Paris vs New York

From where I sit on the couch, I have a perfect view of the Empire State Building. I arrived in New York yesterday to a warm, muggy day — with no lines at customs and no traffic on the roads into the city from Newark Liberty Airport. From landing on the runway to depositing the bags in the apartment was literally less than one hour — a record-breaking speedy entry into “The City.”

There’s always a bit of mail waiting for me when I arrive at our apartment. In it among the “garbage” mail was a direct mail piece from a real estate agency promoting property in the West Village and touting the average price per square foot in the neighborhood, where the apartment is located.

When my daughter and I bought the apartment in 2008, the rate of exchange was $1.50 to the euro and I had the good fortune, thanks to the increasing values of real estate in Paris, to borrow against the property in Paris in euro value to purchase the apartment. It may have been the best investment I’ve made to date, but I largely have Paris and the euro to thank for that.

New York City has seen the same kinds of increases this past decade that Paris saw in the first decade of the 21st-century. The average per square foot in the West Village is now more than double what we paid for the property eight years ago. My Paris apartment, purchased in 2000, is now four times more valuable, making the increase in values about the same between Paris and New York year to year (11% annual increase in New York vs a 10% annual increase in Paris).

The New York apartment is a “co-op” as opposed to a “condo.” In a forum on Trulia.com, Mitchell S. Feldman of Fillmore Real Estate, explains the differences well and in some detail. In synopsis, he writes: “Condos are real property and are protected by ALL real property laws. When you purchase a co-op, you are buying shares of stock in a corporation that allow you the right to live in an apartment as if you owned it.”

Condos are more expensive than co-ops and with co-ops there are more rules and regulations to which you must abide. He adds that even though co-ops can be more restrictive, which tends to lower their values as opposed to condos, owning a co-op is certainly much more financially sound than renting.

There are lots of sites that describe the differences well, manhattan.about.com is another one, but it’s tough to avoid co-ops in New York, because about 85% of all residential housing in the city is just that — and about 100% of pre-war buildings are co-ops, meaning that the West Village has a higher percentage than most. Our building was built in 1897 by an Irish immigrant named Michael Hallanan, who invented a rubber horse shoe pad. His initials, are still on the building and he was known as “the father of Sheridan Square.” The building went co-op in 1985 and has only 88 units in total (relatively small for New York). Fortunately for us, the building has very liberal policies — one reason we grabbed it so quickly (I can remember walking in and saying immediately “We’ll take it.”)

One thing I discovered this past year, negative to co-op ownership, is that the banks aren’t keen to lend money using the co-op as collateral, because of it’s not considered “real” property. In addition, many co-ops will not consent to the use of the shares of stock as collateral for loans to shareholders — it’s within the judgment of the board of the co-op.

Another disadvantage is compliance with the co-op board and the by-laws, often very restrictive, which must also approve all purchasers and often even those who rent. Candidates are in essence buying into a membership and therefore new members are rigorously screened. (We submitted a large dossier to the board for their scrutiny and my daughter underwent an interview!) Many celebrities have been turned down by selective New York co-op boards — largely because of the attention they might draw to the building.

My daughter attended an annual homeowners meeting just prior to my arrival. As with just about any gathering of that nature, there are always a cast of characters and more than one opinion per person. The same is certainly true for Paris “copropriétés,” even if they operate more like condos than co-ops. Mostly, I have found these meetings both frustrating and amusing, but in some rare cases, appalling (as with our client’s who’s request for wheelchair access into her apartment was denied. You may remember the article).

One thing for sure, having real property in both cities has been the best investment for a secure future and by diversifying in two currencies, a hedge against their consistently fluctuating values.

While I’m here in New York, I am welcoming personal consultations Friday and Saturday and Sunday on the subjects of working, living and investing in France. This for the special price of $330 for up to two hours (normally 330€, a $42 savings!) If you are interested, please text me at +1 (917) 388-0590.

A bientôt,

Adrian Leeds
The Adrian Leeds Group

(with Daughter, Erica)

Respond to Adrian: [email protected]

P.S. Money can be an awfully difficult thing to deal with, especially when you’re living outside of your native country or have a foot on each side like so many North American Expats living in France. I’m an Expat living in France for more than 22 years and I can tell you that the questions surrounding investment, taxes, currency exchange and protecting one’s assets from one country or the other is forever on all of our minds. Here’s your chance to learn a lot and have lots of those questions answered at our first North American Expat Financial Forum in Nice, France. Sponsored by Cross Border Planning and the Adrian Leeds Group, this four-hour forum on October 17th bringing together five international speakers is an opportunity not to be missed. See our special page for this even to learn more and register for your spot!