of UHNWIs in North America, but has comparatively low prices because of the housing collapse.
The only concern is the property taxes (for example New York has an annual property tax). While this has not been known to actually have an impact on the super wealthy, their personal real estate advisors could get worried.

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Source: New York Observer, May 2013

Finally, an increase of building permits in New York… but it won't be enough

The good news: Building permits for new real estate developments in New York are back on the rise, which means much-needed apartments should soon come on the market. The bad news: It still won’t be enough.
For the year 2012 (through October), New York City issued permits for 40 new residential buildings in Manhattan, for a total of 2,287 new units. That’s an increase of 15 percent compared with the same period in 2011, but still far from normal. Normally, permits for around 4,000-5,000 units per year are issued per year.
Manhattan permits peaked in 2008 at 9,700 units before Lehman Brothers collapsed and finance for developers began drying up. This lack of financing brought construction to a halt. Rising demand and a scarcity of new apartments have created a rush on new luxury condominiums in certain neighborhoods, with some buyers signing contracts for spaces even before they are built.
While developers are beginning to find ways to finance future projects, but many challenges remain such as land costs and more upfront payment. Furthermore, permits don’t always immediately translate to new units. The lag time between the filing of a permit and the selling of an apartment is typically six months to two years. There is also the question of how many of the new units will become available for sale and how many will be designated for rent.

Source: New York Times

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The Most Expensive Homes You Can Buy In New York City

The following list consists of the top ten most expensive homes currently for sale in New York City.

10. Townhouse on the Upper West side: on sale for 50million USD
The townhouse was built in 1900 in the Beaux Arts style and completely renovated in 1998. It has 7 floors, eight bedrooms, 14 bathrooms and a roofgarden.
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<p>9. Duplex penthouse on the Upper East side: on sale for 50million USD<br />
This penthouse is located on the 19th floor of the building has six bedrooms, eight bathrooms and terraces.<br />
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8. Penthouse on top of the Mandarin Oriental hotel: on sale for 50million USD
This 4825 square foot condo penthouse has a 30-foot gallery and a wine cellar, as well as acces to the hotel's concierge service and amenities.
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7. Apartment on top of the Plaza hotel: on sale for 55million USD
This apartment has 4 bedrooms, a 60 foot long living room and magnificent views on Central Park.
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6. Penthouse on top of the Mark hotel: on sale for 60 million USD
This penthouse has six bedrooms and a wrap-around terrace.
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5. Penthouse on top of the Baccarat hotel in midtown: on sale for 60 million USD
This penthouse (still under construction) will have five bedrooms and 5.5 bathrooms.
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4. Apartment at 15 Central Park West: on sale for 95 million USD
This apartment is located on the 35th floor, has 5 bedrooms and has views on Central Park.
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3. Full-floor apartment on Fifth Avenue: on sale for 95 million USD
This apartment is on the 18th floor, has 15 rooms and is overlooking Central Park.
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2. Apartment in midtown: on sale for 115 million USD
This duplex apartment is on the 51st and 52nd floor.
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1. Penthouse on top of the Pierre hotel: on sale for 125 million USD
The triplex penthouse has five bedrooms, six bathrooms, a private elevator as well as well a marble staircase.
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Source: Businessinsider.com

Manhattan Apartment Prices increase with 5.9% as Home Inventory Drops

Manhattan apartment prices climbed in the first quarter of 2013 as buyers competed for fewer apartments available due to the biggest inventory decline in more than a decade.
The median price of all co-ops and condominiums that were sold from January 1 until March 31 rose 5.9 percent from a year earlier to $820,555 based on appraiser Miller Samuel Inc. and brokerage Douglas Elliman Real Estate. The number of properties on the market plunged 34 percent, the most in more than 12 years of record keeping. Other real estate agencies are reporting 26% decline in inventory compared with last year.
Based on the appraiser Miller Samuel and agency Douglas Elliman, apartments in new developments had an even higher drop in inventory. The inventory of apartments in new developments fell 42 percent in the first quarter from a year earlier. The median sale price climbed 36 percent to $1.33 million.

Source: Bloomberg April 2 2013

Living in luxury across the world

New York, Paris, London, Hong Kong and Sydney all rank among the top 10 cities for luxury living, but the costs in those cities can vary widely, according to a report published by Knight Frank, a real estate research firm.
Of the global cities surveyed, Hong Kong is the priciest. Luxury two-bedroom apartments there sell for $4.81 million. The cost of consumer products is also high, with milk going for about $10.22 a gallon and gasoline selling for about $8.10 a gallon..
In New York, a typical luxury two-bedroom apartment sells for much less, $2.135 million. And consumer goods in the survey are far cheaper, relative to Hong Kong.
By and large, the top-tier cities do not change much year to year, says Liam Bailey, head of residential research for Knight Frank. Still, two cities dominate when it comes to demand from foreign buyers: "The competition is really between London and New York," Mr. Bailey says.

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Source: Wall Street Journal, March 2013

Chinese Mom Buys $6.5 Million New York City Apartment for 2-Year-Old

A CCTV story has made international headlines after a New York City real estate agent revealed that a Chinese mother purchased a $6.5 million apartment for her child who is 2 years old.
The woman ended up buying in the luxury Manhattan building One57. The 90-story building, which is still unfinished, will have a library with a pool table and 7.3-m aquarium, a private concert hall and a “pet washroom” along with a perfect location on 57th Street between Sixth and Seventh Avenues.

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Source: Time, March 23 2013

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