Archive For February, 2013
Housing costs squeeze middle class, speaker says
The number of middle class New Yorkers is up since the recession, helped by a broader definition, but they are increasingly under pressure from higher housing costs.
By Matt Chaban
February 11, 2013 1:47 p.m.
Council Speaker Christine Quinn, who released the report, The Middle Class Squeeze, in advance of her State of the City speech Monday afternoon.
There are some 1.9 million middle class New Yorkers, enough to comprise the fifth-largest city in the country, just ahead of Philadelphia, according to a new City Council report. That number has grown by 126,000 since 2001, reversing long-standing trends of “white flight” from the city to the suburbs—between 1989 and 2000, the city lost some 86,000 middle class families.
Still, getting by in New York has not gotten any easier for these families, particularly when it comes to housing, where costs have been skyrocketing.
“We need to make sure that the people who want to stay in our great city can afford to stay here,” said Council Speaker Christine Quinn, who released the report, The Middle Class Squeeze, in advance of her State of the City speech Monday afternoon. “We have no greater challenge or obligation to the families we represent than to tackle this problem head on and deliver results.”
The study is an update of one undertaken by the council in 1997. That report, entitled, Hollow in the Middle: The Rise and Fall of New York City’s Middle Class, found a decline dating back to 1989, in the number of New Yorkers with middle-class incomes. The study defines those in the middle class as a family of four earning between $66,400 and $199,200 annually.
One important difference between this study and the previous one is that while the lower limit of middle class has remained defined as 100% of the area’s median income (AMI), the upper limit has been defined upward from 200% of AMI to 300%, a shift that underscores how much more money it takes to be middle class in the city these days.
The report offers the example of “an experienced, single public school teacher earning $100,000.” This person would have fallen above the 200 AMI for a single individual, which is $93,000, technically making the teacher upper class. “It is hard to think of someone living on a school-teacher’s salary as upper income,” the report notes.
Meanwhile, housing costs have only been rising since 2001. The report finds that average rents are up 44% across the city (6.2% on an inflation adjusted basis) in the period, while the price to own a property has risen even more, up 47%. As a result, homeownership, long a badge of the middle class, fell to 51% in 2011, from 55% in 1999. And it is even harder to come by affordable housing depending on which borough one calls home—Manhattan has housing costs four-times the national average, the report notes, while Brooklyn is three-and-a-half times more expensive, and Queens two-and-a-half times more expensive.
As a result, Ms. Quinn is calling for new affordable housing measures in her State of the City address, in particular a program that will add 40,000 new units, the largest since the Mitchell-Lama program in the 1960s. She will also push to make as much of the city’s affordable housing stock permanently affordable, rather than allowing the affordability to expire over a period of decades.
“We will not allow middle class families to get priced out of the neighborhoods they helped build,” Ms. Quinn said during the speech. “We will keep New York City what it has always been – a place where opportunity is given, not just to those who can afford to buy it, but to those willing to work for it.”
Read more: http://www.crainsnewyork.com/article/20130211/REAL_ESTATE/130219995#ixzz2KiYMRrzB
Harlem’s 125th Street Attracts Big Retailers
Hiroko Masuike/The New York Times
Developers are building a $14 million retail building next to the Apollo Theater on 125th Street that will expand dining choices.
By TERRY PRISTIN
Published: February 5, 2013
The recession slowed commercial real estate development everywhere, but it was particularly hard on Harlem, which had only recently begun to attract national retailers after decades of disinvestment. A number of projects had to be shelved when the financial markets dried up.
Financing is still hard to come by in Harlem, but these days, 125th Street, the neighborhood’s main shopping street, is beginning to hum with activity. Two new developments are currently under construction, each featuring the kind of chain restaurant that was rare in the neighborhood not so long ago. A third project that will bring Upper Manhattan its first Whole Foods supermarket is also expected to get started later this year.
“Retailers are seeking new neighborhoods in Manhattan where they can achieve great revenue,” said Jared L. Epstein, a principal of Aurora Capital Associates, a New York development company that is the Adjmi family’s partner in a four-story 100,000-square-foot shopping center rising at the corner of 125th Street and Frederick Douglass Boulevard. “This is one of the last neighborhoods that has the density of foot traffic that can support their business model.”
Anchored by a 30,000-square-foot Designer Shoe Warehouse, the new development at 301 West 125th Street is directly opposite Harlem U.S.A., the pioneering retail and entertainment center that opened in 2000, giving the neighborhood its first movie theater in many years — now called the AMC Magic Johnson Theater Harlem 9 — as well as national retailers like a 35,000-square-foot Old Navy store.
The Adjmi development will include the city’s first Joe’s Crab Shack, as well as a health club under Equinox’s lower-priced Blink brand and a party supplies store. (Mr. Epstein declined to say how much his project would cost.)
Half a block to the east, the developers of Harlem U.S.A., Grid Properties and the Gotham Organization, are putting up a $14 million, three-story retail building at 269 West 125th Street, next to the Apollo Theater, which will include a Red Lobster restaurant, also new to the neighborhood.
In the early days of Harlem U.S.A.’s existence, shoppers and moviegoers had few places to eat within easy reach, but first local restaurants and then chain restaurants have provided more choices, said Grid’s president, Drew Greenwald. He said he expected to lease the shopping mall’s only current vacancy — an 11,000-square-foot space that was previously occupied by a bookstore and the Hip-Hop Culture Center — to a casual sit-down restaurant whose name he was not ready to disclose. “This corner is becoming a little bit of a food hub,” he said in an interview in his office at Harlem U.S.A.
The two new developments have more in common than seafood, however. Both are being financed by their developers.
“The capital markets are still circumspect across the board, and in Harlem, where things are almost always more difficult, that’s true as well,” said Kenneth J. Knuckles, chief executive of the Upper Manhattan Empowerment Zone, an economic development program.
Financing is also not expected to be a problem for a development intended for a large, weedy lot at the southwest corner of Lenox Avenue and 125th Street. The site was acquired several years ago by the retail specialist Jeff Sutton, who is planning a five-story glassy building that will include two creditworthy tenants: a 40,000-square-foot Whole Foods supermarket and a 75,000-square-foot Burlington Coat Factory. The site is opposite the Harlem Center, whose tenants include Marshall’s, Staples and other national retailers. But the Whole Foods lease came as a surprise to many people in Harlem. “It was a shock, because of the price point,” said Barbara Askins, president of the 125th Street Business Improvement District.
In 2010, one-quarter of the families in Central Harlem had incomes below the poverty level. But the neighborhood has been attracting more affluent residents, and many of them go out of their way to shop at Whole Foods, Ms. Askins said. And then there is the foot traffic: some 900,000 people walk along 125th Street each month, she said.
Chase Welles, an executive vice president at SCG Retail, an Atlanta company that represents the upscale supermarket chain, based in Austin, Tex., said that opening on 125th Street was not a tough call. “There’s real density there,” he said “The people meet the general Whole Foods demographic of income and education.”
Developers of other projects on 125th Street, however, have yet to pin down the financing they need to begin construction. Janus Partners, a company with a long track record in Harlem, and Monadnock Construction hope to start work this year on the redevelopment of the long-dormant Taystee Bakery complex. They were awarded development rights in 2011 after a previous plan involving the food market Citarella did not work out. The site was rezoned in November to permit a mixture of uses.
Jerry Salama, a principal at Janus, said the $100 million, 330,000-square-foot project, called Create@Harlem Green, hopes to attract the type of nonprofit, technology and creative industries that have been flocking to Midtown South, the office district between 42nd Street and Canal Street, in recent years. “Lots of leases are expiring in Midtown South, where rents have doubled since tenants first signed leases,” he said. “We want to be the alternative that is affordable.” Prospective tenants include the Harlem Brewery Company, which would move production there from Brewster, N.Y.; a biotechnology firm; some nonprofits — and, appropriately enough, a bakery. The site is close to where Columbia University is building its new Manhattanville campus.
“The proximity to the Columbia expansion makes this project more feasible and exciting,” said Blondel Pinnock, a senior vice president at the Harlem-based Carver Federal Savings Bank and the chairwoman of the 125th Street Business Improvement District.
Danforth Development Partners and Exact Capital say they also plan to break ground this year on the redevelopment of the Victoria Theater, a long-closed former vaudeville house just east of the Apollo Theater. Like several other projects in Harlem that have yet to materialize, the Victoria complex, which has been in the works since 2007, is challenging. It would include 229 rental apartments, half of them income-restricted; a 210-room Cambria Suites hotel with a ballroom; retail stores; and a cultural arts center with two theaters. Zoning regulations encourage developers to include cultural uses to give the street more character and prevent it from turning into a big-box strip.
Craig Livingston, a managing partner of Exact Capital, which joined the project in 2011, said lenders had been wary of committing to a new hotel in what was considered an untested market. The Cambria Suites would be only the second hotel built in Harlem since 1913, when the Hotel Teresa opened. The other new hotel is a 124-room Aloft, which lacks a restaurant and other amenities.
“You can’t point to 20 other successful hotels in Harlem, but the economics are there to support a new hotel in Harlem — definitely,” Mr. Livingston said. He cited the popularity of 125th Street as a tourist destination and the pricing advantages of being outside Midtown.
Deborah C. Wright, the chief executive of Carver Federal, said some developments on 125th Street had probably been harder to achieve because officials had imposed requirements to foster job growth — like including a hotel. But she expressed confidence that all the projects would eventually get done. “We may have over-engineered the protection so it’s taking a little longer than we like, but it’s going to happen,” said Ms. Wright, who first began working on Harlem development in the 1980s. “It’s zigging and zagging, and not following a straight line, but it’s inevitable that sites will get developed and complete the circle that began 30 years ago.”
This article has been revised to reflect the following correction:
Correction: February 7, 2013
An article in the Square Feet pages on Wednesday about new commercial development in Harlem misstated the relationship between Aurora Capital Associates and the Adjmi family in a project on 125th Street and Frederick Douglass Boulevard. They are equal partners. Aurora is not the minority partner.
A version of this article appeared in print on February 6, 2013, on page B10 of the New York edition with the headline: Harlem’s 125th Street Attracts Big Retailers.
Renter fatigue?
While the Manhattan rental market is still strong, brokers weigh in on whether New Yorkers have reached a tipping point on sky-high prices
February 01, 2013
By Melissa Dehncke-McGill
There’s been a lot of buzz in the industry lately about the long-hot Manhattan rental market finally taking a breather from its constant rent increases.
Indeed, while the rental market is still up about 5 percent year-over-year, it saw a dip in prices between the third and fourth quarters of 2012.
This month, The Real Deal talked to rental brokers, firm heads and market analysts to gauge what they’re seeing on the ground and what they make of the recent softening.
Most noted that the market is still incredibly strong and argued that the recent weakness was nothing more than a seasonal downshift. Others said it still remains to be seen whether renters have maxed out on their willingness to pay increased prices.
Citi Habitats’ Gary Malin said he would be watching to see whether 2013 brought “renter fatigue,” meaning renters had hit a tipping point.
One telling sign is the dynamic at work between the boroughs.
Market analyst Jonathan Miller noted that the difference in median rent between the Manhattan and Brooklyn markets has “compressed” slightly in the last year. Some say that may be because an increased number of Manhattanites are turning to the outer borough for more affordable apartments.
But he noted that the “more modest” rental growth in Manhattan is a good thing. “Anytime you have out-of-control growth that doesn’t self-regulate, it always ends badly,” Miller said.
Others noted that while some renters attempted to flee the rental market recently to buy instead, they are now back because qualifying for a purchase is still difficult.
“The same customers who might have fled the rental market at the beginning of 2012’s fourth quarter are now returning to our rental offices in search of another year’s lease,” said Douglas Wagner of Bond New York Properties.
For more on which rental price points are performing best, what’s going on with rental development and what’s happening with concessions from landlords in the rental market, we turn to our panel of experts.
Gary Malin
president, Citi Habitats
For the last few years Manhattan rents were continually going up, but recent reports show that the market is now softening slightly. What are you seeing in terms of prices for Manhattan rentals?
During the fourth quarter of 2012, we saw Manhattan rents decrease by a relatively small amount. The shift can largely be attributed to the time of year. And rents have actually increased by an average of 5 percent year-over-year and are nearly 15 percent higher than they were two years ago. So they still remain at near-record-high levels. It remains to be seen just how much of the recent rent drops are seasonal, versus signs of “renter fatigue” — my term for the point where renters just can’t afford to pay the asking prices anymore. If we see continued declines into 2013, it could be a sign of the latter.
The most recent market reports also show that inventory ticked up. What are you seeing in terms of inventory compared to six months ago, a year ago and two years ago?
Six months ago was the peak of the summer renting season, so there is more inventory on the market now than there was during that extremely active period. The vacancy rate is also up slightly from one year ago. In December 2012, it was 1.37 percent, up from 1.27 percent the year before. But it’s important to keep in mind that these rates are extremely low compared to the national standard.
TRD and others have reported that some first-time buyers have been pushed into the sales market because rental prices have gotten so high. What are you seeing on that front, and how is that impacting your firm?
Our agents have transitioned a lot of rental clients into the sales market. The studio and one-bedroom market on the sales side is currently very active. … However, strict lending standards and an uncertain economy mean that many New Yorkers will remain in the city’s rental market — by choice or necessity.
Which Manhattan neighborhoods have seen the biggest price drops and inventory increases as part of this rental market softening?
In terms of rent declines across all apartment sizes from November to December of 2012, the biggest drops occurred in Midtown West. When examining vacancy rates for the same period, the largest jump in the number of available apartments occurred on the Upper East Side.
Which Manhattan neighborhoods have held up the strongest since the softening began?
Downtown areas have continued to perform extremely well — areas like Soho, Tribeca and the West Village. One reason is the lack of inventory. You don’t see many [giant] high-rises in these neighborhoods, and that’s part of their charm.
We’ve reported that many renters are opting out of the pricey Manhattan market and are looking for rentals in Brooklyn and Queens instead. What are you seeing on that front?
During 2012, our firm worked on several new residential buildings in Downtown Brooklyn and in Long Island City and Astoria, Queens. All these developments have performed exceptionally well. Renters can find new luxury rental properties that are trading at a 25 to 30 percent discount to equivalent properties across the river.
Adina Azarian
president, Adina Equities at Keller Williams NYC
For the last few years Manhattan rents were continually going up, but recent reports show that the market is now softening slightly. What are you seeing in terms of prices for Manhattan rentals?
The winter months are always slow. I think it’s very possible that once [we move beyond the off-season] it will be more clear that any softening was just really normal fluctuation. Prices have gone up on average about 20 percent in the last two years.
Sources say that the upper end of the rental market has done far better than the middle and lower ends. Is that what you’re seeing?
I agree. The luxury market is very tight. The three-bedroom-and-up luxury apartment is just hard to come by, and the rents are through the roof. In general, there’s been a major slowdown in new construction, especially for large luxury apartments that investors used to buy and rent. That slowdown has definitely caused a lack of luxury rental inventory.
Do you expect the softening of the market to have any sort of impact on whether developers continue to build new rental buildings?
I think the rental market is still too strong to have that impact. However, I have had conversations with developers and investors who recognize the lack of new construction and see the demand. So they are thinking “condo” again.
Bahar Tavakolian
senior vice president, Stribling & Associates
Recent reports show that the market is now softening slightly. What are you seeing in terms of prices for Manhattan rentals?
Yes, that seems to have been the trend. It appears that we peaked in the summer. Prices have softened just slightly, [but] some owners and agents are not keeping up with market changes and are insisting on asking rents of the peak period. These listings tend to stay on the market.
Which Manhattan neighborhoods have seen the biggest price drops and inventory increases as part of this rental market softening?
FiDi has always had a rather large inventory of rental properties. Midtown West with MiMa and large residential buildings on and around West 42nd Street also has a large inventory of rental units.
Is the upper end of the rental market doing better than the middle and lower ends?
Absolutely. It’s all about inventory, and there’s a serious lack in the upper end.
Douglas Wagner
executive director of leasing, Bond New York Properties
Are you seeing more renters move into the sales market because rents have gotten too high?
Some renters have turned to the sales market because of high rents, lack of choice and low interest rates. [But] we’re finding that some consumers have become turned off by bidding wars, lack of choice in the sales market and the arduous qualification process for mortgages. The same customers who might have fled the rental market at the beginning of 2012’s fourth quarter are now returning to our rental offices in search of another year’s lease.
Which Manhattan neighborhoods have seen the biggest inventory increases and price drops as part of the rental market softening?
Vacancies in Midtown West and the Upper West have increased by approximately 15 percent since December 2011. The only neighborhood that shows lower prices this year over last is the Upper East Side, where some of the most affordable inventory in the city can be found. The studio and one-bedroom market starts at about 2 percent cheaper than last January.
Which Manhattan neighborhoods have held up the strongest since the softening began?
The West Village maintains the highest value and the lowest vacancy rate. Prices have barely changed in this neighborhood in two years, although there is about 12 percent more inventory this January. Time will tell if landlords have to adjust their historically high prices to see these apartments absorbed.
What’s going on with concessions in the rental market?
Developers [continue to offer customary concessions] on new construction. There are also some landlord concessions at the highest price point of each size category. For example, the $3,500 studios and $4,500 one-bedrooms sometimes offer some free time or a partial broker fee in buildings with large inventories.
What are the most surprising trends you’re seeing in the Manhattan and New York City rental market today?
Landlords with mid-market apartments in walk-up and mid-rise elevator buildings have spent much of the past year renovating ordinary apartments in order to be competitive with the higher-tier properties. We’re seeing some well-designed and highly finished tenement-style apartments pricing like doorman units.
What are the most positive trends you’re seeing in the Manhattan rental market today?
We look forward to the forthcoming changes to real estate advertising regulations, which should take effect by the spring. Brokers will become more accountable for representing themselves transparently to consumers. Rental agents who misrepresent themselves on Craigslist as owners will find no tolerance and big penalties under the new laws.
What are the most troubling or worrisome trends?
There are fewer choices than ever for economically limited renters.
What sorts of trends are you expecting to see in the rental market in the coming months?
We anticipate prices will remain high. Whatever seasonal build-up of inventory we might experience in the first quarter will be absorbed in the second quarter … [and] vacancy rates will remain at crisis levels during 2013.
Jonathan Miller
president/CEO, Miller Samuel
What are you seeing in terms of prices for Manhattan rentals compared to six months ago, a year ago and two years ago?
The rental market has continued to rise on a year-over-year basis, but the pace of growth has been easing over the past three months. The median rental price is up 0.8 percent from the same period last year, up 11.3 percent from the same period two years ago, but down 1.6 percent, or $50, from six months ago. Of course, that’s a seasonal decline.
What are you seeing in terms of renters opting out of Manhattan because it’s become too pricey and renting in Brooklyn and Queens instead?
We have been seeing this trend evolve over the past year. [But] the difference in median rent for Manhattan and Brooklyn has compressed over the past year as demand rises in Brooklyn. The difference in median rent between Manhattan and Brooklyn for December compared to a year ago went from $525 to $513. Not a large change, but it shows how Brooklyn has been rising a bit faster than Manhattan has.
What differences are you seeing between the higher and lower ends of the rental markets?
The lower end of the rental market has seen more competition with the sales market as first-time buyers consider buying and move into the purchaser market. We are not seeing the same activity in the larger-apartment market.
How are landlords, particularly those who have new development buildings that they are still looking to lease up, reacting to the changes in the rental market?
I don’t think the rental market will be about falling rents over the next year. Employment has risen and mortgage rates have fallen. … Rents will remain elevated for a while, whether or not they rise or fall a bit going forward. [But] I think we will see more use of landlord concessions going forward. The period we are in now without much use of concessions is the outlier.
What are the most positive trends you’re seeing in the Manhattan rental market today?
A more modest pace of growth is always a positive trend. Anytime you have out-of-control growth that doesn’t self-regulate it always ends badly. Think about the housing boom in the middle of the last decade.
What are the most troubling or worrisome trends?
That we have no cohesive economic policy vision coming out of Washington and that the banks really aren’t all that solvent. Also that the rise in rents, not just in New York City but in the U.S., was a function of tight credit and that the entire boom in multi-family development was predicated on rising rents. It just makes me nervous.
Javier Amor
salesperson, City Connections
How is the Manhattan rental market doing these days?
In the last week and a half, people have been asking for up to $100 off the asking price of an apartment. In most cases, my fiduciary responsibility is to the landlords and we try to get the landlords as much as we can, but we have had to come down $50 in most cases from the asking price.
How long are Manhattan rental apartments staying on the market?
I am seeing the apartments on the market a little longer, but historically speaking, we are going to see a dip in the market right after the holidays, all the way through to the middle or end of February.
Which Manhattan neighborhoods have held up the strongest since the softening began?
The West Village, Tribeca and Chelsea have kept their pricing.
What are you seeing in terms of renters opting out of Manhattan because it’s become too pricey and renting in Brooklyn and Queens instead?
What I see the most is people moving from Midtown West to the Hudson Heights and Washington Heights area. They are blown away by the amount of space they can get. The psychology is that it is still in Manhattan.
Which price ranges in Manhattan are seeing the most softening now?
I think it would be right around $1,900 to $2,200. The apartments are sitting a little longer than we would like and usually we have to adjust downward.
How are landlords, particularly those who have new development buildings that they are still looking to lease up, reacting to the changes in the rental market?
At one point, they were no longer paying commissions. Recently, I have seen that come back with some of the buildings informing us that they are paying brokers commissions until a certain date. I haven’t seen any other concessions like free rent.
What are the most surprising trends you’re seeing in the Manhattan and New York City rental market today?
My past customers are asking what it would take to buy a home. They’re asking me what it would cost for them to own an apartment that’s similar to the rental that they are living in now.
What sorts of trends are you expecting to see in the rental market in the coming months?
I think we are going to start seeing a bit more of people wanting a better deal. I think they will become a bit more aggressive in their offers if they find a comparable [rental] two blocks away.
What are the biggest challenges to renting apartments in the current market?
For some people it is just qualifying. For the landlords I represent, I have to make sure I am bringing a qualified tenant, and more often than usual there have been clients whose credit has taken a hit. That’s my least favorite part of the job.
Weekly Real Estate News
The bursting of the housing bubble plunged the economy into a recession from which it has yet to fully recover. But economists say this could finally be the year that housing lifts us out of the doldrums. Just over half of economists surveyed by CNNMoney identified a housing recovery as the primary driver of economic growth this year. The rest were split fairly evenly between consumer spending, increased domestic energy production and stimulus from the Federal Reserve as major growth drivers. “Homebuilding activity will likely remain the strongest growing component of the economy in 2013,” said Keith Hembre, chief economist of Nuveen Asset Management. “After several years of excess supply, demand and supply conditions are now in much better balance.” Home sales rebounded to the strongest level in five years in 2012, as home building bounced back to levels not seen since early in the recession. Near record low rates, rising home prices and a drop in foreclosures have combined to bring buyers back to the market. The economists surveyed also forecast that there will be just under 1 million housing starts this year — roughly matching the 28% rise in home building in 2012. Moody’s Analytics is forecasting much stronger growth — a 50% rise both this year and next year, which it estimates will create more than 1 million new jobs. “There’s a lot of pent-up demand for housing, and very little supply,” said Celia Chen, housing economist for Moody’s Analytics. “As demand continues to improve, home builders have nothing to sell. They’ll have to build.” She said that growth in building will mean adding not just constructi! on jobs, but also manufacturing jobs building the appliances and furniture needed in the new homes, which in turn drives overall consumption higher. And economists say the tight supply and renewed demand for housing should lead to higher home values — about a 3.7% increase according to the survey. “One of the most significant indirect effects from the housing recovery is the ‘wealth effect’ on consumers due to the recovery in home prices,” said Joseph LaVorgna, chief U.S. economist of Deutsche Bank, who said better home values can affect both consumer psychology on spending as well as their actual finances. “Even small moves in home prices can have large effects on consumption, because housing comprises such a significant share of household assets,” he said. Source: CNN/Money
Remodeling sentiment rose to the highest level in five years, according to the National Association of Home Builders’ (NAHB) Remodeling Market Index (RMI) for the fourth quarter of 2011. The RMI increased to 46.6 in the fourth quarter from 41.7 in the third quarter. In the fourth quarter, the RMI component measuring current market conditions rose to 48.4 from 43.0 in the previous quarter. The RMI component measuring future indicators of remodeling business was also positive, increasing to 44.8 from 40.4 in the previous quarter. An RMI below 50 indicates that more remodelers report market activity is lower (compared to the prior quarter) than report it is higher. The overall RMI averages ratings of current remodeling activity with indicators of future activity. “As more consumers remain in their homes rather than move in this economy, remodelers benefited from a gradual increase in home improvement activity, taking us to a five-year high,” said NAHB Remodelers Chairman Bob Peterson, CGR, CAPS, CGP, a remodeler from Ft. Collins, Colo. “2011 ended on a strong note for the remodeling industry.” Current market conditions improved significantly in all four regions over the third quarter of 2011.! The RMI reported higher market activity in two important categories: major additions 52.3 (from 45.2) and minor additions 50.1 (from 45.7). Future market indicators in each region also experienced gains from the previous quarter. Two of the indices reported a level over 50: calls for bids at 50.7 (from 45.4) and appointments for proposals at 50.1 (from 43.3), while work committed for the next three months only rose to 31.5 (from 29.9). “With several key components above 50, the latest RMI provides reason for guarded optimism going forward,” said NAHB Chief Economist David Crowe. “The residential remodeling market has been improving gradually, mirroring the trend in other segments of the housing market. We expect a modest growth in remodeling activity to continue throughout 2013.” Source: NAHB
Rents were up for the third consecutive year in 2012 and are forecasted to rise again this year, according to MPF Research. Apartment rents increased 3 percent in 2012, a slower pace than in 2011 where rents rose 4.8 percent. The historical norm for the past two decades in rental increases is 2.5 percent per year. According to MPF, many property owners weren’t as aggressive in asking for higher rents in 2012 as they were in recent years. “Many on the operations side of the apartment industry have focused on sustaining their very tight occupancy levels during a period when job growth and new household formation have been fairly sluggish at the same time that renter movement has begun to inch up from the unusually low levels experienced in the previous few years,” says Greg Willet, MPF Research vice president. Source: Realty Times
Weekly Interest Rate Overview
The Markets. Rates continued to trend upward in the past week. Freddie Mac announced that for the week ending January 31, 30-year fixed rates rose from 3.42% to 3.53%. The average for 15-year loans increased to 2.81%. Adjustable rates also rose, with the average for one-year adjustables rising at 2.59% and five-year adjustables increasing to 2.70%. A year ago 30-year fixed rates were at 3.87%. Attributed to Frank Nothaft, Vice President and Chief Economist, Freddie Mac, “Rates on home loans continued to trend upwards this week amid a growing economy led in part by the recovering housing market. For instance, new home sales totaled 367,000 in 2012, the most in three years and reflected the first annual increase in seven years. Pending home sales in 2012 averaged its highest reading since 2006. And the S&P/Case-Shiller® 20-city composite house price index rose 5.5 percent over the 12-months ending in November 2012, the largest annual growth since August 2006. All of these factors helped residential fixed investment to add nearly 0.4 percentage points to real GDP growth in the fourth quarter alone.” Rates indicated do not include fees and points and are provided for evidence of trends only. They should not be used for comparison purposes.
Current Indices For Adjustable Rate Mortgages
Updated February 1, 2013
| Daily Value | Monthly Value | |
| Jan 31 | December | |
| 6-month Treasury Security | 0.12% | 0.12% |
| 1-year Treasury Security | 0.15% | 0.16% |
| 3-year Treasury Security | 0.42% | 0.35% |
| 5-year Treasury Security | 0.88% | 0.70% |
| 10-year Treasury Security | 2.02% | 1.72% |
| 12-month LIBOR | 0.849% (Dec) | |
| 12-month MTA | 0.175% (Dec) | |
| 11th District Cost of Funds | 1.071% (Dec) | |
| Prime Rate | 3.25% |
Economic Commentary
The Numbers Don’t Lie
This week the markets were focused upon the all important employment report. While the number can be volatile from month-to-month, the dip in first time unemployment claims during the previous two weeks made the markets more optimistic regarding January’s numbers. They came in at a lackluster 157,000 jobs created for the month with an unemployment rate of 7.9%. These numbers were worse than expectations; however, a revision of previous data added over 300,000 new jobs to the data previously released in 2012. The numbers don’t lie. There have been additional reports released recently that show the economy is growing more quickly. For example, the December orders for durable goods were much higher than expected. Preliminary numbers indicated that the growth of the economy stalled in the fourth quarter, but this pause was attributed to temporary factors such as the weather according to commentary by the Federal Reserve released after the Fed meeting ended on Wednesday.
As we have pointed out in the past, a growing economy is great news. But it also means that we can expect higher prices to join the party. It is not a coincidence that home prices rose last year. More recently, oil prices are up around ten percent and interest rates have begun creeping up as well. All along we have warned that the Federal Reserve Board has no power to keep rates low in a stronger economy. Nor would they want to. There was more drama regarding the Fed meeting this week for this very reason and rates eased a bit when the Fed indicated they are continuing their support for low rates. Meanwhile, it is expected that those who have been on the sidelines may very well recognize that this is their last chance to purchase a home which is on sale. Rates and home prices are up slightly, but they are currently still a bargain. If the numbers keep rolling in like they have, this fact may no longer be the case.
Courtesy of Scott Raphael @ GauranteedRate.com
East vs. west battle brews
Critics say midtown east plan may jeopardize West Side development.
February 3, 2013 5:59 a.m
A plan to rezone a large swath of midtown east to allow a new generation of super-skyscrapers could cost the city dearly unless the plan can be delayed, according to critics of the project who cite threats to the redevelopment of the Hudson Yards area west of Penn Station.
The city is counting on new development around the rail yards to generate hundreds of millions of dollars in taxes and fees to pay part of the cost of extending the No. 7 subway line to the area.
City Councilman Dan Garodnick, whose district encompasses midtown east, raised his concerns last week at a breakfast panel hosted by Crain’s. He said that more time should be taken to weigh the potential impact of the midtown east rezoning on West Side subway financing. He also suggested that the starting date for the rezoning could be delayed from the current target of 2017 to allow a commercial district to take shape in the Hudson Yards area.
“I would ordinarily let the market decide where commercial development takes place on its own time frame, but the city is on the hook here,” Mr. Garodnick said.
To help pay for the extension of the No. 7 subway line to the West Side rail yards, the city devised a mechanism in which real estate tax revenue from new development and proceeds from the sale of local air rights would service the billions of dollars in debt needed to build the extension.
The recession, however, forced many developers to delay or even cancel their projects, curtailing their payments to the city. According to a recent study by the city’s Independent Budget Office, $170 million in taxes and air rights were collected in the Hudson Yards area from 2006 to 2012. That was $113 million—nearly 40%—less than the city’s initial projections.
The money was used to pay a portion of the $517.5 million in interest payments due on the bonds through 2012. Because the revenue fell short of expectations, the city, which has guaranteed repayment of the debt, had to pay more to make up the difference. In total, the gap-filling effort cost the city $137 million during the six-year period.<!– $r("(\s*?|\r*?)(<ul|<bl|<ol||block>|ol>|ble>)(\s*?|\r*?)
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Critical mass
The city’s liability is only growing. Interest payments on the debt have risen this year by more than $20 million, to more than $150 million, requiring the city to set aside more funds to keep the bonds from defaulting. According to the IBO, the city put up $155.6 million in advance to service the bonds in 2013 and 2014.
Meanwhile, work has begun on only one major office tower west of Penn Station, a 2 million-square-foot-plus skyscraper to be anchored by high-end handbag maker Coach.
Mr. Garodnick and other critics fret that the rezoning in midtown could shift the focus of development back toward Manhattan’s core just when construction on the West Side is still struggling to achieve critical mass.
“The city has said they won’t compete, but are we really certain about that?” asked Raju Mann, an executive at the Municipal Art Society, which has criticized aspects of the midtown east rezoning push, including its impact on potential landmark buildings in the central business district. “Can anyone guarantee that five years is long enough to get Hudson Yards started and that the city won’t have to keep plugging these holes in the financing for another nine or 10 years?”
Winning over the skeptics, including Mr. Garodnick, will be crucial to the Bloomberg administration’s hopes of gaining approval for the rezoning, which it has identified as key to maintaining the city’s long-term competitiveness as a global business center. <!– $r("(\s*?|\r*?)(<ul|<bl|<ol||block>|ol>|ble>)(\s*?|\r*?)
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Going forward
At the Crain’s gathering last week, Deputy Mayor for Economic Development Bob Steel, a chief architect of the rezoning plan, gave no hint of ceding any ground on the midtown east effort before the mayor’s term ends Dec. 31.
“Mayor Bloomberg has told us every single day that … we’re going to run to the finish line and finish our responsibilities,” Mr. Steel said.<!– $r("(\s*?|\r*?)(<ul|<bl|<ol||block>|ol>|ble>)(\s*?|\r*?)
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A version of this article appears in the February 4, 2013, print issue of Crain’s New York Business as “East vs. west battle brews”.
Read more: http://www.crainsnewyork.com/article/20130203/REAL_ESTATE/302039970#ixzz2Jxbz72VQ
Landlord and Tenant: Natural Enemies?
Landlord and Tenant: Natural Enemies?
Damon Winter/The New York Times
Dorothy Lashley, left, is landlady to Barbara Morris in Harlem. The women often share stories and dinner.
<NYT_BYLINE>
By JOANNE KAUFMAN
Published: February 1, 2013 39 Comments
Victor J. Blue for The New York Times
Megan McDonell, left, is a tenant and, yes, a sometime dinner guest of Melanie Adsit in Queens.
Richard Perry/The New York Times
Rob Curtin, now a homeowner in Long Island City, was once induced to move by a nosy landlord.
Well, maybe not by all.
Mr. Curtin’s landlady, who lived in the ground-floor unit of the two-family house, made no secret of her disapproval.
“She said: ‘You shouldn’t be partying with girls this late. Girls like that are no good,’ ” recalled Mr. Curtin, 33, who works in television production. “She was very interested in my love life.”
The landlady’s assessments of those friends, while not necessarily or consistently off the mark, were disconcerting, said Mr. Curtin, who had previously — and happily — lived in a landlord-occupied building. There, the owners had given him espresso, not advice.
“It was awkward that she was making comments at all,” he said. “But I wanted the relationship to be good while I was living there. She meant well, but really, it was none of her business.
“But,” he added, “maybe it was her business, because I was living in her building.”
For the majority of those who rent apartments in New York City, the landlord is simply the person to whom they make out a monthly check, a faceless being who races to the bank with that check — but doesn’t always respond with similar speed when there’s a problem with the boiler.
For some, however, the landlord is not abstract. For better (he’s always around checking up on things) or worse (he’s always around checking up on things), the landlord is the upstairs or downstairs neighbor. It’s the durable stuff of movies and sitcoms, like the 1960s series “Hey, Landlord” and the ’70s series “Three’s Company.”
Life with the landlord has its own particular complications and compensations. These range from the too-much-in-your-face and too-much-in-your-business sort, to the homeowner whose table always has an extra place. If the relationship is contentious— well, you know where the door is. But if it’s harmonious, that could translate into attractive terms when the lease comes up for renewal.
There are no hard figures on how many New York City apartment buildings have an in-house landlord. But it’s more likely to be the arrangement in small buildings, more likely on side streets than avenues, and more likely in the outer boroughs than Manhattan. That’s “because the housing stock, a lot of duplexes, is built for it,” said Jonathan J. Miller, the president of the real estate appraisal firm Miller Samuel.
“Having the landlord in the building is more common than you think,” he added. “But it isn’t something you see in the marketing or listing of a building, and it’s not seen as an amenity like a gym or a roof deck that will affect the rent you pay.”
There can be advantages to having a live-in landlord. “The assumption is that things will get fixed quicker because the landlord is there,” Mr. Miller said. “He’s subject to the same inconveniences as the tenants, so if the hot water is off, he has an incentive to fix it.
“By the same token, you may have to be more mindful of your behavior than in a large building where the landlord lives elsewhere.”
Sunny Zachi, the owner of Alpha Properties, a rental agency in Manhattan, says he makes a point of outlining the virtues and drawbacks of living in a landlord-occupied building. “I tell a prospective tenant that the building is clean and well taken care of. But then I say, ‘Guys, the landlord lives there, so there are things you have to be cautious about; he doesn’t want people who have parties until 4 a.m.’ ”
Landlords and tenants have to find a balance between privacy and intimacy that suits everyone.
The women who cycle in and out of the three-bedroom second-floor apartment that Melanie Adsit rents out in Astoria are tenants, but often they also become friends.
“We actually hang out and have dinner parties,” said Ms. Adsit, 37, an art education consultant who lives on the first floor with her husband, Alex Eaton, 36, a freelance cinematographer for film and television, and their newborn daughter. And sometimes, tenants become family. Ms. Adsit’s brother married a woman who had lived upstairs.
“I feel our tenants have been very patient with us,” Ms. Adsit said. “They know they have a good deal, so they’re not demanding.”
Megan McDonell, one of Ms. Adsit’s tenants, says that good deal includes the backyard. “Melanie and Alex are like, ‘Go on out there and invite your friends over,’ ” said Ms. McDonell, 31, an editor at a publishing company. “During Hurricane Sandy both my roommates were stranded elsewhere, so Mel and Alex invited me down to dinner and to hang out with them.”
Despite the general coziness, Ms. Adsit said there had been some minor annoyances in the past, like the sound of clicking high heels overhead, and an oversharing tenant. “If you said ‘How are you?’ ” she recalled, “you’d get an epic tirade about the latest terrible things that were happening in her life. We used to watch from the window to make sure she was in the apartment before we went out, because we didn’t want to be stuck on the stoop for 20 minutes listening to her problems.”
Peter Harris was naïve, he said, to think it didn’t matter that the landlady lived on the premises when he and his wife, Jan, rented a duplex apartment on the Upper East Side in the late 1980s and early ’90s. “Then we found out she was a combination of nosy sitcom neighbor and cuddly grandma,” said Mr. Harris, 69, an executive in the private equity business and the former chief executive of F.A.O. Schwarz and the San Francisco 49ers football team.
“She would not just note who came and went; she had a point of view about their demeanor. And when she came to our door, it was almost like a military inspection as she looked over my shoulder to see how clean our apartment was.”
The landlady’s probing went further, according to Mr. Harris. “She became very interested in our lives, including our latest in-vitro success. She wanted to know the details in a way that made it seem as if she were the third person in bed with us.”
And sometimes, he added, there were expectations that they would be there for her. “She asked us to feed her cat and accept deliveries when she wasn’t there,” Mr. Harris said. Once, in a swap of landlord-tenant roles, she even asked him to come look at her backed-up sink.
For a 36-year-old freelance medical writer living in a two-family house in Queens, the elderly landlady seems to be a combination of grandma and Santa Claus, “because she knows when you are sleeping, she knows when you’re awake.”
The writer, who asked that her name not be used because she hopes to renew her lease, said she thought the landlady was a very sweet person. “I like her,” she said. “I really do like her.”
But when she and her husband moved in last February, the lack of a door on their baby’s bedroom generated a battle, with the landlady finally saying to them: “Why do you want a door? Oh, you don’t want to hear the baby cry?” It felt like “a commentary on our lives,” the writer said.
With the demands of work and child care, the couple didn’t have time to buy curtains, and as a temporary solution, put cardboard boxes over the glass to keep the light out. “The landlady said the boxes didn’t look good and she gave us curtains,” the writer said. “I didn’t like them, but I put them up. If I hadn’t, I think she would have been hurt. It was like she was giving us a gift.”
It has taken a year for the couple to make their peace with the situation, to accept the trade-offs: the lack of privacy weighed against the attractive rent. The landlady’s reproving comments that the baby isn’t dressed warmly enough weighed against the freshly renovated apartment. The monitoring of their comings and goings weighed against the lovely view of the Manhattan Bridge and — what with no one above them or next door — the peace and quiet.
The writer is also aware that the living arrangements present challenges not just for her, but for the landlady as well.
“We’re paying tenants and we have our rights,” she said. “But I want to be respectful of the fact that this is my landlady’s home. I can tell she struggles with having someone live here.”
There is no such struggle for Dorothy Lashley, who has owned a brownstone in Harlem for 30 years. She lives on the first and second floor and rents out the third and fourth to tenants who call her Mama.
“It’s been a pleasurable situation so far,” she said. Perhaps that’s because Ms. Lashley, 71, spells out the rules of engagement before a lease gets signed. “We don’t slam doors,” she said. “If you want to have a party, invite everyone. People don’t have to come, but they have to be invited. If you don’t fit in, you have to move out.”
“Dorothy makes it homey,” said Barbara Morris, 64, a retired nurse who has been a tenant of Ms. Lashley’s since 1998. “People don’t have to worry about heat. If you need something done, it’s done right away.
“Last week I cooked some greens and rice in chicken broth and took a plate down to her,” added Ms. Morris, who was recently invited to Ms. Lashley’s apartment for a birthday dinner of lasagna and cake.
Mr. Curtin, meanwhile, weary of the incursions on his privacy, moved out as soon as his lease was up, and has since bought a condo in Long Island City. “My building is friendly but impersonal,” he said, sounding relieved. “I’d probably have to be dead for a few days before someone would come and check on me.”
A version of this article appeared in print on February 3, 2013, on page RE1 of the New York edition with the headline: Natural Enemies?.
JPMorgan Joins Rental Rush For Wealthy Clients: Mortgages
By Margaret Collins, John Gittelsohn & Heather Perlberg – Feb 4, 2013 10:21 AM ET
Justin Sullivan/Getty Images
A large “rent” banner is posted on the side of an apartment building in San Francisco, California.
JPMorgan Chase & Co. (JPM) is giving its wealthiest clients the chance to invest in the single-family rental market after other investments linked to the U.S. housing recovery jumped in value.
JPMorgan Entices Millionaires to Become Landlords
Daniel Acker/Bloomberg
PulteGroup Inc., the largest homebuilder by market value, was the biggest gainer on the Standard & Poor’s 500 Index last year, rising 188 percent, helping an index of 11 builders more than double since the end of 2011, and raising concern among analysts including Michael Widner of Stifel Nicolaus & Co. that growth is already priced in.
PulteGroup Inc., the largest homebuilder by market value, was the biggest gainer on the Standard & Poor’s 500 Index last year, rising 188 percent, helping an index of 11 builders more than double since the end of 2011, and raising concern among analysts including Michael Widner of Stifel Nicolaus & Co. that growth is already priced in. Photographer: Daniel Acker/Bloomberg
The firm’s unit that caters to individuals and families with more than $5 million, put client money in a partnership that bought more than 5,000 single family homes to rent in Florida, Arizona, Nevada and California, said David Lyon, a managing director and investment specialist at J.P. Morgan Private Bank. Investors can expect returns of as much as 8 percent annually from rental income as well as part of the profits when the homes are sold, he said.
The bank’s wealthy clients are joining a growing number of private-equity firms and individuals buying rental homes in the regions hardest hit by the U.S. housing crash. Blackstone Group LP (BX) has spent $2.7 billion, and said last month it accelerated purchases as home prices rise faster than anticipated. Even after home values in November gained by the most in six years, investors are wagering on rental properties as an alternative to housing-related stocks and mortgage debt that’s already soared.
“The traditional places people might look — homebuilder stocks and appliance makers — probably aren’t the best places for new investments,” said John Buckingham, chief investment officer at Al Frank Asset Management in Aliso Viejo, California, which oversees about $4.5 billion. “They’ve had fantastic runs.”
Builders Gain
PulteGroup Inc., the largest homebuilder by market value, was the biggest gainer on the Standard & Poor’s 500 Index last year, rising 188 percent, helping an index of 11 builders more than double since the end of 2011, and raising concern among analysts including Michael Widner of Stifel Nicolaus & Co. that growth is already priced in.
Whirlpool Corp. (WHR), a home-appliance maker, was the third-best performing stock in the S&P 500 Index last year, rising 114 percent, and subprime-mortgage bonds gained more than 40 percent.
The investments rallied as the housing recovery strengthened through 2012 with the Federal Reserve pushing mortgage rates to record lows, and as institutional investors increased their purchases of foreclosed homes. Home prices in 20 U.S. cities rose 5.5 percent in November from a year earlier, the most in more than six years, an S&P/Case-Shiller index of property values showed last month.
Pooling Investments
New York-based JPMorgan, whose private bank oversees $877 billion, started pooling investments from its clients in mid- 2012 into a partnership to purchase distressed properties, betting that prices will rise over the next several years and provide investors with income from renters along the way, said Lyon. The firm uses a third-party manager to find homes, buy and manage them, he said, declining to name the firm.
The goal is to sell the houses within three to four years in one of three ways: through an initial public offering of a real estate investment trust, a sale to an existing REIT or to an institutional buyer such as a pension fund, Lyon, who’s based in San Francisco, said. Clients will receive a share of any price appreciation depending on the size of their investment.
The strategy is similar to institutional buyers including Blackstone, the world’s largest buyout firm, Thomas Barrack’s Colony Capital LLC, and Oaktree Capital Group LLC. (OAK) They’re aiming to profit from low prices on distressed properties, often those in foreclosure and sold at auction — and the demand for rentals from people who don’t want to own a home or can’t qualify for a mortgage.
Harder Mortgages
“It’s hard to find a private-equity firm on the planet that doesn’t have a strategy in this space,” Gary Beasley, chief executive officer at Waypoint Homes, said last week at the American Securitization Forum’s annual conference in Las Vegas. The Oakland, California-based company has bought homes in California, Arizona, Illinois and Georgia.
Since the 2008 financial crisis, lenders have required higher credit scores and larger down payments to qualify for mortgages. Borrowers whose loans for purchases closed in 2012 had an average credit score of 740, according to data compiled by real estate data service CoreLogic Inc., up from 716 in 2006. That’s contributed to a decline in the U.S. home ownership rate to 65.4 percent at the end of 2012 from a peak of 69.2 percent in June 2004, the Commerce Department reported.
The number of renter-occupied residences increased an estimated 1.1 million last year while the number of owner- occupied households fell by 106,000, according to a Commerce Department report.
Beaten Down
Buying single-family homes to rent in some locations has become more attractive to bond investors in the past year as mortgage-backed securities without the backing of the U.S. government have become more expensive, said Sandeep Bordia, head of residential and commercial credit strategy at Barclays Plc.
“If you look at some of the really beaten down areas — Miami, Orlando, Vegas, Tampa — we do think the return on that asset, if you just buy a home, collect the rent and do whatever you need to do on the cost side, you’re getting a return of somewhere between 6 percent and 8 percent,” Bordia said. Non- agency mortgage-backed securities are generally yielding 4 percent to 6 percent, he said.
The “sweet spot” in many areas would be homes prices between $100,000 and $150,000, Bordia and other analysts wrote in a Feb. 1 report. While smaller homes can provide the highest gross rental yields, there are fixed costs and the risk of higher tenant delinquencies, they wrote.
Getting Crowded
Even as the housing market probably will do well across the nation, areas where property prices already are high such as San Diego, Los Angeles, Denver and San Francisco, will see lower rental yields, of 4 percent to 5 percent, Bordia said.
Jumping into the single-family home market now carries the risk that it’s already getting crowded, and the bargains in the best locations are dwindling, said Craig Pastolove, a managing director at New York-based Morgan Stanley. (MS)
“There’s a lot of capital out there that is chasing these investments,” so there may be price inflation, Pastolove said.
While buying single-family homes to rent is among “the smarter ways to invest going forward,” Pastolove advises wealthy clients to buy the properties to rent themselves if they are able. Morgan Stanley isn’t purchasing homes or managing them; instead it’s making loans to high-net-worth customers at rates lower than a typical mortgage, and using their investment portfolios as collateral. That provides people the capital to purchase investment properties, he said.
Economy Intertwined
Investors also shouldn’t write off companies directly tied to real estate, said Rex Macey, chief investment officer at Wilmington Trust, a unit of M&T Bank Corp. (MTB) Housing is so intertwined with the economy that many companies directly or indirectly involved will benefit from a continued rebound.
“This is a tide that is going to lift a lot of boats,” Macey said.
Since Goldman Sachs Group Inc. (GS) wrote in a Nov. 28 report that housing gains may be priced into the market for equities most tied to housing construction, homebuilders have rallied 15 percent. The S&P Supercomposite Homebuilding index fell 0.3 percent today at 10:20 a.m. in New York. PulteGroup fell 0.6 percent to $20.22.
Mark Kiesel, portfolio manager for Pacific Investment Management Co. also said housing-related investments will continue to do well as Americans seek to buy homes.
“If they don’t own a house it is time to buy,” said Kiesel, who sold his home in 2006 before the market crashed and then bought last year in Newport Beach, California, where the investment firm is based.
Pimco Picks
Pimco’s Investment Grade Corporate Bond Fund (PIGIX) returned 15 percent, compared with 9.4 percent for the Barclays U.S. Credit index last year, because of its emphasis on housing-related investments, he said.
As investors look for ways to benefit from an improving housing market, bank stocks are an “inexpensive” opportunity because many of their loans are backed by U.S. real estate, said Brett Nelson, a managing director in the investment strategy group of Goldman Sachs’s private-wealth-management unit.
“Their fortunes are directly tied to the trajectory of the U.S. real estate market,” Nelson said. He uses State Street Corp.’s SPDR S&P Bank ETF, an exchange traded fund tied to bank stocks that’s gained 8.5 percent this year.
While 2012 saw the first stage of a housing rebound, prices are still 15 percent below their 2007 peak, according to the Federal Housing Finance Agency. Spending on residential construction also increased at a 15.3 percent rate in the fourth quarter and climbed 11.9 percent last year, the most in two decades.
“We believe that housing is still very much going to recover and that you’ve had a big rally already in housing- related equities,” said Pastolove of Morgan Stanley. “So it’s about looking for other opportunities while they still exist.”
To contact the reporters on this story: Margaret Collins in New York mcollins45@bloomberg.net; John Gittelsohn in Los Angeles at johngitt@bloomberg.net; Heather Perlberg in New York at perlberg@bloomberg.net.
To contact the editors responsible for this story: Christian Baumgaertel at cbaumgaertel@bloomberg.net; Kara Wetzel at kwetzel@bloomberg.net; Rob Urban at robprag@bloomberg.net
Adam Ashkenas Manhattan Real Estate 