Tales from Williamsburg

I bet they can't wait for your next I told you so posting.

congrats--are these hypothetical properties or are they yet to have addresses assigned?

CondoP,

Comps mean nothing - closed sales matter only. No doubt Billyburg has been doing great but your example is just stupid - if the economy turns tomorrow, your comps will be worthless, together with the value of your apartment.

If you want to have a meaningful discussion with people that have doubted the strength of the BBurg market, you should provide solid info, i.e. closed sales, showing the profit made from buy to sale.

also the spy tripled in the interim, so what's ur point

To get a triple you have to go back to 1995.

and john75 begins with classic and absolutely SPENT 'economy turning tomorrow' hypo....followed by the good 'ol 'comps mean nothing' coupled with asking for 'closed sales' contradiction.

good stuff.

CondoP,

Are you on drugs? Did you read my post? I did not write that the market is turning tomorrow - I wrote that in order for you to make your point you need to present solid data like closed sales because comps won't mean anything IF the market turns.

Other than that, I couldn't care less about BBurg - I would never want to be part of the bridge and tunnel crowd.

correct greensdale, but it is only feb right? buy now or be priced out forever

Manhattan prices are near 2004 levels in real terms. Enjoy your fake comps.

Preserving my projections. Can't wait to discuss when these years occur....

Sale Sate Mar-13 Jun-14 Jun-18 Jun-23
Sale Price $949,000.00 $1,029,000 $1,200,000 $1,500,000
Annual % Change 8.43% 4.15% 5.00%
$/SQft $886.92 $961.68 $1,121.50 $1,401.87
Sales Cost % 7.825% 7.825% 7.825% 7.825%
Sales Cost $ $74,259 $80,519 $93,900.00 $117,375
Net Sales Price $874,740 $948,480 $1,178,100 $1,427,625
Debt $568,291 $556,223 $512,283 $443,855
Gain $306,449 $392,256 $665,816 $983,769

nice glyphs--no clue wtf they mean

i guess these buildings havent been assigned addresses yet--i thought the many stalled buildings had resumed construction, had finished, and/or were selling well??

love to see specifics, if they exist

Just as annoying as the I told you so are the morons who think that the crazy price increases in Williamsburg are fake or exist only on paper. Get an insider account and go look at actual sales. There you will see clear spike in prices and the number of places that go for over asking.

http://www.nydailynews.com/life-style/real-estate/williamsburg-sales-skyrocketing-loft-tops-800g-article-1.1268392

Condopresident- any knowledge of Bedford management? they seem unresponsive to tenants/owners complaints. Is that specific to them or a common practice at Williamsburg? Your comments and inside info will be aprreciated.

John75, comps are, by definition, actual sales.

Another lottery winner retires early. Owners have tons of gravy, including a multi-million dollar payout when they retire or 30 more years of rent free living.
The deduction is almost a moot point, and most owners earn too much anyway. Take the million dollar lottery payout at retirement and be happy.

Renters, they can't afford to buy. They will need to be broke renters until they can amass 6-figures liquid. Most idiots can not manage to do this. Hence, they do not get the jackpot at retirement and 30 years of rent-free living, to boot. Lifelong paycheck to paycheck renters?

Buyer buys $80k townhouse in 1980. Sells it for $6mm when he retires. And no, saying he could have taken that $8k downpayment to the racetrack and put it all on some horse (or investing into a company on the verge of bankruptcy) is not a valid opportunity cost comparison, you blithering imbecile.

What if stupid renter eventually buys in old age? Owners would be living rent-free at that age. Instead, she subjects herself to $60,000 a year in rent. LOL, nice "retirement" sucker. Correct, she is a ginormous fool. This is a case of "too little, too late" She should have bought something back in the 1970s or 1980s, like other people her age. She'd be sitting on millions and be living rent free. A true idiot renter who had made things even worse. At the least, should have moved to a $1500 studio.

Maybe not NYC, but owners have literally recouped 100% of the cost of their apartment in the 10 years of paying below market cost to own than to rent (owning is much cheaper than renting). Even if the apartment was today valued at $0, owners am still ahead. Wrap your mind around that.

2 years ago, I recall seeing $200k studios being posted here. Of course, some of SE crazies told buyers they were CRAZY. Now, there seem to be none of these $200k studios. If the cheapest studios are now listing for $300k, can we infer that the smart investors who bought 2 years ago are now sitting on a 6-figure profit cushion? Pretty damn incredible. Live for $1000/mo, and get paid $100k to do so. A renter doesn't see that sort of money in a lifetime!

Renters LOSE: Bought in 1983 for $1m. Sold in 2012 for $8mil. Owner walks away with a $7m profit. Renter's profit? $0. Yes, those brilliant renters can avoid the increasing cost of electricity and point out the 6 people who bought in 2009 who are underwater. They are so frickin' smart! Just think owners live for free for decades after paying off the mortgage. And get $7 million bucks as a parting gift.

Renters get ZERO percent return. And, renters pay MORE every single month, both during the mortgage and after it's retired.

Average renter net worth $5k
Average owner net worth $250k

Renting is for short-term thinkers. People used to say Manhattan was overpriced in the 1950s, 60s, 70s, 80s, and 90s. Guess what? Anyone who paid off their mortgage over 30 years was looking at a jackpot of wealthy when they retired. Renters? Nothing. Just sniveling ants trying to keep their rent control. If you take a long term perspective, buying is ALWAYS a no-brainer jackpot lottery system for your retirement. And, no, being down on your purchase from 2010 does not negate this.

Wow, anyone who bought a studio or 1BR in the 1990s is sitting on about $300,000 of cold hard cash for apartment sitting. Real estate is truly a money tree, if there ever was one. Oh, and you'be be living mortgage free by now as well. For the rest of your life.

NOT BUYING NOW VS. NOT BUYING EVER? BIG difference. Sure, this is a stupid time to buy at inflated prices after prices have gone up x00% in the last x years. Anyone who already bought from 1850 to 2008 has made out like a robber baron. That boat has sailed. Anyone who bought in 2009 or 2010 lost lost money. BUT, anyone who never EVER buys in their entire lifetime is a stupid f*cking renter idiot funding someone else's retirement. It's an important clarification that some here are too dumb to understand.

I am 100% agreement that prices are headed down. If you're not already sitting on a mountain of pre-2008 profit, then don't bother. That ship has sailed. Owners should now just concentrate on paying off the mortgage, and living rent free for the rest of their lives. Renters, well, I guess can just keep paying off their master's mortgage.

dealboy-
"Sure, this is a stupid time to buy at inflated prices after..."
when is it that you're thinking it will NOT be a stupid time to buy?

" I am 100% agreement that prices are headed down."
When/timespan?

Somewhere else is still waiting for that NYC real estate market crash to pretend he has been right to be a renter all this time.

CondoPres: On your original post, what do you think the monthly payment would be in 2005 at 6% mortage rates and today at 3.5% rates? Assume 1000 sft...

Good question about the when to buy. I have friends who are looking for a place (baby on way) and they didn't jump in last year in hope things would cool down. Now they are one of the hoards of couples going to open houses and submitting multiple offers.

If you were looking to buy a place to live (longterm) when would you jump in? I see things leveling off, but no 10% corrections in any near future.

malthus - have no idea what you asking without knowing other critical assumptions.

realtime - there's nary a management co. in burg that is worth the dollars your building will drop on them. basically, you will receive attention from said company commensurate the $ you pay them. If boutique building, then little to no attention. if bigger building, then better attention. therefore, if you're small enough, then consider self-managing.

i just love the phrase 'fake comps'.

if anybody's curious the return on eq. for my above assumptions they are as follows (also smart folk; not those confused by these glyphs can back into my equity).
Sale Sate: Mar-13;Jun-14;Jun-18;Jun-23
Return on Investment: 285%;326%;530%;881%;1548%;2733%

aside from my told-you-so nature, i do have serious thoughts (same as everybody else and their mother's newspaper article) on why prices are rising so rapidly in the burg (severe supply/demand imblance; also the value of the tax abatement is huge) and whether the price increases are a bubble (no - because REAL money that's been on the sidelines is coming to the table - not 100% financed plumbers) and the macro issues that threaten (and by that i mean threaten to, at worst, level-off) the rising prices(increased supply and rising rates).

key question(s) are when/how these price threats will materialize. obviously tax abated market/affordable waterfront developments (dominoe and on up to GP) are your supply increase sources - but those are at least three years off. easy pre-2007 abatement is gone for small developers so boutiques are not as much of a threat from a supply-side perspective. i think a mass rental to condo conversion (ala NYC in the 80's) is a supply-side threat but consider the developers who build big rentals...their RE play is to build big/rent/hold for 5 to 10 and then cash-out refi (with no taxes to partners) OR sell big then. alternatively, the math on selling big vs. piecing out condos is probably pretty compelling toward piecing out condos....notwithstanding the tax consequences. who knows, but a threat to consider nonethless.

per rates, considering junk/corp. bond issues and recent fed minutes, rate increases could come sooner than 2015....maybe 2014 now. consider also the abtement effect on rising rates...

bottom line: sans a credit bubble, i am all ears as to any solid reasons prices in the burg sub-market will level-off (maybe retreat somewhat) in the next two years from the REAL comps occurring now.

My point is that if you run the numbers you should see that the actual monthly mortgage payment for the buyer from 2005 at 571 per sft and 6% is about the same as the one today at 3.5% and $764. If you ponder that it may be one reason that you think you are seeing rising prices (Whether you actually are is a separate question and I won't go too far into the changing inventory there, which distorts the price per sft comparisons, except to say that there are probably few areas of the city that have seen more new luxury condos built as a percentage of inventory).

In short, I think you have already identified the reason prices may "level off". Fed minutes yesterday showed greater disagreement about when to end QE3 and people immediately took some risk off the table earlier than June. When mortgage rates go up again (whether after June or sooner) and the fed is no longer subsidizing home purchases, affordability will take a serious hit if we don't see a corresponding rise in local incomes.

"John75, comps are, by definition, actual sales"

whoops.

"Somewhere else is still waiting for that NYC real estate market crash to pretend he has been right to be a renter all this time."

LICC still thinks it is 2007.

whoops again.

2004 prices.

whoops.

"Another lottery winner retires early. Owners have tons of gravy, including a multi-million dollar payout when they retire or 30 more years of rent free living."

It isn't gravy if you paid a million in extra dollars today for a payout worth half that in real dollars.

"The deduction is almost a moot point, and most owners earn too much anyway."

Yes, those negative returns are just too much.

"Renters, they can't afford to buy."

If you have to lie to prove your point, your point is moronic.

"Renters get ZERO percent return."

Dumb mistake. Renting isn't an investment, but neither is owner-occupied real estate.

Renters just paid less.

And got to put more in *actual* investments.

"Renting is for short-term thinkers. People used to say Manhattan was overpriced in the 1950s, 60s, 70s, 80s, and 90s. Guess what?"

Guess what... we're at 2004 prices.
Means almost a decade of losers....

"Renters? Nothing."

Well, except those stock market returns which are outpacing buying. And if you leveraged, wow....

"Anyone who already bought from 1850 to 2008 has made out like a robber baron."

Again, false.

"That boat has sailed. Anyone who bought in 2009 or 2010 lost lost money."

The stat say... or 2008... or 2007... or 2006... or 2005....

Why isn't owner-occupied real estate an investment? It may not be an income generating investment, but it is an asset that may appreciate in value. When calculating one's net worth, primary residence is included with stocks and bonds (investments) as assets. Unless I'm interpreting the comment incorrectly, most home owners would say their home is an investment.

Malthus here's you theory in hard numbers...I see your point, however, it's still critical to break out the facts (you coudl get best execution rate at 100% financing in 2005; now you have to be 80%) and forward assumptions...your theory presumes a ~8% rate for a return to 2005 $/sqft to occur. I'll preserve my 8% rate projection forever on thsi SE board at not happening before 2018. We will revisit that topic then.

Ultimately - and very generally, however, we do agree that IR raise is a threat.

Year PP Sqft $/Sqft LTV LA Rate AMM PMT
Credit Bubble 2005 $560,000.00 980 $571.43 100% $560,000.00 6.000% 30 $3,357.48
Supply/Low Rates Present $749,000.00 980 $764.29 80% $599,200.00 3.500% 30 $2,690.68
Higher Rates 2016 $560,000.00 980 $571.43 80% $448,000.00 8.125% 30 $3,326.39

Even in 2005 there were more people financing new purchases with 70-80% LTVs than 90-100% LTVs. So I don't think you should introduce that variable into it. If we start talking variables we might note that 2005 was the year they rezoned Williamsburg so you might be comparing a walk up constructed in 1925 with a high rise with water views and a bike room.

Still take a look at your numbers again and try them another way. Forget the 2005 purchase and 100% financing for now. In 2016 what would the price be if the interest rate was 6% and you could afford the same $2691 per month payment? $561,000.

2013 2016
749000 561000
599200 448800
3.50% 6%
360 360
($2,690.68) ($2,690.78)

Totally disagree that the Wburg sub-market which is what we're speaking about had more lower LTV buyers than higher LTV buyers. In fact, I think that's not true. Introducing LTV into the scenario, therefore, is necessary.

And in doing so, or even taking 90% as an LTV, you'll find that a 7-8% rate is required to back into a 2005 affordability number.

We can agree to disagree on that. I know what the national numbers are and I doubt anything specific to Wburg has been produced. I also have no stats on the changing housing inventory there but I think its pretty well-known that the average place in that area is pretty different from the average place today.

But you have no argument with my numbers above then right? Going forward, if interests rates go back to 6%, buyers right now are going to take quite a hit, all other things being equal.

Malthus, I think the thing that is not being thought of is the number of foreign buyers/all cash in williamsburg. As a foreigner buying in nyc you are pretty much limited to condos. Also williamsburg is considered much more hip by a lot of foreigners (see ny mag article this week) so it is a little different. A change to 3% to 4% won't change much. This calculations are based too much on premise that people buy for investment purposes.

I will stress once again that simply saying "Williamsburg" is insufficient. There are definitely different markets within the large confines of Williamsburg. I tend to think North Williamsburg, South Williamsburg and East Williamsburg are distinctly different in price, amenities and appearance.

And which "Williamsburg" is your preference?

My preference is North Williamsburg.