What Will It Take For Co-ops To Sell Again?

Agreed. Same thing is going on in Murray Hill and other areas.

@MCR the availability of high salaried jobs in NYC is certainly what drives the fundamentals (primarily rents) to be so damn high ($6k for a 2 bedroom in Murray Hill). With medianHH income around 150k in Manhattan, people can afford to pay a lot for housing.
However, that does not explain why someone would pay so much to buy something at 1-2% cap rate instead of renting. I think the explanation of the distortion is people with high assets/ family money/foreign buyers etc. basically not the professional/working class. Or maybe people at certain income levels just wanting to own no matter what.

"Or maybe people at certain income levels just wanting to own no matter what." Yes.

>>> I wouldn’t go out of my way to return, but I wouldn’t say “nah” either.
Returning to the theme of the thread, that’s how I’d feel about visiting friends living in UES coops.

Its a residential area, I don’t think it needs to be a destination. From my memory, it was not much of a destination 20 years ago. But cannot beat its convenience with all of the amenities for a parent, close to the park, good transport to office jobs.

@dogcat why do you want to buy instead of rent?

Good question. I guess it’s personal preference. This is not an investment, but rather peace of mind.

It’s psychologically painful to pay this amount of rent (100k/yr). I have young kids and personal situation will keep mew here for 10-15 years.

From a pure math perspective renting wins, but one can always adjust the timeline or other variables and get the result you really want.

>However, that does not explain why someone would pay so much to buy something at 1-2% cap rate instead of renting.

Because it's consumption, and in New York, there's nothing wrong with consumption.

In our case, I view ownership as consumption and Mr. MCR does not do any analysis at all below a ceetain threshold, so I guess if you asked him, he would view it as consumption as well. I asked him where the majority of his partners live, and he said that he does not even know, but reminded me of various invitations to Bronxville, Greenwich, Westport, Scarsdale, etc. that we are never in town to accept. I can think of two invitations we were able to accept in the city, and both were spectacular apartments of partners 10 years older than us. I guess as I think through this, I don't know anyone with school age children who lives in the city other than the three families I know in my building. With respect to those families, they are all backed by generational wealth, which supports @krolik's analysis.

MCR,
I remember when every Diner had 2 eggs, hash browns, toast and coffee for $2.99

Maybe part of the lure of homeownership is that it's such a brass ring in the US - being able to answer 'I own' is something anyone who is not a New Yorker, born and bred, is raised to strive for. The American dream and all that

@dogcatbird999 'This is not an investment, but rather peace of mind' - yes. No landlord to terminate the lease.

The peace of mind like seeing the announcement of an assessment for more than you paid for your apartment. Something which never happens in a rental.

@30 - exactly
I follow listings in a condo I rented in years ago, and they apparently put in place a 15 year assessment, equal to about 15% extra maintenance. This follows on after another multi-year assessment 10 years ago which was ~50% extra maintenance.

It's not like the base maintenance stopped going up either. Base maintenance & taxes are both up ~30% in 8 years.

Some owners pre-paid the assessment before listing their units too, so comparing closing prices over time really muddles things.

Note at least half the assessment costs were discretionary as its covering things like newly enhanced common area amenities or renovating lobby/halls to try to look more modern in a 100 year old building..

Isn't part of risk mitigation looking into the state of coop finances prior to purchasing? Researching records on maintenance, etc?

I'm assuming discretionary upgrades are largely confined to higher end coops, not at more modest addresses.

>> However, that does not explain why someone would pay so much to buy something at 1-2% cap rate instead of renting.

I probably know something about this based on my experiences and interactions over the past decade or two.

There is certainly a small subset who have infinite money, making the whole thing a “whatever” like you would buying a shoe. And there is a subset who have the money (though not infinite) who decide, while not very financially prudent, that buying is more important to them than the finances for whatever reason.

But there is also a large contingent who are simply not financially competent. Some understand their lack of financial competence and view the purchase as the “safe” thing to do. Getting 1-2% is better than 0% at the bank, and prices don’t ever go down, right? Others think it is actively a great financial decision. “RE went up in the past N years, so I think it’ll go up 4-5%/yr in the next N years!” This has been a dying breed, but there still is “NYC is undervalued relative to suburbs because it didn’t go up 50% over the last N years, which means the 50% coming!”

Point being, there are all sorts of reasons, not just a single one.

So Yentle’s buyer is a financially illiterate person that really wants to own, or someone so rich they don’t count the money (but does that person want an older coop apartment instead of a shiny new condo?)

@Krolik - I too would like to sell products&services to this type of customer and would pay for a client list lol

@MTH - on its face, sure you should be able to catch this kind of board spending pre-purchase.. on the other hand this assumes boards & their behaviors are static! prior to 2010 they didn't have any big assessments on this scale in recent history. Arguably after the first big one you could have read it as "well thats it, lobby, halls, they fixed everything, what else could they do!" Of course now, after the pattern of behavior, you can avoid buying.

+1 on @steve123's comment re the limitations of even the best due diligence efforts.

Re Yentle's buyer - I think the buyers are affluent empty nesters. If it will be used as primary residence, I am thinking retirees with a finite amount of money in the low ten figures. If pied-a-terre, I am thinking the buyer isn't counting money.

@30yrs - I love how reasonable diners still are compared to "restaurants."

>> So Yentle’s buyer is a financially illiterate person that really wants to own, or someone so rich they don’t count the money

First, I don’t think Yentle’s apt runs at a 1-2% cap rate. Second, “financially illiterate” is a bit harsh. I said “not financially competent”. I associate “financially competent” with the possession of a specific skill. Would I personally trust this person with my money?

In any case, I think someone like dogcatbird is Yentle’s buyer, or else the profile MCR gives.

Yes, how could I forget dogcatbird?! I do think the apartment works for that profile as well. Unfortunately dogcatbird wants to be a scootch bit closer to the park than the location of Yentle's building. I totally get the dog thing; when we used The Phillips Club as our pied-a-terre, I lived for the early morning walks in the park where all the dogs are allowed off leash. I don't know if that is still a thing, but those early hours in Central Park with the dogs were as good as it gets for me (except for that one time one of my dogs bit Nicolle Wallace's housekeeper . . .)

Frankly, I could also see Yentle's apartment work for @krolik in a few years if her and her partners' careers continue on their current trajectory and she adds a consumption component into her analysis as she raises her family.

@MCR I understand my current apartment might be larger than Yentle’s. I think i could be a buyer for a large 3/3 in 5-10 years if careers continue on the same trajectory, or a house in BK/queens if i can think of an area that is substantially cheaper than manhattan, but close enough still and has good amenities.

Krolik.v2 or DogCat could be a buyer for Yentle’s place if price is right for the interest rate environment.

My own considerations were not entirely financial, and while it was not a terrible decision, it is not a stellar investment either. My place is at about a 4% cap rate at the price i purchased + reno. The spend part of my monthly payment is about 4k right now. A similar place is 6k to rent. Not having to move or negotiate with a landlord is so great though.

One more note on above is that my place has a decent return on equity, because it is levered with 70% debt @3% while yielding 4% on assets.

(That math doesn’t work for yentle’s place buyer given much higher interest rates today. Any buyer would have an expectation of rate cuts, but no specific timeline or numbers.)

Additional appeal of UES not mentioned above: colleagues in suits industries (and dogcat’s friends) will not make fun of you for living there. I am told that midtown is really not respectable, Murray Hill is “for young people” etc.
Tribeca, UES and UWS are the kinds of places no one will criticize.

Re: the rates aspect

We now have 3 cuts priced in for 2024 and another 3 in 2025, fed clearly pointing to September as the first cut and all the subsequent economic data for weeks has cleanly reinforced its time to cut.

So we are past the "will they cut soon" stage, past the "when will they start cutting" stage, and proceeded to "how much how fast" stage.

So who knows, maybe 5.0-5.5% mortgages by next spring RE season, and in the 4s by end of 2025.

Of course aggressive cutting could be in the context of a contraction, in which no one has the cash & confidence to buy anyway despite low rates!

@steve123 exactly. That’s why i think yentle’s decision to wait it out a bit is a decent one as there is a good chance things will improve when rates are lower. Or if not, at least yentle would know that they did not leave money on the table by not waiting.

I checked with Wells today. 10/6 in low 5% if you keep $1mm assets with them. So I suspect, other private banks will be in that range. While I don't know if this will have an immediate impact on real estate prices, one of my positive scenario seems to be in play. If the 10y rates stays solidly below 4% (3.81 right now), perhaps mortgage spreads will come down.

While Nada seems to disagree with this, but I do think relative value between suburban/WFH FL/TX locations and Manhattan does matter as many people post covid moved to these locations partially (lower income taxes being the other part) due to lower housing cost.

>> Frankly, I could also see Yentle's apartment work for @krolik in a few years if her and her partners' careers continue on their current trajectory and she adds a consumption component into her analysis as she raises her family.

I doubt it. Yentle's apt is (say) 40% better than Krolik's according to the market. Even if it works as an upgrade for Krolik, consider what it'd mean financially. By monthly "spend", I think Krolik means interest on the 70% debt + maintenance. She's currently at $4K/mo, and at Yentle's last ask and current rates, with a 30% downpayment, the "spend" would go up to $9K/mo.

Going from $4K/mo to $9K/mo is a whole lotta money for just 40% more. But here's the real kicker. If she moves, she's gonna have to kiss most of her 30% downpayment goodbye between transaction costs and the lower sales price it'd take for it to sell. Welcome to the locked-in effect...

Maybe rates go lower, maybe they go higher, who knows. But I'm guessing that Krolik's move out of her current place, if/when it happens, will be to something more than just 40% better or outside NYC. Otherwise, why bother?

>> Additional appeal of UES not mentioned above: colleagues in suits industries (and dogcat’s friends) will not make fun of you for living there. I am told that midtown is really not respectable, Murray Hill is “for young people” etc.

It sounds like your colleagues in suits industries are douches who lack self-esteem.

>>>It sounds like your colleagues in suits industries are douches who lack self-esteem.

Not something I can control, but they do expect me to know (or learn quickly) what to wear, how to pick a fine wine, and where it is respectable to live. I guess that's one more negative for UES as a lot of those douches live there...

>>>She's currently at $4K/mo, and at Yentle's last ask and current rates, with a 30% downpayment, the "spend" would go up to $9K/mo.

And that is for a 2br??? Neither Krolik.v1 nor Krolik.v2 are interested. LOL. Even if market thinks this is a 40% better place, Krolik values flexibility of lower fixed living costs.

>>>she's gonna have to kiss most of her 30% downpayment goodbye between transaction costs and the lower sales price it'd take for it to sell. Welcome to the locked-in effect...

I did catch a Covid low and bargained hard, so I think I would be down ~100k. Yes, we are not moving for a while, even if we decide to have a second..

>Maybe rates go lower, maybe they go higher, who knows.

Probably lower.

" by steve123
about 12 hours ago
Posts: 739
@Krolik - I too would like to sell products&services to this type of customer and would pay for a client list lol

@MTH - on its face, sure you should be able to catch this kind of board spending pre-purchase.. on the other hand this assumes boards & their behaviors are static! prior to 2010 they didn't have any big assessments on this scale in recent history. Arguably after the first big one you could have read it as "well thats it, lobby, halls, they fixed everything, what else could they do!" Of course now, after the pattern of behavior, you can avoid buying"

A) I think people would be surprised at the lack of depth of due diligence performed by the average purchaser's attorney

B) Due diligence has gotten extremely difficult as Coop attorneys have widely been instructing boards to leave out large chunks of Coop business from the minutes of board meetings. There is no way to actually do due diligence on some of the most important stuff.

I don't know I krolik was being facetious. But saying you just need to find a sucker to sell is all kinds of problematic. It's like say "Don't pay attention to the market value. Just find a sucker and get more money."

@30yrs - 'Let's plan a project and not mention it in our minutes' - isn't that falsifying records and couldn't it get a board in trouble with existing coop members? Also there's a difference between the kinds of places mentioned here - coops west of Lex, Sutton Place, etc and more plain Jane coops in less prime areas. It's hard to imagine a board in many of these places saying 'Let's make it fabulous again' because in many cases these buildings were never fabulous to begin with. Servicable, even charming, sure, but not prime. And if a place has enough studio or 1BR apts I'd think it would make discretionary spending less likely.

Yes, to getting a meticulous lawyer who has been around the block a few times. And maybe get an engineer in the picture to check out brickwork or the boiler room, idk.

@Krolik and @inonada with you on 'respectability' - I thought that went the way of social registers. Although human vanity never just disappears it just takes new forms so why should it surprise me. Old wine, new bottles. 'Hip' 'cool' 'respectable' - a lot of people have very firm ideas on these things.

In the end there's no zero risk solution. Your landlord might terminate a lease to use the apt for family or to sell it. You might buy in a coop with an out of control board on a spending spree or a board actively hiding financial issues. Which is more likely?

@MTH - its not just the probability of rent up vs reckless board is more likely, its a question of the magnitude of the downside

If my lease goes up too much, or the neighbor turns out to be insane, I spend $5k and take a day or two off to move.

If my condo/coops costs start to get out of hand, I am stuck in an illiquid asset that may take 6-18 months to unload, with round trip taxes&fees in the $100K range.

This is like as other discussed you can look at owning or renting as paying a premium. For owning its some feeling of having control (as BS as that me) vs the "freedom premium" of renting.

Re: board minutes, 30 is right
When I was on the board, our management agent would take minutes and one thing that was obvious was the lack of specificity. It wasn't that things were omitted entirely, it was just very very unspecific.

Like "board discussed Local Law 11" vs "the board spent 30 minutes discussing the possible need for a $1M assessment to cover LL11 in the near future". OR "board ratified 2025 budget" vs "board was advised that contributions to reserve fund are recommended to be X% but is only contributing Y%" etc.

Also plenty of stuff that came to the board outside meetings or was to do with individual unit/owner complaints weren't really included I suppose arguably for privacy reasons or something. So a casual reading of the minutes is unlike to uncover that 5% of the building is in open revolt over some perceived grievance and lobbying to overturn the board, fire the managing agent and go on a spending spree.

>>> I don't know if Krolik was being facetious

I was being provocative. I think prices need to go down for middle class buyers (that carefully count their dollars) to come in. Or rates need to go down.

MTH,
I know of way to many instances of the following:
Board has been discussing major assessment for months/over a year, But this discussion has been sanitized from the official minutes. Seller puts unit on the market, finds purchaser and contract is generated. Contract specifically States " there are no current or future planned assessments." Buyer's attorney reads the minutes which contain nothing about an assessment. A few months after closing the purchaser is hit with a huge assessment.

Or the Coop is involved in a huge lawsuit. On advice of council the lawsuit is never mentioned in the board minutes. Purchasers attorney reviews the minutes but since there's no mention, doesn't know there is this huge lawsuit. After closing, purchaser is talking to a neighbor and the lawsuit comes up and this is the first time they've heard of it.

To me, the ultimate way to achieve “peace of mind” and “mitigate risk” has been to have a fat bank account. If you inherited one, lucky you. If not, then the options are some combination of: make a lot, spend little, and invest well. For as long as I’ve been here, purchasing Manhattan RE has violated the “spend little” and “invest well” principles. I think the “respectable” thing for me to have done ~15 years ago would have been to buy an apartment, like a proper grown up, when prices were hitting a “low” using “once-in-a-lifetime” ZIRP mortgages. But the cap rates sucked, and I figured normalization of those cap rates would mean long-term expected returns of 0% on the money. So obviously, that didn’t seem like “invest well”. And when you’re spending 2x for the same thing as renting, it didn’t seem like “spend little”.

I tried to “invest well”, and no matter how I trace the money that would’ve gone into a downpayment ~15 years ago, it has now grown by a somewhat implausible 10-15x. Not from any single big score or large risk, simply from the taking of steady measured risks where the reward seemed worthwhile. Was I lucky? Probably, but even an index fund would have done 4-6x depending on the balance of stocks vs bonds. And 4-6x was exactly what I would have expected ~15 years ago, just as I had expected 0% from Manhattan RE.

In the end, I would’ve turned out fine without the 15x or 10x or 6x or 4x. But I didn’t know that going in, and trying to be “respectable” would have come at a cost to peace of mind. In the end, it’s only money, and nothing like a fat bank account to come to the rescue should any unexpected financial events come your way.

I understand the above viewpoint may not apply to others, so no one should take it as a declaration for how others should conduct their lives.

@30yrs It sounds like buyers should be interviewing and asking for documentation from boards (as well as being interviewed by and providing their own documentation): 'please provide written assurance the coop is not engaged in litigation that could result in awards, fees penalties'

@steve123 I see your point re likelihood vs downside in each instance renting vs ownership

@Krolik here's hoping one or the other...or both

Here in Florida, there's definitely a stigma to being a renter. Why? I'm not totally sure. But in New York City, I think the majority of people are renting, I never thought there was any stigma attached to that. And in your case, nada, without giving away too much personal information, if one had a personality subject to envy, I think most would be of your 'rentals' ; )

I think there probably is a degree of stigma in certain quarters. Living in public housing? Probably no stigma. Living in rent stabilized? Probably no stigma. Living in rent control? You're a god. But in the UES, I figure there's a stigma.

Krolik, what is your take based on the douches you interact with?

For me, it's definitely changed over time. In my 20's, no one cared. In my 30's, I started getting a lot of pointed questions from certain quarters. I'd explain my take as politely as possible ("I like living in nicer places; I like investing where I'll get good returns; I don't have self-esteem issues to be resolved by apparent status"), but I'm not sure it really registered. These days, there is no stigma. I'm not sure why, but I figure it must be because people now think I know / knew what I was talking about. Kinda silly that the appearances convince them, not the logic. But such is humanity, I suppose.

>It sounds like your colleagues in suits industries are douches who lack self-esteem.

??

I lived on the UES a while ago (Yorkville) and even then I got from progressive schoolmates: it's not diverse demographically, you (I) chose to live there (bc rents were cheap!) therefore (by some crazy logic I don't get) I didn't want it to be diverse.

West of Lex it is a beautiful neighborhood regardless of past, current or future cachet

>>> Krolik, what is your take based on the douches you interact with?

I have not observed any stigma associated with owner vs renter status.

How refreshing!

I wonder if there has been a shift in attitudes because of the poor financial performance of ownership in Manhattan for so long.

I don't think there is a sitgma outside of any building about renting vs owning, but within any building, renters are generally treated differently because of the simple and logical fact that they are not committed to/invested in the physical health of the building in the same way owners "should" be.

Also, there are no long-term renters in most coos by design, so you don't get to know them organically in the same way you get to know fellow owners over many years of tiny organic interactions that ultimately form a community for better or for worse. I think being a renter in my building would be lovely because I wouldn't be aware of the crazy beneath the polished veneer of my fellow residents, and my own crazy wouldn't be bothered by potential differences because I would know that it was only short-term.

>> I don't think there is a sitgma outside of any building about renting vs owning, but within any building…

Great, so stigma only exists from the people you see the most ;).

That’s a good point on coop renters being short-term by nature. The longest I ever stayed in one building was 6 years. After a couple of years, the owners understood who I was: I took better care of things than most owners. I recall a conversation with the board prez whereby they had decided to start charging a month’s common charges for leases. Why? Maybe for revenue, maybe for wear & tear. The board prez explained “Most renters aren’t like you. As I like to say, no one has ever washed a rental car!” I then proceeded to explain how I had recently rented a Ferrari in Tuscany for a week and washed it thrice, simply out of respect for myself, the car, the hordes of local fans, and the country. His reaction: “Of course you would…”

My word still carries weight there, as I recently vouched for an acquaintance who wanted to rent there by emailing the prez and another board member.

Ha! I washed my rental car in Costa Rica, but to be fair, it was covered in a decent amount of mud.

With respect to my own comment about thinking it would be lovely to be a renter in my building because I wouldn't see the crazy of other residents and my own crazy would not emerge given the short-term nature of the whole proposition, the short term nature is the problem inherent in that scenario. The problem with my being a renter in my only building is that it would require me to move after two years, which is a non-starter for me. For me it all comes back to the fact that what I like does not exist on the rental market for on any semi-permanent basis. I am wired to put down roots, regardless of whether I pull them up periodically because circumstances change.

>> Ha! I washed my rental car in Costa Rica, but to be fair, it was covered in a decent amount of mud.

If you wouldn’t want to drive your own car around muddy, why would you want to drive a rental muddy?

We were walking to dinner last night, and a group of young women all dressed in white were taking pictures of themselves, which for better or for worse is a common sight in these parts. One of them had managed to drop their raincoat in the fray. We got to the corner waiting for the light, and the group had caught up. One of them declared “Well, I just threw my raincoat in the trash!”

I generally don’t get people who drop their stuff all the time. Get your shit together people, and take care of your shit! I have a pair of friends with young kids, and we were at a local park with the kids running around the field. The mom managed to drop the kids jackets, unaware and leaving them behind, no fewer than 4 times, with me picking it up thereafter. Eventually I suggested she place them in the bag she was holding. (I am considered a genius by some, and you can understand why with such earth-shattering ideas.)

Meanwhile, I own exactly two jackets — both ~8 years old and in great condition.

Additional pet peeve regarding coats…

People who go to restaurants who obviously care about their appearances, as evidenced by fine light colored coat made of some soft material (mohair? cashmere?), but then they insist on not checking said fine coat whose price no doubt exceeds my annual clothing spend. This coat looks like shit, because it’s all wrinkled from them sitting on it, half of it dragging on the ground as if we’re in an Irish pub rather than a high end dining establishment.

Now I’m all for not caring about appearances, but if you’ve paid $1000+ for a coat and are paying $100+ per person for the meal, for fuck’s sake, go ahead and spring a stingy $1 to keep it in good condition and from being an eyesore to the other patrons.

@nada - This statement "the mom managed to drop the kids jackets" (sic - kids') raises the following questions for me:
(1) Why is it the mother's responsibility to carry the kids' jackets?
(2) Were the fathers not in attendance?
(3) If the fathers were not in attendance, why did you not mention that, but rather simply note that the mothers dropped the ball . . . er, um, jackets?
(4) If the fathers were in attendance, why did you not mention that, but rather simply note that the mothers cropped the ball . . . er, um, jackets?
Just saying . . ..

*(2) Was the father not . . .
*(3) If the father was not . . .
*(4) If that the father was in attendance, why did you not mention that, but rather simply tat the mother dropped the ball . . . er, um jackets.

Again, typos have always been the bane of my existence. That is the one thing I understand about DJT; it is all about communicating, and sometimes form just gets in the way of what I want to say. Those who care about substance will understand what I am communicating, for better or for worse.

And on the point of not checking expensive coats: I, for one, am all about coats that keep me warm. They tend to be expensive. Evertheything I wear out is down or wool - including the finer forms of wool such as cashmere (no fur here despite a lot of it handed down from previous generations - those coats live in cedar closets that nobody likes to think about). I never check them because restaurants don't always get their indoor temperatures right, and I hate being cold. Apologies for the eyesores that might be my expensive coats left that are not as beautiful as others might like them to be. It is all about keeping me warn. I know I could drive a truck over those all my coats and they would last my entire lifetime; I bring them to the drycleaners as time allows, but I ride them hard in the in between, and they hold up well.

And this brings me to the muddy rental car: My car is muddy much of the year. I drive my care though all sorts of weather and park it on the street regularly. I treat a rental car no differently than I treat my own car. There is zero chance that I wash it before I return it.

Finally, as to this: "We were walking to dinner last night, and a group of young women all dressed in white were taking pictures of themselves, which for better or for worse is a common sight in these parts. One of them had managed to drop their raincoat in the fray. We got to the corner waiting for the light, and the group had caught up. One of them declared 'Well, I just threw my raincoat in the trash!'"

No comment. That does not resonate with me at all, and I don't know anybody who would defend that behavior.

But back to the topic of the thread, the 4th floor apt at 3 E71st is now in contract. A 2/2 on the park with eybrow-raisingly low maintenance. I have that building on my long-term watch because I remain intrigued.

@mcr Even you may have taken this car to get washed. It had not only traversed something called the monkey trail in guanacaste. We had also driven it from Nosara to Santa Teresa, this involved fording several Rivers and I would say only about 20% of it was a paved Road. The rest was a combination of trail and Beach over the course of about 4 hours.

@30yrs @steve123 What you're saying about increased and unpredictable maintenance are you saying coops in NY are just bad investments? Or just bad investments at current prices? There's got to be some value to not having to pick up sticks every 2 or 3 years.

Re coats everyone's got their pet peeves. Mine is people on their cellphones in public places with the volume on max. I've been known to kindly offer people my wired earphones so I don't have to listen to the cheesy sound effects on whatever game they're playing or news sites they're watching. They usually get the hint.

MCR, regarding the kids’ jackets…. I dunno why the mother felt responsible for carrying the jackets. They could have just as easily been set down somewhere. The father was playing with the kids. Beyond all the cooking, his home life involves a whole lotta cleaning up after the mom & kids. If I needed someone to hold one of my 2 jackets for 5 mins, I’d definitely ask him.

I understand on possibly being cold at restaurants. Rarely is a full-length coat, the type that drags on the ground, in order. Who’d want to wear that while dining? I’ll suggest a cardigan or cardigan sweater or something like that, easily wearable or slung on the chair depending on how you’re feeling, in addition to the checked cost. Advanced tip: you can always ask the cost be brought to you at the table should the cardigan not suffice. (Oh lord, I’m now giving fashion advice…) Of course, this is all tongue-in-cheek. Wear what you like, sweep the floor with it as you choose — it is for you to decide, not me!

Another favorite of mine is the following. I often say that I want to be the second worst dressed person in any venue. A t-shirt & jeans is my uniform of choice, but it’ll always be nicely fitted, etc. My wife nearly always dresses nicer than me, but if it’s a step too far ahead, I’ll upgrade my wardrobe accordingly. So I’m always entertained by these couples where the guy (always the guy!) is schlepping into the upscale dining establishment, backpack in tow, in sloppy shorts, crocs, and a baggy t-shirt and the gal (always the gal!) is wearing her finest, full make up, as if she were going to a wedding. Coordinate, people! (Or not, I don’t mind the entertainment.)

MTH, have you ever understood this walking around talking on speakerphone thing? It’s too loud to hear the speakerphone, so the person keeps moving the horizontally-held phone from their 6 inches in front of their mouth (yelling of course) to right next to their ear (phone horizontal, head turned in strain). No video, just talking. Forget about headphones, I just want to explain to them how a phone ? works.

>> But back to the topic of the thread, the 4th floor apt at 3 E71st is now in contract. A 2/2 on the park with eybrow-raisingly low maintenance. I have that building on my long-term watch because I remain intrigued.

3 of 4 listings in contract. Goes to show units move when the price is right.

These coops full of workhorse 1000 sq ft apts with maintenance at $4-5 ppsf are just too incongruous. They neither broadly work for rich people, nor the mere affluent.

@inonada Yes, that, too - had to remind a gentleman on a train that his conversation was not as interesting to everyone else on the train as it was to him. I got off at the next stop but hope that had its intended effect for the sake of others. Probably not he looked shocked then like he wanted to take a swing at me

On maintenance: how do some places (160 E 91st, 310 RSD, 425 E 79) keep it so low - these are doorman elevator coops.

On lawsuits: in France they often mention in the listing: no pending litigation. Why isn't that a legally binding requirement for coops in NYC?

maybe the buyer should put it in the purchase contract, that seller warrants that there are no
lawsuits pending against the Co Op and such warranty shall survive closing

@mth regarding lawsuits, this is a standard question on the buyers attorney's questionnaire for management. I've found most listing agents will forewarn you, especially if it's a large piece of litigation, this way the situation can be managed. A smaller lawsuit such as an individual owner suing the sponsor or co-op, condo etc. over a slip and fall, leak, etc usually wont to be disclosed as the agent and sometimes the owner may not have known about it. This will come up in due diligence.

Unless the seller is on the board there is no way of knowing if lawsuits are pending.

@value Sounds like a good approach.

@stache I wonder if the seller typically could get a board member to affix something to that effect with exceptions made for minor incidents

from my experience, if your lawyer asks detailed questions about financial items mentioned in the co ops financial statement, the Board has a tendency to reject the buyer

@nada : My mother's fashion advice was: always dress as though you're going somewhere slightly better afterwards. Not way better, just slightly better.

This, of course, assumed gradations of style and social events that are mostly now gone.

The problem with the coat checks is that they are very uncommon in the US or at least in NYC, and so most restaurant and theater goers don't count on a coat check as a part of their outing, it is just not part of their routine. I am always amazed that Broadway theaters have people in their seats wearing puffy jackets...

On the coop diligence front, I have a problem with the whole setup that "your lawyer will do the diligence once you have an accepted offer". Firstly, a good lawyer will charge me hourly for diligence, and I don't want to have to pay since this is something I can easily do myself. Secondly, this is the kind of diligence that I often want to do myself. Finally, some of this info is type of stuff I want to know before the initial offer. But most brokers/sellers and buildings are not very open in this respect. A good broker that specializes in an area/building can be helpful in some cases.

@Krolik Good to know! I am financially illiterate so may reach out to you in a few years for a recommendation

Sorry: I'm talking about financial and legal contracts. I should read them myself but will definitely need someone who is good at legalese to help me through it.

In my view, the purchase contract should be done by a lawyer, but in terms of due diligence, the owner needs to understand financial health of a building, assessment history, etc. the owner needs to fully understand this and this understanding cannot really be outsourced.

By the way, when I was looking, I initially had no idea how coop financials "should" look like in a well run building. So I did diligence on 3 or 4 buildings first to get an idea.

Some things you should be checking:
how many people work in a building and does that make sense to you
how large is the coop mortgage (on per apartment basis - how much of it is attributable to your apt) and when does it need to be refinanced
does the coop have any commercial rental property and is it rented or vacant
does the coop have any money in a fund for planned or emergency repairs
what are the planned improvements, etc.

That's super helpful! I'll pin those. Thanks Krolik

I don't know if this has been mentioned already, but to answer the question in the thread title:

When I first got my license and we were doing showings by gaslight...

Maybe 5% of the market was Condos and 95% Scoops. If you wanted a Condominium there was a very limited diversity of sizes, styles, etc The premium for Condo was X%

These days Condos are fairly ubiquitous. You have a fairly wide variety of sizes, styles, price ranges, etc. So whatever you want in terms of building, size, price range, whatever, you probably can find some Condominium. As such, most people don't HAVE to buy Coops. Since almost no one prefers Coops

I don't know if this has been mentioned already, but to answer the question in the thread title:

When I first got my license and we were doing showings by gaslight...

Maybe 5% of the market was Condos and 95% Scoops. If you wanted a Condominium there was a very limited diversity of sizes, styles, etc The premium for Condo was X%

These days Condos are fairly ubiquitous. You have a fairly wide variety of sizes, styles, price ranges, etc. So whatever you want in terms of building, size, price range, whatever, you probably can find some Condominium. As such, most people don't HAVE to buy Coops. Since almost no one prefers Coops over Condominiums This is going to shift the market.

So I think the answer to the question is that co-ops are going to have to give bigger discounts over condominiums. I also think that this means that co-ops are going to have to shift there guidelines in the direction of condos. And the ones that don't are going to be punished in terms of sales prices.

The main aspect of coops that would need to change to resuscitate share price is the inability to rent out the apartment; I just don't see that aspect changes until both the Greatest Generation and the Boomers leave the building, so to speak. Who wants the under with the line set at 30 years (no pun intended)?

I am taking the line and the over. Hopefully I will still be around when the bet is called to see whether I was right.

In Florida most condos have restrictions on rentals. How many times a year you can rent out. As well as how many units in any given building can be rented at one time.

Although somewhat restrictive, you can rent out co-ops, so I don't think that's the biggest problem in and of itself. I think co-ops need to drop this whole antiquated board approval process, which to me violates fair housing rules. Let a co-op transparently post requirements for acceptance, eliminating mysterious turndowns of otherwise very qualified buyers. And also eliminate interviews as part of the process, this is an apartment building, not a country club.

There are still many co-ops that function efficiently in New York City. This thread seems to be mostly focused on co-ops that exist in locations that are not desirable to a large portion of the buyer pool. Along with restrictive board policies.

Keith
TBG

This thread is focused on apartments that are overpriced

And in the meantime, one apartment in Yentle's building in contract.

Yentle, Do you know if they got the ask or was there further discount?

Do you really think yentle's apartment is overpriced? Sutton place apartments are sitting unsold for many months at $800-900 a square foot.... Look at Ali's listing at 35 Sutton place? Do you think that's overpriced??

And while we're at it, let's eliminate condo applications, what a waste of everybody's time. Essentially the same requirements as a board package for a co-op, and all they have is the right of first refusal.

And co-op board packages, jeez... The online portals are designed with 2010 software technology. And personally, I think it's just ridiculous that you have to put together something that in some cases is the size of a phone book to buy a generic apartment in a white brick co-op building. For one building on the upper East side, I had buy a hand truck to get the completed board packages to the managing agent! My biggest problem with a co-op is the fact that a small group of board members can control your fate when it's time to sell. Since co-ops are corporations, I feel like they reek of antitrust violations? Or is that idea not applicable?

Keith,

Big difference between Sutton place and UES West of Lex. You have central park, public transportation, private schools, and amenities.

UES co-op prices are about the same as 15 years ago. So they were a poor investment purchase back then, but today adjusted for inflation they are almost half price. This might be the right time to buy a co-op. Also, all the new condos west of third avenue and below 86 street are selling out upon completion. So yes, the affluent do want to live in the UES and they are paying between 3 and 4 thousand a square foot

Of course I understand that is a difference. But they seem to be suffering a similar fate.

Keith, They are both stuffy coop. What premium do you put on UES west of LEX coops vs Sutton place coops everything else being equal?

Interesting question. Everything else being equal, It then simply comes down to what neighborhood you prefer, which is very subjective. I think it's easier to put a premium on something such as Parkview versus non-park view west of lex.

Personally, I really like both these neighborhoods, and if I had the money I would happily live on Park avenue or 5th avenue near the park. Even though I'm just an old punk rocker , I've always been very entertained by old New York money, they are a very fun crowd in their own way. New money, not so much. I also like Sutton place, but in a way it's such a small little nook of a neighborhood.

I put a large premium on UES west of Lex coops over both Sutton and Beekman. I don't know the number, but for me personally it would be somewhere between 20-50% based on proximity to Central Park alone. I feel like Central Park is NY's ocean/beach, so I view real estate near it the same way that I view real estate on or near the ocean.

@keith - the limited nature of rental in coop is what traps people. We had two sellers in our building who wanted to keep their apartments as investments at this point because they were getting such great rent on them compared to what the ultimately sold for. I actually lobbied for them, but it was a non-starter. My position to my fellow board members was that it was a win/win given the revenue we were getting from the juicy rental surcharge. The sellers were even willing to pay more in rental surcharge, and I tried to convince my fellow board members that if they really wanted to discourage rentals, increasing the rental surcharge was the way to do it rather than blanket prohibition against long term rentals.

@MCR - the prohibition against long term rentals also seems sort of counterintuitive in a way

My old condo had lots of sales turnover to the point that rental units actually turned over slightly less. A number of renters like myself were there 5-10+ years.

My current condo we've had a number of couples who after having first/second kid decide to upgrade by renting a bigger unit within the building while renting out their own smaller unit.

I'm kind of like nada where he mentioned about basically treating borrowed things as good or better than my own. To me, it's more stressful to go through the wringer turning in a dinged up rental car vs the normal wear&tear dings I expect my own car to accumulate over time. When you rent, any damage you do is marked-to-market on turn in and you owe it in cold hard cash. If I own, I can accept or repair as/when I see fit.

Personally I'd prefer a model where you require someone to be a primary resident for say 5 years before renting out, and then are allowed to rent out say 4 years per decade, on rolling 2 years leases.. with a hefty surcharge.

Gives owners options if circumstances change, attracts longer term tenants, reduces turnover, and fills the coops bank account. Given the length of RE bear markets, limiting owners to 1-2 years only and then also enforcing price limits on sales really leaves owners between a rock & hard place.

@steve123 - I agree on all fronts.

Mcr, I agree with your comment to some extent regarding ocean. But there's a big difference between Ocean view and proximity to the ocean, that's what I was saying, that's where the premium is. Pick a building on 5th avenue or Central Park West, look at the pricing for Central Park view apartments versus non-parkview. Same with Riverside drive and Hudson Riverview.

I view it as a negative to have a bunch of investors owning in primary residence building. That's why for me my gripe is with the board approval process, the financial hurdles put in front of buyers. I'm not buying my apartment to rent it out. If I getting in a little bind, being able to rent it out 2 or 3 years should do the trick. If you want ultimate flexibility, then you simply avoid co-ops and buy a condo.

Yes, I get it. I am quirky because for me it is not about the view of Central Park, but rather the proximity. As a surfer, wouldn't you pay a premium to be able to walk with your board to the ocean versus having to drive to it?

I also agree about not wanting to have a building that is too investor-friendly. That is why I like the compromise @steve123 proposed.

300_Mercer - I don't know the under-contract price. The unit was basically on the market for 3.25 years, starting at 1.9M with the last ask at $1.2........

Ha! I can ride my bike to the ocean with my board attached. But I'd be looking at a minimum of $3mm to have a similar house where I could walk off my deck onto the beach.... Just look at the properties on 5th avenue that face the park versus face away from the park....

For proximity AND view, the premium I'd pay is 100%. Seriously, I would pay 2X our current apartment for proximity AND view of Central Park.

I just checked Yentle's building
@Yentle - I told you your neighbor was your greatest competition!