CO-OP/CONDO BUYERS

Say you live in a rent-stabilized apartment, but you want to make an investment. Can you purchase share of a co-op elsewhere — with the intention of renovating and flipping it — without ticking off the landlord? That's the question Ronda Kaysen fields in this week's Ask Real Estate column in The New York Times. "Can the owner of the rent-stabilized apartment start eviction proceedings against me? Separately, am I permitted to own the co-op unit without actually living in it?" he asks. Kaysen explains that it's perfectly acceptable for tenants of rent-stabilized apartments to own property elsewhere — as long as that rent-stabilized unit is the primary residence. "Where you run into trouble is if you live in that second home for more than half the year," Kaysen explains. It should be no problem for this particular potential investor, since he has no intention of living in the co-op unit he's interested in purchasing. The actual pickle, of course, is that co-op boards tend to require shareholders to live in the units they purchase; that is, the purchased unit has to be the primary residence. "A board would not be likely to allow a purchase by a buyer who did not plan to live in the building," says Kaysen. So what's a guy to do? Try investing in a condo instead. Condo rules are typically more flexible.

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Mayor Bill de Blasio is passionate about affordable housing, and — considering that even financially well-off folks are getting priced out of the likes of Brooklyn and "settling" for Manhattan — that's a good thing. But it goes to show that sometimes even those who have the best of intentions either don't think their plans all the way through. The New York Times reported that "when New York City planners unveiled maps charting a 73-block area in the Bronx to be developed with housing, they called it 'Cromwell-Jerome.' But no one in that area seemed to know where that was." Whoops. So is the mayor a little out of touch? Well, let's take a look: "The plan, which calls for 80,000 new apartments, mostly for households with annual income of less than $69,000, requires an extraordinary amount of diplomacy, even with the mayor's allies. Neighborhood groups and their City Council representatives, who must sign off on any rezoning, are anxious about taller buildings, more people and gentrification. Labor unions want assurances that they will have a bigger role in construction, even though it drives up costs." But some affordable-housing advocates are concerned that "new homes that are designated as affordable" will go to a mix of income levels, rather than to the poorest residents, which puts current residents at risk for being displaced "as people with higher incomes move into the neighborhood and make it more upscale." 

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An inevitable consequence of all these new apartment towers rising across the Five Boroughs is that some neighborhood icons become collateral damage. Locals in Long Island City worried that the Queens Clock Tower was doomed, especially as "Queens Plaza undergoes rapid development — including a plan to build a 70-story apartment tower, the borough's tallest, right next door" to the beloved structure, DNAinfo reported. Today, their efforts to preserve the building paid off: "The city's Landmarks Preservation Commission [LPC] voted unanimously to landmark the former Bank of Manhattan building in Queens Plaza." The clock tower has been part of Long Island City's landscape and skyline for nearly a century. Built in 1927, the former bank building at 29-27 41st Avenue was "known at the time as 'the first skyscraper in Queens' and was honored by the Queens Chamber of Commerce as the borough’s best business building, according to the LPC." Sometimes the good guys really do win.

Photo by Jim.henderson (Own work) [CC BY 3.0], via Wikimedia Commons

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A cursory scroll down our home page gives you but a glimpse of all the new buildings being constructed in New York. It's undeniable that we've seen a construction boom, with co-ops and condos rising all over Manhattan, particularly luxury towers. But despite all the new apartments available for the taking, Crain's reports that there's a record shortage of homes on the market in Manhattan — and it's the luxury market that's helping to skew the numbers: "Unlike the last construction peak, in 2008, when developers generated more supply to meet demand, a number of factors have converged to warp the economics of owning and selling a home in Manhattan — and in the rest of the boroughs — making it more expensive for businesses to retain the highly skilled workers who can keep the city's economic engine humming." According to the article, of the 850,000 apartments in Manhattan, only "5,200 were available for sale in the first quarter of 2015. That's 26 percent below the historical average and just 25 percent above the low of 4,164 in 2013." Fueling these dismal results is the fact that, like it or not, co-ops and condos together make up just 25 percent of available apartments in Manhattan. The rest are rentals. With resale inventory stagnating, potential sellers are skittish about putting their own homes up for sale. Who can blame them? "Because there are so few listings, sellers are nervous that they won't be able to find another home. Even if they do, those apartments one step up will be pricier as well. As a result, they're holding on to their apartments, further subtracting from the potential number of listings," the article explains. And that vicious circle is going to keep pressure on those prices.

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We've been hearing for some time that Brooklyn is getting ridiculously expensive — Manhattan-levels of expensive. Just a month ago, Brickunderground reported that the price difference between Brooklyn and Manhattan is shrinking, while we remembered days of old, when people who couldn't afford to live in the Big City had to settle for the consolation prize: a decent apartment in Brooklyn. Well, it's starting. People in Brooklyn are getting priced out and moving to… Manhattan. Who'd have thunk it? The New York Times reported that "five years ago, Eric Kabakoff and Christina Lewandowski bought a one-bedroom in a new condominium in Gowanus, Brooklyn, with the idea of moving to a two-bedroom in the same building after a while." After being outbid on two apartments there, "the couple realized their $750,000 budget was not going to be enough." Gosh, that's not even an entire million. In a case of "go figure," they found places in their (rather ample to many of us) budget in Manhattan, and settled for their consolation prize: a two-bedroom co-op a block from Central Park in Carnegie Hill on the Upper East Side. A block from the park. On the Upper East Side. Let that sink in, because when prices in Brooklyn get so high that a place a block from Central Park on the Upper East Side is a bargain, you know we're done for.

Photo by Rik Lee

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A report published by housing analytics company RealtyTrac shows that, as many of you may have guessed, lucky folks who buy and flip property in New York City stand to reap among the greatest profits. "The strong returns of home flippers in the first quarter demonstrate that there is still a need in this recovering real estate market for move-in ready homes rehabbed to more modern tastes," said Daren Blomquist, vice president at RealtyTrac. The report found that property flippers in New York, Northern New Jersey, and Long Island had an average return of investment of 47.1%. Additionally, home flips made up 3.7% of all sales in the New York and New Jersey metro area. Click Read More to view chart and video. 

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What do you do after purchasing a collection of buildings along West Broadway, between Warren and Murray streets? Knock them down to make way for a super-duper, mega-ultra, luxury condo, of course. According to Crain's, Cape Advisors purchased the "high-end TriBeCa properties for $1,000 per square foot, a price that underscores the eagerness among builders to deliver luxury housing in the city's most exclusive neighborhoods." For those doing the math, it's $50 million total. The new condo will be approximately 46,000 square feet, and Crain's anticipates that, to turn a profit, Cape Advisors will have to sell the apartments for at least — at least — $3,000 per square foot… or more. They'd better hope that there's no pause or drop in the market. As for word on the street, well, not surprisingly many lament the loss of the buildings, which, though dilapidated, some argue could have been renovated. Instead, we lost another bit of Old New York character and charm for the sake of massive shiny glass and steal. One commenter on the Tribeca Citizen blog nails it: "TriBeCa is done. Welcome to the Upper East Side 2.0." 

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Last week Habitat shined a spotlight on annual meeting presentations. It was part of a series of articles showing some behind-the-scenes of board life for anyone who is interesting in running for the first time. This week, in the final installment, we look at the agenda.

The generic agenda for an annual meeting, as typically specified in association bylaws, divides the gathering up into four basic parts: formalities designed to comply with arcane legal requirements; presentation of informational reports; voting; and the Q&A/gripe session, referred to euphemistically as "unfinished business" or "new business."

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In a bizarre turn of events, two financially healthy co-ops have recently learned that purchasers have been unable to get loans from a commercial bank because the nonresidential portion of the building’s income is more than 15 percent.

"It's like one step forward, two steps back," laments Mitchell Unger, controller at the management company The Lovett Group. He found out the hard way about this new rule, which the Federal National Mortgage Association, commonly known as Fannie Mae, instituted on March 31. A broker handling a sale at Forest Hills South, a Queens co-op Lovett manages, "was working with Citibank, who notified the broker that the buyers were being turned down at this tremendously healthy building since [the cooperative corporation] had more than 15 percent of its income generated from non-shareholder revenue." Citibank also turned down buyers at another Lovett property, the tony 49 East 96th Street.

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Nowadays everyone is going on and on about One57 and all the new shiny condos cropping up on Billionaires' Row and beyond, but back in 2008 — a rough year for many people — 823 Park Avenue was enjoying its moment in the sun. According the New York Daily News, the still-swanky building "initially drew waves of high-profile finance types and even former New York Rangers star Brendan Shanahan, commanded top dollar during the last real estate boom, with the penthouse selling for a whopping $30.5 million in 2008." Those were the days. But it looks like the honeymoon's been over for some time. The Park Avenue building, which "was once the cream of the crop … has recently fallen out of favor with buyers." The reason? Mold. And now the very wealthy residents of the luxury condo building are suing the building's developer, Elliot Joseph's Property Markets Group, which converted the building from rentals in 2005. There's the usual he said/she said. But the bottom line is that even the mega-rich aren't immune from a little grief in the city, and that while the main thing in the real estate game is location, location, location, it suddenly means nothing when it means dealing with an issue like gross mold.

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