what catalyst moves prices significantly down

who can we blame?

wow. An answer disguised in a question? How Fking genius. How so so Fking genius. Almost like a borker asking, if it's inexpensive do you want to live there? Is that akin to if a thousand men have not slept with your finance, would you really wanna be married to her?

Such delectable questions. Such sincere questions. Such unknowable questions. Maybe in the asking we have hit bottom. So says the imbeciles who have denied the bubble even existed. All clear to buy!!!!!!

Even if no further down, prices not increasing for say the next half dozen years will be a 'net' decline in terms of three things:
1) real dollars
2) the value of ownership in relation to renting
3) the whole psychology of the marketplace starting especially with the younger and first time buyers.

does buyerbuyer ever happen without a huntersburg?

buyerbuyer, just keep it simple.

What makes you think all of the factors you listed as having happened already have already been fully priced in?
And would it really be surprising if the market decline has been temporarily mitigated by false hope?

You are forgetting that much of the runup didn't come from fundamentals, it came from unreasonable expectations and psychology.

We can't ignore that on the way down.

I agree psychology was a huge factor in the runup. It's also a factor in the fact that prices haven't fallen further, I think, as pent up demand (people psyched into believing "buy now or be forever priced out" thought they were/are getting an opportunity).

If prices do ever drop significantly more in a short time period, it could gather momentum quite easily, and send the market further down....but my point is..what's going to nudge the prices down again....

riversider

There is actually research where merely asking a question over and over gets children to accept the premise as true. In the experiment, the children are asked a ridiculous question like "have you ever seen an elephant eating apples on an airplane" once without any other prompting, followed by 30 minutes of playtime with no other mention of the suggested image. This is then repeated just once a week for several weeks, and after just a couple of weeks, not only are the children saying yes, they elucidate detailed descriptions of their experience seeing an elephant eating apples on an airplane.

This was part of the response to the McMarten preschool incidents. I think it was on the 60 minutes piece about day care abuse hysteria.

What will nudge prices down again? Some shock that we don't anticipate right now.

what will make us cold?

a cold snap.

what will make us hot?

a heat wave.

what will make us sad?

something sad.

SkinnyNSweet, that's rather interesting, I've thought that for some time but about a wholly different societal matter. Do you have any more info that could point to the study? (sorry for being off topic)

what will make us happy?

riversider going away.

"If prices do ever drop significantly more in a short time period, it could gather momentum quite easily, and send the market further down....but my point is..what's going to nudge the prices down again...."

People realizing that prices actually went down - there are those, even here, still in denial - and the fact that the bounce many have called for didn't come either. There will be more and more of those anecdotes of losses, the reverse of what helped the runup. If nothing else, think of it as folks who tried to hold out their hope, and hope never really came.

And, btw... did you really leave out mortgage rate increases?

Plus, I think huntersburg has it right... tons of things we don't know about yet that could scare folks. Just this week, the national numbers were bad again... that could scare more folks.

I mentioned interest rates....tat seems to be the best, most reliable reason to expect prices to decrease. but open question when and how much rates rise.

If the answer is that it takes a shock to move the market lower, then this market is different from other markets that are still dropping without a shock...(because there there are other factors I mentioned that are not so significant in nyc)...

Of course a major shock could be bad for nyc re.....but be definition a shock might not happen....

but..maybe it would.

but maybe it wouldn't

brilliant as always.

in other words...those saying "500 psf" are either depending just on interest rates rising a lot....or on a shock that might not happen.

the gays, it's all about the gays..

stop looking at your bar graphs and excel spreadsheets (to a point)..
your assessment sounds like the LTCM fellas (Long-Term Capital Management).. and we know what happened to them when their numbers blew up in their face..

so long as gay sex dominates this island (and if you don't think it does, your husband is either lying about his 'late meetings,' or you're another UWS single gal who still believes her fellow male shopping buddy will give in one day and romantically bang her senseless her on her balcony/firescape.. it won't happen), real estate will blossom..

when i say us 'gays' i don't just mean gay-on-gay relations.. that amounts to about just 20% of the gay-property increase correlation.. for one we like cleanliness, and our surroundings show, and so does the rent (in time)..our incentive for living in the ONLY vertical domestic city is due to such conveniences as 4 fckbuddies in our building or the iPhone application, Grindr, which tells me how close my next sex buddy is in feet/meters.. where else can you runoff to your apt 4 blocks down with XXhUngFratLaCrosseXXX hottie working across the street from you who so happened to pop up in my iphone app? not LA, too much driving, setting up, etc.. and lunch is only an hour!

so that leaves us with 80% left of gay-property increase correlations.. where do they come from

roughly 40% to the creatively needy crowd.. SATC fashionheads (who lack the most fashion sense of all, but we're hear to tell them otherwise, after rent's paid of course assume gay landlord), the lonely trophy hedge fund wife who redecorates her apartment 7 times a year to fill her empty bed while hubby's is working 'late' again, the emo apple macbook type at starbucks 24/7 not really doing any work who uses his 2nd tier 'ivy' schooling (ala Brown, NYU, CooperUnion, etc) to pretend he's not gay, just browsing manhunt to see which guy he 'could' get should he choose and while his 'girlfriend' hangs out with her gay male pals to make herself look better to incite any sort of sexual activity from said boyfriend..etc, etc, etc.. point is, a premium is paid for such proximity to homorotica.. so long as the media does their part, these gullible types will easily follow.

that leaves us with another 40% of gay-property correlation.. and that goes to the bankers (and supporting staff of accounting, law, operations, incoming clients, etc).. granted the city's cleaned up aesthetically.. oh but the dirt is still live and pulsating, throbbing even. ever wonder who's buying up those pied-a-tierres in lincoln center up and down the west side? probably some hedge fund dad from fairfield CT who needs to escape from the trophy wife (see above) and get plowed by a young hot frat dude who's looking to pay rent.. this is where the vertical nature of the town shines, giving said hedge fund Dad (and thousands like him from overseas whether they be colleagues, clients, or tourists) a major advantage in choosing his boy of the night..so many to choose from all within blocks from the apartment.. XXHungFratJockXXX is definitely not taking the train to Westchester, and by the time he gets here, wifey might be awake.. time to buy another pied-a-tierre studio for my late 'work nights.'

You still seem to have this assumption that the effects of the shock are only felt right after the shock. I think that assumption is way off.

With reference to the $500 psf prediction, what exactly are we referring to and what is the metric today? I asked before it it was referring to UES and UWS co-ops. Thanks

ask riversider.

decent point somewhere...I guess then that I am saying the lingering effect will be nominally flat, down a little...unless you're saying the lingering effect will be a steeper increase....

hey...

might be up.

might be down

might be slightly down or slightly up or slightly the same.

unless of course its more than slightly up.

or more than slightly down.

With reference to the $500 psf prediction, what exactly are we referring to and what is the metric today? I asked before it it was referring to UES and UWS co-ops. Thanks

Anyone?

sure....

buyerbuyer is ready willing and able to add some some gibberish to your gibberish.

I don't know what specific type of building they mean by 500psf.....

Since the nyc micro market factors (inventory, new develop) don't seem to be causing a further decline, it seems to me that that nyc bear argument for significant nominal declines (as oppposed to nominally flat, eroding the bubble over time) is basically an argument that we will see significant interest rate increases and/or a macro shock. In contrast, the situation in real basket case markets is leading to further declines even without those shock factors.

One would think interest rates will increase a lot, but you don't have to watch much cnbc or whatever to know that that is hardly a concensus.

Ever increasing real estate taxes and maintenance!! They are slowly kicking in for more than 5 year old new construction and continue to go through the roof for some buildings.

I hear you 300...but that's a slow erosion, or nominal flat argument, not something that will cause another big nominal drop in prices (which the 500psf crowd predicts).

Trying to rationalize and predict the future of Manhattan RE is a fruitless excersize, especially in today's uncertain climate. If one were to try, the answer to your question is "nothing." Nothing short of (gods forbid) a dirty bomb going off in Times Square is going to move the market. And even should such a horrific event occur (and it will not) knowing New Yorkers, we'll just take a couple of days off, clean it up, and get back to work.

There is a psychological barrier in place at the current one thousand dollars per square foot asking price that will not be broken, ever. This number will remain stagnant for a decade or at best fluctuate within a hundred bucks. No one who bought since mid-1990s will be willing to absorb a loss of such magnitude. The only other way to get remotely close to the magic $500psf is to find some poor unfortunate should who absolutely has to sell because of divorce or some other calamity. And even then, the borkers will snap that property up themselves and re-sell it inflated market rates. So, five hundred dollars per sq ft is not going to happen. The middle class will never return to Manhattan, the island will become an enclave or the rich and super rich. You'll be lucky to get a one bedroom in Long Island City overlooking the Newtown Creek for $500 bucks.

The simple fact is that being an island with no room to expand and build, Manhattan will always be at a premium, and the $1k simply reflects the fact that prices have been undervalued and are now correct given the salaries and bonuses of the people living there. Additional premium exists because of the high exposure and the mythos of "living in the City" a dream in which everyone wishes to participate. The city has NYPD Blue grit and Sex in the City polish, while its institutions and employers attract the best and the brightest and the beautiful. The entire planet wants to experience this, to live here, and will pay to get it. Despite cries of alarm that gentrification and "mallification" of Manhattan is taking the edge off, The Edge is still able to charge $1k and folks pay it without batting an eye.

The brand name that is Manhattan, protected by mega-brokerage houses, a business-comes-first administration ran by a billionaire, and reliant on RE taxes and fees for salaries and services, will survive unscathed, despite the inevitable Fall of America and its economy. Fueled by successive Quantitative Easing rounds, the Wall Street engine will power the City to new heights, in effect becoming a latter day City-state which obeys no rules other than its own. If you have not invested up until now, do so soon, or find yourself in Jersey.

I think the "wealth effect" has returned since mid-2009. Until portfolios weaken again, wealth will continue to buoy the segments of the market where supply is scarce and affluent buyers have to compete for attractive product. So, to name a few arbitrary triggers:
- S&P ~1100 would cool the low-luxe pre-war market.
- S&P ~1000 would freeze it.
- Municipal bond defaults - especially a scare involving NY munis - could cause a tailspin.

Mortgage rates trending upward are a long-term threat, but in the short run rising rates seem to cause panic buying than panic selling. I'm not sure that's a rational response, but it's what I see.

If one is looking for a catalyst for Manhattan real estate to drop, I don't see rates being a catalyst. If rates rise by 100 bps my feeling is the market can handle it and a 5-6% fixed rate mortgage or even a 7 is still cheap by historical standards. It won't be psychology either, as the stories about real estate have been front page too long. If real estate drops , in my opinion, it has to be the result of a change in the local employment and income picture.

West81,
I think the wealth effect from a rising portfolio has been over-estimated. I do think that if the S&P declined to 1000 over a short period, a drop of around 16% you might see a media effect(fear) and this could be confused with a negative wealth effect.

"The simple fact is that being an island with no room to expand and build" Other than the massive landfill projects over the past 400 years.

smell this, therez your catalyst right there.
Corlearshook.... NO MORES land, but the first time we added another floor, cause we learned to make stairs, we doubled manhattan..... FLMAOZzzzzzzzzzzzzz.........

GO BUY SOME RE BULLZ... STFU and GO BUY SOME More. RE BORKERS, unite and pool your income and go buy some MORE bf it's too late.

STFU and buy some more..... FLMAOz

As a buyer, I found the original comment very interesting but I have been thinking for a few months that prices may have stabilized. Maybe prices will still decline in new developments, but likely not in the resale market.

Of course, buyers want very low sale prices, but I wonder if having very low sale prices is good for the NYC economy in general.

I think prices will decline in troubled new developments that aren't selling, but there just aren't enough of those to have a major impact on the market. It's not brickell avenue....

No bear has stepped forward to give a reason for significant declines >5%...other than large int rate rises,,,or a shock. ...so it seems to me that the bear argument is basicallya belief that some big shock is comming or that int rates will rise to market effecting levels (but that would take a decent rise,,,imho).

w67, whats wrong with owning real estate? someone has to be the landlord and make money off you. or do you prefer to pay your rent to the government?

to be clear, it is also bearish for re in real terms if prices stay flatish....but that's not what the screaming 500psf poster is saying

Gold good, commodities good, tulips good, stocks good, bonds good, except when a bubble is deflating. Flmaoz.

Wez hadz a bubblez. No good to buy. Simple. Simple. Keepz it simPle for financial retards.

It's like talking about the climate by discussing todays weather.

The catalyst is relative value.
Million dollars used to seem like a lot. What do you think it will feel like when Milk is $24 dollars a gallon.
I'm just old enough to have consumed an excellent slice of grade A NY pizza for 25 cents. If I told the pizza shop owner that some day he would get upwards of $3 a slice I'm sure he would have said,"from your mouth to G-d's ears".
RELATIVE VALUE
High interest rates and a Nippon style recovery...only worse

and

FREE w67
FREE cc

SE, Your grey paint couldn't hit the side of a barn

FREE'ED
My bad...
I know...grey barn

"The simple fact is that being an island with no room to expand and build" Other than the massive landfill projects over the past 400 years.

And you can't leave out the expansion into previously unconsidered areas. The Upper East no longer just competes with the Upper West. Pretty much everything south of 96th is now safe for yuppies. And north of 96th certainly has more options for the money set than ever before.

There is *substantially* more realistic inventory available for the buying set just because more locations are now considered.

And then there is Brooklyn, which is a much larger part of the consideration zone. You had Brooklyn Heights and Park Slope as potential options, and now its half of Brooklyn as options.

And then there is the rezoning of Manhattan....

Pretending that the island factor means no expansion of competition for the $$$ is just short-sighted.

"a 5-6% fixed rate mortgage or even a 7 is still cheap by historical standards"

If you really want to run with that logic... $500 psf is expensive by historical standards.

Thats a bad argument to make if you are claiming prices will hold.

Flmaoz. By historical stds we r way way way the fk above bubble territory!!!! Oh god, riversider is my favorite financial retard Bc he is so so earnest. So earnest. Like he knows something. In his own head, he's a Fking genius.

What falcogold1 says is very true - that one million dollars used to seem like a fortune and now you can barely buy a 2 bedroom condo for that amount of cash. But what really is the optimum price for real estate in NYC - $800 psf - higher, lower? I still feel the RE prices here are too expensive, but at a certain point I have begun to accept that it is incredibly expensive to live here and that one million dollars does not buy much. And the economy tanks here and prices fall to $500 psf or even lower, will many of us be happy with everything else in the city except the RE prices?

>one million dollars used to seem like a fortune and now you can barely buy a 2 bedroom condo
Isn't much of this due to inflation, as well as the bubble?

one million can't even buy a really top end one bedroom, but is this is true in any top end city. Just check out Vancouver.

When were we last at $500?

go away.

Easy question huntersburg.

In my nabe, W67's favorite generic RE comp - Lincoln Towers.

1200sqft 2b2b (with DR) - < 300k in 1997.
300kish in 1998 and rising fast.
Under 400k in 1999.
2000-2001 - 400kish (saw a pair of low-floor adjacent ones on market for 800k with parking spot).
2002 - 500kish
2003 - huge acceleration - high 600s.

Fast forward - you're getting a "deal" if you get one for under 1m.

2002, thanks, helpful.

So when do we get back there? Is that the lowpoint or just passing through?

How was the area in 2002 compared to day - development, crime, building, retail, schools, etc.?

once again you've forgotten the basic rule.

IMO, if anything, things have gotten worse since '02.

1. Less interesting retail (though I like Trader Joe & Whole Food).
2. Lots more development (entire Hudson Yards area) w/o accompanying infrastructure leading to overcrowded roads, public transportation, schools, etc.
3. Crime is the same

Right around 2002 we passed the point of rent v. buy equivalency.

Interesting, thanks.

Apparently once again I have not explained myself well so I will try once more and then sign off for the evening. You can certainly buy 2 bedrooom coops for one million dollars - maybe 2 bedroom condos in some neighborhoods. When I look at the sales history of apartments that I view and see the prices that the owner paid for the same apartment in 2003 or 2004, I am not happy with the increase in the price sought.

However, someone is paying these prices for these apartments. If not, the asking prices would continue to fall or the owner would take the apartment off the market or choose to rent the unit instead.

I think the difficulty with these general questions is that many of us are looking at different submarkets. Maybe prices for 3 bedroom units in new development condos will drop while smaller resale units will stay flat.

All I was trying to say is that if housing prices continue to drop, it probably means that the local economy is not doing well and that will not be good news for many of us.

Another reason is that many (not all) of the typical catalysts for moving can be deferred, and often are when emotions regarding losing value factor in.

Crime in the city could be much worse. I blame the Mexicans. As a newer immigrant group to NYC we see their industrial side but their capacity to invigorate the crime industry has been weak. Especially when you consider the focused productive gang members in the south west. To be fair...they are relativly new and not used to the cold. But you just wait...put your money on adaptability. Five years from now we're going to know the names of these litino mafias...if they don't let use down.

Did I just write that?

That's it...I'm adding ice to these drinks

> IMO, if anything, things have gotten worse since '02.

Bag logic. All the factors noted would actually have increased prices AOTHBE.

Big box stores add to $$. Big new development on the far side, making the towers more central, would add to $$. More people, more vibrant neighborhood, add to $$$.

All the hot neighborhoods get more stuff and more crowds to go along with the higher prices.

Here is what I am wondering. I will use Apartment 35D at the Oxford (422 East 72nd Street) as an example. This 2 bedroom, 2-1/2 bath unit sold for $1,350,000 in 2002, #1,550,000 in June 2009 and then for $1,800,000 in July 2010. Putting aside the 2009 sale which one can argue was slightly below market, how volatile should RE prices be in terms of price increases and price decreases in a healthy economy?

As a buyer myself, I would love to pay a very low price for an apartment. But I am also concerned with volatility of RE prices. Probably some apartments in some buildings always hold their value, but with respect to many apartments in NYC is it really good if prices go up and then down dramatically within a 10-15 year period? At what point does the market stop correcting itself from bubble prices and prices declines are instead occurring because of a poor local economy? While a 5% further price reduction may be a correction from the bubble, is a 10% price decrease still a correction and so forth?

Happy New Year to all the SE community.

Some things to consider, lobster.

RE moves with inflation for over the long term. There are basic economic reasons, and there are empirical studies showing this. I'm sure you've seen the chart from Shiller covering the US since 1871. There was also a study of a block in Amsterdam over a few hundred years (!) showing the same. The gotcha here is how long it all lasts: the Amsterdam study showed periods upwards of 30 years where things remained above/below inflation. Bubbles can take quite a while to deflate/reverse: look at how long it took stupid optimism (1998-2000) to turn into stupid pessimism (2008-2009) in the stock market. The RE market is much more sticky.

If you agree with the inflation premise, you can draw a line using the SE condo index and CPI. If you think 2000 prices are "right", then it'd take a 30% drop to get to trendline. If you think 1995 prices are "right", then a 45% drop. I personally think 2000 prices were OK, 1995 prices were good. A lot of people on SE think these trends are unique to Manhattan. I don't think this is at all right. If you look at indices for single-family homes in the NY area, it's the same story. If you look at other high-income areas, the exact same story is there.

This is the world given to you, you have to make choices. It'll likely take years (say 10) for prices to become "OK" or "good". One choice is to pay up, and know you are paying up. Another choice is to pay up but delude yourself to think you haven't. A third choice is to sit it out, which will probably take a while. I've obviously decided the third. If I look at the rent I'm paying for my condo, minus the common charges and taxes, and I compare it to the price for my unit, it is a no-brainer. If I compare to a unit sold in 2010 more than a dozen floors below with significantly worse views, it works out to $1350 a month per $1M. If I compare to the asking price of a unit for sale a few floors above, it works out to $950 a month per $1M. That doesn't even include transaction costs, insurance, or upkeep. I've just got better uses for my money.

Calculated risk discussed this very question the other day....

There is no perfect gauge of "normal" house prices. Changes in house prices depend on local supply and demand. Heck, there is no perfect measure of house prices!

That said, probably the three most useful measures of house prices are 1) real house prices, 2) the house price-to-rent ratio, and 3) the house price-to-median household income ratio. These are just general guides.

http://www.calculatedriskblog.com/2010/12/question-1-for-2011-house-prices.html

Just to be clear, you are saying that prices were last ok in 2000 and will take 10 years from now (to 2021) to be ok again.

Long time.

(reply was to inonada)

Sure, why not. Maybe we see "OK" in 2015 and "great" in 2020. Or "great" in 2015. These things can take a long time. IMO, 2009 provided the greatest opportunity in stocks that I'll see in my lifetime. Maybe I'll see another one, but I wouldn't be surprised if I don't. IMO, it was better than 1982 and even 1974. I would put stocks at OK right now, meaning it's a good valuation with proper compensation for risk priced in, and Manhattan RE as poor, meaning zero or nearly-zero compensation for risk. Similar to stocks in late 2000 after the peak. Holding things up are real rates that are lower than anything seen in generations and bubble-head mentality that is pervasive still in society, as evidenced by some on this board. Headwinds are rising rates (market is placing fed funds at 4-ish% in 2015, will catch the 5-year ARMers by surprise despite the obvious that led them to 5-year ARMs rather than 7- or 10-year) and continued lack of success in using RE as an investment, including owner-occupied. A lot of uncertainty, but that is my expected-case outcome.

So, assuming that one is still in cash (!), what do you see as investment opportunities going forwards?

I still like stocks best long-term. S&P earnings around 70, normalized for the ups and down, so a yield of 5.5%. Add 2.5% for inflation and 2.5% for GDP growth, something like 10.5% expected yield. A premium of 6% over 30-year treasuries and TIPS, so looking decent to my simple eyes. You can probably find better individual opportunities too.

No "greats" in my view at the moment, but those come by very rarely IMO.

I mean asset classes, I'm sure there are individual "great" stocks.

Riversider, if I am bringing up a question that in any small way was discussed on a blog entitled "Calculated Risk Finance and Economics," I do not know what that says about the blog. :) But I printed it out and will give it a thorough read. Thanks.

Inonada, thank you for the detailed discussion about RE prices. I agree that "2000 prices were OK". It is good to know that RE prices in NYC are not unique and indeed are similar to RE trends elsewhere.

2.5% inflation is above the 2.5% GDP growth?

inonada...For the nyc market to get back to say 2000, I assume you are referring to that in real terms, so do you see some nominal drops (what catalyst...), or just erosion back to 2000 by flattish prices that don't keep up with inflation.

I have no idea what the ultimate real price will be in Manhattan, and prices still seem to be in a bubble, and I don't think Manhattan is impervious to market forces, but...1) I do think NYC is generally a better "product" today than 20 years ago (not quite as extreme, but similar to the vast change in downtown Wash DC)...and...2) there has been an explosion in wealth in farflung places that seems to be effecting prices in markets like London as well, and the art market, but I don't know how to quantify what that does to the NYC market. Go to Moscow and it's not hard at all to find run of the mill yuppies who would love to buy an apt in nyc or london (not just oligarchs),,,or the marais, etc.

Big part of stock market return has traditionally been in the form of dividends. S&P yields under 1.8%. Prior to the mid 90's the yield was roughly 4.1%. Assuming that dividends grow at past rates, roughly 6% and the market reverts to it's mean(something that has been argued is happening to real estate..so why not stocks too) then one is looking at making no money in stocks for at least ten years. Additionally if one argues that inflation stays low and the weak economy prevents businesses from passing along prices then the argument that earnings will drive stocks higher is missing as well.

The Schiller P/E ratio is above 18. Buying stocks at these levels will make positive returns difficult.

Reversion to the mean is a lazy argument that doesn't account for human progress. It's not so dissimilar from assuming creationism is the way the human race was formed.

And yet, it proves empirically useful most models employ it. I can't prove why, but it does seem more often than not, that when prices move too far in one direction they often tend to move back. And when people talk about being above or below trend, they are in some way inferring mean reversion.

Too far? in one direction?

As in when the Dow fell under 8000, I bought stocks, and sold some recently.

Keep in mind that bonds can also underperform inflation for very long periods of time also. What a lousy investment bonds were from 1940 to 1980!

And cash, with a zero return today, is not a particularly attractive alternative.

Thus, the dilemna.

For now, I agree with Ned Davis that we are in a cyclical bull (equity) market within a secular bear (equity) market. Enjoy for now. But expect to reduce equity exposure later in the new year.

Ned's view is also that we are in both a cyclical and secular bull market for emerging market equities. But keep in mind that many of the great global developed world multinationals are also heavily invested in emerging markets and should fare pretty well over the longer term. Many are selling at 10 to 14 times earnings and represent extraordinary value.

I do respect Jeremy Grantham. Just think he's a bit early with his gloominess. But the retiring Boomers will be a big challenge as entitlement spending explodes.

Ah, the old Chinese curse. May you live in interesting times. Indeed.

Enjoy!

"huntersburg
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2.5% inflation is above the 2.5% GDP growth?"

Yes: companies have been known for real growth.

buyerbuyer: "1) I do think NYC is generally a better "product" today than 20 years ago (not quite as extreme, but similar to the vast change in downtown Wash DC)...and...2) there has been an explosion in wealth in farflung places"

Two words: Wayne, NJ. None of what's happened is particularly special to Manhattan. Look at any affluent submarket within the Case-Shiller indices. Look at the tiered indices, and at the top segment. Very similar to SE's condo index. To me, this all is "new economy" fluff from 2000. Why haven't we seen a corresponding increase in rents? They're well below CPI since 2000. There may be an idea there, but there's only so much one should attribute to it given evidence to the contrary.

I see your point inonada -- rents are in some cases not far off from ten years ago even in nominal terms. I still get back to the point of this post -- what in the hell is going to move this market lower. It seems like pent up demand is keeping things flat nominally and we are in for a long erosion of real value back to sensible prices. At least for now I am pretty sure we do not have the exacerbating factors of innumerable way underwater owners, and foreclosures sales swamping the market. What do you think..in terms of manh./nyc nominal prices...

10.5% expected annual return on stocks. Not too shabby.

Two words: Wayne, NJ.

NYC = Wayne, NJ?

What catalyst you ask?
Reality check -- in late 2008 most of the major NYC financial institutions were BANKRUPT. Then Bernanke wrapped up a big fat trillion dollar gift and deposited it in the accounts of those NYC banks. That gift has kept on giving by keeping most of wall street employed and is the ONLY reason NYC real estate did not crash. Get it, the Fed bailed out NYC real estate and is artificially supporting prices as we speak.
So the catalyst is simply when the Fed turns off of that mainline drip to the banks. Then the cards will fall. Will it happen? When? Ask Ron Paul.

i bot spot s&p contracts at 665.75

he redbaiter, spare us the hindsight trades----tell us day-of-trade, or it's meaningless

West34, lots of What ifs.

What if Lehman didn't go under? What if Bear didn't need to be bought by Chase?

S&P spot contracts at 665.75. What was the "day-of-trade"?

Trillion dollar bank bailouts are a rounding error. Bank CEO's are children compared to the folks that have made the pension and health care promises to the tens of millions of workers around the major cities. These unaccounted for and unfunded liabilities are by far the greatest potential catalyst to real estate weakness in the next few years. The odds are pretty decent that you could see major flight from the biggest U. S. cities. The small group of individuals that provide the bulk of financial revenue to these cities may simply take a pass.

The 1970's could return pretty easily to NYC. Probable, no. Possible, absolutely.

Hb - what are you talking about? They were ALL BANKRUPT! Chase, Citi, GS, Lehman, BS, AIG, etc. It happened. There was a bailout. There still is a bailout. What do you think tarp, talf, qe1,2, etc actually did? They replaced trillions in inflated crap worthless "assets" with cash. Cash to pay the hundreds of thousands of financial services employees who LIVE IN NYC. Cash that right now is being used to buy real estate at $1200psf. The bank bailout supports NYC real estate at artificial levels. It's not that complicated.

that's all nice and good, but we are where we are today and prices are what they are. There's no referee to say that the situations you don't like didn't happen so that you can prove a point that doesn't actually exist.

But if you do get to play the game to erase what you don't like, then it seems fair game that I can play the game too.

back to now....w34..what are saying might actually happen in the future that would effect nyc prices?..

Again, what the he'll are you talking about? Is clear communication a foreign concept to you?
The question was something like "what catalyst will lead to further correction in NYC real estate prices?"
And my very clear simple answer is "if and when the government stops GIVING money to the banks that employ 40% of new yorkers directly or indirectly then real estate prices will cease to be artificially supported and will correct accordingly"

Ok, Mr/Mrs/ Great Communicator, what does past "bankruptcy" have to do with anything? Why did you bring it up if we are talking about a future catalyst?

Because the bailouts are not just past history. They are current events. Google to identify all the ONGOING Fed programs the intent of which is to strengthen our still shaky banks. If they pulled the plug today the cards would fall.

What I googled was "Chase Bankruptcy", "Citicorp Bankruptcy", etc. and didn't seem to find support for what you wrote.

http://www.sourcewatch.org/index.php?title=Total_Wall_Street_Bailout_Cost

Did you sleep through the past 2 years of financial history?

Funny you should ask.

No

When was the Chase Bankruptcy that you referenced in support of your statements?