Existing Home Sales Rise in May 2017

The National Association of Realtors (NAR) is reporting an increase in existing home sales of 1.1% in May, which is a positive adjustment from April which saw a decrease in sales.  Total existing home sales is defined as completed transactions that include single-family homes, townhomes, condominiums and co-ops.  The annual rate of home sales increased to 5.62 million which is ahead of the seasonally adjusted rate from April at 5.56 million.

Lawrence Yun, NAR chief economist, says

“sales activity expanded in May as more buyers overcame the increasingly challenging market conditions prevalent in many areas. “The job market in most of the country is healthy and the recent downward trend in mortgage rates continues to keep buyer interest at a robust level,” he said. “Those able to close on a home last month are probably feeling both happy and relieved. Listings in the affordable price range are scarce, homes are coming off the market at an extremely fast pace and the prevalence of multiple offers in some markets are pushing prices higher.”

Inventory rose 2.1% in May to 1.96 million homes.  This is lower than the same period last year where there were 2.14 million available homes, a decrease of 8%.  As a result of decreased inventory, the median home sales price increased nationwide to $252,800.  This may be affecting overall sales and deflating the market according to Yun.  He states that “home prices keep chugging along at a pace that is not sustainable in the long run.  Current demand levels indicate sales should be stronger, but it’s clear some would-be buyers are having to delay or postpone their home search because low supply is leading to worsening affordability conditions”.   House price gain may also be affected by the 16 year low unemployment rate.

Of significance in the Northeast the May figures saw an increase of 6.8 percent to an annual rate of 780,000, and are now 2.6 percent above a year ago. The median price in the Northeast was $281,300, which is 4.7 percent above May 2016.  Existing home sales for properties listed between $500,000-$750,000 increased 20.6% from the same period last year.  It increased 30.3% for properties listed between $750,000-$1,000,000 and 32.1% for properties listed above $1,000,000.  The New York City region would attribute significantly to this increase.

 

What Property Management Companies Should Learn From The Grenfell Tower Fire

fire safety property managementOn June 14, 2017 a catastrophic fire hit the Grenfell Tower in North Kensington, London.  According to the most recent news reports, 79 people are presumed dead following the fire that ripped through the 24 story tower that was built in 1967.  The fire broke out in a kitchen then set the exterior of the building on fire and began to spread at a horrifying rate.

According to the reports by tenants of the building, the fire alarms did not go off and were only alerted by other tenants knocking on their doors alerting them of the ensuing flames.  The residents were informed to “stay put” at the onset of the flames and that decision was reversed later on.  By that time the flames had consumed the building.

From these reports, it appears that some of the casualties could have been prevented at the Grenfell Tower.  Correct procedures were not put in place and uneven instructions by the building management may have had a part in the loss of life.  So what is the correct response?  The National Fire Prevention Association (NFPA) can give us guidance on what to do in order to prevent such issues in the event of a fire.  You can read their action plan for High Rise & Condominium Safety here.  Of significance in High Rise Apartment & Condominiums is

  • Select a fully sprinklered buildings.  If the building is not fully sprinklered ask the landlord or management to install a fully sprinklered system.
  • Meet with your landlord or management company to learn about fire safety features in your building (fire alarms, sprinklers, voice communication systems for evacuation).
  • Make sure all exit and stairwells are clearly marked, not locked or locked by security bars and clear of clutter.
  • If there is a fire, pull the fire alarm on your way out to notify the fire department and your neighbors.
  • If an announcement is made throughout the building, listen carefully and follow instructions.

fire safety property managementThe NFPA also has set up guidelines for other high rise buildings.  Primarily set up for commercial buildings, some of the recommendations in the report named Guidelines to Developing Emergency Action Plans for All-Hazard Emergencies in High Rise Office Buildings can be of use in the residential setting as well.  The NFPA states:

“With the increased recognition of the need to prepare and respond to non-fire threats such as extreme weather, workplace violence, and utility disruptions in the high-rise environment, the traditional building fire safety plan and organization are a logical starting point. In fact, the Advisory Committee members recommend that a single, integrated plan and preparedness and response organization be utilized to assist building management and emergency responders in an all-hazard approach to building emergencies.”

Their Emergency Action Plan (EAP) calls  EAP procedures that occupants should follow in an emergency situation, an emergency evacuation, or a drill. Each EAP should have a procedure for total-building evacuation.  Also what is required is for persons to have roles such as Fire and Life Safety Director and and Deputy in order for their to be a clear chain of command and leadership in the event of a catastrophic event.

The Grenfell Tower fire is a tragic event that may change how procedures are followed in the United Kingdom.  Here in New York City, property management companies should be prepared to follow strict procedures to ensure the safety of our tenants as well as our landlord’s assets.

 

What Manhattan Property Management Companies Should Know About Millennial Renters

Millennial renters for Property ManagersIt has been said that the millennial generation is one of renters.  There are plenty more in the generation that are looking to suspend home ownership in lieu of renting.  Manhattan property managements companies have to adjust to this generation’s notions of purchasing property and should ask the tough questions as to what exactly are Millennials looking for in a rental property?  According to a survey by J. Turner Research titled A New Lease On Millennials we may have some answers.

According to the survey, the main factors that affect a rental decision are location, quality of amenities and price point.  Survey takers also took into consideration commute times for work, proximity to public transportation value of the property and the condition of the underlying rental unit.

Amenities have become a prime consideration for renters.  We have seen many units staying vacant because the unit did not match when it comes to amenities-wise other units in the specified location with comparable price points.  Features such as including a washer and dryer and having access to outdoor patios have become important for renters.  For building managers in New York City, upgrading your pool or on-site gym should become on your to-do list if you are expecting to attract more millennial renters.

Millennial renters in Manhattan

With millennial renters becoming a bigger percentage of the New York City rental market, property managers should start taking note of what the market is bearing and begin to feature additional features that younger renters are looking for.  While some things may not be possible at the property it is easy to upgrade existing “convenience” items.  Remember it is an investment and although it seems costly now, you can potentially retain a tenant that will be with you for many years to come.

It is estimated that there will be close to 80 million millennials moving out in the next few years.  With that knowledge it is important to start adapting to these renters attitudes towards renting and being developing a strategy to lure the highly valuable millennial renters for the future.

 

10 Year Low Reported on Mortgage Delinquencies

Corelogic is reporting that mortgage delinquencies in March fell to the lowest level since 2007.  Corelogic, a property informationanalytics and data-enabled solutions provider headquartered in Irvine, California is reporting that mortgages that are in some stage of delinquencies, including those 30 days or more past due to those in foreclosure, dropped from last year’s 5.2% to 4.4% in March, the lowest rate in 10 years..

As of March 2017, the foreclosure inventory rate, which measures the share of mortgages in some stage of the foreclosure process, was 0.8 percent compared with 1 percent in March 2016. The serious delinquency rate, defined as 90 days or more past due including loans in foreclosure, was 2.1 percent, down from 2.7 percent in March 2016.

Of significance is that Corelogic looked at early-stage delinquencies which is  defined as 30 to 59 days past due.  The report indicated that early-stage delinquencies have dropped to 1.7% in March.  This is down from 1.9% last year.

“Dropping delinquency and foreclosure rates reflect the beneficial impact of stringent post-crisis underwriting standards as well as better fundamentals such as higher employment, household formation and home price gains,” said Frank Martell, president and CEO of CoreLogic. “Looking ahead, we expect these positive trends to continue as the industry shifts its focus toward solving supply shortages and looming affordability crises in an increasing number of markets.”

 

Maintaining Efficient Rent Collection Methods for NYC Property Management Companies

rent collection nycWhen you own New York City investment property whose main income is the rental revenues, your objective is maximizing the rent you collect, not only by the amount but the time frame of collecting it. The most convenient and hassle free occurrence is if all tenants paid their rent on time and it would clear in a flash.  The truth of the matter is that no matter how well you try, this rarely occurs the way you would like.  Although background screenings including the disclosure of  financial documents and reviewing landlord/tenant issues with the court may prevent the majority of bad tenants, sometimes tenants fall into unexpected financial situations which will affect your bottom line.  It also means that you will not be collecting your rent in a timely fashion.  This is why landlords should choose a property management company that will assist in maintaining regular flows of payments even in the worst of circumstances

Communicate with tenants your expectations on payment

There are two things that a successful property management company should do to ensure that rent collection is optimized.  The first is that Blue Harbour Property Management has had success starting with the careful screening of your potential tenants.  We use all of our resources to get a financial background of the prospective tenant.  We ask for financial documents as well as look at the court records to see if there have been any previous issues with the individuals with collecting rent and actions being brought against that person.

When there is vacancy whether it be in a single-family home or in a 100-unit apartment complex, some would try to cut corners and rent your property as quickly as possible and not be as diligent as you should be with your tenant choices. The staff at Blue Harbour Property Management as well as the realtors associated with us are extremely cautious and patient.  We do our research and provide the right information such as looking at the FICO credit score of the prospect and see whether their income is sufficient enough to be able to pay the rent regularly.

Once the tenant is decided on, we explain to them what our expectations are with respect to rent delivery and documents are provided to them at the lease signing on where and/or how rent can be submitted.

rent collection nycOnline Payment Process

More and more we are seeing property management companies allowing tenants to pay through an online portal.  Blue Harbour Property Management allows the majority of our tenants to pay their rent via our website.  This is now becoming a convenient way for tenants to make payments without any delays.  When the rent is collected the system automatically deposits the money into the owner’s bank account for use. By having the process become an automated one instead of personal allows us to have a better relationship with our tenants.  It also allows our staff to conveniently know when payments are made and whether any collections actions should be brought against the tenants.  Time is of the essence with rent payments and we are ahead of the curve with respect to making sure prompt attention is given to receipt of rents and curing any issues with respect to non-payment.

Clear rent policies along with a secure technology platform through Blue Harbour Property Management will help your New York City rental property rent collecting run efficiently.


City Council Likely Will Change Heating Requirements for NYC Landlords

heating increase nycIn a move that will definitely affect NYC property managers and landlords in the colder months of the year, the city council will vote tomorrow on proposed new legislation would require indoor temperatures be at least 62 degrees between 10 p.m. to 6 a.m. Presently the law calls for between the hours of 6:00 AM and 10:00 PM, if the outside temperature falls below 55 degrees, the inside temperature is required to be at least 68 degrees Fahrenheit.  Also, at nighttime between the hours of 10:00 PM and 6:00 AM, if the temperature outside falls below 40 degrees, the inside temperature is required to be at least 55 degrees Fahrenheit.

It is being reported by Crain’s  that a committee passed the bill which was similar to a failed proposal sent to committee in 2015.  The means the measure is likely to be approved by the full council tomorrow.  There is no indication that there will be an increase in the fines for the non-compliance of the proposed law.  Presently the fines are as follows:

  • $250-$500 dollars per day for each initial heat or hot water violation
  • $500-$1,000 per day for each subsequent violation at the same building during the same and/or the next calendar year from the initial violation or, during the same and/or the next heat season

If the owner fails to pay the Court ordered civil penalties, HPD will enter a judgment against the owner and the property and seek to enforce that judgment.

heating increase nycProponents of the new legislation indicates that it will enhance the well-being of  tenants, particularly. As noted in the report, “Manhattan Borough President Gale Brewer added that boosting the nighttime minimum will bring New York City in line with Boston and Chicago, cities that often endure frigid winters on par with the Big Apple. The proposed bill would also get rid of the requirement that landlords only need to heat buildings when the outside temperature falls below 40 degrees, meaning the nighttime minimum would apply throughout the October 1 through May 31 heating season.”

Opponents of the bill include environmental groups which state that increasing temperature will increase carbon emissions.  Mayor de Blasio has pushed to reduced emissions by 80% over the next three decades.  Property management companies in New York City as well as landlords should be aware of the changes and adjust accordingly based on the additional resources to be used based on the changes.

 

 

2017 Home Sales Expected to Increase by 3.5%

Home Sales are increasing by many measures and the National Association of Realtors has recently revealed their prediction for the 2017 year.  At the 2017 Realtors Legislative Meetings and Trades Expo, Lawrence Yun, chief economist of the National Association of Realtors presented his 2017 midyear forecast.   He was joined by Jonathan Spader, senior research associate at the Joint Center for Housing Studies at Harvard University, and Mark Calabria, chief economist and assistant to Vice President Mike Pence.

As recently reported, the first quarter for existing home sales was the best quarterly existing sales pace since 2007 (5.62 million), and forecast is for the activity to remain consistent and finish around 5.64 million which would be the best since output since 2006 (6.47 million) and 3.5 percent above 2016.

Yun states:

“The housing market has exceeded expectations ever since the election, despite depressed inventory and higher mortgage rates,” said Yun. “The combination of the stock market being at record highs, 16 million new jobs created since 2010, pent-up household formation and rising consumer confidence are giving more households the assurance and ability to purchase a home.”

Supply and affordability are holding the market back.  Yun believes that a healthy labor market should be generating more activity but prices continue to increase and moderately priced housing is off the market quickly in the last quarter.

At the expo, Calabria also addressed the housing market.  He indicated that low labor participation rate as the primary reasons why the current economic expansion is the slowest since World War II.

“A strong labor market will drive a strong housing market, but you can’t have a strong housing market without a strong economic foundation,” said Calabria. “The recovery has been uneven with roughly 70 counties making up roughly half of all job growth. The White House’s proposed plans to cut corporate and individual tax cuts will help large and small businesses grow, hire and ultimately contribute to more households buying homes as more money goes into their pockets.”

Yun also addressed economic activity and said economic growth in the first quarter was “a huge disappointment” at 0.7 percent but  he anticipates an increase in consumer spending and homebuilding will be factors for the gross domestic product to finish higher.

Real Estate Sales Pace is Highest in Ten Years

home sales highest since 2007The National Association of Realtors (NAR) is reporting the strongest national sales growth in a decade for the first quarter of 2017.  They are also reporting that as a result of this sales growth, inventory levels are down causing significant growth in the sector.  The report indicates that the national median existing home price has increased 6.9% from the first quarter of 2016 to $232,100.

In metropolitan areas, single-family home prices last quarter increased in 85 percent of measured markets, with 152 out of 178 metropolitan statistical areas according to NAR. Only  Twenty-five areas (14 percent) recorded lower median prices from a year earlier.

NAR chief economist Lawrence Yun states:

             “continual supply shortages ignited faster price appreciation across the country in the first quarter. “Prospective buyers poured into the market to start the year, and while their increased presence led to a boost in sales, new listings failed to keep up and hovered around record lows all quarter,” he said. “Those able to successfully buy most likely had to outbid others – especially for those in the starter-home market – which in turn quickened price growth to the fastest quarterly pace in almost two years.”

Mr. Yun goes on to say:

“several metro areas with the healthiest job gains in recent years continue to see a large upswing in buyer demand but lack the commensurate ramp up in new home construction. This is why many of these areas – in particular several parts of the South and West – are seeing unhealthy price appreciation that far exceeds incomes.”

home sales highest since 2007Total existing-home sales, including single family and condos, climbed 1.4 percent to a seasonally adjusted annual rate of 5.62 million in the first quarter.  This is the highest level since 2007 at 5.66 million and is 5% highest than the same quarter in 2016.

Of significance in the Northeast existing-home sales in the area declined 2.2 percent in the first quarter.  This is still 4.2% higher than the same period in 2016.  The median existing single-family home price in the Northeast was $255,000 in the first quarter, up 2.2 percent from a year ago.

We expect considerable opportunities in New York City property management as home prices continue to appreciate.

Foreclosure Activity Lowest Since Pre-Recession 2005 Level

foreclosure activity lowest since 2005Housing appears to be stabilizing nationwide however there is still need for improvement in the New York City metropolitan region.  ATTOM Data Solutions, a company which curates a multi-sourced housing database released a report today indicating that foreclosure filings are at the lowest levels since 2005.  Foreclosure filings consists of default notices, scheduled auctions and the actual repossession of the property by the banks.  It is being reported that there were 77,049 filings on U.S. properties in April. This is down 23% from a year ago at the same point and at the lowest level since November 2005.

“Foreclosure activity continued to search for a new post-recession floor in April thanks in large part to the above-par performance of mortgages originated in the past seven years,” said Daren Blomquist, senior vice president at ATTOM Data Solutions. “Meanwhile we are seeing an elevated share of repeat foreclosures on homeowners who often fell into default several years ago but have not been able to avoid foreclosure despite the housing recovery.”

Of particular interest in the Northeast is that in New Jersey, Connecticut and Massachusetts foreclosure filings actually increased by 1%, 29% and 3% respectively.

Also of note is that a new analysis of repeat foreclosure starts, shows them increasing in some areas and in particular in New York City. In NYC repeat foreclosures occurred at 54%. This was the highest level of the 5 metropolitan areas that were examined for the analysis.  The other cities included Los Angeles (39%), Miami-Dade County (32%), Maricopa County, Arizona (26%) and Essex County, New Jersey (20%). A repeat foreclosure start is defined as a foreclosure start filed on a property address-owner last name combination in 2016 with a previous foreclosure start on the same property address-owner combination in the last 10 years.

Nationwide, initiating foreclosures are at pre-recession levels.  A total of 34,085 U.S. properties started the foreclosure process in April, down 6 percent from March 2017 and down 22 percent from the same time a year ago.

Maximizing Your Returns During Peak Rental Season in NYC

In the property management industry, we know that the period between April and September is the peak season for rentals in NYC.  This is the time when renters, home owners and first-time home shoppers decide to make the transition to their next home. It’s is estimated that between roughly 78% of all moves happen during this period with the highest number of moves in June, July and August.

In that same period of time, roughly 30% of individuals decided to forego renewing their lease and look to new housing.  With so many people moving during this period it become critical that property managers in NYC become aggressive in advocating on behalf of your landlords and look for the best tenants available. Property managers should focus on turnover during this peak season in order to get the best quality tenants and increase rents if the market allows in your neighborhood.

During the peak rental season the market is at its highest point with respect to prospects looking for a new place to call home. This means you can ask for a slightly higher rent amount than you would in the off season. In addition to setting a higher standard for tenants, you can also set the rent slightly higher and still have a plethora of prospects who are willing to pay a bit more for their ideal home. Even in New York City’s feverish market, we can push rents a little further during this peak period.

As a seasoned real estate practitioner, property manager or landlord in New York City, you want your property to come available for rent April through September. The best way to ensure that this happens is to negotiate with your tenants for the lease to end during the peak rental period.  It can be advantageous on your end to sign a longer lease or shorter depending on when you are signing in order to gain the peak season for renters.

At Blue Harbour Property Management, we have helped many landlords maximize their rental revenues by using techniques such as using the peak season for the signing of leases.  This has become more important as rents have vacillated in Brooklyn, Manhattan and Queens for the last 18 months.

If you need assistance with the management with your property in the NYC region or would like additional information on what services we provide you can contact us at anytime at 718-843-1185.  We are a leader of small and medium sized properties in the New York City region.