REPOST: A Scarcity of New One-Bedrooms

The market share of one-bedroom apartments in New York City is expected to dwindle further this year. It is not because there is no demand for these apartments, but rather, the cost of prime lots in the city is forcing developers to build multi-bedroom units to recoup expenses. C.J. Hughes of The New York Times explains the situation further in the report below.

Some condominium developments, like 93 Worth, offer a few one-bedroom units.  | Image source: nytimes.com

Some condominium developments, like 93 Worth, offer a few one-bedroom units.  (Image source: nytimes.com)

For decades, one-bedroom apartments have been a fixture of New York. But finding one going forward, at least in new developments, may become as hard as hailing a cab in a downpour.

Developers convinced that buyers want extra legroom — and often seeking to recoup their own sky-high investments in land — are phasing one-bedrooms out of new buildings in favor of much more spacious units.

“I don’t know that one-bedrooms will ever become extinct,” said Charles R. Bendit, a chief executive at Taconic Investment Partners, “but I think the nature of the city is changing. Young kids aren’t leaving as quickly as they once did, and people who are making an investment are investing in a family home.”

Mr. Bendit is putting his analysis to the test as he develops Sterling Mason, a once-stalled condo at 71 Laight Street in TriBeCa. When conceived during the last real estate boom, by a different developer, the project was to have offered five one-bedrooms out of 36 units, in a complex made up of a new building and a renovated one, side by side.

But after buying the building for $65 million in 2012, Taconic decided that bigger would be better, and it reconfigured the interiors to allow for larger apartments, a process that involved removing two elevator banks and stairways. Today there are no one-bedrooms at Sterling Mason, which has 32 units, 14 of them three-bedrooms.

And the bet may have been a smart one. Since last summer, when sales began, eight of the units have sold, at an average of $2,700 a square foot, according to Streeteasy.com. And “no one is coming in to say, ‘Gee whiz, I wish you had one-bedrooms,’ ” Mr. Bendit added.

Whether to be family-friendlier, or for reasons affecting the bottom line, developers generally appear to be decreasing the supply of new one-bedrooms.

At the start of this month, there were 104 for sale in new condos in Manhattan, out of 654 units in total, or a 16 percent share, according to research from the Corcoran Sunshine Marketing Group.

Over the same time last year, there were 194 one-bedrooms for sale out of 718 units, or a 27 percent share, the data show. Similarly, at the beginning of 2010, there were 463 one-bedrooms on the market, out of 1,798 units, or a 26 percent share.

Even when resale units are taken into account, the one-bedroom market seems a shade of its former self — though of course the shortage bodes well for anyone with a one-bedroom to sell.

Last week, there were 1,227 one-bedrooms for sale in Manhattan, according to Streeteasy.com. The units, mostly south of 110th Street, were listed at a median price of $745,000, or about $1,130 a square foot, the data show. At their peak in December 2008, by contrast, the number of one-bedrooms in Manhattan reached 3,257, according to Streeteasy.

As the recession roiled the market, one-bedrooms encountered strong headwinds; many of the first-time buyers drawn to these starter apartments were unable to get loans, which caused units to linger and dip in price. Since then, in the last couple of years, as the housing and lending markets have improved, one-bedrooms have practically flown off the shelves. Sales, in fact, made up about 41 percent of all deals in the fourth quarter of 2013, according to the Miller Samuel appraisal firm; the quarterly showing was the strongest since 1997, when they represented about 43 percent off all deals.

Given that one-bedrooms constitute such a large portion of the market, one might think developers would want to build more of them. But many developers have had to shell out more for land purchases — in Manhattan, prime lots can cost around $850 a square foot — so there is often pressure to build the larger, more expensive units, said Jonathan J. Miller, the president of Miller Samuel.

“It’s not that there is no demand for one-bedrooms,” he said. “It’s that there is no demand for one-bedrooms at $4,000 a foot, which would make some of these sites feasible.”

Launch media viewer A one-bedroom unit at 530 Park Avenue. | Image source: nytimes.com

A one-bedroom unit at 530 Park Avenue. (Image source: nytimes.com)

The market share of one-bedroom sales is expected to drop further in 2014 as new multi-bedroom products begin to work their way through the system.

The list of condominiums with few one-bedrooms is long and splashy. Walker Tower, the conversion of a former telephone building in Chelsea, on West 18th Street, had just three one-bedrooms out of 53 units. Closings there began in November.

There are only eight one-bedrooms, out of 145 units, at 56 Leonard in TriBeCa, according to a spokeswoman for the Alexico Group, a developer in the project. At One57, the skyscraping condominium from the Extell Development Company on West 57th Street, just eight of 94 units are one-bedrooms, according to a company spokeswoman. Brokers say that one-bedrooms are often used for nannies. But at Walker Tower, which ended up with a total of 47 units in the building, some of the scarce one-bedrooms were combined, according to Michael Stern, the managing partner of the JDS Development Group, which developed the building, along with Property Markets Group.

Even smaller projects are supersizing: the Schumacher, a condo conversion at 36 Bleecker Street in Greenwich Village, has no one-bedrooms among its 20 units, according to its website, though it does have several four-bedrooms.

Still, even though one-bedrooms seem to be fading in importance in the sales market, they are plentiful as rentals, brokers point out. Nor are all Manhattan developers eschewing one-bedrooms, which make sense for some projects’ economics. When they are offered alongside larger units, they can prove more popular, as at 530 Park Avenue, a 109-unit condo conversion on the Upper East Side, at 61st Street. Since last spring, 60 units have sold, 22 of them one-bedrooms, according to Aby J. Rosen, a principal of RFR Holding, its developer. Only three one-bedrooms are left, he added.

In less affluent areas, where land prices are lower, one-bedrooms may be a better fit. At Edgecombe Parc Condominium, a project underway at 456 West 167th Street in Washington Heights, more than half the units, or 27 out of 49, are one-bedrooms. Seventeen have sold since marketing began in November, according to Ilan Bracha, a broker with Keller Williams New York City, which is handling sales. Prices at the building, which is being developed by Gleam Realty, have averaged $700 a square foot, Mr. Bracha said.

Large units in areas like TriBeCa attract families in part because of the top-rated public schools. But in neighborhoods like 530 Park’s, where the schools are not as much of an attraction, family-size units can be a harder sell, said Mr. Rosen, adding that many one-bedroom buyers have said they will use them as pieds-à-terre.

“Everybody is chasing the $50 million buyer,” he said, “but I would rather focus on the $7 million to $10 million buyer.”

Sometimes the sites themselves determine the sizes of units. “You don’t want to bastardize the shape of a building; if it dictates larger apartments, it’s better not to create tiny units,” said Doron Zwickel, a Core Group broker in charge of sales at 93 Worth Street, a 91-unit project in a former textile factory in TriBeCa. “But this was not a very deep building, with lots of windows, so it was very efficient to do.”

At 93 Worth, there are 16 one-bedrooms, or 18 percent of the total, as well as 22 studios; eight units remain for sale after a little over a year of marketing, Mr. Zwickel said. Average sale prices have been $1,850 a square foot.

At a new condo that Mr. Zwickel is marketing at 241 Fifth Avenue, the one-bedroom count is even higher: 35 percent of the listings, or 16 out of 46 units. Only one of the units remains.

“I believe that most of the product in the works is still geared toward the high end and the mega-rich,” he said. “I think it would be wise to create more variety.”


Clients looking for real estate opportunities, whether a two-story home or a one-bedroom apartment, contact seasoned realtor Marian Khosravizadeh. For the latest news on real estate, follow this Twitter account.

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REPOST: Bigger than Google Fiber: LA plans citywide gigabit for homes and businesses

Ars Technica reports that Los Angeles officials are planning to install a fiber network that provides free Internet access to 3.5 million residents and businesses. The project, if realized, will encourage more people to buy or rent properties and live in the city.

Image Source: arstechnica.com

Image Source: arstechnica.com

Los Angeles is about to unleash one of the most ambitious city-led broadband projects to date, with the goal of bringing fiber to all of its 3.5 million residents and all businesses.

Next month, the city plans to issue an RFP (request for proposals) “that would require fiber to be run to every residence, every business, and every government entity within the city limits of Los Angeles,” Los Angeles Information Technology Agency GM Steve Reneker told Ars today. The City Council this morning unanimously voted to move forward with drafting the RFP and will vote again in a few weeks to determine whether it’s ready for release, he said.

LA expects the fiber buildout to cost $3 billion to $5 billion, but the cost would be borne by the vendor. “The city is going into it and writing the agreement, basically saying, ‘we have no additional funding for this effort.’ We’re requiring the vendors that respond to pay for the city resources needed to expedite any permitting and inspection associated with laying their fiber,” Reneker said. “If they’re not willing to do that, our City Council may consider a general fund transfer to reimburse those departments, but we’re going in with the assumption that the vendor is going to absorb those up-front costs to make sure they can do their buildout in a timely fashion.”

The new fiber network would offer free Internet access of 2Mbps to 5Mbps (possibly subsidized by advertising) and paid tiers of up to a gigabit. The fiber network would also power Wi-Fi hotspots in public areas.

The winning bidder would not be required to offer landline phone service or television, but it’s likely that they would. “I would think that’s how they’ll justify the buildout, is being able to offer triple play [packages],” Reneker said.

Residential broadband in LA today typically ranges from 5Mbps to 50Mbps from the likes of AT&T, Time Warner, Verizon, Cox, and Charter, Reneker said. (Verizon pointed out to us that it offers 500Mbps service to residents.) Gigabit speeds are available to businesses, but at a higher price than other communities, Reneker said. By expanding gigabit access and hopefully lowering the price, LA hopes to attract new entrepreneurs and keep existing businesses from leaving the city.

Reneker said the network would be open, meaning the vendor would have to sell access on a wholesale basis to other network providers that want to deliver services over the fiber. “We’re not looking at trying to… be monopolistic and try to force anybody out of the market,” he said. The winning bidder should make out well, though, as it would gain lots of new residential, business, and government customers.

The RFP would favor companies that can offer not only fiber Internet but also cellular service and data center hosting. That makes AT&T and Verizon possible candidates. In one potential scenario, the city would pay the winning vendor for its monthly broadband, phone, cellular, and data center needs. Los Angeles has 24 distributed data centers that it would like to modernize and consolidate while boosting disaster recovery and replication, so the data center component alone would be lucrative.

If you took out the cellular component, more companies beyond AT&T and Verizon could offer compelling bids, Reneker said. Time Warner, Cox, and Charter would be among those.

But Google Fiber in its current form wouldn’t be considered. “They would have to change their business model,” Reneker said of Google. “They only run residential. We’re requiring a component for the business. That would be a new market for them. There are two things: would they be willing to change their model slightly, and also would they be willing to respond to an RFP? I don’t believe they’ve responded to RFPs in the past in other communities, but they would need to here in Los Angeles.”

This project was spearheaded by recently elected council member Bob Blumenfield and has the support of Mayor Eric Garcetti, Reneker said. Reasonable pricing for residents is important, as one-third of the city’s population makes less than $45,000 a year. LA schools are also rolling out iPads to 650,000 students and struggling to ensure that everyone who gets one has affordable connectivity, he said. LA wants the winning bidder to make donations of home broadband equipment to nonprofits that distribute them to needy residents.

Once the RFP goes out, the city will take bids for three months. Contract negotiations with the winning bidder could “easily” take six to nine months because there will be numerous services, each with their own service-level agreements, according to Reneker.

It will be a lengthy process, but the time is right to get it started. “It just seems like now is a good time to give it a shot,” he said.

Homegrown realtor Mariyan Khosravizadeh has extensive knowledge of the communities in Los Angeles and can help buyers and sellers with their various real estate needs. To search for properties for sale or rent in Los Angeles, visit this website.

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REPOST: U.S. Mortgage Rates Rise for the First Time in Five Weeks

This Bloomberg article reports about the increase in mortgage rates in the U.S. as a result of the government shutdown.  

Image
Image Source: bloomberg.com

U.S. mortgage rates rose for the first time in five weeks as a partial government shutdown delayed some borrowers from getting a loan.

The average rate for a 30-year fixed mortgage climbed to 4.23 percent from 4.22 percent, Freddie Mac said in a statement today. The average 15-year rate increased to 3.31 percent from 3.29 percent, according to the McLean, Virginia-based company.

The shutdown has lengthened the wait for some borrowers seeking mortgages backed by the Federal Housing Administration and Department of Agriculture. It also has postponed the release of economic-data reports, including the Department of Labor’s monthly employment figures, which Federal Reserve officials use to determine whether to continue stimulus efforts.

“We’re working blind in a very murky environment right now,” Keith Gumbinger, vice president of HSH.com, a mortgage-data firm in Riverdale, New Jersey, said in a telephone interview yesterday. “The longer this drag persists from the government shutdown, the less likely it is that the Fed is going to make a move at the end of the month.”

Federal Reserve Chairman Ben S. Bernanke said last month that more signs of lasting improvement in the economy are needed before the central bank cuts its $85 billion in monthly bond purchases. Minutes of the Federal Open Market Committee’s Sept. 17-18 meeting, released yesterday, show most policy makers indicated that budget cuts and an increase in borrowing costs were a drag on economic growth.

The average rate for a 30-year fixed loan jumped to a two-year high of 4.58 percent in August from a near-record low of 3.35 percent in early May.

Image
Image Source: finansure.net

Refinancing Applications

Homeowners are taking advantage of the recent drop in rates to reduce their monthly loan payments. The Mortgage Bankers Association’s index of refinancing applications rose 2.5 percent last week, the fourth consecutive gain. A measure of purchases slipped 0.7 percent, the Washington-based group said yesterday.

While the federal shutdown is proving to be an “inconvenience” for the housing recovery, it may “become more problematic if the deadline for raising the debt ceiling passes without Congress reaching an agreement,” Paul Diggle, property economist at Capital Economics Ltd. in London, said in a research note yesterday.

If the U.S. doesn’t raise the debt limit by Oct. 17, the country’s borrowing authority would lapse. Treasury yields and mortgage rates would rise if the government were to run out of money, Diggle said.

Mariyan Khosravizadeh specializes in real estate services in Los Angeles County. Go to this website to search for available homes and properties in and around Los Angeles County including Woodland Hills.

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REPOST: Barns, Reborn as Homes

Instead of tearing down old barns, some homeowners are making the most of the ample space and open-concept design. The Wall Street Journal’s Dawn Wotapka highlights some of these transformed spaces that belie their former agricultural uses.

Take a rooster—and maybe a milk cow while you’re at it—into Judith Racht’s home in Niles, Mich., and the animals would likely agree it looks nothing like a barn.

While the concrete grain silo is a giveaway to the structure’s former life, the sleek, modern interior looks more like an urban loft space than a place where animals might have once slept. Ms. Racht, a 64-year-old art-gallery owner, used to live in a proper house on the 62-acre farm. But in 2010, she razed the house and moved into the antebellum barn. “You went in there and you just felt like you were in church,” she says.

A two-year renovation transformed the interior of the 4,200-square-foot home, which now features contemporary furnishings, modern-art pieces and an open-concept kitchen with stainless-steel cabinetry. The home has two bedrooms and four bathrooms, with a workout room and 57-foot-long lap pool in the basement.

Many old wooden barns dotting the landscape don’t see much agricultural use anymore. But these structures are proving to be surprisingly compliant with current tastes, offering ample square footage and open-concept design in remote locales with plenty of privacy. The result: Instead of tearing them down, deep-pocketed homeowners are making hay while the sun shines, turning them into spacious, modern residences.

Image 1: “In 2001, Arnold and Elise Simon Goodman paid $35,000 to buy a barn located west of Albany, N.Y. It was then moved to their 150-acre property in Pine Plains, N.Y., where it is today. The structure was transformed into a vacation retreat for couple, whose main home is in Manhattan.”  Image source: wsj.net

Image 1: “In 2001, Arnold and Elise Simon Goodman paid $35,000 to buy a barn located west of Albany, N.Y. It was then moved to their 150-acre property in Pine Plains, N.Y., where it is today. The structure was transformed into a vacation retreat for couple, whose main home is in Manhattan.”
Image source: wsj.net

The inside of Arnold and Elise Simon Goodman’s barn in Pine Plains, N.Y., could be mistaken for a New York City warehouse conversion. The posts, beams and trusses—all joined with wooden pegs—frame a space with polished concrete floors, a leather sofa and glass tables.

The Goodmans, whose main residence is on Manhattan’s Upper West Side, caught the barn bug over a decade ago. In 2001, they paid $35,000 to buy a barn located west of Albany, N.Y., and have it moved to their 150-acre property in Pine Plains. In late 2003, while the barn was being converted into their vacation home, they paid about $15,000 for two smaller barns, these from south of Albany, that are now used as a garage and storage shed next to their 1-acre pond. The couple’s latest project is a barn from Great Barrington, Mass., that was disassembled so it could be converted into a two-bedroom guesthouse on their Pine Plains property.

While Mr. Goodman declined to disclose spending totals, the guesthouse is budgeted at $175,000, he says.

“We love the space and the airiness of the old wood,” says Mr. Goodman, an 81-year-old literary agent. “It’s been an interesting second career.”

Image source: wsj.net

Image source: wsj.net

Barn projects vary widely in expense and complexity. Sometimes the structures stay put and get a top-to-bottom makeover with modern heating and cooling systems, and other updates for full-time living. Increasingly, however, homeowners are having the barns disassembled and either moved to a new site or used as parts for new construction.

Heritage Restorations, a Waco, Texas, company that turns old barns into homes, has seen business increase steadily over the past 15 years—even during the housing downturn, says Kevin Durkin, the company’s 59-year-old founder.

Mr. Durkin has built barn homes in 25 states and for clients in Japan, New Zealand and Australia. Projects range from a simple 1840s barn transformed into a loft home, to a complicated 1780s-barn turned into a mountain ski home with multiple floors and dormer windows.

To find barns for home conversions, Mr. Durkin posts signs and advertises in newspapers throughout upstate New York. After the purchase, the barns are disassembled and put into storage; the structure’s specs and renderings are cataloged for future homeowners to browse.

Most of his clients buy the wood frames, which he fumigates for insects, and have them relocated to their building site. His staff includes architects, contractors and craftsmen who do everything from recreating barn doors to designing furniture. The typical project takes about a year, and Mr. Durkin usually has 25 going at once—so he spends a lot of time on the road. Prices for completed projects have ranged from $200,000 to $5 million.

Mr. Durkin is currently completing a barn conversion in Millbrook, N.Y., where two structures—one from the 1820s and the other from the 1860s—are being turned into a country retreat. The barns, both found near Albany, retain most of their original hand-hewn hemlock structural elements. Mr. Durkin estimates the project, which has taken two years, will cost $2 million. Details of the four-bedroom home include ornate claw-foot tubs, a 35-foot-tall stone fireplace and reclaimed wood floors.

Mr. Durkin says most of his customers aren’t cutting corners. “People looking for a barn home, they’re not looking to save money,” he says. “It’s character. You’re living in a piece of history.”

Moving and altering these structures can make some preservationists jittery. Dutch barns, first built by European-American settlers in the early 17th century, are particularly popular. While thousands once existed, fewer than 1,000 are estimated to remain, says Walter R. Wheeler, vice president of the Dutch Barn Preservation Society in Rotterdam Junction, N.Y. “So-called historic-barn companies are frequently very aggressive in their approach to the acquisition of barns,” he says. “After removal to a new site they are separated from their history; what was once a building which had a crucial connection to the development of a community is now nothing more than old wood with an attractive patina.”

Other barn enthusiasts say that many structures are being lost to neglect, development and insects. Some owners even give their barns away to rid themselves of both a potential safety hazard and a tax burden. “The first choice is to try to use them as close to the original purpose, but I would rather see them as homes than as kindling or in a landfill,” says Jeffrey Marshall, president of the Heritage Conservancy, a not-for-profit preservation organization.

As a real-estate investment, there’s no guarantee the barn conversions will increase in value or sell quickly. When Lei Barry listed an 1890s converted barn in Horsham, Pa., three years ago, she thought it would command around the $3.9 million asking price within a year. But, after multiple price cuts—including more than $100,000 in late August—it remains on the market as a short sale for $1.2 million. She says she has taken hundreds of calls, but the 10-acre suburban site off a busy road can’t be subdivided or used for anything else. “The listing has been a challenge,” says Ms. Barry, a real-estate agent with Keller Williams Real Estate in Blue Bell, Pa.

Because such abodes are uncommon, barn homes can generate buzz when listed for sale. “There’s a certain elegance that can come along with these properties that is very hard to capture with a more recently built home,” says Chris Masiello, who grew up in a converted barn and is now chief executive of Better Homes and Gardens Real Estate the Masiello Group in Keene, N.H.

Still, these homes aren’t for everyone. They tend to be located in remote areas or on larger pieces of land. Many have soaring spaces that can be pricey to heat and cool. They often have lofts and floor plans that might not appeal to families with children. Buyers are “accustomed to more traditional room arrangements,” says Norman Callaway, managing member of Callaway Henderson Sotheby’s International Realty in Princeton, N.J., who is marketing a $4.4 million converted barn on 17 acres in Hopewell Township, N.J.

Last year, house hunters Alan Wiener and Patti Liberman fell in love with the Tulane Barn in Princeton, N.J. After spending 16 years in a traditional side-hall colonial, they were excited about living in a former dairy and hay barn that had undergone an “exquisite” restoration, says Ms. Liberman, an attorney. The stately five-bedroom home, which they bought for $1.75 million, includes the historic timbers as well as modern touches, such as a kitchen for entertaining and a spa-style bath. The backyard includes a grassy ramp left over from the barn’s working days.

Ms. Liberman, who doesn’t mind the sloped yard, loves that the year “1876” is carved into one of the beams. “We don’t know if it’s authentic, but we think having a bit of history is really exciting,” she says.

Real estate agents like Mariyan Khosravizadeh attest to the saleability of  refurbished spaces.  For more tips on buying and selling homes, follow this Twitter account.

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When should you save a home?

Image Credit: www.bloomberg.com

Real estate represents a considerable investment for homeowners. For many people, it may be the biggest investment of their lives. Hence, many homeowners who find their properties in a state of disrepair (or find a bargain in a distressed home) often ask if the house itself is worth renovating. This question gets asked often, particularly if the home is historically important or holds some sort of significance to the homeowners.

Image Source: www.i.dailymail.co.uk

Sentiment aside, the main factor determining whether a home should be saved is cost. A house can be deemed not worth refurbishing if it is in a state of disrepair far too advanced for the costs of renovation to be justified. In some cases, demolishing the home and rebuilding it can ultimately be cheaper than remodeling the existing distressed structure.

However, there are homes which show signs of extensive distress that is reparable. They may still be refurbished for a reasonable price, which can be justified in the value it adds to the property. While in most cases it would be the resident who pays for the structure, at times a person keen on investing in real estate would choose to buy a distressed property, renovate it, and then sell it for a considerable markup.

Homes (or portions of them, usually their facades) in advanced states of disrepair can sometimes be restored for other purposes, such as for historical reasons in the case of period architecture. In fact, a number of non-profit organizations are willing to save these homes when even their owners cannot find it economical to rebuild them.

Mariyan Khosravizadeh, a real estate agent, is the top choice of clients looking for homes in the Los Angeles area. Visit this site for more details on real estate opportunities in Los Angeles County.

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