Home Prices Breaks Highs of 2016 As Demand Outstrips Supply

Home Sales Price IncreasesHome prices nationwide has increased by 6.2% from the second quarter of 2016 as the price of $255,600 hits peak levels.  The new report by the National Association of Realtors (NAR) indicates that as a result of low supply of housing, prices has remained strong and grown in 87 percent of measured markets.  According to the report, sale prices have increased in 154 out of 178 metropolitan areas from the same quarter last year.

Total existing-home sales which includes single family and condos, slipped 0.9 percent to a seasonally adjusted annual rate of 5.57 million in the second quarter from 5.62 million in the first quarter.  The sales figures are still 1.6 percent higher than the 5.48 million pace during the second quarter of 2016. Both of the figures aboves indicates that there is a need for newly constructed projects.  NAR chief economist stated “The glaring need for more new home construction is creating an affordability crisis that needs to be addressed by policy officials and local governments. An increasing share of would-be buyers are being priced out of the market and are unable to experience the wealth building benefits of homeownership”.

Home Sales Price IncreaseOf significance in the New York City region and the Northeast, total existing-home sales in the Northeast rose 1.3 percent in the second quarter. The median existing single-family home price in the Northeast was $282,300 in the second quarter, up 3.2 percent from a year ago.  Metro area condominium and cooperative prices, showed the national median existing-condo price was $239,500 in the second quarter, up 5.4 percent from the second quarter of 2016 ($227,200). Eighty-seven percent of metro areas showed gains in their median condo price from a year ago.  A recent report by the Real Deal Magazine indicates that up to forty percent (40%) increases in Flushing, Queens alone.  This will affect NYC property management companies as rents are affected by existing home sales prices and mortgages.

 

 

Cash Sales for Homes Heat Up as Inventory Remains Low

Cash Sales HigherThe housing market remains healthy as a new report by Freddie Mac indicates that the lack of inventory of houses is at a two month supply in larger cities.  Freddie Mac’s outlook for August also indicates that because of the highly competitive market it is causing many more people to offer cash sales reducing mortgage originations.

Cash sales made up about eighteen percent (18%) of total home sales for June.  This is an increase of the historical average of ten percent (10%).  The result is there is a loss in mortgage originations of $172 billion because cash sales are above historic norms.   “During the financial crisis, the combination of depressed house prices and tighter underwriting drove the share of cash sales as high as thirty-five percent (35%)” according to Freddie Mac.

The report also states:

“Usually, not many people like to invest a lot of cash into real estate, which is illiquid and has high transaction costs. However, in the current, highly-competitive housing market, a cash offer is an effective way to gain an advantage over other bidders. In a cash sale, the seller doesn’t have to worry about the buyer’s ability to obtain a mortgage or the chances that an appraisal will come in below the agreed sales price. Cash offers also are more common in purchases of investment property and second homes, where mortgage qualification requirements are stricter and mortgage terms are less attractive.”

Cash Sales HigherFreddie Mac also believes that home sales will reach 6.2 million units this year.  This would be a three percent (3%) increase year over year. The market is primarily being stifled from growth potential by the supply in the housing market.

If you are purchasing a property and are in need of a NYC property management company then contact Blue Harbour Property Management.  We are a full service NYC residential property management firm servicing Queens, Brooklyn, Manhattan and the Bronx.

 

Avoidable Mistakes for the First Time NYC Real Estate Investor

Real Estate Investing NYCWhen investing in real estate in New York City, it is common to think that you will turn a serious profit with a quick flip.  Having that mentality has worked in the past but now more than ever it is important to have a long-term strategy in investing in real estate in New York City.  The gains that you will receive normally come from solid real estate investment strategies which include increasing the value of your holdings by hiring a reputable New York City property manager.  Hiring the right property management company will only enhance your ability in building equity and increasing passive income. 

Quick returns as we have mentioned are rare.  Many people go and come out of the real estate investment industry quickly because they never received the returns they were expecting or outright lost money.  So what are some common mistakes that we see from first time real estate investors?

Purchasing a property you wouldn’t think is suitable for yourself

If you cannot imagine yourself living in the house you are considering purchasing then you shouldn’t.  The question I always ask clients is “What if something catastrophic happens…would you live there?” If the answer to the question is no then the property isn’t the right fit for you.  The goal on your purchase is to find something that tenants would be receptive to.  If you are not that interested, than this would be a clear sign that you wouldn’t be as energetic into the investment.   

Not having “rainy day” money for emergencies

There are many times that I have seen investors go into a transaction with zero reserves.  This would put a strangle on your personally if you do this.  You should account for basic monthly expenses as well as have a reserve on hand in the event of a unforeseen repair or expense.  You should always take into account utilities expenses and general maintenance fees such as the property management and landscaping.  You should also have a cash reserve fund in place in the event that a tenant decides not to pay rent for instance or the boiler needs an emergency repair.  The failure to do this can result in potential withholding of rent.  Also you will also have to tap into your personal money to fix such as a retirement account or credit card which will affect you and your family for potentially years.  

Real Estate Investing NYCTaking it personal and forgetting the bottom line

At the end of the day, owning a rental property in New York City is nothing more than business.  You should treat it that way and not let your emotions run your decisions.  Sometime it can seem personal when you have tenants and they want to tell you their life stories for their failure to pay the rent.  You have to be tough and always treat the managing of your property like your own business.  A top-notch NYC property management company can assist you in staying on course with your objectives.  They will also lighten your load and allow you to concentrate on other pressing issues that you may or may not have.  This can result in shedding the burdens that you may have and allow you to purchase additional rental properties.  

Addressing these common mistakes will help you along your way in being a successful real estate investor.  Sure there are other variables at place in maximizing your returns but by focusing on the tips above will help you in achieving your long term goals.

If you are in need of property management in New York City for your real estate purchase, Blue Harbour Property Management can assist you.  Contact us at 718-843-1185 or email at info@blueharbourpropertymanagement.com.

NYC Commercial Property Recycling Fines Has Begun Effective August 1

Commercial recycling NYCThe City has finally begun enforcing their new commercial recycling rules which has taken effective since August 1, 2017.  The rules which have been taken hold after a year long implementation period requires all types of buildings to segregate recyclable paper refuse from metal, glass and plastic containers as well as from disposable materials such as plastic bags and Styrofoam. If at least 10% of a building’s trash consists of textiles and food waste, the owner also will be responsible for filtering out that material and arranging for its proper removal.  Businesses can decide whether they want to collect all recyclables together or they can separate as long as recyclable materials are kept separate from trash at all times. The fines for non-compliance will begin at $100 and will increase to $400 for the third violation.

“The city’s goal is to make recycling consistent at home, at work and at play,” says Bridget Anderson, Deputy Commissioner, Recycling and Sustainability, NYC Department of Sanitation (DSNY). “Commercial recycling rules used to be different from the residential rules. Now they are consistent.”

Commercial landlords and property management companies will bear the responsibility of designating containers for each of the different varieties of refuse and inform tenants, building staff and their private carting service on how to use them. According to Crain’s New York Business  the Department of Sanitation estimates that out of the 9,000 tons of waste generated daily by businesses, up to 54 percent can be recycled. An additional organics component could increase that number up to an incredible 89 percent they calculate.  The City also believes that these new rules will facilitate in meeting their goals in zero waste in landfills by 2030.

Commercial Recycling NYCThe City is attempted for businesses to get up to speed with the new rules.  NYC property managers and landlords can visit nyc.gov/zerowastebusinesses and on.nyc.gov/zerowaste-business-resources to sign up for a free training, host a training, or download signs and education materials. To contact DSNY or request a business recycling training, email commercialprograms@dsny.nyc.gov.

 

Pending Home Sales Breaks Trend and Increases in June

Pending Home Sales June 2017The National Association of Realtors (NAR) is reporting that pending home sales increased in June 2017 which is bucks a three month trend of decreased contract activity from the same time a year ago.  NAR used a pending home sales index which rose 1.5 percent in June to 110.2.  The index has increased 0.5 percent over the past 12 months and for the first time since March.  All major regions saw an increase of activity except the Midwest according to the report.

Lawrence Yun, chief economist for the NAR believes that low supply is hampering an increase in activity although the nation has 2.2 million net new jobs.  He states “Low supply is an ongoing issue holding back activity. Housing inventory declined last month and is a staggering 7.1 percent lower than a year ago.  Market conditions in many areas continue to be fast paced, with few properties to choose from, which is forcing buyers to act almost immediately on an available home that fits their criteria.”  There were 1.96 million homes for sale in June, a 7.1 percent decline from a year ago.

Pending Home Sales June 2017Of particular interest here in the Northeast, the pending home sales index indicates a 0.7% increase in activity from the previous month and 2.9% increase year to year.  The NAR considers Connecticut, Maine, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, Vermont as comprising the Northeast.

Yun expects existing-home sales to finish around 5.56 million, which is an increase of 2.6 percent from 2016 (5.45 million). The national median existing-home price this year is expected to increase around 5 percent. In 2016, existing sales increased 3.8 percent and prices rose 5.1 percent according the the report.  The median sales price is currently at $263,800 an increase of 6.5% year over year.

The Pending Home Sales Index is an idex devised by the National Association of Realtors for the housing sector, based on pending sales of existing homes. A sale is listed as pending when the contract has been signed but the transaction has not closed.  The index is based on a national sample, typically representing about 20 percent of transactions for existing-home sales.

 

 

Tips On Handling Central Air Conditioning Units for Property Managers

AC unit repair NYC property managementWe are now into the hazy days of August here in New York City.  The temperature this summer in the city has been rather mild in comparison to some other years.  Although that may be the case, the temperatures can be somewhat stifling to some without air conditioning.  This is especially true for the elderly and persons that have lost their mobility.  Having your air conditioning units running correctly may be a case of life or death for some and doing so correctly should be a priority for property managers as well as landlords.

While we may be in the clear going into August, maybe now is the time to think about servicing your AC units for the next year.  Most home central air conditioning units which include a condenser.  You may notice this when it is sitting on a pad on the outside of your.  Along with the condenser, the evaporator is located on the inside of the premises.  The majority of the time, it is the condenser that has the issues that creates turmoil for your tenants.  Here are some tips in order to have them run efficiently in the event it stops working:

  1. Once you have turned off the unit, you can remove the outer case of the condenser in order clean the fins.  Because you have four seasons here in New York City, you can potentially have evidence of this in leaves, grass, twigs and garbage that can clog up the fins.
  2. Lubricate the motor to the fan ports.  You can do this by using oil for electric motors.  It is easily found in hardware stores.
  3. Check for evidence of damage to your unit.  It is advisable to look for leaks and cracks.  Specifally it would be a clear indication of a problem if you see an oil or coolant leak.

With respect to the evaporator you should alway check and replace air filters.  It is advisable to replace the filter as follows:

  1. In a vacation home or single occupant home you should replace the filter every 6-12 months.
  2. Regular sized home without any pets the filter should be replaced every 90 days.  With 1 pet it should be replaced every 60 days and adding an additional pet the time period should be adjusted downward by 50%.

NYC property management AC unitsMost people are not knowledgable nor want to put themselves in a position of doing the work to service their AC unit.  If that is the case, then hiring a professional HVAC professional to remediate an issues with your unit.  If you have rental properties and tenants are complaining about the air conditioning then a respectable New York City property management company can schedule and handle all the issues of your unit so you don’t have to.  For more information, you can contact our highly skilled staff of New York City property managers.

City Council Passes Bill Providing Legal Representation to Tenants Facing Eviction

City Council passes rights to counsel bill for tenantsOn July 20th, the New York City Council passed a bill that would require all tenants facing eviction to have legal representation.  The bill requires that the Civil Justice coordinator implement the bill within five years.  Low-income individuals with eviction cases in housing court would have full legal representation while all other tenants not qualified would receive brief legal assistance.  Low-income individuals are New Yorkers with incomes below 200 percent of the federal poverty line – or $49,200 annually for a family of four.

The program is expected to help more than 400,000 New Yorkers each year, according to a report by commissioned by the New York City Bar Association.  According to the City’s Indpendent Budget Office the full cost of implementing the Right to Counsel is estimated to be $155 million.  The City believes it will save $320 million.  The savings would come from the reduction of costs associated with housing evicted individuals and preserving regulated apartments lost to evictions

Intro 214-B was sponsored by Council Members Mark Levine and Vanessa Gibson.  Mr. Levine stated “Too many of the most vulnerable New Yorkers face eviction simply because they don’t have the means to hire an attorney. Today, the passage of this bill marks the beginning of a new era for tenants in New York City. New Yorkers have a right to affordable housing and to a fair justice system. No longer will low-income tenants have to fend for themselves in Housing Court. This new law is an historic step forward in the fight against unlawful evictions. I am honored to stand alongside my colleagues as New York becomes the first city in the country to guarantee legal representation for low-income tenants in Housing Court, and I look forward to working with elected officials across the country to draft similar legislation.”  The City Council states that as of 2013 landlords were represented 99% of the time in court while tenants were represented only 1%.  By 2015 tenant representation was up to 20% according to Mr. Levine while having legal representation reduces the chances of eviction by 77%.

City Council passes Tenants rights billCo-sponsor of the bill Vanessa Gibson stated “This is a monumental day for tenants and a historic day for the City of New York. After four years of advocating, rallying, and marching, we can finally celebrate the passage of ground breaking legislation that will curb the homelessness epidemic and end the cycle of eviction plaguing New York City. With a right to counsel in place, tenants facing eviction will finally be on an even playing field with the landlords taking them to court. I am proud to have spent four years fighting for this critically important legislation and am so thankful to the many elected officials, advocates, tenant leaders, clergy leaders, and civil legal service providers who joined Council Member Mark Levine and me in bringing equity and justice to our housing court system.”

 

 

City Council Enacts New Law To Prevent Gas Leak Injuries

City Council passed gas leak lawThe City Council of New York City passed Local Law No. 153 in November 2016 and it was signed by the Mayor in December.  The law is finally in effect and it will effect landlords and NYC property management companies going forward.  Specifically the law says as follows:

“The owner of a dwelling shall deliver or cause to be delivered to each tenant and
prospective tenant of such dwelling, along with the lease or lease renewal form for such tenant or prospective tenant, and shall post and maintain in a common area of the building containing such dwelling, a notice, in a form developed or approved by the department, regarding the procedures that should be followed when a gas leak is suspected. Such notice may be combined with any existing required notices and shall instruct tenants to first call 911 and then call the relevant gas service provider, whose name and emergency phone number shall be set forth on such notice, before contacting such owner or an agent thereof when a gas leak is suspected.”

City Council passed gas leak lawThe law is a direct response to the deadly gas explosion that took place in the East Village in 2015.  The explosion located at 121 Second Avenue occurred as a result of an illegal tap into a gas main.  The buildings adjacent to the explosion was completely destroyed between Second Avenue and St. Mark’s Place.  Two people died and nineteen people were injured as well.  Eventually, the District Attorney’s Office for Manhattan announced the indictment and arrest of five people in connection with the explosion.  Parties involved were the building owner, her son, the licensed plumber who subcontracted to an unlicensed plumber, the unlicensed plumber and an additional contractor.  They were charged with several charges, the most agregious being manslaughter and negligent homicide.

In order to comply with the new law, managing agents should post a sign in the hallway of the building. A sample of the sign you can read here.

Foreign U.S. Home Sales Increases By 49 Percent and Breaks Record

Foreign U.S. Home SalesForeign purchasers and immigrants purchased $153 billion worth of real estate in 2016.  This is up 49% from the $103.9 billion for the previous year.  The year is measured from the period between April of 2016 to May 2017.  According to the National Association of Realtors (NAR) report,  2017 Profile of International Activity in U.S. Residential Real Estate. 284,455 U.S. properties were purchased by foreign buyers which is an increase of 32 percent from 2016.

Chinese buyers remain the biggest purchaser of U.S. real estate with $31.7 billion worth.  More than a third of Chinese buyers purchased residential property in California.  It is believed it is most likely because of its proximity to and cultural affinity with Asia. The other destinations that were preferred are Texas, Florida, Illinois, New Jersey, Massachusetts, New York, Indiana, and Virginia.  

Canadian buyers are the second biggest foreign purchasers of U.S. real estate with $19.0 billon worth of transactions.   Most Canadian buyers purchased residential property in Florida, Arizona, California, Texas, Georgia, Minnesota, and Nevada. Canadian buyers typically purchase properties for use as vacation homes, so they tend to locate in states with warm climates and resort areas.

 

Foreign Home Sales
NAR’s chief economist states
“Inventory shortages continue to drive up U.S. home values, but prices in five countries, including Canada, experienced even quicker appreciation. Some of the acceleration in foreign purchases over the past year appears to come from the combination of more affordable property choices in the U.S. and foreigners deciding to buy now knowing that any further weakening of their local currency against the dollar will make buying more expensive in the future.”
According to the report, foreign purchasers were 9% higher than the median price in 2016 ($302,290). Also of note is that non-resident foreign buyers made an all-cash purchase (72 percent), while resident foreign buyers paid all-cash (35 percent)
Yun also believes the expanding U.S. and global economies will keep foreign demand high for American properties. The main challenges will be political policies of the new administration regarding immigration and internation trade.

Manhattan Buildings Are Now Being Graded With New Google Chrome Extension

Rentlogic enters ManhattanManhattan property managers and landlords should be put on notice that Manhattan buildings will be graded by using a new Google Chrome Extention by Rentlogic.   The four year old company’s software will allow apartment hunters who are viewing an apartment on a broker’s website or listing service to see the building’s grade in a pop-up window.  The viewer will also be able to see violations, complaints as well as other issues which may affect quality of life (electrical issues, rodents, bedbugs, etc).

Initially, Rentlogic attempted to have brokerages send their listings in order for them to be evaluated and graded.  However, they found that most companies were only sending their best listing according to Yale Fox, their CEO.  As a result of this, Rentlogic decided to go with an algorithm which is similar to what he believes will be a Zagat for properties.

Rentlogic grades Manhattan buildingsThe data that Rentlogic uses derives from government reports but according to Bloomberg the assumptions his algorithm makes are subject to scorn by the industry. One complaint is that he goes back seven years, meaning that the system can include violations incurred by previous owners. Another is that it uses data on tenant complaints regardless of whether the landlord responded quickly or whether the complaint was verified by a city inspector. Fox said the algorithm doesn’t consider unverified complaints and, in general, is designed to give landlords the benefit of the doubt. He said he plans to introduce functions to help landlords improve building grades.”

They are hoping that the software will provide a level playing field as they will not sway too close to landlords nor be overly critical as well.  Being able to prevent disasters such as tenants living in buildings such as the ones owned by Steve Croman would be a goal of the company.  Last summer, the Attorney General Eric Schneiderman brought 20 felony charges against Croman for harrassing rent regulated tenants.  He is facing up to 25 years in jail and up to 8 million dollars in fines.

The Rentlogic plug-in, which works on Chrome, Firefox, or Opera browsers with Internet Explorer and Safari on the way.