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Manhattan Condo Market Index
1. Keep going up?
2. Staying the same?
3. Going to drop?
3b. if its going to drop, when will we see the difference? (in months)
Drop, not sure by how much. I think we have already started to see prices decline.
stay same until Q2 09. Get in while you can!
Drop 5-10% in most neighborhoods, new developments in prime areas flat to -5%. Within 12 months.
Drop 5 - 30% depending on various factors
- 3 BR coops, near good school districts (e.g., UES) likely least affected, at lower end of range ..
- harlem, lower east side, and other "newly expensive" areas to take much larger hit
- brooklyn - even the nicer parts to get clobbered
Prices have already started dropping, and is expected to go down for another couple of years or so, and stay flat for a couple of years after, till inflation catches up with prices
Low trading volumes to continue till end of this year, and possibly till Q2 of next, as sellers and brokers go through shock->denial-> etc.
no economics to back any of this up .. this is my opinion, as this is a poll ..
I'm seeing studio apartment prices going up by $60-$100k. 225 East 79 street studio closed in january for $301...same layout just listed for $460. Studio at the Newport East on 76street closed a few months ago for $340, same layout listed recently for $449k.
425 east 79 street...$301 - $460k same layout.
I'm guessing since most banks won't finance more than 80% now on properties over 750k and not a lot of 1st time homebuyers have 20% or more to put down, that should have a large negative effect on pricing of 1-2BR's.
Flat until Q1 '09 keeping prices at '07 levels. Both sellers and buyers waiting to see what will happen. If economy recovers and there is economic optimism, then prices will continue to be stable if not slightly increase. If economy remains stale (which I expect), prices will fall 5-10% (if not more) by end '09. Have to wait 9 months to see what will happen next.
flat until Q1 09. My feeling is that people are not getting their list price (and that's what you really see) but that in general prices are, and will continue to be, stable.
Either way, I think that we will see flat prices or very minor increases for the next 5 years.
They're going down.... I'd say we have another 12 months to see the difference. This is the first spring where wall street bonuses won't save the RE market, by next spring and again non-spending of bonuses, reality will have set in.
Also feel it depends on how much the reduction of tax roll affects the public schools. Many mid and upper income families chose to stay in Manhattan due to better schools. If the quality of education drops, many of these families will take the path of moving to the 'burbs when the kids reach school age... Those larger apartments will start to linger on the market. I know the public schools' budgets were cut mid year - unexpectedly, due to decrease in tax revenue for the city... A few more cuts to the education budget, and honestly families will be gone. It's ridiculous with all the taxes we already pay, the parents in our public school kick in an additional 300k for funding. And, it's all for basics.
yeah I'd group the LES in with Harlem. what an idiot.
Not so idiotic ----- LES and Harlem have too many new condo projects, and therein lies a weakness. Look at LIC and W-burg --- further along in this problem scenario.
The comment about LES and Harlem is not idiotic --- both those areas have too much new condo-building going on, and that's the connection and weak spot. Look at what's happening to all the overbuilding in LIC and Wburg.
flat for much of 08 and then down in 09, when we really start to feel the effect of 1) Wall Street layoffs throughout this year and 2) declines in core wall St earnings (e.g., M&A) and compensation.
Since the divorce rate is likely to surge over the next few months (16.9% in 1997), and allowing for a 6 month to 1 year lag before properties HAVE to be sold, my guess is that it will keep going down for 18 months. this may generate demand for 1 bed and studios rentals. but that will be in the cheaper areas.
Looks like we've got a house full of bears...well then it's time to buy. The fed has pumped 1 TRILLION dollars into the market already. What does that mean a year from now...inflation. Which in turn means assets become more valuable. It's not rocket science here, it's all been done before, this time is no different.
Comparing the LES in downtown MANHATTAN to Harlem, LIC, and WBurg? What a moron.
inflation doesn't mean asset inflation.
What does inflation mean to you then? Let's look at the scenario obviously your bet is prices will soften my bet is prices will move higher. Fed injects massive amounts of money, not long after companies use money, economy ignites, more labor needed, wages increase from competition,...more money in peoples pockets means more buying power, more buying power means higher prices for sought after assets. Biggest sought after asset = real estate. Unless inventory increases substantially than price increase is very probable. However with 421a tax abatement going away in June, China-related raw materials price increases, office space needs and limited land there isn't much residential development developers can do.
Prices are going up...303 west 66 street. Bedrooms were listed in the mid 500k now the last three listings have all been in the mid 600k and the most recent one is 695k.
Julia - you can't be serious. The fact that prices have gone up in the last few years has nothing to do with what prices are doing now. Further, just because people are listing apartments with unrealistic expectations does not mean the market is going up. Open up the newspapers - we are heading into (or are already in) a recession. Bear Stearns is gone. If you think prices now are going up - you are crazy.
At least Harlem is in Manhattan. Also, I think that Harlem is in a very unusual position for example: Bloomberg identifying Harlem as a "business hub", the rezoning of 125th street to allow for higher density, $7 Billion Columbia expansion, Harlem Park development to be anchored by Major league Baseball cable network, approx. three hotels slated to be built along 125th street, a hug mall going up in East Harlem by the FDR, etc. I just think that since Harlem prices are nowhere near the prices found further downtown, there is room to grow and that growth will be undergirded by the aforementioned happenings.
Depends. When you can rent the place out for as much as it costs to carry it. Minimum -30% - Maximum -50%.
New devs are most at risk: they have mortgages to pay while their units stay empty, and banks want they're money. They're always the first to drop: they're business people, and they just lower their margin. Prices start to fall, they'll convert to rentals.
julia, julia, julia! Prices are going up? Do a quickie query on this website and check out how many listings have gone up and how many have gone down. Why would anybody buy at those prices, when just check out what they want to rent them: 50% less.
Sorry guys. It's going to be a rout.
October...prices are going up daily. I'm looking at prices for studios and one bedrooms under 700k. Apartments that I've tracking have all gone up.
listen to stevejhx he knows what he's talking about. He bought a two bedroom house on Long Island a few years ago that he still owns. Everyone who is anyone anything should know that two bedroom house on Long Island has wonder appreciation potential.
That's anyone who knows anything should know that a two bedroom house on Long Island has wonderful appreciation value. I like Steve feels that the Manhattan RE will go down at least 50% if not close to 100%.
Julia I am in the same boat as you are and I am getting the same results. BUT I have noticed that anything above 700k seems to drop rapidly.
Maybe this is same trend as the rental market. 1-2 br are dropping in rental but studios are sky rocketing...
Julia - Do a search on price changes for the last 2 days. Every single change is a price down. I'll bet if you did the same for 7 days and 30 days the number of down prices would beat the number of up prices.
Julia one more example for you...250 east 54th(Mondrian) apt 21E listed and sold at Halstead in Feb 07 525k relisted March 08(today) same notable broker at 599k. Do you think a high producing broker at a well known company(Halstead) is going to list the unit and waste her time and money at a price that won't sell?
Or . . . check out the studio at 216 E. 7th St. (East Village) - Originally listed at $735K - reduced 3 days ago and now $699K. It's a 5% reduction and its only been on the market for a total of 11 days!
I believe the prices will drop. I work in retail and for the past two weeks we were $50,000 under our usual numbers. The uncertain economy is making people really look at their purchasing, both large and small.
Lincoln Square..the studios were always under 400k now the studios are 425. 439k
Friends in luxury retail have reported anecdotally that sales are off in last month. Also, top end restaurants are beginning to note a downtick I hear--if not in reservations, then in $/person spent. Things are definitely tightening up in Manh and RE will not be immune. Most of us knew that (and said so many months ago on here), but the quesitons remains: how much will RE be hit and for how long?
In street easy, if you search for all studios in Manhattan under 700K, you will find that 23 changed their price in the last week. Of these, 4 had price increases, implying the rest (19) had price decreases. In fact, 14 had price decreases of 5% or more.
In your price range.
SteveF, I DO think a high producing broker at a well known company will waste her time. The beautiful thing is that we can (waste our time) and track it! Anyone want to wager a friendly gamble on the over/under w/ regard to how long it takes her to sell the apartment? It's 402 Square Ft, and the broker, Astrid Pillay, is asking $599,000. It IS a condo, so good chance of one of those pesky foreigners swiping it up for a couple of Euro/yen/name any currency... I say contract in 7 weeks. (after a price drop)
eric cartman...you give me hope. But, are they being priced crazy high so a 5% discount means nothing.
dmag2020...High volume brokers will not take listings that are not within reasonable market prices because they don't have to. Sellers know who the producers are and seek them out. If you are going to use current listings for comps than look for credibility in the agent and firm. I'm not a broker btw, just an investor in condo studios who is noticing rental weakness but price increases. IMHO Manhattanites move in herds rentals strong, prices weak or prices strong, rentals weak.
NYC has already reported a drop compared to last year by money.cnn.com:
... but of course this includes NYC and its 'burbs.
If we are talking just NYC, then I believe it has already happened. I believe most people have already pointed out the number of price drops in the recent month compared to the price increases. You will notice an increased inventory as well. It%u2019s starting to look pretty severe, although NYC is a very big city.
If we are talking Manhattan, then I think we will see single digit percentage drops year over year for 2008 and 2009, mainly because of slower sales of $1 million apartments.
If we are talking about sub $1 million apartments, I do see it stable for 2008, with 2009 taking a small hit if the financials keep on laying people off.
The worst is yet to come. Its the lack of credit that will hit the NYC market.IT's starting already and will last at least the next 12 months. The inventory will begin to rise. Getting an $800,000 loan in this climate is very difficult. And that's assuming you put down 20% on a 1M condo. The credit standards are what is going to drive the market down not just wallstreet. Add job loss and it's shaping up to be a rough 12 months. If you think that Manhattan and the "it" neighborhoods are immune you don't really understand economics. The week areas begin the downward turn first and the strongest will be the last. However all areas will suffer. Oh by the way don't look for the overseas money to save the day. There credit crisis is on the brink. The dollar will get stronger and the overseas money will go away. When the credit problem starts to gain momentum overseas you will see people putting their loved NY condos on the market. This will add to the inventory and further drive prices down. Remember that the foreign buyes have treated NYC like a Vacation Home Market and will be the first assets to go when overseas really starts to feel things are getting tough.
For the past 6 years people have been saying that Manhattan RE will decline now the same people are claiming they have been right for the past few weeks.
dco...I feel with the aggressive Fed action the best is yet to come. My money is on Manhattan. I feel if you are betting against it you are wrong and will lose money. But hey your loss is my gain. So thank God for people who think like you.
its seems unfathomanable that NYC real estate doesnt go down, but stranger thngs have happened....I think the layoffs are the biggest issue, and the psychology of those still working...The credit issue strikes two ways..it prevents buyers BUT it also prevents builders so less supply 2 years out....so really a dilema. The credit issue is more important, to how it effects Wall street employ. I think that NYC is in a cyclical upswing that may trump overall american decay......
just a note, there was this village coop that i wanted to see and after 2 weeks, it already has 11 offers over asking
Regardless of what decade I can think of, I have yet to recall or hear anyone say that it's cheap in Manhattan. Even when apartments were $70K for a nice apartment in a full-service building and a great neighbordhood, people said property was way overpriced. I know 'those were the days...'. However, everything, everywhere has gone up in price. Such is life - and inflation - and bubbles. We can blame the price increase on whatever we want but the reality is that the price increases have been taking place for years now.
Also, I'd never heard of there ever being a parity between Manhattan salaries and properties. What would make any difference going forward? Manhattan property, foreigners vs locals, renters vs owners alike, seem to value it. Otherwise, we wouldn't have so many impassioned contributors on the topic. Do I think that there is a bargain, i.e. a huge drop, in the making? Chances are - no. And, for people to hope for a precipitous drop, would be downright selfish and short-sighted. As things stand, would one be able to shave off a little something / get the seller to offload some expenses? Yes, but that's the extent of the 'give' that I've seen in negotiations. I've tried to finesse a nice purchase and that's the latitude I've gotten. Will there be a slight (5-10%) price correction? Yes, because unfortunately there will always be some sellers who have no financial out and buyers with plenty o'cash waiting to pounce. RE agents will always be happy to represent either since they'll make a commission on a deal worth $800K or $1MM. The difference between the two is significant for the humble ones on this site, but translated into commissions, it's barely negligible for a typical broker.
Interest rates are low and based on my experience with my refi, standards aren't out of the ordinary. So, it's still a good environment in which to buy. Banks just want to make sure that you have 'some' money for your subsistence. The market's just not as frenzied as it was last year but it seems that people are still committed to living here, either as a renter or owner, and that alone, will continue to keep prices level.
coopown98 you make some very good points. One of the biggest problems now is that banks are holding back on mortgages until things start to settle somewhat. Makes it difficult for some to purchase and therefore sellers see fewer buyers.
If a seller can afford it it may be prudent for them to take their property off the market till the dust settles.
Once this "credit crisis'has passed and Manhattan real estate was shown not to be impacted you can bet the house that everyone and their mother will be rushing to buy..this will be the mentality.."Manhattan is indestructible I have to have a piece!" so there will be a surge in prices and renters worst nightmare. Well, we are already 8 months into the crisis and the national scene has deteriorated, maybe bottomed, yet we prosper...time is running out Manhattan housing bears...
steveF - look at the number of sellers dropping prices on streeteasy - is this what you call "prosper" ?
steveF, you're kidding right? ("time is running out Manhattan housing bears")
Q4 07 saw the end of the frenzy and bidding wars. Bulls claimed the new year would bring the usual boost and it didn't. Inventory is trending upwards. There is considerable inventory in the pipeline, and a glut forming in the outer boroughs. There is no bonus bounce this year, and there won't be one in 2009. Buyers are in a great position to wait and see.
lot of wishful thinking as always from spunky and steve ("Manhattan is indestructible, i have to have a piece" was particularly hilarious!!)
tenemental...I don't kidd when it comes to money. When this "credit crisis" passes Manhattan will have a surge in sales and prices. IMHO, once the stock market stabilizes and starts to recover and declares the "credit crisis" over we will see a tidal wave of apt buying.
Manhattan has no subprime problem, the housing setup does not permit it = coop and condo boards. Banks are still lending to prime buyers that is why we have not seen any price softening. People do not have to sell.Simple.
Is it possible the entire country home prices fall 10% and more (california 26%) and Manhattan excapes with prices staying the same or rising. Has this ever happened before? I'm a recent studio buyer and looking to purchase a one bedroom but cannot at 750k.
stevef- Are you trying to say the the credit crisis is over in Manhattan. It has only just begun. This is going to be a slow and prolonged NYC housing correction. It will be just like the rest of the country. I truley hope I'm wrong. A slow economy is bad for everyone.
spunky...wait until the dust settles...are you saying when the dust settles the prices will go up to 750k for a one bedroom or settle somewhere in the middle.
dco I think you need to get some Windex for that crystal ball of yours.
spunky-I like that. No crystal ball. Just an opinion.
You housing bears know your waiting day in and day out for the credit crisis to ...hit! and yet the days go by with Manhattan unaffected and recovery getting closer and closer. "Is the Fed injecting close to a trillion dollars into the banking system having an impact yet?!" "Man this crisis better hit!" The days proceed along as you get more and more anxious....that has got to be one s-cky feeling. Just buy already.
It's not about Bear Or Bull steveF. Its about indicators of a finacial sector that shapes my opinions. If the indicators were bullish that would change my opinions. You see steveF I'm not committed to either side just the indicators. If you diagree with my assesment then you are stating that you have indicators that shape your opinion toward a Bull. I hope at least that you are coming to your conclusion based on some facts and not just blind love for NYC real estate.
steveF - condo boards? Seriously? How about people, sadly believing thay had to buy now or be priced out forever, begging and borrowing enough to make the bank's required 10% down payment. Liens against condos are up significantly because people stretched way too thin and can't pay their maintenance. These same people used arms in many cases, and when you factor in new construction transaction costs, the eventual seller's broker, and the fact that the person they sell to will have to factor an expiring tax abatement into the purchase price, they are going to need a very long time horizon.
Yes, co-ops helped in general, but bulls talk as though everything is luxury 5th Ave requiring 50% down. Most co-ops I see require 20%, and not nearly the 2 years liquidity I see oft quoted. Again, I wonder how many "gifts" recent buyers are struggling to pay back, and how these buyers feel knowing they won't be able to comfortably transition into their next property without a long time horizon.
The recovery is not getting closer. A huge chunk of the Wall St buyer pool has been removed from the market for the next two years, at least.
The NYT had a great article discussing how sellers' expectations are typically very slow to adjust to reality in a downward housing market. It's an illiquid asset with emotional strings and high frictional costs of transfer...thus human nature kicks in and sellers try to "hold out." It should only take a few months for this behavior to abate. Hang in there, buyers. We are holding all the cards!
Hey SteveF, you brought up a listing that you thought was priced right or else the broker wouldn't have wasted her time. I disputed you. How long do think it takes until she sells the apartment you pointed out that she wouldn't waste her time with? This is the listing, in case you didn't see it:
Cause guess what? We can track it and see if you or I are wrong.
A few years ago, this conversation would also include "when interest rates go up...."
They haven't yet. Red flags go up, recession, credit crisis, and voila, key Fed interest rates are lowered a la 9/11/01. Is it reasonable to believe 6% mortgages are here to stay?
New York City R/E, including in prime areas of Manhattan, has crashed before. I wonder if our current thinking is an example of what each stock market crash has caused people to point out, that each time there's a stock market crash eventually people forget it and comfort themselves that some new phenomenon has curred a weakness that caused the last stock market crash, and then a perfect storm happens a few more years down the road, people are shocke, and then they comfort themselves again that that "circuit breaker" or some other new development will guarantee no more crashes.
There are things new and different about the recent real estate bull market. That's what makes it very scarey. But in the immediate horizon.... oh, some more inventory, a little stricter lending standards, a couple of years without record-breaking Wall Street bonuses. But what would make a true crash would be things like massive unemployment, sharply higher mortgage rates, bank failures, massive overbuilding. It's too early to say either way, but there is writing on the wall. So it's once again a question of when, by how much, and for how long. Anyone whose monthly carrying costs on purchasing a home are twice as high as their cost to rent a comparable home is taking a big risk, and it is the momentum and expectation that that asset value will continue to appreciate at 17% per year that is driving them. Being able to decorate one's own home? You can do renovations to a rental.... for a price.
Speaking about a broker wasting time, check out this listing
On the market for nearly 2.5 years....
And they increase the price after 2 years on the market. This is proof Manhattan real estate is from another planet.
Meanwhile, the owner has paid about $53,000 in common charges and RE taxes while the unit has been sitting on the market. I've seen lots of these stale apartments out there.
dmag..I think that condo in Halstead is priced right. It's the only condo openhouse this weekend for studios in mideast under 600k @ 599k listed on the NYT. Looks like the mean is about 625-630 fo the other studio condos. There is another example listing 400sq studio at 236 east 47(the club at turtle bay-lux blding roof deck gym etc) on Belmarc on the 17 flr for 575k. That may be it's only direct competition for below 600k first time buyers. So..........how about taking the current Manhattan wide listing discounts by John Miller of approx 1.5% make it 2% and you get a 590k sell price within the normal 3 months time horizon.
Those anticipating a collapse: let's face it, even $50000 drop on a $800000 property will not help you. Manhattan has always been and always will be overpriced, just like London and Rome and Moscow. Cursing this fact and salivating over a disaster will not help you. If it were not for the internet, nobody would be aware of your sentiments. Steve would have been forced to stick with rejected letters to newspapers, single-spaced, double-sided.
Inquirer: You sound like a typical owner/broker/seller. A $50,000 drop on a $800,000 property (a 6.25% decline), is equivalent to a $93,750 drop on a $1.5MM property or a $125,000 drop on a $2MM property. That's enough to cover your closing costs, buy a really nice new car, or start a great college fund for your kids. If you had the choice of either paying $2MM or $1.875MM for the same unit, which would you prefer? I agree that NYC real estate will always be considered expensive, but that doesn't mean people would be willing to throw money out the window.
hey it's nothing personal inquirer just business. I'm trying to create value for my condos. If I feel street easy influences that than I'll be there to counter anyone who prevents that. I don't want some would be condo buyer being influenced to not buy. I want him/her to buy to increase value. This way I win and all apt owners win. It could be the never ending, everyone wins ultimate pyramid scheme. BTW, let's hope Manhattan follows and becomes as "overpriced" as London, Rome and Moscow.
iMom - I'm no broker or seller. But I am an owner. You see anything wrong with that?
Steve - Napoleon complex is outdated. You do not make difference and do not influence others, except the few who want to be influenced by a hyperventilating message board poster.
Inquirer: Fine...you're an owner. Would you ever pay 6.25% more for something if you didn't have to? Especially on something that cost $1.5MM to $2MM? Funny how you failed to address that point.
iMom- your price sticker is arbitrary, that's the problem. Something that "cost" $90000 in your eyes might "cost" $1.5 MM to someone else. Things cost what people (different people, I might add) are willing to pay for them. That's the flaw with this whole didactic posting: as long as someone will pay $1.5MM for something YOU believe is cost less, it will sell for $1.5MM.
Inquirer: Things are only worth what people would be willing to pay for them. That's exactly my point. Declines in NYC RE will come as buyers reduce their willingness to pay and hold-off pulling the trigger at these relatively high price levels. That's why there are properties sitting on the market unsold for 200, 300 and in some cases, 800 days. Most of the price changes recently listed on Streeteasy have been to the downside. Inventories are gradually increasing as existing listings languish and new units come on-line. According to the market-data-widget on urbandigs.com, Manhattan inventory recently passed 6,000 and is now over 6,200. In today's market (and probably continuing through 2009 since bonuses will be significantly lower next year compared to this year), it's not the seller's asking-price or the list price that will matter. The main driver will be what price buyers will be willing to pay. And like it or not, buyers will NOT be willing to pay what many apartments are listed for right now.
SteveF "I'm trying to create value for my condos. If I feel street easy influences that than I'll be there to counter anyone who prevents that. I want [prospective condo buyer] to buy to increase value. This way I win and all apt owners win. It could be the never ending, everyone wins ultimate pyramid scheme."
SteveF - so you are confirming that real estate is a Ponzi scheme, and real estate bulls are just perpetuating it on this board?? Finally a confession by the real estate bulls !!
iMom hit the nail on the head. The market (ie buys and sellers) dictates the price. These days buys are taking their time, waiting for what they want to pay. Sellers are trying to hold out at higher price points. The urbandigs widget on inventory has basically been going up since it was released. If we enter recession (we might already be there), no buyer is going to rush out and buy something above asking (unless the apt. is priced below market). If the market picks up (the stock market stabilizes, the economy get back on track, etc., etc.) then buyers will jump back in - so as to try not to miss the boat. Right now we are just stalled.
iMom- in most cases of properties on the market for 800 days, it has been taken off the market for a long long time and then put back again. The Streeteasy site does not reflect that fact, it simply records the first day of the listing and does not inform you what has been happening in between. I know an apartment that has been taken off the market for almost 2 years because the family decided to move to LA and just keep it as a base. Do you honestly believe that a place, any place, would not have been sold in 2,5 - 3 years if the owner wants to sell?
inquirer: you're being dismissive, using words like "collapse" and lines like "Cursing this fact and salivating over a disaster will not help you." Most of the bears on this board know that Manhattan will always be way more expensive than the equivalent space in the suburbs. The point is that the NYC real estate market, like any market, is cyclic, not a straight line. We've had very fast and high rise, and now it's over. Many people bought over their heads, even in Manhattan prime. Many in the outer boroughs are in the same position as subprime middle America.
I'm certainly not "salivating over a disaster." I'm following trends, both macro and micro, and I'm feeling the dramatic change in tone in the market. The emotional factors that helped drive the market so high are gone. I know I have more negotiation power than I did last year or the year before, and a huge part of the buyer pool (much of Wall Street) is no longer part of the demand. Your 6% discount above is conservative, but I certainly wouldn’t mind saving $50k. Since I have a very long time horizon planned, that amortized $50k will wind up costing me around $114k over the life of the loan. Early buyers in outer borough new construction have already watched more recent buyers pay 10-15% less as developers have had to price-chop to move inventory.
Lowery said: “But what would make a true crash would be things like massive unemployment, sharply higher mortgage rates, bank failures, massive overbuilding.”
I’m not sure about unemployment nationwide, but a large group of Manhattan’s high earners is being laid off or expecting to make much less in the next two years, minimum.
I’m not a mortgage rate expert, but jumbos are significantly higher than they were when the run up began, even if they’re low historically. Lending standards are tighter (good for long term stability, but not what helped fuel the condo boom), and ARMs are a bigger risk when short-term appreciation is no longer guaranteed, or even likely.
Bank failures: well, we’ve had one. We’ll find out about the others soon enough.
Massive overbuilding: have you followed Williamsburg, LIC or 4th Ave in Park Slope, etc.? Less expensive Manhattan alternatives will only be getting cheaper.
It breaks down to this: I think it’s very likely I can find a property I’d enjoy living in in the next 6-18 months for at least a 10-15% discount. What risk am I taking by waiting? There is no chance I’ll be “priced out forever” in the next two years. In the meantime, I save money every month by paying below the cost of mortgage interest and maintenance on my rental. My down payment fund grows, and I get the opportunity cost.
Spring selling season seems to be kicking in. StreetEasy just emailed me 8 listings for downtown 1brs under $700k.
tenemental- Let's just put this question out for EVERYONE: did anybody on this board sell their place? If yes, did they have any trouble? Theories are bent every which way to accomodate one's wishes, so let's try to ask live warm bodies, What's the stories?
Inquirer: That may be the case for the extreme examples of apartments on the market over 2+ years, but there are many more apartments today that have been actively marketed for the past 200-300 days without any buyers. That number will only increase the longer we stay with current economic conditions - tight credit, reduced job security, declining bonuses, ongoing recessionary pressures etc. This would have been unimaginable back in 2006 when apartments would have 1 open house and receive multiple bids over asking, no matter how outrageously priced. But those days are gone. The sad thing is that many owners (or would-be sellers) are still living in the past.
And for the 2nd time, you ignore all the other points I made and only comment about 1 minor aspect of my post. This indicates to me that you have no response to my other points. I'm done talking to you. I'm just going to let the undeniable increase in inventory, decline in contracts-signed, increase in seller-concessions and eventual decline in prices speak for themselves. Go ahead - live in denial. Live like its still 2006. Live in your own little bubble. I'll be right here in the reality of today's market.
iMom- Good luck with reality. By the way, I don't have to deny anything because I'm just happy with my situation (that you know nothing about). Again, good luck.
inquirer: I'll be happy to hear that answer, but do you really think that a recent seller, who likely went to contract at the beginning of the year, certainly before the Bear meltdown, is in the same position as the seller who'll be selling in '09 after 2 consecutive years with no bonus bounce, or even later this year with continued hits to the financial sector and increased inventory?
I'm not bending theories to my wishes. I managed keep my head above the hype, and now the facts of the market put me in a much better position to buy.
tenemental - iMom keeps talking about places on the market for over a year. etc., so she and you seem to be talking about the same things.
But recent sellers - yes, I think they are in the same position as sellers before them, meaning those who want or have to sell do so and those who can hold for their asking or above price sit on it. Nothing new was invented, only the internet helps spread (or ignite? or manipulate? the sentiments faster. In some circles.
inquirer: "iMom keeps talking about places on the market for over a year. etc., so she and you seem to be talking about the same things."
Umm, no, I mentioned nothing about that, though iMom and I seem to have similar impressions of the current and coming market.
The internet was in full swing before the runup, so I don't know how its presence is suddenly a negative for sellers. I will say that sites like StreetEasy help buyers because we can see actual selling prices and changes in asking and make our own comparisons in other ways. We have an antidote to the endless broker hype that went mostly unchallenged for years. Surely you don't think honesty's a bad thing?
tenemental - Honesty is a beautiful thing. The price fluctuation had always been here. It's normal. The constant thing is this: in spite of all your perusing the sales and pointing a finger at comps, you simply cannot force a seller to adhere to those comps. Convincing yourself that this is the way things ought to be is not the same as convincing others. FYI: I have nothing to do with real estate, I just happen to own some of it and very happily so.
inquierer: buyers are not trying to convince sellers to adhere to comps. If nobody is willing to sell at the price I am willing to pay, I will continue to rent happily.
It seems to me that it's the sellers that are trying to "hype up" real estate prices in order to find the next generation of suckers in this ponzi scheme. See SteveF's post where he admits flat out that that's what he's trying to do.
eric - Then the whole capitalism system is a ponzi scheme. Gullible great unwashed are sucked in unwittingly into the clutches of ... (you fill in the blank.)
inquirer, that's just absurd.
price of an asset equals future cash flows discounted at the appropriate level. hence, asset has underlying value. with change in anticipation of future cash flows, and change in value of the future benefits, the underlying price changes and is traded in a market place.
ponzi scheme is based on an entity (such as a ticket or a membership) with little to no value that is perpetuated solely based on the "Greater fool" theory (i.e., "i know this is grossly over-valued and am foolish to buy it, but i will still buy it because i can sell it to someone who is a bigger fool than I")
equating these two entirely different concepts (one of which is legal and the other that is illegal in most countries) shows you have little understanding of either.
if this was your thinking when you bought your place, good luck!
ok, bulls - we have had two of the (steveF and inquirer) agree that real estate in manhattan is now like a ponzi scheme where next generation of suckers will help sustain prices for the current owners.
spunky, eah: what are your thoughts? if the two of you fess up, then there is no more debate .. we can all log off this website and get some real work done :-)
eric - thank you for the lecture. I was teasing you. Relax. My place: I bought my penthouse to enjoy, there's a huge terrace with my vegetable, and a fireplace, and a river view, and I am happy here. Don't hate me, ... etc. I love Manhattan and my place in it. Sorry. Good bye.
so long as you bought it at a time when it was cheap (3 - 4 years ago), you are fine.
even if you bought it in the last year or so, so long as you are so rich you dont mind paying twice as much to own rather than rent, you are fine.
why would i hate you? i am happy with the flexibility i have to move when i want to, and hold most of the cards should i choose to buy (e.g., all my equity intact, and significant borrowing capacity should need arise)
peace, good bye.
inquirer: "in spite of all your perusing the sales and pointing a finger at comps, you simply cannot force a seller to adhere to those comps."
I don't have to. If your family grows or you divorce you may need to sell. If your financial situation changes considerably for the worse (including cases of illness) you may need to sell. If you are relocating for personal or professional reasons you may need to sell, etc., etc., etc. If you bought prior to 2004 and would like to make a great profit now before things get markedly worse...
"Convincing yourself that this is the way things ought to be is not the same as convincing others."
All of my comments have to do with what "is" happening, not with what "ought to be."
"FYI: I have nothing to do with real estate, I just happen to own some of it..."
Thanks for the biggest smile I might get all day.
I want to hear more about your vegetable, Inquirer.
poorishlady -I meand vegetable garden, tomatoes and squash. And some vines.
tenemental - I think you're wise to not buy right now.
No, I don't think the market has crashed yet. I'm
not sure when it will, for how long, by how much, but
I do expect prices to go down. As I said, I believe
the handwriting is on the wall, but it hasn't all come
tumbling down, and it might come down precipitously.
I have felt for over two years that there is massive
overbuilding of condos, given their prices. However,
they have quickly sold out long past when I thought
they're a glut. If you're a prospective buyer, I
think you're smart to not jump into those right away.
But predicting the future is always tricky. There
was a famous case of a stock trader who foresaw and
predicted the dotcom crash. He was absolutely right
about everything he predicted, except for one thing:
when. He shorted stocks. The market crashed before
his buys had to be made. He lost bigtime.
I would have thought NYC real estate, especially
condos, would have crashed at, say, 2002/2003.
In fact, the most dramatic runup prices has
been since 2002/2003. Oops........ For my
idea of what the right prices are, they have a
long ways down to go. Not just 10%. More like
55%. Do I think they'll go that low? No.
At this point I wouldn't stake any bets either
way. But if you are renting, don't pay more
in GROSS monthly carrying charges after
downpayment and closing costs than you are
paying for rent. Repeat. Do not do it.
Massive overbuilding would be to build more
housing than there are people to live in it.
But there will always be a price at which
someone will live in it for this town. The
question is what will that price be. Many
people seem to focus on the "price" of
real property, and I suspect that's because
they're only thinking of it as an investment
that goes up in value. What is the price
of purchasing property? It is not the
sticker price. It is the closing costs,
the downpayment, the lost opportunities,
the monthly carrying charges. And I
don't see rents going up now.
Massive unmployment? We do not have massive
unemployment. We may in a couple of years,
but we don't now. We have Bear Stearns
collapsing and we have a few thousand
financial services employees being laid
off. It has been worse. It may get
worse. Once again, when, how much
and for how long?
We can debate interest rates a lot. I
think they're all incredibly low,
because I had an ARM which reset
in the late '80s and early '90s
to 12% and over. Its "teaser"
rate was 8%. Possible return to
those kinds of rates is totally
absent from this discussion. I think
people don't want to believe it will
ever happen again. We've grown
accustomed to having the Fed lower
rates every time there's bad news.
I think some people in this market
do not remember 7% and 8% and 9%
unemployment or prefer to forget it.
Likewise with mortgage rates. And
I also remember condo buildings
which halted costruction and stayed
unfinished when the developer went
bust (Astoria, high rise on the
water not far from Tri Boro)
oops, what I meant to type about the
brilliant short-seller in dotcom stocks
ahead of his time was that the market
crashed AFTER he had to buy the stocks,
Further to the halted condo construction,
that project did get completed in the
'90s -- after the whole thing was bought
at a $2-per-share style fire sale. There
is nothing remotely similar to that
situation going on today, yet there are
more condos being built than back when
that mistake was made. So we may get
back to those good old days of gloom and
doom, and are probably headed somewhere
like them, but....... when, by how much,
and for how long?
lowery - I think you are right. I'm sitting on the sidelines. I'd like to buy - but I feel that I'm not going to hurt myself by waiting one more year. (I'm not trying to time the market - I'm also putting together more money for my downpayment, etc.) Even if things somehow pick up - I can't see the market jumping up in the next year.
eric_cartman, tenemental, lowery & october - its nice to see some level-headed-ness on this board. Best of luck to all of you.
Seems like Manhattan builders have been focused on the large, luxury segment during the past economic boom. Could there be a shortage of smaller units? Many smaller units have been used by families as "add ons" to 1, 2 and 3 bedroom apartments, thereby cutting their supply even further.
I see a scenario where Manhattan, due to the instability of Wall Street, becomes a less hot place for families to live, but a very hot place for adults with no kids, thereby causing unprecedented demand for smaller, less expensive units.
So, I predict a price drop on large, seemingly overpriced luxury units, and, perhaps a price increase in small, seemingly inexpensive studios and 1BRs.