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Anyone Else Surprised by UDigs Inventory Trend?
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Active listings tracker:

http://www.urbandigs.com/chart.php?t=Market Trends&s1=Active

I was expecting this curve to continue its moonshot trajectory established Sep-Oct, especially given all the Wall Street layoff buzz. Instead it's EKG-ing again. Momentary pause? Manhattan really is different? Predictions?

layoff buzz so far has been mostly that. Yes, there are layoffs. Yes, they are in the thousands, and bonuses will also be down. But there isn't panic. While it is possible that another, possibly Italian-made, shoe will drop (I think it likely at some point) it is unclear how that will affect us and Wall Street. Not that we will dodge the bullet, that is unlikely. Just that so long as people don't know how it will happen or what it will look like they also don't know how to plan or if they will be one of the 1 in 4 or 1 in 3 that will lose their job is things do come to the worst.

Remember that even all the employees at Lehman were taken by surprise and had huge portions of their net worth tied up in company stock, and some of them should have known there was toruble. But that isn't how the human mind works.

Real estate markets move slowly, even in crashes. I would guess, and it seems from watching the news, that countries crash even more slowly. How do you prepare? Selling the classic 7 and putting the nest egg into gold ETF's is going to seem quite hysterical if there is a disastrous decline of 20% in Wall Street employment. After all, you might be one of the 4 out of 5 who survives.

West34, I have a strong feeling it's a seasonal effect we're looking at. In fact, look at the max view on inventory - it's eerily predictable: after Halloween 2009 and 2010, inventory took a sharp tumble. Looks like we're in the early stages of that yet again. Most likely because of the upcoming holiday season.

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You'll have to explain that one to me jason, because this is what the chart is telling me:

2009: After Labor Day, quick increase in inventory until Halloween, then major dip back down right through the holidays.

2010: After Labor Day, quick increase in inventory until Halloween, then major dip back down right through the holidays.

2011: After Labor Day, quick increase in inventory until Halloween. Let's see what happens.

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I think the state of today's manhattan real estate is mostly those who have to move due to financials or change in size requirements.
For the rest(the "investors," "flippers," etc.) it is doe in headlights waiting for a true bottom (or end) to the status quo.

truthskr, don't you think it's (mostly) always been that way though? Most people simply aren't trying to time the market beyond a 6-12 month buffer, I think. There's certainly a (vocal) minority that is perfectly content waiting, but once most people have made the mental commitment to buying, financials and family needs (size reqs or spousal pressure!) tend to take over. I may be wrong, but that's usually been my impression.

Assuming you mean post Lehman for (mostly) always, yes I agree. Id go more specific to 10/12 months post Lehman.
Right now, most of the novice real estate flippers and developers are completely out of the market. If they were still in current inventories should have forced an increase in price. I think the $1000 per sq ft mark has incredible gravity and inventories are adjusting to that. Tail wagging the dog. (for now)

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I think both 2008 and 2009 saw seasonality affected by the crisis. In late 2008, the market shut down, fear settled in and 3 things happened: demand plunged, off mkt surged, inventory surged. So the seller pool swelled big time as sellers posted listings for sale that may not have otherwise done so in normal conditions. In late 2009, the reflation already started but many didnt buy into it lasting - inventory peaked in April 2009 and came down as demand came back. 2010 and 2011, to me, were highly seasonal markets. Last year the decline in inventory started in mid NOV, similar to this year - maybe a week or two earlier this year. But look at pending sales charts over the inventory charts and hit MAX button. We r even seeing the same tickup in demand at a lag to a pop in inventory post labor day. First the stuff comes on, then the buyers sign, then the brokers update listings so we can measure it. 30-day pace of deals is in mid 800s now, whereas last NOV we totaled 801 new deals signed. I think the ACTV monthly bar charts really tell the story:

http://www.urbandigs.com/chart.php?s1=ACTIVE&mindt=11/17/2010&maxdt=11/17/2011&t=Broker Updates YoY&interval_mindt=2008/01/01

For 13 consecutive months, we have seen yoy declines in monthly new inventory to come to market. What does that tell us?

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Thats fine..they have every right to do that and consumers have every right to see each and every attempt and price that seller tried and fail to sell at

What does 13 months of declines tell us?

Maybe that current sellers are not broke enough to "have to" sell (equities being at decent levels would support that hypothesis) but they also have no confidence that their incomes will grow, and so they're choosing to stay put rather than stretch.

I feel like a lot of the 2-BR action we saw in the past year was not people trading up from 1-BRs, it was people trading across (as one example, New Jerseyians coming to Manhattan) or entirely new entrants, former renters, coming into the market in a big way.

Conversely, I feel like my listing pipeline is heavily estate work now.

UD, do you agree?

ali

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Re: equities being at decent levels would support that hypothesis

I just read that the average 401K saver's balance is currently at a high, with losses from the 2008/2009 correction fully made up by subsequent contributions and investment gains. Thus many people could be feeling "wealthy" again.

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could be Ali, but who knows. For whatever reason, the sell side pool in Manhattan has been gradually shrinking after the crisis/reflation we went through. It could also be that prices are not where they need to be for many sellers to consider selling. being how costly it is to both sell and re-buy, and the lack of well priced quality inventory out there, they are just staying put. Im sure multiple reasons are playing a role in the monthly inventory declines from prior year

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Actually both Fidelity and Vanguard reported this and it was picked up widely in the MSM. Markets have dropped 5-8% since 1st qtr 2011 but then again there are 6 months more contributions in those accounts.

USNews
401(k) Savings Inches Upward
May 2011

The average 401(k) balance rose to $74,900 in the first quarter 2011, up from $71,500 at the end of 2010, and the highest amount recorded since this data began being tracked in 1998, according to recently released Fidelity data. Fidelity 401(k) balances have grown 12 percent since last year and 58 percent since 2009.

About two thirds of the increase is due to market gains and one third is from new 401(k) contributions, according to Fidelity’s analysis of 16,500 401(k) plans with 11 million participants. Nearly 10 percent of 401(k) participants increased the amount they are saving so far this year, up from 7.6 percent of savers who were able to boost their savings rate a year ago. Only 3.2 percent of retirement investors are now saving less than they did last year, about the same as the 3.5 percent of people who reduced or eliminated their contributions in the first quarter of 2010. The average deferral rate is 8.2 percent of pay, an amount that has remained consistent over the past 2 years.

Retirement investors who have continuously saved in the same 401(k) plan for a decade or more generally have the highest balances. Investors with 10 or more years of 401(k) participation had an average balance of $191,000 on March 31, 2011. And 10-year participants ages 55 and older had an average balance of $233,800.

More references:

http://www.investmentnews.com/article/20110511/FREE/110519982

http://money.cnn.com/2011/02/23/retirement/401k_contributions_rise/index.htm

http://www.pittsburghlive.com/x/pittsburghtrib/news/nation/s_728520.html

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Inventory inflection point coming soon? Even with the seasonality, I'm really surprised at the recent drops:

http://www.urbandigs.com/chart.php?s1=Active&s2=&mindt=01/01/2008&maxdt=12/20/2011&t=Market Trends&interval_mindt=2009/12/20

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Re: surprised at what? that no one can sell there apt so they take them off the market?

no, that more people don't HAVE to sell their apartments because they're fricken unemployed -- "gee honey I just sold your Rolex and my last pair of Jimmy Choos on ebay, only one thing left now......"

Still looks seasonal to me - almost identical volume to same time last year.

Dispite all the hupla...
The bulk of locals may have not lived financially on the razors edge.
This is a competitive town but hard to show off compared to your psycho rich neighbors.
Where 1.6M gets you an unimpressive 2 br who you gonna show off to?
Travel out to the burbs. The competition is palpable. I've seen my suburban buds feel it much harder than city folk.
Coops and copitition for re in Manhattan may have reduced (%) those who need to sell as a matter of financial urgency.

Compitition......

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Why is it so hard for people to believe that there really is a "recovery" out there?
Really? Seems like everyone is completely ignoring that such a thing can happen.

Look at the retailers.

http://finance.yahoo.com/q/bc?s=RTH Basic Chart&t=my

Already broke out above the 2007 highs.

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1. 2008 was a far bigger event relative to what is happening now. Think SPX 1200 range rather than sub 1000 range. Yes bonuses are going to be lower, financial services industry is contracting but there is no shock to the system - many people fearing that financial system has collapsed and will not recover, they will never find a job in finance, Manhattan could be down 50% in real estate. None of that came true.
2. US economy is slow but not in recession despite a huge drag by Europe.
3. On an average, cheaper to buy than rent (except for luxury properties Nada uses as benchmark - min $1200 per sq ft where renting is cheaper but supply is limited - )due to very low rates.
4. Limited new supply.
5. Prices close the bottom despite equity prices significantly higher.

I was bearish for a long time (8 years to be precise) but finally decided to buy considering all the above factors and my ample liquidity. That said every asset class can lose money including sovereign bonds. My estimate of prime NYC real estate is down no more than 5% on a average, upside is far higher (again talking about properties <1200 per sq ft).

>People cant sell at the prices they desire so they take their apartments off the market.<

>they also have no confidence that their incomes will grow, and so they're choosing to stay put rather than stretch.<

>Inventory will pick up in the Spring and they still wont sell at the prices they expect..... the RE bubble takes time to deflate... the longer they wait the lower the price...<

Agreed.

Just read: "How We Can Avoid Becoming Like Japan "
http://www.commentarymagazine.com/article/how-we-can-avoid-becoming-like-japan/

After reading it, I'm even less enthused about buying. The debt-to-GDP ratios are frightening. Seems world economies are in for seismic change. IMO, not an encouraging environment for buyers to either go into mtg debt or dump a chunk of cash into non-income producing apts, whose values will probly deflate. So, just watch & wait.

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Hey Falco - I think we have to add that factor to our official "Why Manhattan IS Different" list ;)

- they're not making any more land
- everyone wants to live here
- Brazilians, Russians and Chinese etc are stepping in to support the market
- strict coop boards have prevented over-leveraging
- there is little or no foreclosure activity in prime manhattan
- there is still lots of pent-up demand from buyers wanting to trade up
- interest rates are at historic lows
- jumbo lenders are re-entering the market
- quality of life has changed greatly since prior busts, eg mid-1990s
- NYC economy is more diversified and thus less reliant on Wall Street to support prices
- most people will always prefer to own despite high price/income or price/rent ratios
- NYC real estate is always a great long-term investment
- Unlike the burbs, NY-ers don't conspicuously consume real estate
- Barbara Corcoran said so
- and the number one reason why Manhattan is different - OUR banks are too big to fail!

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Brooks, Brooks, not again. It's a satirical list. get it?

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I still think something ends. Nothing goes on forever.

NY is looking at declining tax revenues. I don't see how they can do anything about it. Finance is slowing. The latest lending by the ECB is less a panacea to cure all ills than an indication of how bad things are that they feel they have to act. The city pension and payroll won't be cut, barring some crisis, so the only way to make up the shortfalls is through service reductions and/or tax hikes on real estate or income. Service cuts reduce the attractiveness of NY (admittedly this will happen slowly), real estate taxes reduce the attractiveness of real estate, particularly if people realize it can keep going up, and income taxes reduce the affordability of real estate and the desire to live in NY.

The only thing that avoids these scenarios are a return to huge growth in finance or a cut in services. Anything else, like the new Cornell/Technion campus, is a bet on the following generation, not the next 10-20 years. (Mind you I am a fan of both universities, but this is no panacea, particularly if the business environment for startups is unfriendly).

yeah but tourism is up!!

Msy I ask how many people who are bearish on Manhattan real estate are long equities? If Manhattan real estate is going down, are equities not going down?

Also, if the inventory level is high, how do you explain the sales in this "nothing special except the location" building for $2000 per sq ft. Unfortunately, parts of W34 satirical list are very true - the first 5 or 7.

http://streeteasy.com/nyc/building/130-west-12-street-new_york

"Msy I ask how many people who are bearish on Manhattan real estate are long equities? If Manhattan real estate is going down, are equities not going down?"

there is no correlation. Equities are flat to down over the last 10-11 years and Manhattan real estate is up multiples during the same time period...Finacial stocks have been destroyed, Citigroup (once one of the largest banks in the world and a huge NYC employer) is down 95% from it's peak, yet Manahattan real estate keeps chugging along..

300: I think #3 on your list is debatable at best. Price to rent ratios still seem to favor renting in Manhattan, IMO. I've done some comparisons on condos which happen to be both for sale or rent so that they make the perfect comp, and the ratios still seem incredibly high. If you don't mind me asking, what do you think the ratio was for your purchase?

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Re: equities are going down. Have not owned any in 4 years

it's amazing that you knew to get out precisely at the market peak!

thoth, why condo, not a coop if you are planning to live there. You can find a space in nice area at 1000-1100 per sq ft with reasonable maintenace. The same place will cost you 4-5 a sq ft to rent. Do the buy vs rent for a coop.
- Count only the interest portion or your mortgage
- There is no grarantee that rental prices will be fixed for thirty year. Hence, do not factor in the cost of 30 year fixed mortgage to keep the comparison the same but a shorter term fixed rate mortgage.
- Do not factor in the high-end reno you may do in your apartment but will not available in a rental.
- Do not assume 10% return on your downpayment as you will always end up in favor of investing rather buying.
- Our all in cost assuming 0% return on downpayment (we are mostly cash investors), and 5/1 interest only mortgage is 20% less than renting (at $4.5 per sq feet per month in prime village) after factoring in periodic basic updates to the apartment, routine maintenance, insurance, transaction costs etc. If we assume 5% post-tax return on downpayment, still a discount to rent. See my previous posts on this.

Brook4 "equities are going down. Have not owned any in 4 years"

how do you explain your missing the rally in the DOW from 6500 in march 2009 through 12,100 today? that's a huge miss, you should not be bragging....

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FOREIGN BUYERS' CHILDREN NEED APARTMENTS TOO!

Foreign buyers bolstering holiday home sales
Brokers report apartments are being given as gifts -- with everything but the bow
December 22, 2011 11:00AM
The Real Deal

By Guelda Voien

Two years ago the holiday season was a dark time for New York City's residential real estate brokers. This holiday season could not be more of a departure. Appointments are up, housing supply is down and brokers are planning to work through the holidays, making sure to be available for international buyers who will be in town and may just want to pick up a multi-million dollar Manhattan apartment as part of a holiday shopping spree.

The bleak days of 2009 have not yet fully faded from memory. "Nothing compares to that," said Shelley O'Keefe, a senior vice president at the Corcoran Group and head of on-site sales for Soho Mews condominium, at 311 West Broadway, of the 2009 holiday season, shortly after Soho Mews premiered. But things are more than looking up this year.

Director of private brokerage at Stribling & Associates, Kirk Henckels said he recently made two "enormous" sales -- both foreign buyers and with Central Park views -- at lightning speed. Though addresses could not be disclosed, industry sources indicated that both went for more than $10,000 per square foot.

Joanie Schumacher, Corcoran Sunshine Marketing Group's on-site head of sales for the Laurel, at 400 East 67th Street, said she would normally take a holiday weekend off. This year she is on call Christmas Eve, New Year's Eve and the day after Christmas.

"It's especially busy this year. Certainly busier than last year," Schumacher said. "We have more Europeans and more South Americans [looking at apartments]."

Those buyers are often families, looking to add a Manhattan home as a second or third residence, or investors looking to park money in a market that looks exceedingly calm in comparison to Europe's. Schumacher said one French buyer -- of a $4.85 million three-bedroom home on a high floor -- began negotiations two weeks ago and will be dropping in later this week to sign documents and get the keys.

Sabrina Kleier Morgenstern, an executive vice president at Gumley Haft Kleier, reported more than one foreign buyer with plans to sweep through the city during the holidays to buy "Ippolita jewelry at Bergdorfs, crocodile bags at Hermes," and a condo. One buyer, whose new address near the High Line she declined to give, looked for only two days and wanted to be in before the holidays.

Corcoran's O'Keefe is also ready for a busy holiday. "I'm definitely going to be around and our sales office will definitely be open [until Dec. 24]," she said. "I live downtown. If someone called on New Year's Eve and wanted to see an apartment, I would absolutely come over and show it." Four of 68 units for sale remain on the market at Soho Mews, O'Keefe said.

While previous reports have indicated that more and more parents are buying apartments for their adult children, or at least signing on to their mortgages, brokers report that some foreigners are even buying apartments as holiday gifts. "I've definitely seen a graduation present," said John Tashjian, a principal at Los Angeles and New York-based Centurion Real Estate Partners, and sales and marketing director at Riverhouse, a condominium at 2 River Terrace.

And although no one has asked him to "put a bow on them" he suspects some sales currently in the pipeline could classify as holiday gifts, many of them given to a buyer's child. Of the nine apartments still available in the 264-unit Battery Park City building, where actor Leonardo DiCaprio owns an apartment, Tashjian said he expects two or three to close during the holidays, significant sales given the lack of available apartments in the building, all but one of which lack the stellar river views that units sold earlier offer.

Kathy Braddock, co-founder of Rutenberg Realty in New York City, agreed foreign buyers show a lot of interest at the holiday season, but said in her experience much of it was akin to window shopping -- touring properties but not necessarily signing the dotted line.

A major obstacle brokers mentioned with foreign buyers is that they are less value-driven than native New Yorkers and want something unique that may not always be available.

"When they look out the window [foreign buyers] want something iconic -- views of the park, the Statue of Liberty," whereas New Yorker buyers are more interested in resale value, Tashjian said. And there is not an infinite supply of iconic views.

That said, once foreign buyers commit to buying in New York City, they tend to move quickly. One Chinese buyer recently saw another family was also getting a tour of a unit with views at Riverhouse. As soon as the other family left, the Chinese buyer immediately took the apartment, and worked to get through escrow in three days, Tashjian said. "It was the fastest transaction I've ever done in my career."

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>A major obstacle brokers mentioned with foreign buyers is that they are less value-driven than native New Yorkers

Dollar is weak, so foreigners may get more for their money then native New Yorkers due to exchange rates

But agree this report is probly BS broker hype.

http://www.urbandigs.com/chart.php?t=Market Trends&s1=Active

Flatlined.

February has flatlined before - look at '08 and '11. Seems like too short a time period to draw any real conclusions. Inventory's probably about as low as it's been since Feb 2008 (I believe there was more shadow inventory back then).

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"pending sales seem to be at the lowest point in years except for Jan 2009..."

Looks like they're exactly where they've been the past couple years, no?

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Oct 2010 was the lowest point of pending sales in the last 2yrs - at 1,712 or so. We are at 2,005 now and the most recent trend seems clear.

http://www.urbandigs.com/chart.php?s1=Active&s2=Pending Sales&mindt=02/24/2010&maxdt=02/24/2012&Update=Update&t=Market Trends&interval_mindt=

The ticker (30-day CSGN# at 909 right now)is confirming real-time daily/weekly activity and that this is shaping up to be a stronger February than both 2011 and 2010, in terms of new deal vol. We do have an extra day though this year so that will add 20-30 or so to the total when it comes out March 1st. Still, its a very active February, and an even stronger signal given that supply trends are at such low levels.

Here is a bar chart of Manhattan Monthly CSGN vol since 2010:

http://urbandigs.com/chart.php?k=0107cd24c9ddc99bbb3e8bb396572428

sorry, 1st link broke so please cut & paste to view the chart

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"give it a month"

You said the same thing about the stock market. A few months ago. urbandigs is not your typical broker - in my experience, his analysis is pretty spot on.

I agree bjw. Have been on this site for over 3 years and am a huge fan of urbandigs. Definitely a buyer's advocate.

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utter bs gibberish...havent heard that one before but hey, to each his own. Some believe the data is the data and the data doesnt lie, and some believe the data is bs gibberish. I guess its a matter of how hard you work to sanitize and cleanse the data when building a inventory tracking system. took us 16 months, but hey, who cares right..gibberish is gibberish

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yep total waste

your right its better to rely on individual observations than what every rls exclusive listing update for every rebny member is telling us. you say market is trending down, so it is.

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Always a pleasure watching the no nots ignore carefully collected data and stick their finger in the wind. UB, please forgive them for they know not what they speak.
To the critics:
Get analytical skill set.
All that money on education...total waste of time.
Hope ya got laid a lot in college.

Brooks2, I think it's fair to question urbandigs' data, but only if you back it up with some valid reasoning why. So far, you've provided nothing. That's more what I consider "utter bs gibberish," but let us know...

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"I don't find useful."

That's convincing. Solid work.

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That modern reno at 180 East 79th is now down to the $2,000,000 that other low-floor sixes there have gone for.

That kind of gut renovation in that kind of building is a tough sell. Not many would pay for it, and more would think the place had been trashed. Also, that style requires perfect upkeep, and this didn't get it. See what happens to dark wood floors in a kitchen, and note the grotty edges around the doorways and cabinets: http://img.streeteasy.com/nyc/image/46/25049946.jpg

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hmm...a combative person who sites lots of comps...

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the crazy thing is 8C was listed at 2.25M when 3C was asking 3.2M in early 2010. Naturally, the market acted and 8C sold for 2M. Every buyer remotely interested in 3C at the time likely knew this and waited for to see what someone bid for this highly relevant 8C comp. When buyers got discovery in Sep 2010 I dont see how 3C continued to justify any ask over $2.2m or so considering that now recent sale and highly relevant comparable. I guess it confirms the old saying, "an ask is just an ask".

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Yikes, Brooksie, lots o hate, huh? Unfortunately, it's these kinds of antics that gives bears a bad name. And I do have to agree with Noah on this one - sometimes "an ask is just an ask."

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"Most idiots, this include RE brokers that go along with it, put their apartments on the market at too high a price. It is the dumbest think to do in a declining RE market. I don't think that dope Mastonjones has a clue.
Thus all the price choppers"

I don't get why anyone pays any attention to asking price. People can ask whatever they want, but it doesn't correlate to actual value. So I don't really call those "price choppers." If it's below what it actually SOLD at last, then yes, but the focus on ask is pointless.

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