JANUARY 2005 REAL ESTATE NEWSLETTER

1.   Landlord May Be Liable For Burglary, Assault of Tenant

Chicarelli v. Ursula Realty Corp.

Chicarelli brought a complaint against Ursula Realty Corp. alleging that she was burglarized and sexually assaulted when an intruder entered her apartment as a result of a negligently maintained security system. She also alleges that there was a prior burglary in the building between two and three years ago and that the front door to the building was often opened by a doctor who had his office in the first floor by means of an intercom, without ascertaining the identity of the person buzzing the intercom. She claims that she and other tenants have complained to Ursula Realty Corp. about these security problems.

Ursula Realty Corp. moved for summary judgment stating that Chicarelli can not establish the inadequacy of the security system in view of the unforeseeability of the incident. It also states that she can not prove that the perpetrator entered because of Ursula Realty Corp.’s negligence.

A landlord must take minimal precautions against foreseeable criminal activity by third parties. If the landlord breaches this duty and a tenant is victimized, the tenant can collect damages if the landlord’s failure was a proximate cause of the assault. The plaintiff can only recover if the assailant was an intruder.

Chicarelli must present evidence that would infer that the assailant was an intruder. She has done this successfully. She has claimed that there was a prior burglary in the building, she and several tenants have complained that anyone can enter the building by being buzzed in by the doctor’s office, and she did not recognize the assailant, who did not try to conceal his identity. Since she has lived in the building for ten years, it may be inferred that the assailant was an intruder.

Therefore, Ursula Realty Corp.’s motion for summary judgment was denied.

(N.Y.L.J. 12/15/2004)

2.   New York Real Estate Keeps Rising

New York City real estate rose 14% in market value last year. Every borough showed a rise in property value. In percentage terms, Staten Island rose almost as much as Manhattan. The city’s total property value is at $616 billion. A strong example of the city’s real estate strength can be observed by the Time Warner Building in Columbus Circle. Its value rose over the last year to $1.2 billion, a $200 million increase.

The high demand has kept the market hot for several years. This can be attributed to historically low mortgage rates and the continued migration of new residents to the city. Real estate has replaced the stock market as the financial topic of choice to discuss at dinner parties.

The prices of homes across the country rose 13 percent from the year earlier in the third quarter of 2004. A record 69% of households are homeowners. The houses on the West and East coast have the highest values. The property value increase in the city means higher resale value for owners. However, it also means higher tax bills.

City officials have recently said that they are taking new steps to address the inequities in the tax assessment system. They said the Department of Finance will reduce the taxable assessment value of one-, two-, and three-family homes. This is only the third time this will happen in the last 20 years. It will be reduced in the next fiscal year from 6 to 8 percent.

Manhattan had the biggest rise in overall property value of 15 percent. Staten Island was not far behind with a rise of 14.5 percent. In Brooklyn, Queens, Staten Island and the Bronx the value of vacant land rose about 40%. In Manhattan vacant land value rose 27 percent. This increase suggests that real estate developers might expect more gains in the future.

(N.Y. Times 1/15/2005)

3.   Average Manhattan Apartments Remains Over $1 Million

Although it has slipped slightly from the previous quarter, the average sales price of an apartment in most of Manhattan breached the $1 million barrier for the third consecutive quarter. The average sales price in the last 3 months of 2004 was $1.04. This was 2.6% below the $1.07 million average in the third quarter, but was still 15.3 percent above the quarterly average of $903,259 a year earlier.

The number of available apartment listings fell more then 23% this quarter from last. This was blamed mostly on jitters about the presidential election and concerns about increases in interest rates which had led some buyers to hold back. This dampened prices in the final quarter. The number of sales in the last quarter dropped from 2,337 in the last quarter to 1,987-a fifteen percent drop. However, Dottie Herman, the chief executive of Prudential Douglas Elliman Real Estate said that sale prices traditionally dip in the last quarter.

The median price, which is the exact midpoint, rose 2.3 percent to $670,000 in the last three months of 2004. This is a 15.5 percent increase over the last quarter a year ago. However, the average sales price of luxury apartments, which are defined as those in the top ten percent of all sales, fell 10.7 percent, to $3.67 million. This number can be attributed to the fact that the average square footage of those apartments was down 7.4 percent, to 2,690 square feet. The average prices were still 15 percent above the same period in 2003.

The number of co-ops and condos available for sale dropped from 5,112 to 3,922 in the last quarter. This was a 23.3 percent drop. This was the sharpest quarterly decrease in four years. However, sale price appreciation was strong downtown and in emerging residential areas like Midtown East and Midtown West, these are the neighborhoods between 34th and 57th Streets. The buyers flocked to these midtown areas after they were priced out of the traditional Upper West Side or Upper East Side neighborhoods.

The average yearly sales prices were up 20 percent in Midtown East and 21 percent Midtown West. Downtown prices were also driven up due to new condo developments offering luxury amenities. These amenities attracted new buyers who might have previously stayed uptown. The average sales price of the condos located downtown increased 23 percent to $924,000 and the average loft prices rose 35 percent to $1.49 million.

Outside of Manhattan, seller’s enjoyed price increases as well. The average sale prices in Fort Greene, Brooklyn, increased 35 percent in this year compared to last. Renters are also getting hit with higher rents. The average Manhattan rent increased from $2,334 in 2003 to $2,397 in 2004. Landlord concessions began disappearing this year, such as a month’s free rent and assistance with broker fees. Out of 1,300 buildings tracked, 150 offered these perks as compared to 500 in 2003. Lastly, the vacancy rates in those buildings dropped from 3.25 percent in 2003 to 1.55 percent in 2004.

(N.Y.L.J. 1/3/2005)

4.   City Real Estate ‘Slump’

In the final quarter of last year Manhattan housing prices increased only 3.4 percent. This indicates that the market is waning a little for apartments under $1 million. City co-ops and condos were selling for an average $927,152 in the final months of 2004. This number was up $30,467 from the previous three months. However, this price boost was the smallest price climb in more then a year.

Experts blame this small price boost of under a million dollar apartments on low interest rates. “Anyone ready to buy such homes probably would have by now, considering that low rates have lingered for so long.” However, the final quarter in 2004 was significantly higher then the final quarter in 2003. The prices of co-ops and condos on the East Side were up 29 percent from last year to $881,000. Midtown apartments went up 20 percent to $722,000 while Downtown apartments went up 12 percent to $945,000. The West Side had the highest average price of $1,084,000, but the smallest gain of 9 percent.

(N.Y. Post 1/19/2005)

5.   High-End Housing Down in Manhattan

Although residential real estate prices have reported an upspring in the last twelve months, the New York apartment market has reportedly been spiraling downward. These high-end luxury apartments have shown a substantial dip in the last few reporting periods. In the last quarter apartments with four or more bedrooms have fallen an average of more then $1 million. The average price of all apartments has dropped slightly since the second quarter of 2004. The average price is $1,052,155.

Recent higher mortgage rates are also evidence of a slowing market. Some experts in the industry say that the market is cooling off, while others are more optimistic. Although mortgage rates are moving upward, it is not a rapid rise.

(N.Y. Post 1/4/2005)