Bubble Wrap: March 2006

Air Rights Primer

The NY Times has a great article on the current trade in air rights between building owners and developers in Selling the Air Above.

They explain that the market for air rights has been hot since developers can build at $400-500 per square foot, and routinely acquire such rights for a $100-200 more, leaving them with plenty of room for profit when prices per square foot are around $1,500.

They cover several interesting sales of air rights, including the record deal where the Zeckendorf brothers worked out a deal to buy rights from the Grolier Club and Christ Church in order to expand a planned condo tower on East 60th Street. “The Zeckendorfs offered both properties $430 a square foot for their air rights, in what would be the highest price ever paid in such a deal. But more recently some members of the Grolier Club have balked at the arrangement, pointing out that the club’s air rights are actually more valuable to the developers, since without them the Zeckendorfs cannot buy air rights from the church.”

Mortgage apps continue to decline

The NY Sun reports that Mortgage Applications Fall for Fifth Week in Six.

In line with more expensive borrowing options, the number of mortgage applications continued to slowly decline this week.

“The Mortgage Bankers Association’s weekly home-purchase index declined 0.4% to 399 from 400.8 in the week ended March 3. An increase in refinancing helped boost the Washington-based group’s overall index of mortgage applications by 0.7% last week.”

Need to refinance that adjustable rate mortagage?

WSJ’s RealEstateJournal has some good advice for those think about refinancing an increasingly expensive mortgage in Getting Safely Out of ARMs Without Getting Squeezed.

They point out that there is strong sales pressure and much of it is for loans that are just plain bad, with excessive points and other undesireable features.

“Beware of high-pressure refinancing pitches. Only believe promises of low rates and no prepaid closing costs if you have them in writing. Scrutinize points, fees and your resulting balance, compared with your existing balance. Determine whether the rate may change and how.”

They have also included lots of good calculators, as well as sites to find out if your potential lender is a reputable one.

City Hall continues to rail on real estate market

NY Metro covers the seemingly continuous stream of comments from City Hall about the fiscal impact of the real estate slow down in Mayor, comptroller warn of fiscal downturn with drop in housing market

Bloomberg said “My hope and expectation is — because of the demand of people wanting to live in this city — you will not see real estate prices collapse.” Obviously the city feels the impact of a softer market, as do agents, because their revenue streams from individual transactions have slowed with the drop in volume.

Saying goodbye to the Flower District

The flower merchants, meatpackers and fish purveyors are all headed elsewhere as real estate values have made their locations all but impossible. In Manhattan User’s Guide, Charlie Sussman says Flower District R.I.P.

He notes that while some own their spaces and aren’t subject to the ever increasing eviction notices received by many, the Flower District as it has been known, will soon be gone. It will be replaced by a bedroom community with hi-rises.

Loving a bursting bubble

In Don’t Fear the Bubble That Bursts from the New York Times, David Leonard argues that a cooler market is just what we need, that the crash of the late 80s and early 90s did result in a significant reduction in values, but that it did not cause widespread difficulties for the majority of homeowner. Those who were most affected were “investors” and those who had borrowed too much against the equity in their home.

Instead it allowed many more people to become homeowners.

“The real estate slump of 2006 offers a fresh chance to puncture the No. 1 myth about the nation’s No. 1 topic of conversation: the idea that we should all be rooting for high house prices. The myth is good for real estate agents, but it creates needless anxiety for everyone else.”