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Manhattan Apartment Prices Decline YOY
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so where do prices stand versus 2009? 2007? 2005?

i sold in 2009 and have not really been following nyc since then but i remember plenty of bulls and bears from these boards. looking back over the last 3-5 years, can a "winner" of the argument be declared?

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look at SE condo index. looks like we're just above mid 05 now, about 10% below 07. you sold at the bottom.

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make sure you look to CSGN date, not the actual sale date.

This is because 56% of the units sold were studios and 1BRs. You can twist numbers to "prove" anything you want if you slant the words describing them the right way - it's all nonsense.

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I got out at the right time, far from the bottom. I bought in '05 and sold for a nice profit in 2009. I know how I did, JButton. I meant the rest of the market as a whole. I was not looking for validation of my sale.

NYC prices have nowhere to go but down. Anybody who thinks otherwise is fooling themselves.

1) Weak employment, particularly on Wall Street, where big cash bonuses are a thing of the past. Bonuses are a key driver of the real estate market.
2) A strengthening dollar and weakening Euro mean NYC real estate is way, way more expensive for foreigners than the past year or two.
3) Still super tough to get a loan, especially a big one. Demand remains strong, but the $$$$ just isn't there.

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"NYC prices have nowhere to go but down" - been hearing this tune since 2009. Some people are so certain of some things that they will ignore every valuable real time dataset on current market conditions if it doesnt jive with a preconceived notion of where the market is headed. Yes, bonuses are down. Yes the dollar may strengthen and has strengthened a bit, yes its still a bit tough to get financing for those that are borderline candidates for a certain loan amount..yet Manhattan is performing quite well right now. The data shows it and the Q2 and Q3 reports down the road will confirm whats happening now. So whats the reason for bids that keep coming in then?

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back in late 07 and early 08, there were very real reasons to get bearish on Manhattan re prices - even though the market defied gravity and held on until late 08 as credit blew out. Made many wonder, is credit wrong or are stock prices/manhattan re wrong? I just dont see any clear signs of distress that will cause any kind of sharp reversal right now. If anything, buyers are paying a premium for confidence in Manhattan property, a more stable marketplace, and lets face it, a more liquid marketplace. March saw 1,213 new deals signed...best March UD data has on record. And this is when supply is down 11% in Manhattan from 1 yr ago. Feb came in as the strongest Feb since 2008. another 61 deals signed yesterday alone, 300 over the last 7 days..30-day pace of new deals is at 1,222 right now.

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Manhattan prices on the re-bound!

"It’s not a boom yet, but the Manhattan real-estate market is coming back strong.

The average sales price of a Manhattan apartment hit $1,483,591 in the first quarter of the year, according to a report released today by Brown Harris Stevens. That’s up 9 percent compared with the same period last year.

The city’s economic rebound also helped push the average co-op sales price up 10 percent — to $1,181,715 — and the average condo price up 8 percent — to $1,889, 560, the highest level in three years.

“New York City’s recovery continues to best most predictions,” said BHS president Hall Willkie, “and this combined with a stable inventory of available apartments makes me optimistic about the coming months.”

Read more: http://www.nypost.com/p/news/local/manhattan/prices_movin_on_up_uNfk8eQWSBP8t6SevM5wWK#ixzz1r4ocr28v

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Brooks2 - please dont tell me I have to explain to you the lag of quarterly sales reports ended March 31. You are aware that many of the filings that filled that report were deals that were signed 5-6 months ago.

You think that report accurately reports on complete Q1 sales, yet Im sure that about 800-1000 Q1 sales are not even in that report due to the lag of acris filings. Im reporting on real-time deal vol, the pace that listings go from actv to csgn for signs of volume.

Here is a look at how many Q1 sales so far that never made that Q1 report because filings came in late - which also means these Q1 sales will ultimately be counted in the Q2 report released July 1st:

April 2 - 75 Q1 sales filed
April 3 - 21 Q1 sales filed

This will continue for months and slowly dissipate with time. Last time I did this was Q3 last year, I waited 6 weeks and counted 600 sales in Q3 that due to the lag were actually counted in Q4's report.

http://www.urbandigs.com/2011/11/market_ticking_up_looking_ahea.html

If you want to look at price action and the quarterly reports that discuss them, fine, but understand the following:

1. Its lagging and reflects a snapshot of the marketplace some 5-6 months ago - think 2-3 months from contract signing to closing another 2 weeks to 2-3 months for the filings to come in via ACRIS

2. It is based on sale date not contract signed date - lets say you sign a contract in late August, 2011 when the market was very slow and only say monthly deal vol in the 500s, compared to 1,200s now. It closes in late November, and takes 5 weeks to become publicly filed on January 3rd 2012. That sale will populate the Q1-2012 report, released April 1, that you are discussing now for current conditions.

Thats my point. That Q1 report is more a snapshot of what the market did from say Aug-November or so in 2011. Not much we can do, but we can read it and interpret it knowing how lagging it is.

Brooks2 - "different asset classes. was there a stock market bubble the last 10 years. this is a foolish comparison. "...

wow wow wow! just when I think you cant get any dumber. So credit blowing out and equity prices are not related in any way to real estate markets? Sounds like you dont get it. Back in 2007, at the height of euphoria, when credit blew out I had this discussion with many, including on this SE board when you were not here..unless your spunky with a new name. The same argument was made. 'different asset classes, a foolish comparison'..credit tells all and equities will follow credit. Your out of your league son

urbandigs:

i remember that you yourself were quite bearish on manhattan real estate, as was i. i bought an apartment in 2009 for around 30% off peak comps, not because i particularly expected this to be a high performing asset going forward, but because my was ready to buy and it was a small enough piece of my portfolio that i could afford to take a potential hit on it. but things have turned out differently: i would now expect to be able to make a tidy profit on the apartment if i decided to sell (no plans to sell though).

curious to hear what you think those of us who were bearish on the market got wrong--why things have not played out that way?

so i see the battle rages on...apparently it cannot be easily decided and it has a lot to do with perspective. there used to be (probably still are) the "price chop" threads; were most of those price chops overpriced properties with pie in the sky prices that just needed to come down or did they have an actual affect on comps in their hoods, driving down the actual price for similar units? i am a suburban guy now and occasionally we see things like this:

Original list price: $2.2 million (May 2005)
Reduced price: $1.6 million (January 2008)
Reduced price: $1.48 million (May 2009)
Reduced price: $1.3 million (October 2010)
Reduced price: $1.25 million (April 2011)
Reduced price: $1.225 million (September 2011)

Sale price: $999,900 (March 2012)

it would seem that these types of drops haven't really hit NYC the way some on these boards thought they might back when i was posting regularly...and if they haven't, they likely never will.

HR - if u recall, I was most bearish in late 2007 and early 2008..discussions on UD over that time will show that. The reason then was because Manhattan was trading at euphoric levels all while credit was blowing out and equities only began to see what was happening with abs/cdos on banks balance sheets. ABX indexes were the first sign of the major trouble in mid 2007, then the two bear funds..Then stocks collapsed as the street realized the severity of the issues, early 2008 - I was still bearish then because Manhattan didnt adjust at all to what was happening with credit/equities. Then Lehman failed, and Manhattan just shut down, no bids..less bearish at this time. I wrote in late 2008 how bids were coming in around 15-20% below peak levels only 10-12 months earlier, got a bit chastised from my colleagues that time. Even less bearish, but still bearish at that time because the correction was happening. You bought at a great time. I was very wrong in from the period between early 2009 and fall 2009, as I simply did not believe the reflation in equities that would ultimately power a reflation in Manhattan RE. I thought it was a fake out, and more dominos would fall again with banks. I was still bearish at this time, when blood was on streets, a time I should have become more and more interested give the steep discounts that could be had - only issue was lack of volume at that time..I started to believe in it and turn slightly bullish I believe very late 2009/and early 2010. Since then the market continued to be seasonably strong and higher price points started to join the reflation.

Hard to say what we got wrong back then..if you recall, nothing could be trusted for a period of 6-8 months or so between late 2008 and early 2009 - i thought Citi would be nationalized when stock traded at $1, believe it was early March 2009. That was the height of fear. With that kind of fear and the idea it would spread to EU and Asia, the downside risks just seemed greater than upside potential. But it turned out the time to buy was when blood was on the streets and everything was ridden with fear...u need iron cahones to take that risk given the uncertainty at that time in the market. So for me, I just did not think manhattan would have such a short lived negative reaction to that whole mess. If u think about it, it was a 6-month freefall to the bottom, and then a reflation. I thought it would be more strung out over multiple years of lackluster volume and depressed bids. Didnt turn out that way

JButton: "look at SE condo index. looks like we're just above mid 05 now, about 10% below 07. you sold at the bottom."

The SE index was 1933 in Feb 2009. It is now 1900, down 2% nominally.

If you bought with cash, the income probably was worth 2% per year after CC/taxes/upkeep/etc., so a 4% gain overall, but amortize away 3 years of transaction costs at 1% per year and you're at a 1% gain.

If you borrow 80%, then interest would have been 6-7% in Feb 2009 (jumbo, depending on ARM vs. fixed) -- maybe you refi into 4-5% -- let's call it an average of 5% -- 3 years on 80% @ 5% per year, putting you down 10-11% overall on nominal purchase price, or down 50% of downpayment. If owner-occupied and interest was tax-deductible, then that saves ~4% of purchase price, so down 6-7% overall on nominal purchase price, or down 33% of downpayment.

Meanwhile, a stock index like SPY is up 103% since Feb 2009. A bond index like TLT is up 22%. A NY muni index like 77%. A gold fund like GLD is up 73%. A oil fund like USO is up 47%. A high-yield corporate bond index fund like HYG is up 76%.

So if you did anything with your money short of putting it under a mattress, selling in Feb 2009 was about as opportune a time to sell as any.

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http://www.urbandigs.com/2009/06/keeping_it_real_less_bearish.html

This June 2009 post kind of shows the change in bearishness to 'less bearish' over the course of late 2008 to early 2009

"Wall Street Salaries Rose in 2011 for Most Workers, Survey Finds" - Bloomberg.

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"curious to hear what you think those of us who were bearish on the market got wrong--why things have not played out that way?"

HR, my prognostications here have been pretty much carried out so far. I prognosticated that there'd be a long period of flat prices leading to little to no return on equity on a cash basis and a slow bleed on a levered basis, which has been the case. My strategy of taking advantage of cheap, subsidized rent by the wealthy for the wealthy, while putting money into other cheap assets (stocks being my asset of choice).

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ok

"So if you did anything with your money short of putting it under a mattress, selling in Feb 2009 was about as opportune a time to sell as any."
My mistake here was to assume he went into contract in feb/09 which would mean closing much later, so he actually timed it to perfection entering into contract in 3q/4q 2008. Good job Sniper.

Sniper what did you do with the money, invest in stocks or buy a new place?

Ino, you seem like a master investor with a benefit of lookback. Most people got washed out at the lows and saw very little of the 09 rally.

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JButton - paid off all debts, a little in college fund, a few small investments here and there, lots of hookers and blow and put most of the rest under the mattress. i have been renting for going on 3 years, patiently awaiting more drops in RE prices (or i should really say, waiting for sellers - suburbs - to catch up to reality with their pricing) and i hope to get a lot more value than i would have a few years back while taking out a much smaller loan to get it.

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How do the bearish people explain the fact that the major developments in Williamsburg, nsp2, edge, 80 met, 58 met, are all about sold out, and have all raised prices over the past year, in some cases as much as 20%, with prices at edge units now in some cases up to 1200 psf. How can that be reconciled with a weak market?

people will pay a premium to be a hipster.

"you can't dress trashy 'til you spend a lot of money"

Why haven't prices come down to fundamentals as fast as UD expected when he was predicting "Armageddon"? It's not the war of Gog and Magog. It's a real estate bubble. RE prices, like wages, are sticky downward. So real estate bubbles end slowly.

Up-to-the-second real-time trading data are useful mainly if you have already decided to trade and are only trying to decide between now and a month from now. If you are making long term decisions, they just distract from the basic questions:

1. Are prices still higher than fundamentals?
2. Is it plausible to imagine that, over the indeterminate time in which you will hold the unit, prices will move even further from fundamentals? And,
3. Do you want to own so badly that you don't mind a good chance that you will have to write off half your purchase price?

it was also a bubble in credit and the effects of that will go on for years. deleveraging continues but total consumer credit has been ticking up recently..securitized loans are dead. that 'engine of the housing/credit bubble' will simply not exist again for many years like it did during the boom.

I agree with you on re prices being sticky downward, and that re bubbles end slowly - as most markets are following that path now. However, manhattans bubble popped and has since performed in a different way...seeing a sharp, fierce decline over a shorter duration of time followed by a progressive reflation to get us to today w/ our typical seasonality.

w67thstreet - A failed day trader..

wait, your own father kicked you out of the family Real Estate practice..

so whatz that makez youz???

LmFAoZzzZzZ :)

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Thanks Noah for your updates http://www.urbandigs.com/2012/04/march_in_the_books_-_new_deal_.html
Real data is always appreciated. I've noticed prices are up since 2010 in almost every building we looked at.

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Are there any other people like me who are getting jacked up on their rent and thinking about buying, and then looking at the prices to buy and just getting depressed?

brooks get your nose out of w67's ass, just because he likes it, doesnt make it right

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