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Thread: What Goes up Keeps Rising

  1. #1

    Default What Goes up Keeps Rising

    January 15, 2005

    In New York Real Estate, What Goes up Keeps Rising


    The market value of New York City real estate rose 14 percent last year, an increase that follows three successive years of sharp gains as property values continued a heady run, according to a report released yesterday by the city's Department of Finance.

    The report found the increases were broadly based throughout the city, as property values rose in every borough, with Staten Island rising almost as much in percentage terms as Manhattan, according to the figures, which put the total value of property in the city at $616 billion. In one stark indication of the strength of real estate in the city, the Time Warner building in Columbus Circle rose in value over the last year by more than $200 million to $1.2 billion.

    These increases, even in the face of sluggish job growth on Wall Street and an overall economy that lags the nation's, indicate that "the rules of real estate have changed" as several factors have combined to keep pushing prices upward, said Jonathan J. Miller, president of Miller Samuel Inc., a real estate appraisal and consulting firm. Several years of historically low mortgage rates, coupled with the continued migration of new residents to the city, have kept demand high, and the market hot.

    The numbers further seal the real estate market's role as a singular force helping to drive the city's economy, with, as Mr. Miller put it, real estate replacing the stock market as the financial topic of choice to discuss at dinner parties.

    The strength of New York City's real estate market reflects a housing boom that has swept across the country. During the third quarter of 2004, home prices throughout the nation rose 13 percent from a year earlier, according to the federal government. A record 69 percent of households now own their homes; housing values on the West and East Coasts are highest.

    The increase in property values in the city means that homeowners can potentially enjoy better resale values, but it also presages higher tax bills for most property owners. For example, the 100,513 homeowners on Staten Island whose homes are now worth more than they were a year ago can expect their tax bill to go up an average of $136 next year if the tax rate remains at this year's level, according to the city, while the figure citywide for owners of single-family homes would be $141, according to officials.

    One of Mayor Michael R. Bloomberg's chief Democratic rivals, City Council Speaker Gifford Miller, cited the new data in arguing that the tax bills to be issued based on the new assessments would effectively wipe out a substantial portion of the $400 real estate tax rebate the city is offering again this year.

    "The city shouldn't give with one hand in tax rebates and then take away with the other through arbitrarily higher tax burdens," Mr. Miller said in a statement.

    But city officials said yesterday that they were taking new steps to address what they acknowledged to be longstanding inequities in the tax assessment system. For only the third time in the last 20 years, they said, the Department of Finance will reduce the taxable assessment value of one-, two- and three-family homes next fiscal year, to 6 percent of their market value from 8 percent. The change addresses perennial complaints from consumer advocates that the system effectively punishes people who live in neighborhoods where real estate values are not rising as quickly as those in hot neighborhoods.

    A large reason for the inequities in the tax system is a 6 percent cap on the increase in a property's taxable real estate values. That has had a perverse effect on tax burdens, as people with properties whose real estate values have shot up quickly are paying much lower taxes, proportionally, than those whose properties have not. Martha E. Stark, the city finance commissioner, said that people who buy newly built homes are similarly socked with disproportionately high assessments and that the change was meant to help them too.

    "In order to make it uniform and therefore equitable, we've got to lower the ratio, and we did," she said.

    Ms. Stark said the change would result in reductions of up to 25 percent in the assessments for 30,000 homeowners, and in a stable assessment for 60,000 people who otherwise would have had an increase. Most of those people are in Brooklyn, Staten Island and Queens, officials said.

    Ms. Stark said the city had also changed the assessment system to more fairly address the differences between rental buildings that charge market rates and those that remain in the rent regulation system and cannot.

    Manhattan experienced the biggest rise in overall property values, 15 percent. Staten Island was next at 14.5 percent.

    Suggesting that real estate developers might expect more gains in the future, the value of vacant land rose about 40 percent in Brooklyn, Queens, Staten Island and the Bronx and 27 percent in Manhattan.

    Yet economists and housing experts warn that the giddy real estate market may be dampened by even moderately rising interest rates or other bumps in the region's economy. In a recent article in The Regional Financial Review, published by, a research and consulting firm, the company's chief economist, Mark M. Zandi, wrote that even a modest increase in mortgage interest rates "is expected to have a substantial impact" on the housing outlook.

    Looking at the national picture, Mr. Zandi added: "Housing is at a turning point. After a decade of steadily improving conditions, and current record levels of activity, the market is poised to weaken." He cited New York as one of numerous cities around the country in which many residents with average household incomes could not afford typical new homes with a 20 percent down payment and a 30-year fixed mortgage rate of 6 percent.

    And the 14 percent rise in real estate values is smaller than the rise last year of 17 percent. But, acknowledging that, Ms. Stark said, "The real estate market is stabilizing a little bit, not softening."

    He added, "Real estate continues to be a great investment."

    Copyright 2005 The New York Times Company

  2. #2
    NYC Aficionado from Oz Merry's Avatar
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    Oct 2002


    No snarkiness, please

    Mapping the Wealth of New York City by Housing Values

    Expensive Homes Are Tallied; 7,279 Valued at More Than $5 Million

    By Josh Barbanel
    Updated Feb. 2, 2015

    New York’s soaring luxury housing market has produced a concentration of property wealth that spans most of Manhattan, flickers across the river into Brooklyn and even touches a corner of the Bronx.

    A new analysis—the first of its kind—now suggests the size of that wealth. The tally of the upper tier of the co-ops, condos and houses in New York City—those at more than $5 million each—puts its total fair market value at $65.2 billion.

    The city’s Independent Budget Office found 7,279 homes valued at more than $5 million already on the tax rolls in New York City, including 128 valued at more than $25 million each, based on sales prices in 2014.

    The office, a city-funded agency, assembled the data at the request of The Wall Street Journal to shed light on a debate over proposals to impose higher property taxes on pied-à-terre buyers from around the world. Its numbers suggest the city’s most expensive homes would generate less money from a higher tax surcharge than what its advocates have suggested.

    Although state legislators now seem unlikely to take up such a measure this year, analysts say, the issue is likely to be brought up again and again.

    “If not this year it will come back,” said Geoffrey Propheter, an economist and tax expert who did the analysis. “No in tax policy really means not now.”

    Slide Show : NYC Buildings Where the Wealth Resides

    The Independent Budget Office’s totals don’t include scores of high-price apartments in new condominiums under construction—or on the drawing boards—which likely will add to the total.
    “Manhattan is obviously becoming the abode of wealth, and the trend will continue,” said Kirk Henckels, director of Stribling Private Brokerage. “The pattern is for New York to become wealthier, not poorer.”

    The review points out somewhat obvious bastions of wealth in new condos, such as 15 Central Park West. In that single building, the analysis found, 206 high-value condos have a total market value of $3.1 billion.

    But it also includes now-valuable co-ops owned by people who are house-rich but cash-poor. They paid far less long ago and now struggle to pay monthly upkeep, brokers say.

    “All my equity was in the apartment so I was forced to sell,” said Eliane Reinhold, a 76-year-old photographer, film editor and composer, who sold her co-op on Central Park West for $5.375 million in January.

    According to the left-leaning Fiscal Policy Institute, $650 million a year could be raised by an annual property tax surcharge of up to 4% on pied-à-terre owners of homes with market values of more than $5 million.

    But Mr. Propheter disagrees. He found that if the tax were on all $5 million residences—rather than only pied-à-terres—it would raise at most about $380 million. Because many of these apartments are owned by New Yorkers, “actual revenue will fall somewhere well below this maximum,” the analysis noted.

    There was no way to tell how many of these high-priced homes are pied-à-terre from city records, said George Sweeting, a deputy director of the Independent Budget Office. One hint: After the city phased out a co-op and condo abatement for pied-à-terre in 2013, the number of abatements fell by 29% in Manhattan and by more than 50% in a few buildings, he said.

    State Sen. Brad Holyman of Manhattan, a sponsor of the property-tax surcharge bill, said that even if it raised less than the amount originally forecast, it could raise significant money for city needs, including affordable housing. “The global superrich are not paying their fair share of real estate taxes,” he said.

    Manhattan was home to 95% of those on the list. The Upper East Side had 1,907 residences on the list, including 48 valued at more than $25 million. It was followed by Lincoln Square, the West Village, SoHo and Tribeca.

    The list had 242 Brooklyn properties, three-quarters of them in Brooklyn Heights and Cobble Hill. Eleven homes were in the Bronx, including six valued at between $6 million and $10 million in Riverdale and Fieldston.

    The analysis used a mass appraisal system, similar to what the city would have to pass if these taxes were adopted. It used a new methodology to value co-ops and condos based on recent sales, which under exiting state law must be assessed as if they were rental buildings.

    “The methodology sacrifices precision for volume, but it is a matter of necessity,” said Jonathan Miller, an appraiser and president of Miller Samuel Inc.

    But, he added, it could lead to many tax challenges based on expert appraisals.

    The building at 101 Warren St., above, has 16 units valued at more than $5 million. Photo: Ramsay de Give for The Wall Street Journal

    Ms. Reinhold said her parents moved into a rental apartment at 91 Central Park West in the early 1940s and bought a unit there in the 1960s for about $12,000. About a decade ago, she began to find it hard to maintain, and she took out a mortgage that led to foreclosure threats and lawsuits. With the help of her broker, Anna Kahn of Halstead Property, she put it on the market.
    Now she is moved into a rental penthouse in a new building on Fifth Avenue.

    “I thought my heart would break,” she said as she contemplated the sale. But now that she has done it, she said she was “looking forward to the future.”

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