INSIDE VERTICAL LIVING A Frank Cuneo + Alan Levy Publication
The Y N C Manhattan Effect PAGE 2
Interview with Michael Lanning, Senior Manhattan Residential Mortgage Expert PAGE 4
Tavern On The Green Incarnation Sky High Views The Majestic On CPW, A Historical Detail P AGE 6
JULY - AUGUST 2010
A Frank Cuneo + Alan Levy Publication
The Manhattan Effect
INSIDE VERTICAL LIVING
You probably already know that Manhattan is the greatest place on Earth, and that making this 23-square-mile island your home means a lifetime of cultural, culinary, and creative adventures at your doorstep. But diving into the world of New York real estate can be daunting, whether you’re a renter looking to buy for the first time or are ready to sell your current Manhattan apartment in order to upgrade, downsize, or just get a change of scenery. Despite the country’s recent economic downturn, those looking to purchase a home in Manhattan are still facing a better situation than those in many other markets. Fairly Light Foreclosures Though the national media may have had a field day covering the country's foreclosure crisis, Manhattan has escaped relatively unscathed, thanks in part to the strict financial requirements that co-ops (which make up 70 percent of the borough’s for-sale listings) have in place. “Equity positions in co-ops can range anywhere from 20 percent to 50 percent, therefore that doesn’t create a level of speculation you’ve seen in Miami, Las Vegas, and Southern California,” according to Frank Cuneo, real estate broker with Halstead Property. “You’re more likely going to be able to weather hard economic times here since the foreclosure market itself doesn’t really affect Manhattan to any great degree.” Only one in 50,000 units have hit the auction block in Manhattan, he says. That’s in contrast to one in every 526 homes in Los Angeles and one in every 4,300 homes in Queens. The First-Time Factor Mortgage rates are also the lowest they’ve been in the last 50 years. And, since the credit crisis has loosened up a bit, banks are now starting to fund jumbo loans (loans over $729,000), again with much better rates than a few years back. The bad news for
sellers, of course, is that prices have fallen between 10 percent and 30 percent. The good news? They can take advantage of those lower prices when it comes to purchasing a new unit. It's first-time buyers, however, who are in the best position of all. “Buyers who have been on the sidelines because they’ve been priced out of the market now have inventory to look at that’s cheaper,” explains Cuneo. “You can get a great price and people are jumping at that.” First-timers have a lot to think about when it comes to what type of home they’re looking for. Condo or co-op? Which neighborhood? What kind of amenities? And of course, one of the biggest considerations of all: How much? “Usually, with a first time buyer, price is a very important factor in terms of where they want to live. And also, at the end of the day, you have to take into consideration what the resale factor is going to be," says Alan Levy, real estate broker with Halstead Properties. "People usually know the where they want to live. The question is if they can afford the neighborhood. If they can’t we’ll try to guide them to the cusp of the area.” Value, Value, Value The old Mark Twain saying "Buy land,
they're not making it anymore” rings especially true in a borough with a whopping 71,000 people per square mile. It's that density that helps keep up demand in Manhattan and, in turn, keeps property values steadier here than in many other local and national markets. “Manhattan has always lagged on entering the recession and will lead in the recovery,” according to Cuneo “There are a couple of basics that make the market strong: It’s very competitive, there’s only a certain amount of real estate, and there’s always competition for the better locations.” The days of buying a unit, adding a few bells and whistles and then putting it up for sale in order to make a quick buck are long gone, according to Levy. And that’s not necessarily a bad thing. “Prior to this recession, everybody was looking for luxury this and luxury that – the Miele and the Bosch and all the high-end appliances. Now those things don’t matter as much. Now it’s all about the value." he says. "If you buy real estate in Manhattan and you treat it like a true investment, not to flip it, but to keep it for five-plus years, you’re going to do well."
Written By Joel Glass
A Vertical Living Strategic Partner Exclusive Interview
Vertical Livingâ€™s Residential Expert Michael Lanning
D EC IPH ERE S THE MOR TG AG E M AD N ES S
Interview by Frank Cuneo + Alan Levy
INSIDE VERTICAL LIVING
hen it comes to the mortgage meltdown and the fallout that followed, there have been plenty of theories about what went wrong and whoâ€™s to blame. But now, with the credit crunch loosening up, the gloom and doom dissipating, and sales activity picking up again, it seems many Americans are moving forward. Still, many have questions about just how to go about getting a mortgage in 2010, a process that looks drastically different now than it did just a few years ago. Michael Lanning, senior mortgage loan officer with Bank of America Home Loans lays it all out for buyers looking for answers.
What’s changed the most about the funding process recently? Michael Lanning: Over the last 15 months, the lending process has reverted from a low-documented process — where borrowers used to provide little or no income or asset information and were able to quickly close — back to a fully-documented process where every single loan is being analyzed to the nth degree. Not only from the credit side, where we’re analyzing income and assets, but more importantly, from the collateral side, the actual property type. Banks are going to continue to be very cautious. They’re still lending, but there are all of these variables that make it difficult to move things at a faster pace. Should you get pre-approved for a mortgage prior to starting your search, even if you don’t have a specific property in mind? ML: If you’re filling out a loan application and saying “I make x amount and I have this much money in the bank“ without providing the backup documentation to be verified, it means nothing. I tell people it’s vital to provide that information before getting started. Most professional realtors won’t even show properties unless the buyers have some type of pre-approval, if, in fact, the buyer is looking for financing. Realtors want to make sure they’re talking to a qualified buyer and that they’re showing the right price-point to that person. And for the buyer, you don’t want to find out after you’ve signed a contract that you’re not going to get the proper financing and put your earnest money deposit at risk. What’s required these days in order to get a loan? ML: It’s very simple: 30-day paystubs and your W-2s. And not only do we want to see this year’s W-2, we want to see last year’s too. We want to see continuity. Especially here in the finance capital of the world, with the fi-
nance meltdown, bonuses are being scrutinized too because they’ve been turned upside down so lenders have been very apprehensive about including bonuses. If borrowers are looking to potentially use their bonuses to qualify, we have to know exactly what the bonus history is and when they’re paid. What about for someone who is self-employed? ML: The self-employed people have really been hit hard in this whole mortgage mess. We need tax returns, with all the K-1s, with all the schedules. We’re looking at cash-flow. You need to have some kind of documentation that’s been filed with the IRS stating that you’re self-employed and you need to be self-employed for two full years.
We’ve heard lots of horror stories about buyers getting pushed into mortgages they couldn’t afford and getting in over their heads. What steps should a buyer take to make sure they’re dealing with someone who’s going to help them with the proper loan and offer solid advice? ML: First and foremost, I think in this environment you should be talking directly to the bank. A mortgage broker is going to sell themselves as “I know 40 banks … and if someone has a lower rate I’m going to get the lower rate.” I don’t think that’s the best route considering that each lender has their own internal guidelines besides Fannie and Freddie’s. In case there’s any type of wrinkle, appraisal issues, anything, you want to make sure that you’re talking to the bank directly.
What are red flags to look for? ML: Well, the best rate is always going to drive where people go, which makes sense, but just make sure that when you’re getting a rate quote they put it in writing. If they email you and say “Oh I can match that” or anything like that, I would be cautious because anyone can tell you what you want to 5
hear. But when you want to lock a rate, if they can’t provide you, in writing, that it’s locked in at the parameters that had been given to you, you should be cautious about continuing.
What special considerations do coop buyers in Manhattan have to take when trying to get a mortgage? ML: Co-ops dictate about 65 to 70 percent of residential real estate here in Manhattan and there could be numerous reasons why a co-op wouldn’t be approved by a lender. Is there any litigation? Any foreclosure processes? How much are they collecting per unit and then paying out for maintenance? Is it a positive cash-flow? Negative? And then there’s the issue of co-op insurance. The managing agent needs to be on the insurance certificate, and there are minimum requirements for insurance and maximum deductibles. It’s a lot of the minutia. I try not to get the borrower involved in because it’s so confusing, so I enlist as many people as I can to get the correct documentation we’ve requested, the realtor, the bank attorney. There are a lot of moving parts we need timely responses to. What’s the one piece of advice you’d give a first-time buyer? ML: You should be collecting your documentation prior to even talking to someone about a loan. Once you understand what we’re qualifying you on and what your credit is, it’s not as daunting as you would think. And you should be talking to a professional who will walk you through the steps and help you understand the steps. With all the guideline changes, you need to talk to someone who knows what they’re doing rather than someone who’ll say “Oh I can beat any rate.” You can get quoted any rate, but unless that person can actually fund the money at closing, that means nothing.
INSIDE VERTICAL LIVING
A Frank Cuneo + Alan Levy Publication
NEW PLANS FOR TAVERN “TACKY” ON THE GREEN A new round of submission proposals from restaurateurs who would like an opportunity to operate one of the city’s most famous coveted dining oases. The plan would require the demolition of the Crystal Room (sheds a tear). The dining room currently looks like a bad banquet hall at a Holiday Inn . Vertical Living hopes it will land in the right hands, so New Yorkers, especially urbanites on the UWS can enjoy a fine dining experience in Central Park. The proposals involved include The Cipriani group, Donald Trump and Dean Poll (operator of the Central park Boathouse). Let’s hope Bloomberg’s vision influences the decision makers. Vertical living is rooting for an operator who will bring world class architecture and dining to one of the City’s most valued pieces of Real Estate. Manhattanites demand change, let’s hope the transformation goes to an operator of quality and value versus flash and cash.
MANHATTAN’S RESIDENTIAL SUPER HIGH RISES Vertical living in the sky – Most Manhattanites look out their windows to a familiar fishbowl of other buildings (and people) – but there are the fortunate few who tower over everyone else, in apartments at the top of the skyline. Being almost 60 stories up having your morning cappuccino can make the world seem surreal and gorgeous. Vertical Living has clients inquiring about the super high rises that only Manhattan can offer. Trump World Tower at 845 United nations Plaza at 900 feet is one of the tallest residential buildings in the world. The Department of buildings does not keep track of these super high rises so to find one you must look up and once you find these superhigh rise apartments they don’t come without a key to the world price tag. The Wow factor is often worth the premium price tag and most owners use these spaces for entertaining and wooing business associates who often go home to their lackluster views compared to the eagles of the sky.
A MAJESTIC HISTORY
Featured Property of the Month. Each month we feature a building Vertical Living finds special. A little History: Upper West Side, Manhattan
The Majestic is one of five towered skyscraper apartment buildings which define the impressive skyline of Central Park West. Erected in 1930-31 by the Chanin in Construction Company, headed by architect and developer Irwin S. Chanin, it is an excellent example of the Art Deco style in its streamlined later phase. Chanin had attended the highly influential 1925 Paris ex6
position of decorative arts, and returned a convert to the "modernistic" style. The Majestic was the Chanin organization's first "experiment" ^ in applying the Art Deco style to residential building. The Majestic successfully adjusts the city's housing laws to the new style; its soaring twin towers are a response to new regulations enacted in 1929. Although built during the Depression, it belongs to the luxury apartment building genre of the 1920s. While the Majestic's sparing use of ornament and simple materials reflect its date of construction, the resulting austerity is an integral part of the building's stylistic imagery.
Central Park West, the northern continuation of Eight Avenue bordering on the park, is today one of New York's finest residential streets, but in the mid-nineteenth century it was a rural and inhospitable outpost, notable for its rocky terrain, browsing goats and ramshackle shanties. With the creation of Central Park in the 1860s, followed by Riverside Park (begun 1876), as well as a series of transportation improvements such as the Ninth Avenue Elevated Railroad (1879), the Upper West Side in general experienced a period of intense real estate speculation. The 1880s were the first decade of major development, and set the pattern for the Upper West Side, where rowhouses line the side streets, and multiple dwellings, commercial and institutional structures are sited on the avenues. Not surprisingly, those avenues closest to the parks, Central Park West and Riverside Drive, were immediately considered the most desirable. The potential of the parkside avenues for development as prime locations led to an anticipatory increase in land values; prices rose to such extravagant heights that many speculative builders shied away from row house and tenement construction, from which they would realized relatively meager returns, while the very wealthy, who could afford to build mansions for the most part remained
on the more fashionable East Side.
The Majestic is a thirty-one story apartment building with a massive nineteen-story base which conforms to the lot line, extending from 71st to 72nd streets along Central Park West, and 225 feet westward along 72nd Street, 187.6 feet along 71st Street, with an interior courtyard. Setbacks begin at the fourteenth story and continue to the nineteenth, above which rise the large twin towers. The three main entrances appear on each facade and are enframed by rose and black polished granite which also forms the watertable. These enframements are simply detailed with grooves. Office doors also appear at the first story. The first three stories of the building are faced with light gray cast stone. Where the piers appear this stone has been ornamented with notches above the third story. The building from the fourth story up is faced in yellow brick. At the corners of the building, including the towers, the brick has been laid in a striated pattern between the windows. Uninterrupted piers articulate the base of the building on all three facades directly beneath the towers, and also appear on the side elevations surrounding the entrance bays. These piers also continue in the towers, creating a strong vertical element in the elevations. Beneath the windows which are flanked by these brick piers are panels of simple rectangular tiles, which form a slight convex curve, animating the wall surface. At the setbacks terraces are surrounded by simple metal railings. The original windows contain metal casements with upper and lower transoms. The windows are varied in size, but the majority are bi- and tripartite. Some tripartite windows have sidelights. Single-paned windows appear beneath and in the towers, emphasizing their verticality, while windows with three panes, appear elsewhere and provide a horizontal counterbalance. 7
The comer wrap-around windows contain three sections, with three panes on the north and south sides and eight sections with three panes on the east. The square-headed tower terminations on the east elevation above the piers are ornamented with simple abstract sculpture, typical of the Art Deco style. The rounded terminations on the wings at the west sides of the towers are faced in stone and are again typically Art Deco. - From the 2010 NYCLPC Landmark Designation Report
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