Fall 2010 Julia Hoagland is a Principal in the Modern Luxury Living Partnership and a Senior Vice President/Director of Brown Harris Stevens. In her sixth year, Julia and her team have closed or brought to contract over $120M in residential properties. They ranked in the top 10% of producers for BHS in 2009 and have received numerous ‘broker of the month’ recognitions, most recently, ‘Most Deals’ in July of 2010. Julia’s philosophy is straightforward: to achieve the best price in the shortest time with the fewest problems. A privately-owned firm, Brown Harris Stevens has the top grossing sales volume per agent in Manhattan. In 1873 when Charles S. Brown opened his real estate appraisal business in Lower Manhattan, New York City was still just one borough surrounded by four other places called Queens, the Bronx, Staten Island and Brooklyn (in 1898 New York annexed the other boroughs). From the bucolic New York of the late 19th Century, through the cosmopolitan 20th Century and now the global 21st Century Brown’s company, which has since evolved into Brown Harris Stevens, has become known worldwide as the leader in New York City’s luxury residential real estate market. Real Estate — The Safe Investment? Interest rates, consumer confidence and the S&P 500 are all related to the price of Manhattan real estate. While predictably low interest rates have a positive correlation with an increase in Manhattan real estate prices, consumer confidence and the valuation of the stock market are in fact inversely correlated with real estate prices. Admittedly we don’t have too many decades of data for overall Manhattan real estate values*, but even comparing against the historical Case-Shiller S&P Housing Price Index results in the same conclusions. Statistics provide evidence that consumers view real estate as a secure alternative investment. This point is further supported by the high positive correlation between real estate valuations and the price of gold. People invest in gold when they are concerned about inflation and/or the economy. It seems that for many people investing in a home achieves the same goals. Manhattan real estate prices are down over 15% on average from the highs of 2008. Interest rates are at historical lows. Buyers have a lot of opportunities, and sellers have meaningful demand. * Because the NYC housing stock is over 60% cooperative, and cooperative sales prices were not made public until 2003, the Manhattan housing price data between 1997 and 2003 used in this study is incomplete. However, the conclusions between the two sets of data are the same: the correlation factor between Consumer Confidence and the 2003-2010 data is -0.4, vs. -0.7 for the 1997-2010 data. The nationwide data also supports this negative relationship. Sources: Gregory Heym | Terra Holdings Chief Economist, Brown Harris Stevens Market Research, HSH Associates, The Conference Board, S&P, Kitco.com Correlation describes the relationship between two data sets. Correlation factors range between 1 (perfect positive correlation) to -1 (perfect inverse correlation). Everything is perfectly positively correlated with itself; Manhattan Housing Prices thus have a correlation factor of 1 in the above table. For Buyers and Sellers For Sellers: Small investors fleeing the stock market require investment options. Newly-liquidated investments converted to cash, and people looking for alternative secure investments in an uncertain economic environment can lead to increased demand for real estate. Sources of demand can be found in not-so-apparent avenues. Work with your broker to make sure you’re identifying and reaching every target market. For Buyers: Higher maintenance should mean more than a correspondingly lower purchase price. If you have, as an example $15,000/month to spend on housing, theoretically you can divide that amount in any ratio between mortgage and property monthlies (maintenance/common charges and taxes) and be cash-flow neutral. However, a mortgage can be paid down, whereas monthlies virtually never decrease. In an immediate sense $15,000/ month is the same any way you spend it; however, the long term value and return on your investment can be adversely affected by abnormally high monthly charges. Negotiate intelligently; consider both the short and the long term when evaluating investment value. “There is no limit to what you can accomplish if you don’t care who gets the credit.” -Ronald Reagan
	Julia Hoagland, Senior Vice President 212-906-9262 jhoagland@bhsusa.com