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Talk » Sales » Discussing 'When will this INSANITY end?'

When will this INSANITY end?
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So I get these alerts on this Streeteasy site and here are just a couple of representative alerts that show humongous price increases (to well above peak prices before Lehman went under). This feels like a bad dream because it seems like buyers who've been waiting on the sidelines are simply caving in and paying these ridiculous prices. It's like a bad blackjack player who takes a hit on 20 and ruins the deck for the rest of the players! I understand why impatient buyers would pay a little bit more to finally land a new home for themselves, but the additional increment that they're paying is shocking. So here are a couple of examples just from today:

1BR at 2 Horatio that sold for $945,000 a little over a year and a half ago - listed today for $1,585,000.
http://streeteasy.com/nyc/sale/829616-coop-2-horatio-street-west-village-new-york

3BR at 20 East 9th (Brevoort East) sold for $1,990,000 about 2 years ago - listed today for $3,695,000.
http://streeteasy.com/nyc/sale/829555-coop-20-east-9th-street-greenwich-village-new-york

Mkt is what it is...we're selling into the run up.

For 20 east 9th, if this apt sells above 3mm, deserves an "how much profit" post.

When interest rates go up, the Dow goes down and other countries become real estate investment safe. Would love to buy in Spain or Italy...do I trust that they won't come up with rules and regulations that would hurt foreign owners...no , nit when France's new president wants to impose huge taxes on second homes.

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Let's all try to be grown-ups and stay on topic and offer intelligent thoughts, rather than allowing this post to get hijacked by silly posters. What I'm really wondering is why don't buyers just take a deep breath instead of fueling this hysteria. Clearly, it cannot be an unrestrained upward price trajectory. I keep hearing that it's the low interest rates that are allowing sellers to name their price. But what happens when these buyers who overpaid because interest rates were at 4% suddenly want to sell a few years down the road when rates are at 6%? Aren't they setting themselves up for a loss?

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I remember when rates used to be at 12% and the market was hot. There are other factors besides interest rates. There's Wall St. and the more and more internet startups are coming here.

Perhaps also foreign investors are fueling the market.

All the arguments about rising rates are equally valid for other financial assets. People are still holding bonds with some duration and feeling that their money is safe. However, the rate rise scenario is real. I would be selling bonds before I worry about real estate and equities.

In general, if rates are going up due to growth, real estate and equities can easily handle 2-3 percent rise in fed fund rates and 2 percent rise in ten year rates. Mortgage spreads are going to narrow with economic growth, so net impact on 30 y mortgage will be appx 50 bps less than the 10y rate rise. Also, many people are doing 30y fixed rate mortgage (not me) due to low rates. Assuming, these buyers/ owners with low rates had to sell when the rates are higher, a bigger percentage of buyers will shift to ARM if the rates go up.

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For the record, my "FormerRenter" moniker was selected as an effort to maintain a level of optimism that, one day, I would be a former renter. I'm still a current renter, hoping to be an owner. My recent posts are not about gloating over making well-timed real estate decisions. Just the opposite actually - frustration about being priced out.

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columbiacounty and greensdale, can I make a polite request that you please stop this back and forth. I would think that you're both adult enough to be respectful to those on this forum who would like to discuss this issue. Thank you. Appreciate it.

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former renter, There are still some very good prices in UES, Midtown East and Murray Hill. Prime downtown is almost at the 2007/8 peak, if not higher. If you think you will stay in your apt for 10y move fast and lock in some low rates.

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More. Stop being frustrated. ACT before UES becomes prime downtown.

http://streeteasy.com/nyc/sale/789142-coop-3-east-71st-street-lenox-hill-new-york

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greensdale, When are you going to start adding some value? I am sure you are smart enough to tell. It is in you somewhere.

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300mercer, I agree with you that you can still get some value on the UES, Midtown East and Murray Hill. There's probably a good deal of smart money on the UES near the subway stops on the 2nd Avenue line. But those neighborhoods have less appeal to me. I suspect that's why there is some value there - because many people find them less "sexy" (plus there's just more inventory in those neighborhoods, so we're back to the fundamentals of supply and demand being the key driver of price). For the first time, though, I've actually added those neighborhoods to my Streeteasy alerts because I've become more realistic about being priced out of the more "sexy" neighborhoods.

Good luck. If we were to buy today, it probably will need to be upper east side as prime downtown is at 30 percent ish premium to ues.

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Matsonjones, Midtown East seems to be a good compromise between downtown and the UES. Any suggestions as to good full-service buildings in the 700-800/sf range?

HINT: use the IGNORE button ~ works like a charm.

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@Mercer300- just a comment on the first two listings you posted.

The one at 1036 park asking $1.395- there's one on a lower floor that couldnt get $1.25M (same condition) for years. And another one (same apt, same building) in good condition went for about $995k.

Additionally in 09 similar apartments at 118 East 60th street were going in the mid to high $800k range.

Whereas midtown/east sutton place and other areas you mentioned are still at the lower 08/09 levels.

I think there might be an over tendency on this board to think that most purchasers are either foreigners looking for a place to park money or investors. Right now I know a few people who are just looking to buy a place to live. Tired of paying high rents and have now saved enough to buy a place. A few waited to ride out the booming prices, but now realize there is no reason to wait. People are secure in their jobs and want a place. These are the people from NYC who are lining up for open houses and getting involved in multiple bid situations.

FR: I think the days of value are gone. If places are cheaper in certain areas, it is because they are less desirable. Youngish people have no interest in living in UES or UWS. When is last time someone said: "Hey lets go out in UES/UWS..." Nice neighborhoods of course, but very established and set in their ways. So yes, you can find value there, but it is because they are less valued by purchasers.

What are you looking for??

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FR: If you are looking at Midtown East, stay East of 3rd Avenue. Much quieter and much more residential, yet still in a short walk of all midtown has to offer.

Some UWS 1BR in the prime areas are going for above 2008 peak prices.

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Have one couple especially in mind, both from NYC. Want a place to bring up kids, etc. Had been keeping eye on market for last several years. Decided to purchase maybe 10 months ago. Saw that things were starting to rise much above what they expected and so they waited. About a month ago they decided that things were only getting much more difficult so jumped in moe aggressively. They had offer accepted a few weeks ago. Had to step down in neighborhood and more than asking. A few others are looking, but I would say more aggressively now as the prices for first time buyers are going up everywhere and fast.

All of them describe crazy turnouts for open houses that quickly turns into multiple offers. These are all young professionals, good jobs.

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And many of those buildings seem to have very high down payment requirements

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Ottawanyc - If you are saying that UES and UWS are less valued by buyers, I'd have to respectfully disagree with you as to UWS (I'm unfamiliar with UES). As soon as the 20-somethings get older, marry and have kids, where do they want to move? My recent apt search extended from UWS down to SoHo and I got the sense that the UWS was on par price-wise with many prime downtown neighborhoods, not to say all, but many. I am in contract for a place on the UWS (so I could be a little biased) and I certainly feel like I'm paying for the location.

Prime downtown has appreciated more than prime UWS (once you take out outliers like 15CPW).

Here's another shocking listing: a 1BR at the Chelsea Stratus (793 sf) for $1,800,000. Has anyone seen how small the living rooms are at Chelsea Stratus??? Let's not forget how they measure square footage in these new condos, so 793 might even be a stretch. I don't care how expensive the rental market is, why on earth would anyone pay over $2,000/sf?
http://streeteasy.com/nyc/sale/821832-condo-101-west-24th-street-chelsea-new-york

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I'm with Former Renter, an ask of $1.8MM for a one bedroom apartment whose actual square footage is probably closer to 750 (or less when you deduct walls, common hallways and other areas that magically make their way into the reported square footage of a condo) is patently absurd. Maybe (but only the teeniest maybe) in an iconic building like 15 CPW or the primest Tribeca. But 24th and Sixth Avenue? Much as I love Chelsea, that just ain't gonna happen.

Including walls, you can get may be 675 sq ft. Hard to see it sellng for more than 1.3-1.4mm after factoring in craziness downtown.

Rb, I like #5.

I think the pricing for that unit makes sense. If same unit two floors up hasn't sold the rational thing is to price it 300,000 more. No?

Nyc10023 - that may be the case, but my point is about pricing, not price appreciation. Ottawanyc equated price with desirability and desirability with where young people want to live and/or hang out, essentially dismissing the impact of other demographics. Per his (or her) logic, all the downtown areas where the young people go would be more expensive than the UWS and it's pretty clear that this is not the case.

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Redpanda, I was commenting specifically on why certain areas are surging. I think the notion that the UWS is a place where folks look to bring up small children is slightly antiquated. Reminds me of the article a few weeks ago in NY Times about the NORCs. Maybe a better place to retire. I am sure many still make that choice and it is a lovely neighborhood, but I do not think it is usually a number of one choice anymore. Moving to UWS seems more like a responsible and sensible thing to do when you get older, not something you aspire to do.

I think a great sign of a neighborhood being boring is when it is attached to the phrase, "a great place to raise kids/retire." But again, great area, have friends who live there, but these are the type of people who wake up at 6 am to go the gym and then work 12 hours.

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Ottawanyc - I agree that UWS is not the most exciting of neighborhoods, but UWS as a place to bring up small children being an antiquated notion really baffles me. I've never heard of this nor for that matter of any other neighborhood (other than UES, of course) as rivaling UWS in this regard. If you know of such an area, do let me know as I'm truly curious.

What I have found among my friends who stuck it through here for several years is that as fresh-faced newcomers, they aspire to live downtown in the middle of the action, and after a few years, the sheen of downtown living has worn off and while they still want to hang out there, they'd rather live someplace else. The UWS has Central Park and becomes an easy first choice for many.

Yikes - my sentiments exactly :)

like the stock market there will be peaks and valleys in the real estate market. However it moves much much slower. You can see things turning around, or when you read about a rezoning happening, or when you see a new store that was once only in the city etc... The trends are obvious and easy to spot. Its not rocket science, if you have a feeling that an area is changing because you are now going there, then your right. Invest in it, gains are only made with some risk involved. If you are waiting for nytimes to run an article to confirm this area is the new hip area to buy in, your too late for the big gains.

"Mkt is what it is...we're selling into the run up."

Run up?

Signing off W64thstreet

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