Luxury Real Estate

Courtesy of Syd Leibovitch, President of Rodeo Realty

Syd Leibovitch, president and owner of Rodeo Realty, believes that 2012 represents the best time ever to buy a home. Prices are down and interest rates are at historic lows!

Home price forecast:

I think that 2012 will be the year we begin to see year over year increases in the median price on both a local and a National level. I'd forecast a modest 5 percent increase.

Interest rate forecast:

The reason that this year will present a unique opportunity is more interest rate related than price. Rates at 4 percent won't be available for long. I would forecast mid 5's by year end. While mid 5's are great historic rates, it is a 25 percent increase from 4 percent. Most buyers look at their monthly payment as a big factor so remember even if homes stayed the same the payment would rise significantly as rates rise.

My basis for these forecasts stem from an increase in consumer confidence. Nearly every survey and gauge of consumer confidence nationally suggests that we are headed for better times. Corporate profits are up and things are looking generally better. We have seen a rebound on the desire of buyers to buy. There are always people that think prices are so high they can't go higher. I've heard that for 30 years yet they, over time continue to rise. The percentage of people that think it’s a good time to buy and that thinking it’s a bad time fluctuates. In 2005, it seemed like just about everyone thought it was a good time to buy. In 2008, it seemed like just about everyone thought it was a bad time to buy. Over the last year I've seen a building sense of optimism and more serious buyers.

When it comes to home buyers here is how I'd break it down:

First time buyers. With prices down 30 percent from their highs and rates down a 600,000 loan has a $1100 per month lower payment than it would have had in 2006. A $1,000,000 home in 2006 would now be $700,000. So basically a buyer could buy a home that was $1,000,000 for $700,000 and pay $2500 less a month had they bought that same home 5 years ago! FHA financing also allows buyers to buy a home with a 3 1/2 percent down payment. In many cases for not much more than first month rent and a 2 month security, and with today's low interest rates the payment is usually similar to the rent! There has never been a better time to buy.

Investors: If you consider how many of the wealthiest people made their fortune in Real Estate it only makes sense to be a long term Real Estate investor. With prices about 30 percent off their highs and low interest rates there has never been a better time to invest.

Move up buyers. Once I went to get my car serviced. The leasing salesperson met me when I picked up the car. He told me he could get me out of my current lease and lease me the new, better, current model with the same payment. He said "all you need to do is switch keys". I did it! With lower interest rates and lower prices we have people that can buy homes they could have never afforded before. Consider the above scenario with the $1,000.000 home now being 700,000. We have had clients that wouldn't have been able to afford the million dollar home in 2006. It was their dream home but they could only afford 700,000. Now that million dollar home is $700,000 and the lower interest rates makes the payment $1100 per month less than the $700,000 home they bought 6 years ago. Sure they have to take a loss on that home, but save on the new purchase. At the end of the day many people have found that they can sell their home and buy a better one for about the same monthly payment!

Rent your home and buy a new one:

This is what I just did and I'm encouraging all my friends to do the same. The goal should be buy low sell high! If you could afford to buy a new home and rent your current home I don't think you will ever be sorry. Your home will undoubted be worth more down the line, but when it’s worth more so will the one you would be buying. Ever thought about being a Real Estate investor? Why not start now with a property you know?

Courtesy of Jack Cotton of Sotheby's International Realty

We're continuing our discussion around a question I get asked repeatedly: how to break into a luxury market especially one where there's a strong, dominant competitor. We talked last week about the wrong way to break in. Let's start the discussion this week with the first step in a better way to break in.

First of all, SWET that dominant player or competitor. You've probably heard of a SWOT analysis but we're talking SWET:

1. Identify the leader in the marketplace you're trying to break into and identify their Strengths? What do they do well? How long have they have been at it? What's their track record? What are they known for? What's their claim to fame, so to speak?
2. Next we want to look at their Weaknesses – what could they do better? Where do they fall down? What do they not do as good as they could do? What can you do better? You can find the answers to these questions by interviewing people in your marketplace; both agents and consumers.
3. List of everything they do in the conduct of their business. Do they go on their own ​listing presentations? Do they show their own properties? Do they negotiate their own deals? Do they do their own marketing? What exactly do they do? I've talked to some agents who tell me that the agent they're competing with is great at listing and buyer presentations, but that the buyer or seller never sees them again. And while that works for them, it could be an in-road for you if you can turn that around. That brings us to step number four: Turn it around.

What can you turn around, do different, better and opposite of what the leader is doing. This can give you a beachhead in your luxury real estate market? For example, if the leader never shows their own property, you could make that part of presentation that you are always personally involved with every showing that takes place of their property. I heard about one leader that won’t climb stairs for whatever reason. They sit down and wait for the buyer to look on their own. Your proposition to the seller can be how you personally demonstrate each and every feature of the property.

There's no right or wrong here. You just need to know what their strengths are, what their weaknesses are and what you can do that's opposite and better to turn it around to give yourself an edge when you're competing with a market leader in your location.

Remember, and this is important, luxury does not compare itself to luxury. NEVER denigrate or criticize a competitor. As I have said before, you have never heard an ad where Rolls Royce compares itself to Bentley. Use the information gained in your SWET analysis to fine tune your approach and then just sell your approach and the value it brings.

We're going to talk in more detail about additional steps to breaking in over the coming weeks. In the meantime, keep those questions coming. Send me emails and don't forget to schedule your 20-minute phone consultation if you bought the book.

Until then, make it a great week.

Courtesy of Frederick Peters, President of Warburg Realty

I had numerous phone conversations today with Warburg agents who are negotiating multi-million dollar deals (and a couple of multi-multi-million dollar deals.) In contemplating the strategies we discussed, I was struck by the uniqueness of the environment in which we New York City real estate agents are privileged to live. Three years after the nadir of the real estate crash and its attendant financial collapse, our high-end co-op market is healthy and vibrant, with multiple expressions of interest for many ultra expensive properties. And I am talking the co-op market, which by definition does not include foreign buyers. So this is (for the most part) home grown money.

Who are these buyers, and why are they acting this way? Let’s address part one of the question first, and let’s answer it backwards. Here’s who they are NOT: men and women with jobs at the big Wall Street firms. With bonus sizes plunging from last year, and cash compensation a negligible part of the bonuses, even the Wall Street hotshots are not getting paid anything resembling the fabulous sums which drove the markets in 2005, 2006, and 2007. We still see some private equity guys. And there is definitely a strong contingent of hedge funders - either the smart ones or the lucky ones, as so many of their brethren have gone out of business. We see some global manufacturers. We see real estate investors, and REIT owners. Actually, today’s high end buyers run the gamut of professions, EXCEPT that not so many of them work for large Wall Street firms.

As to why this market is so vibrant, I think there are several answers. First, good property is scarce. There is little new condominium inventory, and there are never too many large co-op apartments on the market. With local capital gains taxes at 27%, older people would often rather redecorate than move. So demand tends to exceed supply. Second, the local high end real estate market has recovered much if not all of its value over the past few years, bolstered in substantial part by the international money boosting condo sales. It looks increasingly attractive to home buyers exasperated by the unpredictable rapid cycling of the stock and bond markets. Real estate is, in the truest sense of the word, concrete.

And finally there is the sense of new beginning which always accompanies the purchase of a new home. As the economy slowly improves, those who can afford the luxury of change want to embody the return of (guarded) optimism with an investment in the future. New real estate always represents the possibility of new beginnings, of a clean slate. And who isn’t excited by that?

You can read more on www.warburgrealty.com/blog.

Courtesy of Frederick Peters, President of Warburg Realty

Life is a negotiation. Whether it is with our partner, our children, our extended families, or our co-workers, we are engaged in the give and take of negotiation every day. But the degree to which our personalities and engagement styles inform HOW we negotiate is something we rarely consider. Take me, for example. I have a big personality and a lot of opinions, but at heart I am much more bark than bite. I want everyone to be happy. I want consensus. So I have to be on guard all the time in my business life lest this desire to make people happy compel me to give away too much too soon.

Over the years I have both observed and participated in thousands of sales and rental negotiations. Here are a few things that I have learned about how personality shapes negotiation:

· You must figure out your own style and learn both how to use it and how to control it. For me, that has meant harnessing my enthusiasm in order to generate excitement and good will while at the same time knowing that much of the time I just need to shut up.

· In the same way, you have to be aware of the negotiating style of your customer or client (or broker, or partner, or boss, or mother). The CEO, who is always in a hurry and views every decision from 30,000 feet, needs accurate facts and an overview NOW. He will make a quick decision if you are on hand with what he needs. The CFO, on the other hand, may need to come back and measure everything a few times and will be extremely deliberate. He probably will NOT make a quick decision. And the scorched earth negotiator needs to be met, calmly, with the countervailing facts.

· Silence is golden. Biting your tongue will both stop you from giving too much away and at the same time create an environment in which your counterpart, for the same reason, may be tempted to over-speak. One cardinal rule of negotiation is that less is more when it comes to talking.

· If your clients or customers are a couple, watch THEIR interaction carefully. It will be up to you to understand how they make decisions, and it is rarely as straightforward as it appears at first. The talky one with the big opinions (in my marriage, ME!) is not necessarily the one whose desires will carry the day. Once again, silence is golden. If you stay quiet and observe, you can develop a perception of their negotiating style as a couple which will help you sort their priorities and make the right deal.

· It is NEVER strategic to lose your cool. Your frustration is your problem. Buyers and sellers can easily become emotionally involved in the transaction, so as agents it is our job not to let those emotions hijack the interaction. The best decisions are always made by cool heads. Maintaining a friendly professional demeanor will create good will no matter what your part in the deal. Having a tantrum will do the opposite. It is always your choice.

Managing a negotiation never involves just the price, the closing date, the terms. Managing a negotiation involves addressing all the subtle ways in which each participant either helps or hinders the issues and personalities to coalesce into a successful transaction. And the more conscious we all are of the psychological and stylistic issues which shape our responses, the more effective we are likely to be.

You can read more on www.warburgrealty.com/blog.

Courtesy of Frederick Peters, President of Warburg Realty

In New York, a slowing real estate market characterized the fourth quarter of 2011. Fewer purchasers at every level signed contracts than in the preceding three months, and the market retained the highly stratified characteristics which had marked it throughout the year. Co-ops at the lowest end of the market remained an extremely tough sell, while condos at the upper end continued in popularity, especially with foreign buyers.

The marquee sale of Sanford Weill's penthouse at 15 CPW for $88 million was a particular highlight of the fourth quarter. While unique at $13,000 per foot, the sale was emblematic of the willingness on the part of foreigners, particularly those from the former Soviet Union, to spend extraordinary amounts of money the world over for trophy properties. All over Manhattan, foreign buyers, especially from Russia, Asia and South America, have driven new condo prices up as they use our real estate as a safe haven for their capital. The lower priced properties, frequently in multiples, are the preferred purchase of Asian investors. The high profile, high price units are more often purchased by South American or Russian nationals, likely as pied-a-terre apartments for use a few times per year.

In addition to serving as investment vehicles for investors from around the world, sales continued briskly in the one to three bedroom new condo markets all over town. The fourth quarter saw continued healthy absorption in Harlem and Williamsburg, in Chelsea and the Madison Park area, with a mix of users, investors, and parents purchasing for kids writing the checks. While the pace slowed from earlier in the year, it continued strongly enough to further whittle down the inventory overhang from what appeared to be overbuilding a few years back. Now that these units are getting absorbed, however, an inventory shortage seems more likely to afflict us than an overhang. And for the first time in several years, eager buyers are buying new condos from plans; the Toll Brothers building on 65th and Lexington is almost sold out although the infrastructure has only reached about the eighth floor.

The co-op market, meanwhile, was subject to a highly different set of forces. Without the boost of foreign capital, the mood remained cautious. Among properties costing $5 million and up, scarcity dictated the terms of the market; with so little available, well priced properties in excellent condition were still attracting multiple offers. But with an uncertain economy, the prospect of shrunken Wall Street bonuses, and a country paralyzed by political bickering, the fourth quarter was a time for caution. No one wanted to go too far out on a limb. So even larger co-ops had to be priced exactly right if they were to sell. Buyers were not stretching. They once again liked real estate as an alternative to the zero-sum roller coaster of the stock market, but only at the right price. As for the older condos, they are increasingly indistinguishable from co-ops; their Boards are demanding more and more information, both financial and personal, in the Board packages, and just waiting out the buyers who won’t supply it. Sooner or later, most of those buyers just throw up their hands and walk away.

In the $2 million to $5 million market, the same realities applied. There was less multiple bidding during the last few months of the year than there had been earlier, but even in the multiple bid situations which DID arise, the properties had to be well priced and in great condition. And then the bids rarely went much, if at all, above the asking price. And as the co-ops got smaller, the inventory got larger. The studio and one bedroom markets, especially in the postwar buildings which line the eastern avenues of the East Side from 96th Street down to 14th Street, are still available in quantity and absorption continues to be slow. One of the events to watch for in 2012 will be the tipping point between the undersupplied rental market and the saturated sales market: at what point do those one and two bedroom renters get their increase notices and say, “For this money it would make more sense for me to own”?

2011 was a year in which the complex realities of the newly global economy were felt in every corner of the world. It was a year of market unpredictability during which, on the whole, our New York real estate market was in balance. Buyers and sellers remained largely within their comfort zones, and deals were negotiated aggressively but fairly on both sides. There were some unexpected peaks, like the spring mini-boom, and some unexpected valleys, like the winter doldrums which began the year. But overall well priced properties sold at fair prices to satisfied buyers. We like to think of this as a broker’s market, in which our contribution as brokers in educating both sides and bringing them together seems particularly concrete. We look forward to more of the same in the year ahead.

For up to the minute information, please visit the Warburg Blog.

Courtesy of Frederick Peters, President of Warburg Realty 

Recently I got a request from The Real Deal Magazine to articulate my predictions for the New York market in 2012. I have done this for them every year for the last three or four, and it is always fun to compare what I said to the realities as the year winds down. So far my educated guesses have been pretty good; let’s see if I can keep my record up for 2012. My overall belief is that 2012 will in many significant respects resemble 2011. I expect the Manhattan market to continue to demonstrate the same highly stratified and uncertain behavior which defined last year. More specifically:

· We should anticipate big swings in confidence and therefore in sales and rental activity. I believe that the economy will continue to show gradual signs of improvement, but that volatility in the markets will increase in the months leading up to the election.

· We will see continuing capital flight from the BRIC (Brazil, Russia, India, China) countries. These ultra wealthy buyers will bolster the mid and upper ends of the condo market. There is already heavy demand for the new Extell building opposite Carnegie Hall, One FiftySeven, with many prices hovering around the $10,000 per foot mark. And those prices are going up!

· There will be continued emphasis on turnkey condition to bring in top prices. During 2011 most of the really big prices, on a per square foot basis, were paid for either newly constructed property or that which had been completely redone. Most buyers simply don’t want to add the uncertainty of renovation to the considerable list of uncertainties we already face in the current environment.

· The top end of the market will continue to be active in 2012. We can anticipate a steady stream of deals in the $10 million-and-up category, encompassing town house, co-op and condo transactions. And don’t expect all the purchasers to come from the finance and hedge fund industries! As in 2011, most bankers are receiving a lot of non-cash, future-oriented compensation, and many of the hedge funds did not weather the recent economic storm so easily. Look for lawyers, real estate investors, and entrepreneurs from all over the country, as well as the world, to be staking a claim to the Big Apple.

· It seems certain that many apartments, especially in the older condos and in co-ops, will continue to linger for months on the market as their sellers try to find an appropriate price. The current environment is filled with mixed signals, which sellers AND brokers can easily misread. Conservative pricing is any seller’s surest way to quick action, but sellers are usually reluctant to price conservatively because they fear leaving money on the table. Hard scrutiny of the comps, and of the assets and deficits of the subject property, will be critical to sales success in 2012.

· I don’t see the rental market loosening up much in the new year. Everything for rent is expensive and vacancy rates remain at their lowest level in years. Perhaps the ongoing constriction in the rental market will lead to an uptick in the sales of smaller units, which seem increasingly attractive on an after tax monthly payment basis as rents continue to rise. Of course, this brings first time buyers and their families up against the increasingly demanding co-op and condo Boards, which may demand six months, a year, even five years of maintenance in escrow for neophyte purchasers. A choice between Scylla and Charybdis…

So that, in a nutshell, is my overview on how I think our market will play out over the next six to twelve months. I am going to tuck this away and see how close I was when December of 2012 comes around!

You can read more on www.warburgrealty.com/blog.

Courtesy of Lucas Fox

Friday, 16 December 2011: New research into country estate properties by Lucas Fox International Properties has found this part of the luxury Spanish real estate sector to be in fast-growing demand. Lucas Fox today release their Country and Sporting Estates Market Report 2011 to share investor knowledge in this Spanish property market sector.

The report expedites that foreign and local country and sporting estate buyers are split into distinct niches: Country lifestyle purists and sporting investors. Both buyer types are in accord that country and sporting estate properties retain their assets and value over time, are resilient to economic downturns and market influences. These types of buyers maintain that purchasing a property is a longer-term investment and if well kept, will not deteriorate in value.

Country and sporting estates are seeing particular interest from Northern European buyers (UK, France, Germany, the Netherlands), Russia and Eastern Europe, Scandinavian countries (Denmark, Sweden and Norway), the Middle East, the US and China.

The most desirable properties chosen by lifestyle buyers include hunting, horse riding, polo and golf. In addition, many buyers are attracted and influenced by the prestige that an estate purchase provides.

Client sporting estate enquiries at Lucas Fox have been growing since the creation of a dedicated service. Headed by Charlotte Rodriguez-Banks, the service has seen the number of enquiries via the website to triple from July to the end of September 2011. Other rural real estate analysts have noted a 16 per cent reduction in the time that quality rural properties are remaining on the market than in previous years.

“We will continue to see strong interest in these specialty properties as we enter 2012. They represent a solid investment with long term potential,” predicted Charlotte Rodriguez-Banks.

Lucas Fox has released the country and sporting estates market report to summarize the first quarter of their new service, and will be releasing similar market updates on a half-yearly basis along with their existing market analysis publications on Barcelona, Ibiza and Costa Brava property markets.

About Lucas Fox International Properties:

Founded in 2005, Lucas Fox specialises in offering quality luxury properties, a professional approach and a high level of service. The company has offices in Barcelona, the Costa Brava, Mallorca and Ibiza.

Services

Further information on Lucas Fox’s Country & Sporting Estates service may be found here.

The report may be found here.

Courtesy of Nick Pratt, Slater Anderson, and Keith Ross, Project Managers in LandVest’s Real Estate Consulting Group, specializing in in all aspects of land transactions

When the housing bubble burst and credit markets tightened most land developers retreated to the sidelines or closed up shop. This created opportunities for public agencies and land trusts to acquire land for conservation purposes. Supply and demand dynamics for land conservation versus land development are often countercyclical. When demand for developable land is strong, land values are high and it is difficult – and more expensive – for conservation buyers to compete. When development pressure is soft – as it has been for the last three years in many locations in the US – land values are lower and there is less competition from developers. As a result, public agencies and non-profits have emerged as some of the most active buyers of land today, largely because of access to public funding approved in previous years and an increase in private philanthropy that supports the conservation of natural resources.

Landowners currently have a unique opportunity to maximize the value of their property and to see their land protected in perpetuity. This can be done through an outright sale of the land or through the sale of conservation easements or agricultural preservation restrictions to conservation groups, public agencies or municipalities. New funding sources have been established to encourage these conservation acquisitions. For example, the Commonwealth of Massachusetts has created a funding program for Landscape level projects with multiple projects exceeding 500 acres or more. The program will pay half the cost of the acquisition plus a portion of eligible expenses. In addition, the Commonwealth has established a tax credit for gifts and bargain sales up to $50,000 per transaction.

LandVest has represented multiple landowners in the planning and sale of land for conservation. When LandVest is engaged conservation buyers know that they have a singular opportunity to get a deal done before the property is sold for other purposes. With land conservation deals appearing to be at an all-time high, landowners can benefit from experienced advisors who know how to negotiate on their behalf and facilitate these kinds of transactions. Recent LandVest projects include:

• 24 acres in Weymouth, Massachusetts: Representing the largest undeveloped tract of land left in the town, with sweeping views to Boston and the North Shore. Elected officials unanimously voted for the acquisition of the property which was purchased for full market value, $1,850,000, in August 2011. From start to finish the acquisition process took less than 4 months.

• 228 acres in Ipswich, MA: The Trust for Public Land working in coalition with the town , the state and Essex County Greenbelt, purchased a Conservation Easement and Agricultural Preservation Restriction for $5,100,000 on one of the largest privately owned agricultural estates off Argilla Road. – April 2011

• 80+ acres in Rowley, MA Representing a critical inholding within the 8,000+ acre Great Marsh on Boston’s North Shore. The Massachusetts Audubon Society was the buyer. Price: $2,370,00083+ acres in Sherborn, MA purchased by the Sherborn Rural Land Foundation for conservation. Price : $1,500,000 – June 2011

• 115+/- acres in Narragansett, RI: Purchased by The Nature Conservancy and US Fish and Wildlife Service. Installment purchase occurring in 2011 and 2012.

• LandVest provided consulting services to a major forest landowner in northern California to design and market a CR over forestlands in excess of 8,200 acres with a market value of more than $8.4 million. Funding will be from a combination of public funds and private philanthropy. – Dec 2010

• LandVest provided advisory services to a landowner in Sandisfield, MA, who made a gift of a CR over 1,238 acres of forest and farmland valued in excess of $1.2 million to the New England Forestry Foundation, the third largest CR gift in Mass history and the largest in more than 35 years. – Dec. 2010

• A conservation restriction on 155 acres of religious order lands in Petersham, MA purchased by a partnership between the Town and the East Quabbin Land Trust for $400,000 was facilitated by LandVest using a combination of public funding and private philanthropy. – June 2010

Courtesy of Lucas Fox

Barcelona-based international property and real estate agency, Lucas Fox, has predicted that there will soon be signs of renewed market confidence following the Spanish election results.

“We expect to see market acceptance for the new Spanish governing party in the coming weeks,” explained Alex Vaughan, Director at Lucas Fox International Properties.

Speaking from the Lucas Fox Barcelona offices after the election win by Partido Popular (PP) with 44.6% of the votes, Mr Vaughan said:

“We congratulate Prime Minister Elect Mariano Rajoy and his team for a strong win that we are hopeful will have a quick and positive impact on the property market in Spain. The majority win by the PP with means the new government will have the political stability and mandate necessary to take action to address the current financial crisis and its impact on the property market in this country.”

Vaughan said he believed in coming weeks there will be renewed confidence in financial markets as a result of the election outcome and welcomed the incoming government’s rapid action to announce measures for reanimating the Spanish property market:

“Tax incentives such as the extension of the VAT reduction on new build property and a proposed cut to ITP transfer tax on second hand property purchases will help to sustain and build on the healthy signs in the property market that we observed in the third quarter,” Mr Vaughan said. Lucas Fox International Properties announced its best ever quarter for sales transactions in October this year, trading €19.5 million of properties in the three months from 1 July 2011.

After the third quarter 2011, the company noted signs of strengthening foreign investment interest, a slow down in housing price decreases, and a stabilizing of house values at the luxury end of the market. “If implemented, these proposed tax incentives could stimulate the property market and help assist the lower end of the market to catch up with the renewed vigour at the high end,” Vaughan concluded.

About Lucas Fox International Properties:

Founded in 2005, Lucas Fox specialises in offering quality luxury properties, a professional approach and a high level of service. The company has offices in Barcelona, the Costa Brava, Mallorca and Ibiza.

Courtesy of Bruce Hiatt of Luxury Realty Group

Luxury Realty Group presents the Las Vegas real estate market report for October 2011. This video report includes Las Vegas luxury foreclosures and short sales for luxury high rise condos and luxury homes.