oh don't you just wish you bought at the height of bear hysteria?

in answer to your question, no.

I already had you down as a no.

just wanted to make sure. could've slipped your mind.

I was happy to get an unnegotiated 15% reduction in my lease and another year of rental market pressure on the sales market to buy in 2010.
We've only just begun.

You do realize the record number of purchases in late Q2 and Q3 were a symptom of record number mortgage rejections in Q's 1 and most of 2?

BTW, Congrats on your purchase, with no sarcasm.

I'll reprint a post I made yesterday:

Noah of UrbanDigs makes a fair point of the lagging data and how it will move people:

http://www.urbandigs.com/2010/01/get_ready_for_the_housing_repo.html

Consider, as Noah alludes, if inventory and sales volume remain flat off the 4Q09 data for the next three quarters. Per Jonathan Miller's numbers we would be subject to trumpeting headlines that inventory is down y-o-y: -34% in 1Q10, -27% in 2Q10, -18% in 3Q10. The number of sales would be up y-o-y: 107% in 1Q10, 61% in 2Q10, 11% in 3Q10. Even with a modest movement in sales prices, imagine the psychological effect.

That's the bull case, as prior period comparables favor a momentum argument that agitates the sideline buyer to take action; thereby pushing up values.

The bears, and I still count myself among them, view the macro factors as yet unresolved and that the Manhattan RE market is nearing another tipping point. The credit engine that fueled our boom is gone; the inevitable increase in mortgage interest rates will disproportionately affect jumbo loans; the pool of buyers for the sweet spot ($1-$3 million apartments) and their deployable capital has been diminished; there is more pent up supply (sellers that took a flier on last years maelstrom plus new-dev inventory) than pent up demand by qualified buyers; government assistance reamains unsympathetic to buyers of million-dollar homes, whether they are in distress or at the point of purchase; etc.

I don't want to see Manhattan real estate crash & burn. The secondary and tertiary effects are unanticipated and likely negate any benefits of a cheap buy. I just don't see the kind of stability that encourages making such a major purchase decision.

My bias is that 3Q10 becomes the next pivot point for our market.

i agree that the data lags, but i find myself nitpicking with noah's time periods. huge numbers of closings reflected in the fourth quarter report were for properties that went into contract during the "hot" months. condos seem to be closing much faster, even coops. it is true that i have seen some properties trade at above 2007 levels, the vast majority have been for properties in very scarce supply (3/3s between 5th and park, for example). but it doesn't seem to be in any way a general thing yet, and i'm looking at a lot of closings for properties that went into contract after June.

A lot of speak about "shadow inventory" and little to no consideration to the 3 years of pent up buyers.... people who would have or need to buy but were scared away now sitting on more cash than they have ever had in their lives....

aboutready "in answer to your question, no."

spinnaker1 "I already had you down as a no."

aboutready "just wanted to make sure. could've slipped your mind."

Classic.

I'm probably assumed to be a no as well. Which would be correct.

spinnaker1, be careful, you may upset those select few that will claw down your every statement here (not naming names, but I have money on my "favorite" multi-aliased poster chiming in at some point to do just that). In all seriousness though, I think there are some good questions out there:

1) What will happen to interest rates? I don't think anyone knows for sure, but they will be heard before long. I doubt they'll stay where they are (or go much lower, if anyone's thinking that), which will impact purchasing power. I think some are too quick to declare this as wholly impacting the seller (it'll almost certainly be a give-and-take on both ends), but I'd guess this will ding sellers a bit more.

2) How fast will this cycle be? One of the regurgitated responses has been "cycles always take years," or (my favorite) "a bargain about to become a bigger bargain is no bargain at all," which is all a bit presumptuous for my tastes. The x factor this time around is the internet and spreading of information - will this have a real impact on how quickly we go through this? I tend to think no, but there's no real precedent here, so anyone claiming to know for sure isn't fully cognizant of what's going on.

3) If new development continues to diverge from the resale market, will there be an aftershock effect? If we accept that new construction is generally more desirable, it's clear that it only has so much to fall before we see that segment of the market recover (ie: with equal pricing, more people would spring for new) or the resale market gets banged up further down the line. I'd put my money on the former, but time will tell.

Regardless, congrats again on your purchase - as has been said before, the only thing that matters is that you and your family are happy and comfortable. The rest is just chatter.

Nobody wants to see Manhattan real estate crash & burn, angler, but you seems to be living on a cloud.
Many buyers on the sideline who didn't jump foolishly on the market expect prices to come down to pre bubble era circa 2001. It still upset me when i read nowadays that RE prices are now "cheap". That doesn't mean anything!
What are you calling cheap? Cheap because it's 15% less than an overinflated number to start with?
To me, an apartment is cheap when it cost less to buy it than to rent it. It's as simple as that!

sledgehammer, you and I agree on pricing.

truthskr10 - don't really care the what or the why. The fact that it has happened amid (and in spite of) the gathering storm. It tells me that other factors are at play here, not just simple economics.

No because say you wanted to buy in a new development like the Rushmore. At the height of the bearishness there were only marginal discounts. Now they are 20% and who is to say it won't go lower. The Harrison is experiencing the same -- and those are the successful developments. Lucida, Azure etc? Got to be getting better and better for buyers.

If any big developers default, it will also have an effect. It the market rights itself then I will still not regret being cautious in an extremely volatile, non transparent market. I bought fairly well in Miami by being very patient. I know it is not the same market, there was much more inventory here, but it took over three years from first "burst" to get close to bottom. We have still not bottomed in Miami. I want to take my time here. When I was seriously looking this summer, everything I wanted was listed at 2007 prices. Too much risk for me.

That said, you had your reasons to buy and you are happy. So congrats.

You can take this for what it’s worth. I’m a buyer looking for a high end “trophy” apt and I live in Boston and I have to schedule showings well ahead. I’ve been looking now for 18 months, which predates the market crash. At first, summer ’08 the ny market felt unreal and sellers weren’t taking offers. During the first crisis period late winter, early spring ’09, I like most people was in paralysis and too shell shocked to do anything. By the time I could poke my head out of my ass, it was late spring. It looked like it might be a good time to buy and there were some very nice apts coming on to the market, anyway, to make a long story short (I’ve written about my experiences on other threads), several deals fell through.

So here we are in January and my feeling is that a combination of government intervention and buyers that are able to keep property off the market will maintain the slight positive (bullish) bias that exists today far enough into the new year so that this momentum is sustained at least over the next six months or so.

So, as long as this equilibrium can me maintained I can’t see a significant move down, that is until the next shoe drops or doesn’t.

want to take my time making a NY purchase.

apt23 - my sentiment towards new dev is similar to yours. I still see a big disconnect there. Also, if all I was seeing was 07 prices last spring I wouldn't have bought. It points out the great subtleties in this market where there were early 2000's prices out there in top buildings amid the head in the clouds offerings.

spin: now that i am looking to rent, i am finding very, very flexible prices. how long could the disconnect between rental and own expenses endure?

Are you kidding? the point is it didn't really happen. The "record" number of sales in a 2 month period was the result of 6 months of barely any closings.

If I recall, Q1 had around 1000 closings! When the average is @2000/2500 per quarter.

We're not just talking 2 months here, we've been averaging around 1000 per month for the last seven or better. What got it going was prices started to mesh with buyer expectations.

Does someone have a link to sales charts for manhattan for the last 2 or 3 years?

Spinnaker
I'm pretty sure the average QUARTERLY closings are around 2000/2500.
In fact Q4 was 2400. That's a 600 per month average. Q1 '09 had 1000 closings. That's 250 per month.

Here's a chart

http://www.urbandigs.com/2009/10/manhattan_q3_sales_surge_46_pr.html

And it's a good chart. The colors make it easy to compare the quarters in each year as well.

2005 looks like the worst year and 2009 may have that beat.

what a kanadian way to think. I lived in nyc and traded whole floors in busted condos in 1995 to 2001, FYI we had a nice 200% run up in that 6 yr period. I'd say 50% of run up was due to ordinary "catch up" as we all know RE is an emotional trade... now i ask you spinny, 15% below 2005, even as we point out trades happening at 2004....so you beat the mkt... say the seller undercut the mkt and got out... you caught the proverbial Knife.. got 15% off 2005 or say 20% "mkt". In 1 year, if mkt is trading at 2003 prices and I decide to catch the falling knife for 15% off.. where does that put me vis-a-vis (that's french), spinny lemming and co.?????

w67th, if the goal is to buy at the absolute bottom, then you'll probably be SOL as well. I don't get what's wrong with getting a very good price (and one you can comfortably afford) on a place that suits your needs. Hardly makes one a lemming. As kylewest has said here before, the goal is not to die with as much money as possible.

And before you say it, get your mind out of the gutter!

LOL bjw, and BTW, I think the same thing every time I see your name.

truth, well, it's not my place to say it, but you guys need to have a sit-down with your lady-friends (or man-friends, if that's the case). There's some serious neglect going on!

Here's a prediction.

AboutReady won't buy another Manhattan apartment ever again. She'll be forced out of her Peter Cooper units and into the suburbs because her rent has gone up 30%. Bank on it.

I'll give this 2-3 years. Marking 7-8 years of rent since she sold back in 2004. *ouch*.

You can't change imprinted genetic code.

the W doesn't even help the situation, it might even hurt it.

Yuo konw eevn tgohuh tihs is slpeled wonrg you cna raed it as lnog as the frsit and lsat ltetrs are crorcet.

ill try to get an updated chart up for you guys soon for the one that was referenced in this thread!

Thank you Noah, it is BTW a beautiful chart.

I think the point was made without Q4 '09 but look forward to it.

enrique... do you have greasy hair.. well that's how I imagine you. Hows that PH condo "home" doing? Didn't knock up your wife this winter, heh?

bjw... FYI, I am comfortable that prices which get much lower than 1999-2001 prices... but I think based on my "needs" and timing... i will do a trade in the 2001/2002 range unless something amazing comes up.

Look... I've always said, if the "home" is something you can pay off in 2-5 yrs w/o hardship.. you've "earned" the right to do WHATEVER YOU WANT, including leaving a pregnant nanny to have your thrill... it's not illegal to cheat on your wife... you just gotta handle the consequences...

hey, hockey puck! made you look.

w67th, fair enough. I'm too lazy to look, but what would be much lower than 99 prices? Like sub $400 psf at 1965 Broadway? Honestly, if that happens, I can see myself throwing everything at real estate. Why would you have to leave a pregnant nanny? At that point, wouldn't the wife have caught on?

w67whoreStreet,
I'm doing great! Thanks for asking.

Look another new highs???

Can someone tell me WHY yields on high grade bonds continue to collapse???

http://finance.yahoo.com/echarts?s=SHIAX#symbol=SHIAX;range=3m

Oh that's right! The economy is recovering you dumbass.

ericho, as i've been spending half the amount i would have been spending on the condo i wouldn't bet on it.

and, honey, don't worry about me. i'll be able to afford whatever the fates have to offer, and only more as time goes on as i'm saving wheelbarrow loads of cash by living where i am. i certainly will not have to move to LIC (not that there's anything wrong with that).

"I am comfortable that prices which get much lower than 1999-2001 prices... but I think based on my "needs" and timing... i will do a trade in the 2001/2002 range unless something amazing comes up."

Gee wannabe that sounds an awful lot like a falling knife.

Is there a tiki bar condo being built on a sacred indian burial ground I'm not aware of?

Spin. One of your points is too subtle for me to understand. I don't get how the new dev market can be troubled, while you seem fairly sure there was a buying opportunity last spring. Are you saying new dev prices, which in some cases in manhattan have/had such crazy asking prices, are going to fall dramatically, but that won't impact the broader market, just them?. But if new dev falls a lot in Man. won't that make the more marginal location new dev fall even more, all of which would impact prices in man wouldn't it? If we were talking about a small number of new dev buildings, I could see how you could argue it's a different animal, but that's not the case, is it (altho obviously new dev is nothing like miami in terms of relative size to the market whole).

http://www.urbandigs.com/2010/01/manhattan_q4_sales_up_109_from.html

chart is up!

hmmm second biggest Q4 numbers in a decade. The delusion is rampant.

with that volume of sales and the gov't's support of the banking industry and mortgage products i'm surprised prices fell at all.

jim - new dev prices are still disconnected with the market for wahtever reason - and there are many. That wasn't any different in the spring. I feel there has been a change in buyer sentiment and people are no longer willing to pay the premium for bs amenities. They may start competing with resale sometime...

as i have noted many times before, the new developments are businesses staffed with people who have no upside in raising their hands to suggest lowering prices. it took GM 30 years to die; I'm not suggesting that time frame here but each building will hang in there as long as they can.

some will be able to hang on long enough to sell out. in some of those everything will be OK. in others, not so much. some will definitely not be able to hold out long at all. i think we're just about there for a few more of those.

about -- given the contraction in the finance sector, and other layoffs in nyc, and lost bonusees,..i assume you're engaging in light-hearted hyperbole to make a point, i.e. no government program can get an unemployed person to go buy

(the words after i.e.werent meant to a statement of your point)

1% higher in mortgage rates means 10% decline in housing, this is widely accepted run the numbers on two different mortgages. Many believe that rates will be close to 7% on mortgages by end of year as the govt slows the purchase of mortgage backed securities in the market which is causing these low rates we are feeling now.

Final word: 7% mortgages, another 15-20% drop in prices. NYC is not bullet proof prices have gone insane and a 20% correction is simply not enough.

columbia...i remember!..but to argue, as spin does, that the bear bottom was missed while arguing..oh, new dev still dangerous...doesn't make much sense to me..because sooner or later the new dev will have some impact, one would think

no...but gov't plans can and do induce employed people to make real estate purchases that they might not without the incentive.

col..of course i understand that...but i think it is hyperbole to say that one is surprised prices fell at all given the contractions, unempployment

needless to say, i agree. but based on some of what spinnaker has said, it seems that he got a deal that was significantly ahead (i.e. below) the market.

jim, i was talking quarter over quarter, not yoy. and yes it was a bit of hyperbole, but i think one can't underestimate the effects of easier money. when did the conforming limits change for manhattan? huge impact on the lower-level market, simply huge.

> oh don't you just wish you bought at the height of bear hysteria?

Problem with the OP is a pretty basic but disastrous mistake.... he's confusing volume with prices. Of course, volume was going to have to bounce a bit. note that 2009 sales are still waaaaaaaay behind 2008 sales.

But these transactions are at lower prices.

Hell, market report just showed ANOTHER 5% drop.

Too few people have a real understanding of RE markets. Theyy don't V like stock markets. They dwell. Look at past history. Check out post '87... took FOUR YEARS to bottom.

Yes, the worst might absolutely be over... but that doesn't mean RE prices rebound.

This fundamental mistake basically invalidates the entire premise.

That was a good chart, btw. And folks seemed to have missed the headline... AGAIN.
Volume jumps, prices fall. Thats now two quarters in a row (possibly 3, I can't remember).

Again, confusing volume with prices is a pretty substantial mistake.

"Again, confusing volume with prices is a pretty substantial mistake."

I don't know how you think the OP is actually confusing volume with prices. You can't fully explain the market without talking about both, frankly, which is something you've done before. The story from these reports is that pricing is stabilizing (and urbandigs has confirmed this several times over, FWIW). The large increase in volume is a leading indicator. Does that preclude smaller bumps up and down from here on out? Of course not.

"This fundamental mistake basically invalidates the entire premise."

And with a casual flick of the wrist, you can dismiss a cogent, well-reasoned post. Must be fun!

"All in all, it's proof that more activity is not a sign of rising prices"

- Noah

""All in all, it's proof that more activity is not a sign of rising prices""

Of course it isn't. But you're confusing stabilizing with rising. Enormous difference.

Btw, why would you call it "bear hysteria". They weren't hysterical, they were RIGHT.

I think what you mean is "owners crapping in pants hysteria".

i'm sort of surprised (unless I missed it) that there's not much talk of employment in this discussion - - isn't that especially important for the near term, particularly when you think about the influx you would expect to see for spring/summer relocation/graduation season?

i mean, if everyone living here just shuffles apartments, that doesn't really help aggregate pricing, does it?

i'm sort of surprised (unless I missed it) that there's not much talk of employment in this discussion - - isn't that especially important for the near term, particularly when you think about the influx you would expect to see for spring/summer relocation/graduation season?

i mean, if everyone living here just shuffles apartments, that doesn't really help aggregate pricing, does it?

Yeah, that can't really help either. The additional volume might simply exist to confirm continued declines.

anotherguy

Same goes for the rental market. You cannot have a stable sales market without a stable rental market.
Leases last a year. So RE has better speed bumps than the stock market.
But the direction is unmistakeable.

This is why RE generally takes years to bottom.

somewhereelse - do you think the transparency brought on by the internet is playing a role wrt the speed at which this correction is occurring relative to '87? The bear hysteria continued through what has proven to be a good buying opportunity.

truthskr10 - pockets of stability have clearly emerged.

others - sellers were running a little scared and inventory was much better (in my area of interest) back then. btw I'm in no way predicting a precipitous rise in prices. I didn't intend to give that impression.

strictly anecdotal but......now that i have temporarily given up on buying and have started looking for rentals, I am surprised at the soft mkt for rentals. I can imagine that on the lower end it would go down as young ones double or triple up or even go home to parents. But I have found that the 6,000 to 10,000 mkt often settles out at 30% down. The recent buyers of new developments will not be able to cover carrying costs through rentals. That has got to put pressure on prices.

"somewhereelse - do you think the transparency brought on by the internet is playing a role wrt the speed at which this correction is occurring relative to '87?"

Mildly, but not enough to turn 4 years into 4 months, if thats what you're inferring. ;-)
First off, the internet doesn't change the contract/close lag. And you can't assume that most buyers are like us on these boards, they just aren't. The majority of folks I talked to in "real life" just had no idea that the crash was upon us months in.. including 4-5 friends who were looking to buy!

> The bear hysteria continued through what has proven to be a good buying opportunity.

Looks like some of the hysteria is yours. I mean, folks can make predictions about whats going up and what's going down... but "proven"? Really?

Its quite the opposite. First off, we declined since then.

And, even if we hadn't, what does the next 10 years look like.

In the end, folks that say "proven buying opportunity" are generally snake oil salesman... or real estate brokers.

> I am surprised at the soft mkt for rentals

Agreed. its nutty how soft it still is. I'm seeing the same deals (or better) than I was seeing a few months ago in the buildings I looked at.

I've seen the same thing, apt23. People accept paying $7,500 monthly mortgages - but rent checks that size just don't feel right.

Yea!

i'm not sure how linked the rental and purchase market have been historically. all else being equal, it would seem that rental weakness would be a leading indicator for purchase weakness.

"All in all, it's proof that more activity is not a sign of rising prices"

- Noah

Well I dont know what to say. Im not bullying or busting on anything, just trying to tell you guys what I see out there. Its all relative, period. But people dissect every statement and add there own flare to it. What I see is fairly simple:

From MARCH 2009 Lows - yes, bids have improved and the improvement was progressive in nature. Trades today are higher from trades in feb/march 2009 that cleared in may-july...Now you must wait 2-3 months to see what I mean, as it clears - the problem is the comparison here is to a period in time when VERY FEW trades occurred, maybe 900-1100; and who knows how many of those buyers walked away, broker contracts, couldnt secure a loan, got a coop rejection, etc..Maybe there were 700 fear trades that marked the bottom from the adjustment, that is not much at all..I just wrote about this 5 minutes ago on UD:

http://www.urbandigs.com/2010/01/the_improvement_in_bids_was_pr.html

From SEPT 2008 AFTER LEHMAN - hard to tell from the week or so after Lehman..Id say bids are still lower by maybe 10-18% from these levels as we were trending down 5-7% prior to that event. depends on price point

From JAN 2008 - Bids definitely lower. Maybe 15-20%

From MID 2007 PEAK - Bids definitely lower. Maybe 18-30% depending on price point.

Its all relative and its all a matter of what we are comparing things too. For me, I really dont care or dont follow the quarterly reports and median data..it has proven to be flawed and lagging. I care more about what I see out in the field and where I see trades getting signed in real time and ALWAYS try to keep a mental history of where we came from.

spinnaker1, I'll also add... did the Internet speed up economic factors? Change the foreclosure process? etc, etc.

I think assuming that we just created a world where RE Vs is a little wacky.

Topper. No kidding. I looked at a $7000 2bed at the Harrison. Then I saw the same apt just sold for !,590,000. When you factor in the fee for renting and tax incentives for buying it came awfully close to the same monthly nut.

urbandigs, right on. That's a very helpful breakdown of the different time periods - much appreciated!

but...is it renting at $7K? my guess is not.

Check out this link from Miller Samuel on the degree to which rents and prices have moved together.

http://www.millersamuel.com/charts/gallery-view.php?ViewNode=1249522147RFeuS&Record=1

cc: ask was 7600 plus 15% fee. dropped to 7000. i believe he paid $1.9. as I said, the sponsor just sold the same apt for under 1.6. gotta hurt. over 2 months on mkt.

interesting graph ...but anecdotally i think it overstates quite a bit how much rents went up, based on a couple places i am famliar with

too bad SE doesn't have a way to show what places eventually rent for. can't believe this will go anywhere near the current ask.

welcome back CC!!! yeh!!!!

> Check out this link from Miller Samuel on the degree to which rents and prices have moved together

They move together, but note how much the ratio has changed.... from 850/630 to 980/1050. Thats 1.34 to .9333.
Thats a 44% change!

Also note that rents were basically flat for 7 quarters priot to the crash.

Also consider that much of the "move together" was inflation. If you remove that, you might not see much correlation at all.

CC
Intrinsically linked.
During stable times,just about any apartment you saw both for rent and sale was around 200 times the monthly rental ask. Which works out to 17 times rent roll roughly.

Minimum 1 year lease commitments though provide cover as well as giving "free months" rent a temporary smokecreen. If the downturn is short lived, it will affect a lot less than if this is a 2/3 year event.
But as we creep into a multi year situation, and commercial property owners submit their necessary annual statements to their lenders, the smoke starts to dissipate and new pressures are added on the whole industry. The adjustment or correction will be forced more.

You see it in the stock market so much faster because it's much more liquid.
For stocks, it's PE ratio and no matter how much the seesaw swings or the distractions (sometimes a couple years)gravity will bring the PE ratio back to 30.

The same holds for real estate, manhattan is more desirable, more volatile upswings and there is a premium from the normal 12 times rent roll around the country to 15/17 time rent roll.
Once TRUE rent roll can't be masked, the adjustment will happen.

Yearly leases, one more thing the Internet did not change...

Truth. yup it will come out. Think about all those tribecca new devs where people paid 2.7mm for 2 bedrooms (like 200 Chambers). Some of those apts were put on market for 12,000 rental asks (just under 200X). Now they are down to about 9500 and still not renting. And, Related is marketing their 2 bedrooms in the same nabe for $6000. Yup the numbers will slowly roll out. And as more of those buyers can't cover their nut, and can't even cover their nut thru renting and can't sell for even close to their costs...........dumdedumdum.

Great chart, thank you Topper.
See the rental can't zig and zag as much because leases take at least a year to filter out.
That's why it will never zig and zag as wrecklessly as the sales line quarter to quarter.
But they clearly show a gravitational pull on each other.

Anyone have an older chart during a down time?

apt23, my anecdotal experience backs up what you are seeing. I have been renting in that area since the summer after doing a fair amount of looking around (nothing was moving so I had time). At that point I would guess rental prices were down 10-15% from the prior year. I looked around recently and the asking prices are down further.

"Think about all those tribecca new devs where people paid 2.7mm for 2 bedrooms (like 200 Chambers). "

ow-ow-ouch...

" At that point I would guess rental prices were down 10-15% from the prior year. I looked around recently and the asking prices are down further. "

Thats exactly what happened to me. One building I looked at, same apartment line.... was down 12-15% the first time, then again 12-15% the second time... plus the free month, of course.

(higher end building)

"interesting graph ...but anecdotally i think it overstates quite a bit how much rents went up, based on a couple places i am famliar with"

Because, as usual, it doesn't show the MIX of units. Considering the amount of new construction rental units created since 2003. what do you think rented for more: the tenement units which were ripped down, or the luxury units built on the lots they vacated, even if rents nominally went down?

good point.

Not to mention, we now officially have a double dip Manhattan RE decline. Funny how this is being glossed over.

excellent point 30..makes sense

"oh, don't you just wish you bought at the height of bear hysteria? "

No - but I am thrilled that I sold in 2007 and pocketed a huge profit on my equity!

Spinnaker, here's what I don't get. Even by UD's account, prices are up 3-4% from their March lows. On the other hand, you're probably out 2-3% in carrying costs beyond what the rent is worth. Then you got that 10% transaction cost you need to amortize at 1% a year if you're holding the place 10 years. So all-in-all you're flat, maybe up a percent.

Meanwhile equities are up 68% from their impossible-to-time-perfectly March lows and up 27% from May when you where putting all that cash into your new place, all the while providing a positive 3-4% yield. Pretty much any risky asset showed similar behavior EXCEPT for real estate. So my question to you is this:

Oh don't you wish you had bought something other than NYC RE at the height of bear hysteria?

Maybe your purchase will end up fine, but isn't it a bit premature to be crowing when you are treading water, and meanwhile everything else you could have invested in went straight up?

inonada - Keep buying your equities then. I'm doing both and glad I purchased my apt at the height of inventory, prior to the "slow" summer approaching. I think owners were much more willing to play back then as opposed to today. btw, how's the return on your rental $$ looking?

the money saved? seems like that's 100%.

What's being saved and what's being risked by throwing it all at equities?

Spin, there are many positive aspects to buying, even now. But to say there are no savings to be had in renting like products in almost all situations is just wrong. With some misgivings I went into bonds. That's where my savings are going. Not the returns recently found in equities, but greater, certainly than performance in real estate.

Somewhereelse points out that the ratio between prices and rents have changed over time. That is true. (Although she/he did not realized that there are two y-scales - one for prices and one for rents.)

http://www.millersamuel.com/charts/gallery-view.php?ViewNode=1249522147RFeuS&Record=1

The price/rent ratio is shown in the bottom panel of the chart and it has risen pretty dramatically over the period. It started at about 17. Peaked at about 26. And it's now at 24. (Alas, the chart does not go back to the early nineties. But if it did you would see price/rent ratios in the high single-digits. Studios even traded in the mid-single digits.)

I'm reminded of the late nineties. My hair stylist (a.k.a., barber) would periodically disappear to the back room. I asked her what she was doing. Answer: day trading. I was worried about Harriet so I brought in a chart on the price/earnings ratio of the S&P going back to 1926. She gazed at it intently and then exclaimed, "Wow, look at that spike now! Is that good?" I did my best to explain that that was not good. But alas, the story ultimately did not end well.

AR - I don't think I ever said "...there are no savings to be had in renting like products in almost all situations..." The only point I'm making here is that pre summer 09 has turned out to be a good time to buy and that throughout the run up to summer (when I made my decision to buy) most everyone was talking about a looming bloodbath. The jury is still out though and I'm not so arrogant to say those who bought then won the prize for buying at the bottom. Its just a mid game observation.

I think the major shift in the Manhattan RE market has been from real estate behaving like a luxury good to now behaving like a normal good. Before the crash, RE demand increased with price which is the behavior of a luxury good. Now, RE demand increases when price decreases, which is a function of a normal good. Basically, RE is now behaving like it should - as a normal good rather than a luxury good.

I remember seeing a J Miller graph and I remember thinking that the luxury good correlation was strongest in the condo market. The coop market still tended to look like a normal good.