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 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

The end of the year is always a time for reflection. Here is my list of some of the events and issues which made a real impression on me or our business in 2011:

1. Unbelievable real estate purchases, primarily by Russian oligarchs. These included the $40 million sale of a 4,000 square foot apartment at 15 Central Park West to Taiwanese tycoon Min Kao; the approximately $88 million pending sale of Sandy Weill’s 6,000 square foot apartment in another part of the same building to 20-something Russian fertilizer heiress Yekaterina Rybolovleva and her father Dmitry; and the $220 million sale of the penthouse at One Hyde Park, in London, purchased by Ukrainian billionaire Rinat Akhmetov. This provided an interesting context to one of the year’s great ongoing soap operas, the London litigation between Russians Roman Abramovich and Boris Berezovsky, which has provided a fascinating and appalling look into just how some of those fortunes were made.

2. The freak October snowstorm. Central Park was devastated by the loss of tree limbs as a result of the huge snowfall on trees which has not yet lost their leaves. A tragedy for all New Yorkers who depend on the beauty of the Park to keep us sane!

3. The Euro meltdown. The United States, a nation of immigrants, had been banded together for over a century before we attempted a Federal income tax, which is still contentious a century later! How could anyone expect that the Eurozone countries, which have been at war with each other on and off for millennia and have such distinct and antipathetical cultural identities, would band together and bail each other out easily when the economic lifting got heavy. We certainly have not seen the last chapter on this one.

4. China. Their manufacturing economy slowed. Their high handed internal governance is provoking more and more pushback from an increasingly informed and prosperous populace. They are our major bondholder. And they have a major appetite for New York City condominiums though not, like the Russians, of the $40 million variety. They prefer prices under $2 million, and they may buy several. We have learned that you may have to go to them, but their interest in investing in our coastal cities is as vast as their country.

5. Landmarked districts in New York City. A great idea gone a little awry. No one believes more than I in the preservation of our city’s diverse and gorgeous architectural heritage. But when sweeping districts begin to include gas stations and tenement buildings, something is not right. The population of our city is growing and we will continue to need sites for development. It is fair neither to the owners of the real estate nor the potential users of the more effectively deployed sites to bar them from development when there is no possible reason to preserve them.

6. Shadow inventory. There was a lot of talk a few years back about how all the condo inventory available in the city when the recession began would hang over the real estate market for years to come. It was always my feeling that absorption would bounce back and the big issue for us would be LACK of supply, not oversupply. And here we are! Buyers are snapping up that “shadow inventory” all over town, while the few new projects under construction, like Toll Brothers’ new building on 65th and Lexington, are selling briskly from plans while the buildings are still a year away from completion!

There’s more…but those are today’s highlights. With that I am signing off till 2012, and wishing all of my readers a wonderful holiday season!

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

Courtesy of Kirsty Bryson of Luxury Homes by VAPF

Called “El Gordo”, which literally means “The fat one”, the whole country comes to a standstill every 22^nd of December, glued to the TV screen or the radio, wishing for their number to be called out by one of the children on stage, boosting their bank accounts and turning many instantly into millionaires. This date is symbolically the start of the Christmas festivities, the last day at school for the kids for that year and for many workers also their last day at their job until the New Year.

With a top prize this year of 4 million euros, the 40 children chosen to “sing” out the winning numbers always proceed from the San Idelfonso School, a government subsidized boarding school for children whose families have socio-economic difficulties, the majority of which are immigrants. They spend months preparing for what is to be their big day and their voices have become the most famous soundtrack in the country.

The Spanish lottery was instituted by King Carlos III in 1763, and Spain has been hooked ever since. Not even the Civil War managed to get in the way of "El Gordo" - in fact, during the war there were two national lotteries, one on either side of the front lines. Tickets go on sale in July with 85,000 numbers issued for each of the 185 series. Each whole ticket (priced at 200 €) is then further sub-divided into décimos – a tenth part of a whole ticket- which is what most people settle for. Often, these décimo tickets are split into even smaller shares, divided between friends, workmates or relatives. In total, more than 157 million décimo tickets are on sale.

All in all, 2,520 million euros will be handed out in 25.5 million prizes, so it’s no wonder that the average Spaniard will spend around 100 euros on lottery tickets for this famous draw! Fingers will be crossed at the Grupo VAPF head offices as we all hope for a great start to our annual Xmas holidays!

Merry Christmas to you all and our best wishes for 2012!

Courtesy of Frederick Peters, President of Warburg Realty

Over the last fifteen years, all our lives have been revolutionized by technology in ways we could not even have imagined when the Internet (or World Wide Web as it was known in those days) first came onto the horizon. Business has been profoundly transformed by the transparency inherent in full access for everyone to information about anything. We have had to keep up, as best we could, as change races ahead of us. We are challenged by change not only to stay current but also to sort through its myriad directions and promises to determine what we believe in, what works for us. In other words, one of the greatest challenges of the new millennium has been to embrace change without sacrificing our identities to it. This process, every day and every week, profoundly engages me, my agents and staff.

How do you redefine yourself while remaining true to the values which you most believe in? I think each of us has a different answer, but I can tell you mine, and with it the vision I embrace for Warburg.

First, I believe you have to build on the bedrock of who you are and what you know your values to be. More than anything else I want Warburg to be a values based company. I want us to be known for doing not only the smart thing, but also the right thing. I want us to believe in and support each other, to believe that a success for each of us is a success for us all. And I want us all to remember that, although we are here to make money, money is not always the most important thing. Pride in ourselves and what we represent, in our companies and our communities, both bring success and enable us to savor it.

Second, I believe that we need to embrace the future while honoring the past. We have an extraordinary history as a company going back almost 120 years; each of us should be proud to be a carrier of that tradition and to embrace what remains best about it. At the same time, we need to understand that some traditions need updating. Print ads gave way to online ads, phone appointments to e-mail appointments, cocktail parties to Facebook. Who today can imagine not having a BlackBerry or an iPhone? In three years everyone will feel the same way about tablets. An e-blast reaches more people in seconds than a mailing could in days or weeks. Blogs define the writer as an expert, a go-to person, in a way that has no precedent in the pre-Web 2.0 era. So we need to be thinking, not “how have I done up until now?” but “how do I see my place in the future, and what steps do I need to take to realize that vision?” Our only successful direction is forward.

Finally, I believe every one of us has a role to play. The vast majority of you will not have your names read this year as having been one of the top earners in your office. So I would like to address this third category to you. There are many ways to be a significant member of our Warburg family. Perhaps you are a great recruiter, spreading the word about what a terrific place Warburg is to work (believe me, we need as many of YOU as possible.) Perhaps you always have great ideas about listings when your colleagues are trying to figure out what to show. Maybe you just brighten everyone’s day a little by saying hello. While we are a business, and we need to function like a business, we are also a little world, and it takes all kinds of skills and personalities to make that world go around. So I honor you all, those who have made a million dollars and those who have not, those of you whose careers are ramping up and those of you who may be slowing down – you are all threads in the fabric of Warburg’s vibrant, evolving tapestry and you have my deep gratitude and respect.

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

Courtesy of Frederick Peters, President of Warburg Realty

As I have mentioned before in these blogs, Thanksgiving is my favorite holiday. Last week 30 of our closest family and friends gathered at the house in Connecticut to eat, drink, commune, and play with the tiny members of the fourth generation. As we do every year, we went around the table offering each guest the opportunity to express what they are thankful for.

Here is my professional gratitude list:

· I am thankful that the United States, for all their differences, are still fundamentally united. I am grateful that my tax dollars can be used to support education programs in New Mexico, or provide food to children in Missouri. Would the European Union be in its current critical state if France and Germany felt that way about the poor in Greece?

· I am thankful that New York City remains enough of an international center to retain a vibrant residential real estate market. International buyers and wealthy non-Wall Streeters buoyed Warburg’s success this year, as did a record number of $15-million-plus home sales.

· I am thankful that every day of my life here, there is a fascinating museum exhibit to see, a beautiful concert to hear, a transformative reading to attend, a wonderful friend to meet. It is a privilege to sell the city and the unique lifestyle it offers.

· I am thankful that the transparency ushered in by the Internet has redefined the way residential brokers do business. With information so readily available, we have had to create a new value proposition which depends on expertise, and in the process make ourselves more conscious of what services we provide to consumers.

· I am thankful for the high level of professionalism in most of the colleagues with whom I interact. That said, I would be even MORE thankful if New York State raised the bar on its requirements for real estate licensees. It is just too easy for anyone to get a license in this state. Ours is a complex and profoundly important job and the barriers for entry here are just too low.

· I am thankful for the transformative power of social media, which allows me and the company to reach so many with this blog, through Facebook and Linked In, or on Warburg’s Twitter account. I love the way the notion of advertising which was prevalent when I came into the market 30 years ago has been incorporated into the far larger and more embracing concept of viral marketing.

Above all, I am thankful for change. The way we sell, the way we disseminate information, the way we interact with each other – all of it has evolved SO much in the last ten years; can we even imagine a business world without e-mail today? Although I often resist it, and resent it, the rapidly altering landscape of the post-technological world has kept me on my toes, both frustrated and exhilarated as I strive to integrate apps and links and SEO into Warburg’s overall strategy, while maintaining our fundamental values of integrity and strong interpersonal interaction which make our organization flourish. After twenty years, running a business is still a voyage of discovery. And I still love the view from the prow of the ship. 

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

Courtesy of Frederick Peters, President of Warburg Realty

Last week The Real Deal held its annual forum at Avery Fisher Hall. I found myself in the surprising position of debating Lockhart Steele, the founder of curbed.com, on the topic of whether social media is good or bad for real estate. In theory, I was debating on the “bad” side, which, considering that I am both a blogger (quod erat demonstrandum) and a big Facebook fan, seems ironic. Nonetheless, there are a number of things about the media in 2011 which frustrate me, and I made those the focus of my debating points.

Here, in somewhat random order, they are:

1. I really hate the anonymous comments. Lockhart argues that the comments are an integral part of blog sites, and that they both expand and enrich the discussion. I get that, but why do they have to be anonymous? In my experience, not needing to identify yourself leads to egregious breaches of even the most basic politeness or relevance. A business story turns into a trashfest; respect-worthy individuals have irrelevant and off color sexual innuendo thrown at them, all because the writer doesn’t need to sign his/her name. My feeling is, have the courage to identify yourself or don’t participate!

2. The Internet has enlarged, facilitated, and diminished reporting, all at the same time.

· Enlarged, in that the vast database resources of the world are available at a keystroke, so creating connectivity between regions, ideas, and people is easier than ever.

· Facilitated because the sort of shoe leather reporting which was still the norm early in my career has mostly become obsolete. It’s easy to get the information you need.

· Diminished, for exactly the same reason: it is TOO easy to get the information you need. During the early years of my career, the reporters who covered real estate knew the business cold. They had done lots of research, cultivated sources, done analysis in order to draw conclusions based on facts. I see less and less of that today. With few exceptions, reporters DON’T tend to know the business cold any more, and they somehow mistake data representation for reporting.

· I was struck recently by the similarity between a good reporter’s work and that of a skilled agent. The Internet provides both (and both their audiences as well) with access to information. What separates excellence from mediocrity is the ability to make distinctions, draw conclusions, bring the data to life in a way which illuminates and contextualizes that information for the benefit of the user. Analysis, a balanced perspective giving both sides of the equation: these old fashioned virtues are increasingly hard to come by.

3. I spoke at the forum about the “Kardashianization” of residential real estate reporting. Residential real estate is the biggest asset many Americans own. Why then is it increasingly covered like “soft” news? Why is it more about bold faced names, decorating, and amenities than about the significant business trends on which the markets rise and fall? I suppose I am as interested as the next person in where Snooki’s hideaway is (on second thought, maybe not) or the distress caused by bedbugs, but can anyone imagine commercial real estate being covered this way!?

I don’t ask for much. I want blog commenters to have the courage to identify themselves. I want to deal with reporters who know my industry and actually analyze data to arrive at conclusions. And I want to read more about the complex trends which drive our market and less about Gaga’s new loft. OK?

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

Courtesy of Meghan Barry, President of Luxury Real Estate

San Miguel de Allende,in the state of Guanajuato in central Mexico is historically significant as the first municipality declared independent of Spanish rule. The buildings in its historic colonial center are of 17th and 18th century Baroque and Neoclassical architecture. Winding stone streets and breathtaking views of the surrounding valley add to the appeal of this mountain community. A UNESCO World Heritage Site and Condé Nast top ten travel destination, San Miguel is a center for intellectual, cultural and artistic life, with many galleries, schools and events to celebrate and encourage the arts.

While navigating through the peaceful streets of San Miguel or the lively historic core near the Plaza Allende, it’s difficult to see what lies behind the large exterior walls of the local residences. I had the opportunity to visit with long-time Luxury Real Estate member Joanie Barcal of Allende Properties on a recent visit, to hear about the local real estate market and get a better understanding of the type of property one might find in this idyllic mountain town. Luxury properties often include multi-level terraces to leverage views and private interior courtyards with lush gardens to accent the melding of traditional architecture and modern amenities.

While in San Miguel I was able to participate in the Dia de los Muertos celebrations, wander the Mercado de Artesanias, enjoy the local cuisine and visit the La Gruta Thermal Springs and local spas. A must-do is a horseback riding outing through the valley near the Cañón de la Virgen. Visit San Miguel de Allende and buy some real estate. You won’t be disappointed.

Courtesy of Frederick Peters, President of Warburg Realty

The Chinese love to buy art, jade, jewelry, real estate. They prefer, to a much greater degree than Westerners, to put a substantial portion of their wealth in THINGS. Increasingly, as I watch the wild fluctuations of our national stock markets and those around the globe, and I listen to my colleagues, my customers, and my clients talk about the vertiginous swings in their securities portfolios, I sympathize with the Chinese. There is much that is appealing about owning stuff, real stuff, which you can touch and hold and feel.

Everyone has an opinion about the economy, and these opinions run the gamut (and there seems to be an economist endorsing every position from one end of the spectrum to the other). But a few things seem clear, at least to me: our economy cannot really recover without a concurrent recovery or re-balancing of the European economy, and the European economy has a long way to go before it can really begin to recover. The critical financial issues in Greece and Spain, not to mention those looming for Italy and Ireland, took years to create and may well take years to sort out. In the meantime, markets the world over behave like roller coasters. And I suspect that this is the new normal, that for at least another year these daily vacillations of hundreds of points embody the global uncertainties which cannot be wished away. It’s fear, it’s here, get used to it (to paraphrase Act Up!).

In this environment, the appeal of the real has never seemed greater. Real estate is so…concrete. As Mark Twain famously said about land, they are not making it any more. Real estate is satisfying to own, it cannot be wiped out by market forces like your shares in Lehman or MF Global, and Bernie Madoff cannot fool you about whether or not you actually possess it. There it is. The same is true of an Andy Warhol painting, or a vintage piece of Van Cleef invisibly set ruby jewelry, or a jade cup. They have the ability to give their owner great pleasure, and in the meantime they aren’t going anywhere.

It has been an interesting fact of our year at Warburg that most of our really big deals have been done with buyers who are NOT in the finance industry. The majority of our buyers for major properties this year have been in real estate. They have steady cash flow, which is appealing to Boards, and unlike their stocks their properties are not being re-valued every day. Americans of the 20th and 21st centuries have been so attached to liquidity that money has become an end in itself. But money is just a metaphor, an abstraction, a stand in for a service or value provided which can then be bartered for something else. And then most of us are invested in the stock market, a further abstraction, where money is transformed into a bet on the future of this company or that company. But these days the smartest clients also feel the lure of the real, and they are buying tangibles as a hedge against their stock positions (which in the current interest rate environment return almost nothing anyway.) So in this regard I agree with the Chinese. Buy land, or condos, or art, or antiques. Don’t underestimate the investment potential, pride of ownership, and talismanic power of real stuff.

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

Courtesy of Frederick Peters, President of Warburg Realty

In her charming and funny book “The Last Blind Date” (full disclosure, I am in there as her real estate agent), Linda Yellin allows a whole chapter for her co-op Board experience. Coming from Chicago, or anywhere else in the world, I understand how bizarre and invasive this process can seem. Since 2011 has been a bad year for turndowns (and no, most of them are NOT about the Board being unhappy with the price), I thought I would make some suggestions as to what a reasonable and fair Board process might look like.

The City Council has some Board related legislation under review, as I discussed in a blog earlier in the year. That legislation, modeled after a similar bill passed on Long Island, has aroused the opposition of the Council for New York Co-operatives and is therefore probably doomed to failure. But I do believe a reasonable bill could pass, and that Boards and managing agents could themselves take steps to make the process more expeditious and transparent. To whit:

- Time parameters – give the Boards 30 days to review a package and ask for more information, schedule an interview, or reject. And don’t make an exception for the summer. That’s why conference calls exist. And then give them 15 days after the meeting to provide a response. There is no reason why this part of the process cannot be expedited. People’s lives are on hold waiting for the outcome.

- Standardize all the forms so the purchase applications and financial statements are identical across the spectrum of buildings. Make sure the purchase applications are free of questions which violate Fair Housing rules. Put those forms on line.

- Require that all Board members receive an annual half hour of Fair Housing education from a professional (this excellent suggestion which I wrote about a while back comes from Hall Willkie, President of Brown Harris Stevens. It would go a long way towards eliminating inappropriate or illegal behavior)

- Create a firewalled virtual package for every building so thousands of pages of paper don’t get wasted on every package which is submitted.

- Finally (and this is beyond the realm of legislation) let the same presumption of innocence which our legal system promises to criminal defendants apply to co-op Board applicants. Board members, if the financials aren’t clear, ask a question. Don’t be so quick to turn the thumbs down on good people with reasonable assets. The vast majority of Board rejectees are upstanding, would pay their maintenance in a timely manner, and would be pleasant, neighborly co-shareholders. Let’s give apparently qualified people the benefit of the doubt!

Forget about making Boards legally responsible for giving a reason for every rejection; it is never going to pass in Manhattan and would create a liability nightmare which would make any sane person balk at joining their Board. It just isn’t practical. But some improvements in the current system, like those I address above, are both achievable and necessary. Let’s start there.

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