The Markets. Fixed rates on home loans fell sharply in the past week to their lowest levels since May of last year, in response to the markets — especially the continued drop in oil prices. Freddie Mac announced that for the week ending January 8, 30-year fixed rates decreased to 3.73% from 3.88% the week before. The average for 15-year loans fell to 3.05%. Adjustables were down slightly, with the average for one-year adjustables decreasing one tick to 2.39% and five-year adjustables down to 2.98%. A year ago, 30-year fixed rates were at 4.51%, which is over 0.75% higher than today’s levels. Attributed to Frank Nothaft, vice president and chief economist, Freddie Mac — “Rates on home loans fell to begin the year as 10-year Treasury yields slid beneath 2.0% for the first time in three months. Meanwhile, the Fed minutes indicated ongoing discussion regarding the timing of the first rate hike. Of the few economic releases this week, ADP Research Institute reports the private sector added an estimated 241,000 jobs in December, which exceeded market expectations and followed an upward revision of 19,000 jobs in November.” 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 January 9, 2014
|Daily Value||Monthly Value|
|6-month Treasury Security||0.08%||0.11%|
|1-year Treasury Security||0.23%||0.21%|
|3-year Treasury Security||1.00%||1.06%|
|5-year Treasury Security||1.50%||1.64%|
|10-year Treasury Security||2.03%||2.21%|
|12-month LIBOR||0.602% (Dec)|
|12-month MTA||0.121% (Dec)|
|11th District Cost of Funds||0.686% (Nov)|
Rent or Buy? The Math Is Changing
Billy Gasparino and Jenna Dillon-Gasparino were savvy enough to wait out the housing boom of a decade ago as renters. Not until 2010, well into the bust, did they buy a house in the Venice neighborhood of Los Angeles, less than a mile from the beach, for $810,000. [NYT]
Cramped city dwellers often want to buy the apartment next door and combine units, but the borrowing process can get complicated
When it comes to combining dwelling units, two really are better than one. But expect higher fees and more paperwork.
Mortgages for connecting two condos or co-ops, or converting a multifamily to a single-family house, can be complicated. “It’s not the kind of thing that you take off the shelf,” says Mike McPartland, head of investment finance for North America at Citi Private Bank. [WSJ]
Banks are looking to expand their programs aimed at helping doctors, lawyers and others in well-paid professions qualify for large mortgages
The rise of the jumbo-loan market has some lenders stepping up efforts to attract lawyers and doctors as borrowers.
So-called specialty-profession loans, designed to ease the qualification process for people in certain professions, may offer lures such as low—or no—down payments or no mortgage-insurance requirement. “Historically, these loans perform very well and have low default rates,” says Michael Zimov, a physician-specialist officer at Ohio-based Fifth Third Bank. [WSJ]
Contact me to discuss assisting with the pricing, sale, or purchase of a home.
- Average condo prices climbed considerably since last year, with a 35% increase in average price and a 30% increase in average price per square foot. Median price only saw a 2% increase. These figures were supported by growth in the number of sales over $5M.
- Average discount from last asking price to last sale price for condos also tightened to just 1.7%.
- Co-op average price per square foot was up 8% year-over-year and average days on the market decreased by 36% from last year, down to an average of 90 days. Listed inventory also dropped 21% since Jan 2013 to just 2,463 co-op units on the market.
- Average price per square foot saw double-digit gains in the one and two bedroom categories and single-digit gains in the studios and three bedrooms.
- Average days on market decreased by 38% year-over-year, the lowest average since August 2010, further indicating the tightening of the Brooklyn market.
The full reports are available at the links below.
With inventory tight these days, don’t leave anything to chance
By Gary Malin / NEW YORK DAILY NEWS
Thursday, October 10, 2013, 6:27 PM
Jeff Bachner/for New York Daily News
Citi Habitats president Gary Malin.
The Money Pros are standing by to take your questions.
Q. With inventory very tight right now, I want to do everything I can to make sure my apartment deal goes smoothly. What are some tips for aceing the co-op approval process?
A. The co-op board approval process can be nerve-racking, and it’s important to know what the process will entail before placing an offer.
Co-op buildings are run by a co-op board, just like a company has a board of directors. This group of building residents reigns supreme, and has the right to approve or reject all potential buyers, and for any reason – as long as it is not in violation of fair housing laws.
Boards want to see that would-be residents are financially qualified to purchase the apartment in question (by examining pay stubs, tax returns, etc.), and that they will make good, quiet neighbors.
Financial qualification requirements vary from building to building. Typically though, most boards like applicants to have a monthly income that is four times greater than their total monthly housing expenditure (mortgage payment, plus maintenance fees/taxes and insurance), and in addition, have a full 12 months of housing costs available in liquid assets (cash, money market accounts, bonds etc.).
If you are working with a real estate agent, ask him or her to give you as much information as possible about the approval process for the board in question. It helps to know what you are walking into beforehand.
Meeting with the board is the most important step in the process. Remember that first impressions count. Be on time, be friendly, and be prepared.
Understand the ins-and-outs of all your required financial documentation, and be sure you can answer questions about it quickly and accurately. Be sure to dress appropriately, as you would for an important business function.
When in doubt, err on the conservative side.
Let the board ask the questions, and answer only what is asked of you. Volunteering additional information only increases the chance they will find something you say unacceptable. In most cases, a short interview is a good sign you will be approved.
Always have a positive attitude about the apartment and the building. Act like you wouldn’t change a thing about both.
Now is not the time to discuss your plans to knock down walls and gut the apartment. While renovating your unit is your right as an owner, its best to avoid bringing it up during the interview.
The goal is to act like you love the building and will be a no-hassle neighbor.
Keep in mind, co-op boards are allowed to ask personal questions. Asking what you do on the weekends and if you have frequent guests are common questions. While it’s okay to spin the answers a little, reply to them honestly.
While the co-op approval process can be a challenge, remember the payoff of a home you love is worth the short-term inconvenience. Keep the tips above in mind, and you should be in great shape.
Malin is the president of Citi Habitats.
Do you have a question for the Money Pros? Send it to email@example.com.
By Tina ChadhaPublished: October 16, 2013
Interest rates are creeping up, and you’re tired of throwing away your paycheck on rent. More and more, home ownership feels right for you — even in this market. But before you start scanning listings, Gary Malin president of Citi Habitats, offers this advice.
“First and foremost, you need to [research and] understand the market conditions, which makes the process less scary for people,” he says. “Once they understand that there’s tight inventory, they understand that prices are a certain way.”
Set a price
“You should always set a price for which you’re willing to spend,” Malin says. “Obviously everyone wants to get a deal. But in this market, which is a hot, competitive market, with lots of potential buyers for very limited inventory, you may need to pay asking price or potentially above ask to secure the apartment of your dreams. So set a price point you’re willing to go to. Try to obviously get it to be less, but if you have to get to that price point, don’t get upset that you didn’t get what you perceived to be a deal.”
Have the papers ready
“Have all your finances ready to go — you’ve gone to your mortgage broker, you’ve been prequalified, you know what you can afford, you have your down payment ready. You’ve done everything to put yourself in the best possible position to close quickly, because you’ve done the due diligence before actually going out and looking for a home. A lot of first-time homebuyers say, “Oh, I’m going to put my toe in the water.” What happens when you find the home of your dreams but you ended up losing it because you dragged your feet on all the other things that somebody else was more prepared to act on? I think if you’re going to make the decision to get into the market, you should go full-force. That doesn’t mean you have to buy anything, but you want to put yourself in the best possible position to succeed if you do find something that you want.”
Don’t stress out
“The first thing I tell a first-time homebuyer is to have fun with the process. If you take the process so seriously, issues that really aren’t issues — like a homeowner who isn’t negotiating with you — seem insurmountable. There are always ebbs and flows in the deal that ultimately work themselves out. But that’s why you have people there, like an attorney and broker, to guide you. So enjoy the process. Be proud of what you’re about to do, and rely upon the professionals there to keep an even keel, because if you get too emotional, it can make the process more frustrating.”
Know when to walk to away
“Know when this deal is not working for you. Know what your drop-dead point is. Determine that before you start the negotiation process. If [the deal] gets beyond that point and if someone is trying to tell you why you should go outside of your comfort zone, walk away and find something else.”
How to find a broker
“Speak to all the people you know that have bought,” Malin says. “Personal references are the best way for most things to happen. Find out if they had a good experience with the individual. Do some research on that individual. If the person is in the market and they work for a reputable firm, the most important thing is to see if that person is someone you can relate to and they can relate to you.
You can really create the environment that you want. For instance, I’m a responsive human being. I get back to everyone that works with me very quickly. If I was going to be engaging a real estate broker the one thing that would be very important to me would be for them to understand the way I work. … It makes a better working relationship.”
MANHATTAN — Take a tape measure on your next open house visit.
Some listings might use closets, hallways — inside or outside the unit — and even elevator shafts in their measurements. Others might just include usable space.
Then there are questions about how to include terraces or outdoor areas.
There are no rules that dictate how to measure square footage, experts told DNAinfo New York. Because of that, some brokers discourage buyers from relying on the price-per-square-foot figure to gauge whether they’re getting a good deal.
“Buyers and sellers are always asking about per square foot,” said Dan Bamberger, of CitiHabitats. “It’s the most common way people try to make a justified analysis of how much they should be paying for an apartment.”
“I hate to put it like this, but it’s really more trickery than anything else.”
Usually when an apartment is listed, brokers hire someone with a tape measure — rarely a licensed architect — to create a floor plan, explained Bamberger, who recently wrote about the murkiness of square feet in a newsletter he sends to clients.
For his piece, he randomly selected four Greenwich Village apartments currently on the market and found that the floor plan, on average, was nearly 44 percent smaller than the listed square footage.
Bamberger also found discrepancies of nearly 12 percent in square footage between the same unit listed at two different times or similar apartments on different floors of the same building. Yet in many cases, buyers would pay a premium based on price per square foot, he said.
There are few references for homebuyers to check apartments’ square feet. Co-ops — which represent three-quarters of Manhattan’s housing stock — have no public record, and measurements for condos are included in their offering plans, explained Jonathan Miller, president of the Miller Samuel appraisal firm.
Queens Borough Public Library/Images of America: Jackson Heights
“If you put two licensed architects in a room, you would not get identical measurements,” he said. “You would get a close measurement, but there isn’t a level of precision available.”
Miller said measurements in listings tend to be between 5 and 10 percent higher than the actual size.
“A 2,000-square-foot apartment might be closer to 1,800,” Miller said. “That doesn’t mean that apartment in that building sold for 10 percent more than it was worth.
“I think there’s an expectation of precision that doesn’t exist. But it’s not like [the space] was hidden from you when you bought. It’s just another rating for the apartment.”
A lot of brokerage firms don’t include square footage in their listings or are cautious about the numbers being approximate, because they’re worried about being sued, he said.
Case in point: David Wilkenfeld, founder of PromGirl.com, a major formal dress e-tailer, agreed to pay $13 million for a penthouse at 200 Chambers St. in TriBeCa that was listed at 4,700 square feet.
But only after he agreed to the deal, he learned that the condo’s offering plan listed the unit as having 4,548 square feet, according to a lawsuit he filed against the broker in March, essentially seeking a $2.08 million refund based on the smaller size.
The lawsuit claimed the 2012 sale of the condo was “hurried” by email during the “traumatic period of Hurricane Sandy and its aftermath in New York City.” The case was dismissed in April.
Especially in today’s market, with its lack of inventory, using such questionable numbers to base home-buying decisions may not make for the most solid foundation, the experts agreed.
When he works with sellers, Bamberger tries not to disclose the square footage since it could present issues or disputes down the road, he said.
When he works with buyers he encourages them to assess the apartment on its merits rather than on the listed square footage.
“You have to make a subjective opinion on what an apartment is worth,” Bamberger said.
Intense buyer demand for housing drove pricing trends as it was met with limited available properties; the result was rapid absorption and price increases across the board.