New York Values #22 - Airbnb

Airbnb is a polarizing service. I myself fall on both sides of the aisle depending on when you ask. At its core, I love the idea of being able to rent a room in someone’s home here rather than pay $80+ for a shady hostel bed or $200+ for a motel near LaGuardia airport. Or rent a whole apartment for friends rather than two double beds, again at exorbitant prices. And there’s the added benefit of getting more of the culture/architecture/feel for a place than if you stayed in a chain hotel. I’ve also used the site to long-term sublet my apartment when I traveled (with my landlord’s permission), and to rent the second bedroom when I was between roommates. 

However, I hate their interface, especially for hosting. I hate their customer service (or lack thereof). And it sucks if you accidentally rent to someone who doesn’t understand how it works and rates you 4 stars instead of 5 because “this is clearly someone’s home.” Yes, yes it is. It’s in my description. That’s how Airbnb works. Or how it initially worked, before people started taking advantage of the system. 

The New York value here is that it is still easy to find an apartment or room in NYC to rent on Airbnb for a relatively cheap price. Regardless of the legality of the tenant’s or owner’s listing, as a consumer you can access this city for less than a quarter of prior costs. When I came to NY as a high school or college student I slept on floors, under desks, or not at all, depending on people’s availability. My friends and I could not afford a hotel room, and many hotels won’t rent to 18 year olds. Now? You have options, guys. It makes the gap between apartments easier, too! If you have a lease ending and a few days before the next one starts, you can just Airbnb a cheap spot while you put your furniture (if applicable) in storage somewhere. Good job, Airbnb. You may not be perfect, but you get some things right. 

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I was supposed to write about sellers in a soft market this week, but I want to write more about Airbnb instead. Dear sellers, I promise to get back to you next week. Lo siento. Don’t list in the interim. 

New York’s city council recently voted unanimously to require room-renting sites like Airbnb to supply exact addresses and personal information about their hosts (full names, whether they rent or own). The justification for this is that people are gaming the system, worsening our existing dearth of affordable housing. There are legitimate concerns surrounding “ghost apartments” and apartments being used solely for Airbnb rentals, so at face value you can make this argument. However, the hotel lobby has a lot of power in NYC, and has donated extensively to city councilman-and-womans’ campaigns. This makes it hard to separate how much of the recent measure is to protect “the people” and how much is aimed at protecting corporate interests. 

Because my relationship with my landlord is not the best (read: he’s letting the building fall apart around me), I’ve been careful to stay within the legal confines of my lease. However, most Airbnb hosts do not. Most new leases in the city involve riders that prohibit any and all Airbnb activity. There are some reasons for this that make sense. While I was careful to make sure anyone who would share my space was respectful, not everyone is so discerning. And if you live in a building where your neighbors are constantly Airbnb-ing to loud, obnoxious guests, I totally understand how that would be frustrating. Getting onto multiple leases solely for the purpose of making them into Airbnb’s and earring a profit isn’t really fair, as you aren’t taking on any of the responsibility that your landlord does, and you don’t pay for maintenance. It’s definitely unfair to make a profit off an income-restricted or rent-stabilized/controlled apartment, as you should be bound by the same limitations in price as the landlord. I was careful never to earn more than my actual rent when I was subletting. 

However, renting out the other room in your apartment — for a portion of the rent rather than a massive profit — if you are between roommates should not, in my mind, be prohibited. People move out and leave the city unexpectedly all the time, and you can’t always find another roommate with short notice, especially one with whom you feel safe. It's incredibly stressful to share your space with someone who terrifies you, and it's also stressful to suddenly pay double because someone up and bailed on you. It's usually not even possible, causing you to fall behind on payments. 

My moral qualms aren't the only reasons that people are unhappy with this proposed law.  Multiple lawsuits have already been filed challenging the decision. Airbnb is obviously angry about it, but the second is a private citizen who rents out a portion of his two-family home using Airbnb. That is completely legal, as he is not bound by . However, after he testified about his opposition to the bill, since he sees it as an invasion of privacy (and I'm inclined to agree), he claims that city officials with Special Enforcement have been actively intimidating and harassing him. This ties back into the theory that our city council is in the hotel lobby's pocket. I can't say 100% either way, but I hate lobbies, so I'll let you guess where my bias falls. 

I don't know what will end up happening, whether the challenges will result in a change or, if not, how the enacted law will affect short-term rentals in the city even more than the "Airbnb lease riders" already have. My hope is that, even if this does go through, people who rent out a portion of their space responsibly are able to continue to do so, for the good of both hosts and travelers.

Thanks for reading,

xoxo

Anna

New York Values #21 - Buyers' Market

Today’s New York Value is inspired, as usual, by a combination of real life events and an article I read, and it’s all about buyers!

Yesterday I submitted a board package for my FIRST sales deal (all 350 pages of it), which is equal parts exciting and terrifying. Co-op boards are like the Wizard of Oz: no transparency, no peeking behind the curtain, simply an announcement of whether your client is granted an interview. If not, they don’t tell you why, and you’re left to dejectedly speculate. But I’m sure this will go well. My client is a gem. Positive thoughts, yo! The Secret! Tony Robbins! High Frequency! 

Then today we had our agent sales meeting, where frustrated listing agents talked about their strategies for price drops in a market where seemingly nothing is moving. The even more frustrating part is that buyers are not acting on this opportunity, but are still waiting for the floor to fall out, worried that mortgage rates are going up while the market may still drop lower. As one agent put it, the market is going through turbulence and buyers are strapping in, preparing for a crash. The turbulence isn’t actually a sign of a crash, however, but a market correction that was inevitable after the past years of rapid price increases. 

Where I keep all of my money

The value here is how much data is available in NY real estate, although not in real time (yet, but don’t worry, Compass is on it). You can run comps for any apartment or building, no matter how bizarre and unique. You can read endlessly about the new development being proposed or built, to predict how neighborhoods will look years down the road. Quarterly reports, The Real Deal, Brick Underground, broker spam (my spam is the best spam, though), no other market has quite as many resources or as much activity, or as much data about said activity, as this city. 

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The actual real estate value is related to this article in The Real Deal. Brokers have been telling buyers that it’s a buyers’ market for months. And it is. Just ask any seller or listing agent; they will rant about it. But because there is a lag between when new development is planned/priced and when it hits market (years), a lag between when someone thinking about listing their place and when it goes into contract (months), and even a lag between when something goes into contract and when it’s actually listed as sold (months/weeks), many of these homes priced too high, that aren’t moving, were priced based on the data available when the market was still artificially inflated. 

Also due to the lag time in information, buyers have remained skeptical of acting, concerned that the market will continue to drop and that they should wait it out. But today, FINALLY, The Real Deal published an article backing us (the experts, if you will) up. The New York Times is writing about the power buyers currently have. Now that the news has caught up with our reality, buyers will start jumping into the pool, the market will readjust, and prices will stop falling. It’s 2009 all over again!

This is true at all price points; I was able to negotiate a price 10% below listing for my co-op buyer, at the sub-1 million point, which is usually the most competitive. The more expensive the property, the smaller the buyer pool, and the more leverage you generally have in negotiation. 

Me, advising my clients on how money works

So, if you are in the market to buy, start looking. We’re reaching the bottom, and if you don’t act now you’ll end up with higher interest rates, less inventory, higher prices, and less power. I’m honestly just upset I am not currently in a financial position to purchase an apartment…or the plane tickets I’m constantly looking at (travel bug forever). 

If you’re aiming to sell, check back in next week. Because my team just had a closing yesterday on an apartment that should have been hard to sell, but wasn’t. If you price your place right, it will sell, and sell quickly (unless it’s above $5 million, but that’s always a tricky market). If you insist on listing it way above its value, it will sit stagnant, which will lead to a whole host of problems I will get into next week on New York Values! 

xo

Anna

New York Values #13 - Flights

Today is my BIRTHDAY and I woke up at 4am in Reykjavik, Iceland after a 24 hour layover to head to Berlin. Iceland was cool and I’m glad I had a day to check out Reykjavik, which is really beautiful, but I’m definitely going back with a crew and enough money/time to rent a car and drive the whole country. 

In light of my being abroad, today’s New York Value is about how living in NYC makes it so easy and cheap to travel compared to most of the United States. New York is home to two large airports, JFK and LaGuardia, and although Newark is in NJ it’s still very much a NYC airport. LaGuardia is a domestic Delta hub, while JFK and Newark are major international airports with cheap service around the country and world. I thought living in VA and having such easy access to Dulles was amazing, but pretty much any time I compare prices, flying from NY is substantially cheaper.

I met a girl yesterday who goes to school in LA, and she expressed how jealous she was at what I’d paid for my flight (very little), and how easy it is for her East Coast friends to visit Europe, Africa, and the Middle East (ok, she just said Europe, but it holds true for all). Although it’s easier for West-coasters to get to Hawaii and Southeast Asia, Eastern Europe is my favorite place ever, so I’m glad I’m on the better coast (KIDDING! I love CA/Oregon/Washington, but I have no interest in living there). 

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Real Estate Value? Also international themed.

NYC’s housing market has remained stable throughout time in a way that very few can. Part of this is the city’s role in the international economy. Part of it is also the barrier to entry of owning, especially in Manhattan, and most specifically related to the concentration of co-ops.

Having enough money to purchase a co-op is not enough; you also need to show you have two years of “post-closing liquidity” after the sale. In a co-op your monthly HOA fees are called “maintenance,” and you basically need to prove that you will have, in cash or easily liquidated stocks/investments, 2 years of this amount, as well as your mortgage payments, after you buy. For instance, many apartments on the lower end of the price range in Manhattan, at $500k, will then have maintenance at roughly $1000/month. So with 20% down, you’re looking at handing over $100k in cash, getting a $400k mortgage, paying your closing costs (which vary, but let’s say 4% of the purchase price for this example, so another $20 grand), and then need to show about $70-80k more in the bank. This is, of course, after you have an accepted offer, sign contracts, submit a board package that includes such documentation as your past 2-4 years of tax returns, recent bank statements, letters of recommendation, landlord recommendation, employment letters, have your credit and background checks, etc. Oh, AND then you have the interview with the co-op board if they think your application is up to snuff. 

I don’t mean for this to scare anyone off of buying! Honestly, in this city it’s shocking the amount of money and documentation needed simply to rent mean that if you’re in the habit of signing leases rather than just subletting and floating around, buying isn’t all that much crazier. And because co-ops are so strict, during recessions there is very little fluctuation in their values; your asset’s value is pretty protected. There’s a reason all these very wealthy foreign investors have historically and continue to park their cash in the NYC housing market. 

Hope you’re all having a great week, and are getting more sleep than I’ve had the past few days! It’s shocking that this is even remotely coherent.

xo

Anna

New York Values #5 - Guns

My first New York Value lauded the civic engagement of schoolchildren, specifically their work getting an honorary street named for Elizabeth Jennings. And now, starting with the Parkland survivors, we are seeing massive nationwide civic engagement in kids/teens regarding gun control. 

I had to write about guns this week, because on Saturday NYC was home to one iteration of the March for our Lives, with hundreds of thousands in attendance. I was too busy recovering from a stomach flu to go cry-march with everyone, but I was still inspired by the vast showing of support. Anyone who knows me knows where I stand on guns, but this isn’t about me. It’s about this city’s long history of successful gun control reform having a lasting, positive effect on its populous. 

In 1911, a murder near Gramercy Park moved the state congress to pass New York State’s Sullivan Law, which required residents to obtain a police-issued license for any “concealable firearm.” The law made carrying a concealed weapon without such permit a felony. It was the FIRST of its kind and has been the blueprint for similar laws throughout the country. 

This article has a very interesting breakdown of the whole inception of the bill and how it was really spearheaded by a gangster as well as a lawmaker! https://cityroom.blogs.nytimes.com/2011/01/23/100-years-ago-the-shot-that-spurred-new-yorks-gun-control-law/

The real power of this law, though, is the strictness with which it is enforced. Even if you pass a background check and meet the permitting criteria, law enforcement can still deny you a weapon. I’m not going to get deep into the second amendment debate, but it does not grant citizens carte blanche to own weapons; that’s a complete misreading of the law. You’re entitled to apply for the permit, but not entitled to be accepted. Why do you want a gun here, anyway? To hunt rats and pigeons? Just go to a range and shoot their guns; it’s still fun!

There was a drive-by shooting two doors down from me when I first moved to my apartment, and it was terrifying. I am incredibly grateful that it is not more common largely because of the barriers to gun ownership that exist here. Thanks, New York, for being ahead of the curve and keeping me safe.

(Note: After the Sandy Hook shooting, NY passed the SAFE Act, banning outright all assault weapon sales in the entire STATE.)

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The real estate value today is perhaps self-justifying, but it’s to clarify something that has come up a couple times recently. 

You really cannot work with two unrelated RE agents, because one of them is going to end up getting forced out. It happens a lot: your mom knows someone and your friend knows someone or you know someone and your roommate knows someone so you reach out to both. And they both send you listings and put in time, show you around, etc. And you kind of just go along with it until you end up deciding on a place, telling the other agent that you’re all good now and they can stop the search on their end. 

It’s like shitty dating. You’re seeing someone and it seems to be going well, you’re getting more invested, and then all of a sudden they tell you they’re getting back together with their ex, or they met someone else they really like. And you’re left FOREVER ALONE. 

This is also why many agents aren’t particularly excited about tenant-side rentals. At least in a sales transaction one broker is guaranteed to be part of the final deal, and it’s explicitly stated that you should only work with one agent at a time. But in the free-wheeling rental world there are all kinds of communal living or leasing agency options, so not only are some clients working with an array of agents, they’re also exploring other options on their own. It doesn’t feel great to spend a bunch of energy on something only to be told you’re no longer needed! At least if a boss fires you he has to pay you two weeks severance on top of what you’ve gotten for “time served.” In this industry, that’s not a thing. 

This isn’t a lecture or me complaining about my position. Instead, it’s a call to both sides to make sure expectations are laid out early on. As non-agents, if you are up front with anyone you consider working with about all the potential inevitabilities, that person can weigh their options and know what they’re getting into. They should do it on their end as well, but by being smart, savvy consumers, you can take the first step and also impress any potential agent with your awareness. Plus you’ll get the best from anyone you work with because you’ll be an absolute DREAM client!

As always, direct questions to anna.klenkar@compass.com, and I’ll be back next week!

New York Values #1 - Elizabeth Jennings

Because I thrive on content creation, especially about the city I’ve grown to love so intensely, I’m beginning a weekly column of sorts called New York Values, a play on the insult lobbed at us metropolitan folks by those who want to paint urban dwellers as Godless and out-for-themselves. In reality, nothing could be further from the truth, and I’ve seen at least as much behavior that would make Jesus (or whomever) proud here as in my time spent living in rural Virginia or traveling through devout lands.

Because I do real estate now, it’s going to also include another “value”: a listing, tip, or fact about renting/buying/selling that I’ve learned on the other side of the looking glass. Who doesn’t like learning or looking at pictures of gorgeous apartments? Weirdos, that’s who.

And, because it’s me, this first post is about a strong woman standing up to some bigotry.

Portrait of Elizabeth Jennings in 1895, courtesy of Listverse

Inspired by NY Times New York Today, Feb 22, 2018:

One summer morning in 1854, Elizabeth Jennings, a young black schoolteacher, was headed to play the organ at her church. She hailed a horse-drawn streetcar; the conductor didn’t want to let her in because of her race, but she prevailed by jumping in and hanging onto the window frame when he tried to forcibly remove her.

He got the police involved and an officer pushed her out of the streetcar. But she was able to find a lawyer, future president Chester A. Arthur, to help her sue the streetcar’s operator, winning her $225 in damages and creating a precedent that allowed African-Americans to take any public transportation provided they were “sober, well behaved, and free from disease.”

This led to the city’s public transportation becoming largely desegregated within five years. And now, over a century later, the subway boasts an impressive diversity, with its passengers uniformly opposing the intoxicated, poorly behaved, and/or diseased (looking at you, person who gave me the flu on the A train).

Corner of Pearl & Chatham St. where Jennings hailed the streetcar, courtesy of NYHS

Obviously this was a long time ago and doesn’t speak to the current character of the city, but a few things do.

1. This was spotlighted by the New York Times in 2018; they do a daily NY news blast and it’s often focused around a personal interest story about a community activist. It’s probably where a fair amount of these little articles will originate, and it’s a nice way to start your day before you cram onto a crowded train to smell someone’s breath for 30 minutes #doweneedtobetouching.

2. In 2007 the city put up a sign reading Elizabeth Jennings Place on a street corner blocks from where she made her stand. There are spots like this all over NY, with roughly 1,600 honorific street names immortalizing people like musicians, activists, and religious leaders. Who’s Godless now?

3. The reason this street was honorifically named? A group of third and fourth graders at nearby P.S. 361 were so moved by her story that they asked the city. It took them a year, but through petitions, meetings, and a campaign of pressuring local officials, they made it happen. If I had learned this valuable civics lesson at 9 years old I would be way more excited about government.

Elizabeth Jennings Place, courtesy of Narrative Network

And now for the real estate part: fun mortgage info!

Did you know that nationwide people are speculating about how the impending mortgage rate hike will affect the RE market? Did you know that some agents are very stressed about how this will affect their business? Did you know that I am zero percent concerned because people will always buy homes and I do not yet have a consistent income I’m afraid to lose?

However, as my senior broker Joe Quiros likes to say, “You don’t live in in the PRICE; you live in the PAYMENT.” So, for every percent the rates increase, your monthly mortgage payments on a 30 year loan increase 12%. Essentially what this means is that while people will not stop buying, their dollar will not go as far, because the same priced apartment will now cost them 12% more per month than if they had locked in earlier.

For example, for every $100,000 borrowed at 5% interest, you owe $59.40 per month MORE than you would at a 4% rate. That's not a huge difference on a small loan, but NY loans are often sizable, meaning this scales to more like $500/month additional.

If you have any questions about this, send me a message and we can talk numbers. And if this inspires you to GO BUY IMMEDIATELY, then I am clearly an incredible salesperson and we can work together.

There you go, it’s your first NEW YORK VALUE!!! I’ll see you back here next week with another little essay about how awesome NY is and how we are not all giant assholes; we just walk quickly and don’t like things in our way.

<3

Anna