City Real Estate May Face Smoother Ride In 2010

hilarious

Thanks. Good perspective.

great catch, Steve.

LICC, any comments?

Love his name - "SPIN-ola"

lmao.

Funny. Uh, people are buying because sellers are slashing prices.

Where is steveF when you need his broken record? Guess he's peeved that his "I'm outta here" thread got deleted.

Or maybe they took him up on his offer.

hi, stevejhx, do you have a link to when the real estate market bottomed out last time? Or the price stayed unchange for the next few years?

It varies by location, size, etc. The 1989-and-on data at www.millersamuel.com shows the UWS median for all sizes of co-op bottoming in 1996.

Studios and one-bedrooms bottomed in 1993, and two-bedrooms and larger in 1992.

If you want to follow the prices for a single building since 1998, go here:

http://350bleecker.com/policy/sales.html

OUTRAGEOUS!

What a great site 350 Bleecker has. The original offering plan, amendments, etc.

An interesting sidelight is the sponsor making a few thousand a month gross on the 19% they still own. That jibes with the offering-plan amendments at, e.g., www.midboro.com or 2 Fifth's site, where RC/RS rents also tend to run a bit above maintenance.

I wanna know: WHERE ARE THE BULLS?

My favorite part of the article from '90 is the favorible 'buy vs rent' scenario touted by the brokers. The numbers now on rent vs buy right now are still so off the charts ridiculously in favor of renting.

''You hit bottom when the net economic cost of owning an apartment is similar to what it would be for a market rate rental, and I am confident we have reached bottom,'' said John Tyrrel, senior vice president of Sulzberger Rolfe.

HAHAHAHAHAHA!

stevejhx "I wanna know: WHERE ARE THE BULLS?"

While i'm neither bullish or bearish, the dearth of bullish sentiment and groupthink that there is absolutely no chance of anything good happening... is making me think more constructively about nyc residential re ...sorta like the sentiment for stocks in march 09...Steve, remember when you were the only bear and the rest or the board was overwhelmingly bullish (" u can't lose money in real estate, manhattan is different, etc"), what happened?

Cpalms must be fortune-teller gypsy LIQUIDATE IF YOU CAN By March 2010 THE PANIC RESTARTS

CHOP CHOP CHOP

"...Steve, remember when you were the only bear and the rest or the board was overwhelmingly bullish (" u can't lose money in real estate, manhattan is different, etc"), what happened?"

Anyone can point a lousy market and say it's a lousy market. When it does turn, and God knows when that would be, there will be just as few people saying it's about to turn as there were when it turned the other direction.

cpalms....Uh..uh..uh...what matters is not what the self-selected, mis-medicated, dysfunctional virtual family of se posters thinks...what matters is what sentiment is in real life among the humans in nyc...

my take , purely random and anecdotal, is that some people think this dip might be a nice time to buy (i know someone who just bought the adjacent studio because "its a good investment") , lots of people are hardly aware of how much things have gone down because nothing just like their place has sold in their building , lots of people kind of assume the market is always right and don't worry about it...except on this board and among a couple finance types, i don't see deeply held bear beliefs

but that is all anecdotal....curious what others think non-se humans think

CP, there were other sane people: UDigs, for instance. Now the only deniers left are LICC & Juicy. Even petrzitz has sort of turned - the rest of them (Spunky, where are you!) have just abandoned the board.

lowery - "Anyone can point a lousy market and say it's a lousy market. When it does turn, and God knows when that would be, there will be just as few people saying it's about to turn as there were when it turned the other direction."

Umm, yeah...thats what I said...stevejhx was, shall we say, extraordinarily verbose, I think as far back as late 2006 for the negative prospects for the nyc re market. as much as it pains me to defend him, he has been mostly right all along (being bearish) when NOBODY here (and barely anywhere else) was anything but bullish... remember spunky?? I'm just questioning the current groupthink that he is now the bandleader for....

Spun-ky! Spun-ky! Spun-ky!

jimstreeteasy - "what matters is not what the self-selected, mis-medicated, dysfunctional virtual family of se posters thinks...what matters is what sentiment is in real life among the humans in nyc..."

I would like to agree, however the near universal bullishness of this board through 2007 was a FANTASTIC contra-indicator of the residential re market's direction, why shouldn't it be again?

because it was random

cpalms, i think this group is a bit unusual. i'm a bear, and i read a lot of bear blogs, so sometimes it seems like the world is one big bear den. but there's an awful lot of cheerleading going on again. many are swearing that our recovery is around the corner.

my timing is usually off, i tend to call things early. hence my condo sale in 2004. i'm actually interested myself in whether i stay negative for too long. but when reis is saying they don't see any recovery in the retail real estate market until late 2012, and unemployment is still so high, etc., etc., i feel comfortable (from an intellectual perspective, at least) remaining bearish on NYC real estate for now. i certainly see no hurry to buy.

spunky seems downright civil to me these days, given the alternative. i almost miss him.

jimstreeteasy - "because it was random"

brilliant...how so?

seriously, not one bull response. interesting.

Cpalms
41 minutes ago

jimstreeteasy - "because it was random"

brilliant...how so?

Thanks. Well, cp, I think I meant that over the decades of posting on se talk board there will be correlations that will ocurr purely by chance which seem to predict something but they don't

or it could have just been another transcription of an auditory hallucination (although usually I hear dogs barking when that happens, and there haven't been any dogs so far today)

Cpalms - you said it perfectly. This stuff is beginning to remind me of the bubble hyperbole on the other end.

jimstreeteasy- "I think I meant that over the decades of posting on se talk board there will be correlations that will ocurr purely by chance which seem to predict something but they don't"

except in this case the streeteasy talk, market strategist, gushing bullishness from those in the re industry thru 2007 had an inverse correlation to where the market was headed. The fact is these indications were correct. you can call anything of these instances random, but put thousands of similar random occurences together and they become an indication...I think we are starting to see another one now. I can't make the bullish arguement based on the fundamentals, but I believe historically bottoms don't get put in by the fundamentals (they certainly didn't for stock in march 2009), rent vs buy comparisons, etc...they get put in when the weak holders all sell/ foreclosed on, the holdouts refuse to sell because its no longer worth it, inventory is trending lower and its becomes easier to borrow and back to my point, most importantly universal bearishness...we are not there on all these factors but we are there or getting close on many of them.

I'm not sure how you think we're close on any of them... this thing really just started here.

cp-- being serious

- i learn interesting things on se that influence my view of the market but I literally put zero import into the profile of the views of the posters; the sample is too small, period

- group a felt x when y ocurred ONCE ...means nothing, to be logical about it

- you wrote: "they get put in when the weak holders all sell/ foreclosed on, the holdouts refuse to sell because its no longer worth it, inventory is trending lower and its becomes easier to borrow and back to my point, most importantly universal bearishness...we are not there on all these factors but we are there or getting close on many of them."

I don't read it that we are close on those factors. I don't think there is universal bearishness, actually. If there was I think lots of market participants would be acting differently. Miami has universal bearishness.

im a skeptical bear....skeptical because there was a lot of stupidity that got manhattan to where it is...and i wonder if there aren't thousands of people who didn't quite get their chance to pay dumb prices the first time around and might jump in if they can,if they still have a job

JIMBO- They dont have Secure Jobs Cpalms - WHAT kind of Jumbo Rates are out there? Huh? Banks will not do much more than 60% on CASH OUTS Why ? Huh?

LIQUIDATE IF YOU CAN.. The Money IS NOT COMING BIgger Inventory IS !!!

somewhereelse - "I'm not sure how you think we're close on any of them... this thing really just started here."

ok here goes:

1)"hey get put in when the weak holders all sell/ foreclosed on, the holdouts refuse to sell because its no longer worth it, inventory is trending lower"

from UD
http://www.urbandigs.com/charts.html

Inventory spiked from the aftermath of the credit crunch/ crash and has trended lower since, Yes, the shadow inventory boogeyman is out there but prices are down 20% -30% already, 30 year fixed rates at 5%, and new building at zero.. thus shadow inventory has a good chance of getting sucked up with the developers looking to make deals. Im betting the data coming out next week will show that there was a buying binge in the 4th qtr, further lowering inventory. unemployment looks to be holding at 10%, the financial sector has done all the layoffs there gonna do and after a good year might look to cautiously expand again in 2011. We can debate bonus money all we want but at the end of the day 2009 will be a good year for those who didn't get laid off.

2) "becomes easier to borrow"
not to mention the government stimulus, banks are lending again (including jumbos) albeit with actual standards...call a mortgage broker and see for yourself.

3) "universal bearishness"

read any post on the streateasy boards in the last month....

I'm not banging the table bullish, but things change, they can get better and markets usually do what herd thinks it won't.....markets are rarely rational or efficient...

"I don't read it that we are close on those factors. I don't think there is universal bearishness, actually. If there was I think lots of market participants would be acting differently. Miami has universal bearishness"

agreed, and on your second post as well. stupidity won't go away. But we're nowhere near universal bearishness.

cpalms...i dont think youre looking hard enough at what youre saying:

- it is absurd to dismiss the huge estimated new dev inventory...

- se boards do not = universal bearishness....geez..

meaning...the 32 humans posting on se are not likely to be representative of the market

Jimbo-- You Represent only yourself THE SHADOW INventory will CRUSH Cpalm thesis

I go back and forth on the prospect of a second wave down, though I lean toward skepticism. Certainly I see no rush to buy, and I think it likely we'll head down a bit lower for a while. I can see a slow bleed over a second wave down. I don't think the downturn has just started, and I don't see any reason for prices to pop up any time soon. That said, I've been quite shocked at the level of price support we're seeing. The prospect of another leg down certainly exists, but I'm not convinced that it's 100% for sure going to happen. I now think 70% off is a pipe dream.

Does anyone else notice a distinct difference in the two segments steve quotes? The first is far more bullish and data-driven. The second is quite cautious. I say this without having actually read the articles in their entirety.

sunclaus...apparently you took my point as the opposite of what it was..i am saying it is ABSURD to ignore the shadow inventory...

Ok Jimbo..TRY getting a cashout Refi lately ?? Look EAST to HIGH Income neighborhoods on LI and see the HUGE UNMOVABLE INVENTORY of $1M+ Homes ?? Why it happening ?

what do you think I said?...I AM A BEAR IN TERMS OF MARKET VIEW....

i said ignoring shadow is absurd....

perhaps I am overstating the "universal bullishness" but compare market sentiment today from this time in 2008...it's night and day (this is back in the stevejhx vs spunky hey day, lol!)

Again its this universal thinking that worries me....the shadow inventory boogeyman.... time will tell....but I think developers have gotten religion and are lowering prices to the market and dumping inventory hoping that there are deals down the road somewhere...most here will agree ( and I think the 4th qtr date will show) if the price is right things sell in this market....

i find it stunning that with all the support the market has been given the results haven't been BETTER. i've never thought that there weren't people on the sidelines who had the means to save and would jump in when things went down (although they aren't an infinite resource). with record low mortgage rates and (let's face it) renewed weakened lending standards for the lower-priced units, and the huge purchasing of mbs, i would have thought prices would have done better.

evnyc, patience.

..but cp...tons of developers are by no means dumping inventory, they are still pricing at modest discounts and selling at a tepid pace

- and you keep comparing se sentiment...fine...no doubt you are accurate..but you cant extropolate that to general market views.

No choice! Unless bonuses trickle down a lot further than anticipated.

But I now have friends - my age - who are actually closing on a place in January. The hoops they had to go through to get a mortgage have been astounding, despite fantastic credit, so I can't say I'm seeing weakened lending standards. I think a lot of people are terrified of being shut out of the market again - myself included - and it's a legitimate fear. We'll see how things shake out. I felt certain of the bubble popping; now that it has, I no longer feel certain of much.

and comparing it to the stock market is rather off as well, it's giddy as f'ng hell with the additional free money out there. the real estate market has responded to the free money. just not as robustly. it is a rare real estate cycle that doesn't last approximately 20 years. perhaps you'd like to go back to those early-ish bull threads, the ones that claimed that this time was different, and more importantly, manhattan is different. the bull market in real estate lasted from approximately 1998 (surprising date, no?) to 2008. if they create another bubble, would you really think it a good time to buy? how long do you think they could keep a third bubble going, with these fundamentals?

not so much. turns out it still, over time, takes income and reasonable rent/buy levels to support a market fully. who would have thought?

evnyc, was your friend buying in an fha approved building?

re: dumping inventory ( I searched for 30 seconds, Im sure I could find more if I really cared)..a theme we will see more and more of in the next few months...we will see about the "tepid pace" of sales as the UD data suggests and when the data comes out next week we will see, I'm betting you are wrong....

http://curbed.com/archives/2009/12/21/fire_sale_keeps_burning_brightly_at_14th_streets_the_prime.php

have a good one, i'm out for the night...

sales aren't tepid at all. which is why, given all the other support, the continued weakness in pricing is surprising.

things don't proceed in a linear fashion, particularly when your gov't cares so much about the price of your (and the developers') unit.

Hell, I don't know. I thought one of the market things going on is the mystifyingly modest price cuts at some big developments (ok...wmburg...but say Edge, nsp), where they seem to wait it out, rather than shove the stuff out the door. Which is why I said tepid. I thought some in Manhattan were the same. Maybe this stuff isn't representative of anything.

The greater than 50% cut from ask that cp links to above is without doubt not representative. If it were, I might say screw all this and go buy something

This is from a broker, yesterday on the CT market. Strikingly similar.

I am looking forward to 2010 being a better year than 2009 in the real estate arena. Without being the half glass empty I do think we are looking at more foreclosures due to job loss and loans that cannot be reconstructed when there isn't any income being generated. My personal experience is that sellers are being more realistic about pricing their homes (even those who bought in the banner years). I do think buyers are still being cautious about making a purchase, but they are eventually committing to a buy. I am still a believer that buying real estate in Darien is a good place to park your money. Only time will tell . . .

and i was responding . in context, to this: "....but I think developers have gotten religion and are lowering prices to the market and dumping inventory "...

which in my view is not true in a number of developments

"the greater than 50% cut from ask that cp links to above is without doubt not representative. If it were, I might say screw all this and go buy something"

this is what I am trying to say. It seems to me developers make modest cuts in asking prices however these asking prices are still pie sky. However, when you pony up some cash you actually find out some real price discovery. I think that development I linked to is somewhat representative and you will see stuff like this more and more....look at the data closely next week.

I think the broker in Darien is probably correct. Darien - beautiful town, great schools blah blah...30% -40% discount from the peak, 5 % mortgage is a pretty good deal...

She claims Darien is only 20% off peak.

AR, no. Regular marketplace, whatever non-FHA mortgage market is called. Condo building, not coop. I'm not questioning that a number of fundamentals look quite bad. I do question the certainty of the conclusions based on those numbers. The numbers looked "great" for the bulls when they were making their case as well, and obviously they ultimately told a very different story. There's a lot of big question marks out there in how this could finish playing out; I still read the bear blogs, but I detect more than a soupcon of self-satisfaction at having gotten some big things right in many of their writers. It makes me doubt the accuracy of their predictions about the future. At least Roubini revises his predictions when new data comes out, and even he has backed off a lot of his own worst-case predictions.

Juice-Man! Juice-Man! Juice-Man!

A real-estate sob story:

http://www.nytimes.com/2010/01/03/us/03foodstamps.html?hp

"Juice-Man! Juice-Man! Juice-Man!"

Yes steve, what would you like?

Juicy!

So whatta ya think of that 1990 article that sounds JUST LIKE that 2010 article?

20 years later - deja vu all over again, right?

Don't the stages of grief apply here? It seems some are still in denial (things are 10% off the top and bottoming, articles like these or renting out places that should be sold) and anger (people like printer who lash out at me, sellers who get pissed at 'lowballs')... We still have bargaining, depression and acceptance to go before this has run its course.

Rhino, I'm just walking around my gorgeous rental, looking at how nice it is, with a wonderful view, in a great neighborhood that all my friends who've been here have fallen in love with, and think, "Hmm. Costs me $3,600 a month to rent, $12,000 a month to buy...."

Juicy: any suggestions? (And be civil.)

stevejhx:you're relentless anti real estate bias is fun;but are you sucessful?????are your s.e. fellow travelers successful?me-thinks that successful types are busy plotting profitible ventures,not blogging like sheep,blind leading the blind.

I love it...the endless supply of people logging in to tell other people it's a waste of time. Ever hear of hobbies? Amusements? Entertainment?

jrw, I actually am working right now making about $2k a day. Just taking a break every now and then.

What is "successful" in your mind? I have a job I'm good at, I like, and make a lot of money at it. I'm good enough at my hobby, stand-up comedy, to do a 15 minutes set at Broadway Comedy Club on New Year's Eve. I have a lot of close friends whose friendship I value. And occasionally I enjoy commenting on people who think the current real estate market is anything close to normal - it's sort of like going to the zoo to study aardvarks: sure you'll learn something, but deep down you can't stop laughing at them 'cause they're so funny looking.

Someone just got served.

"Juicy: any suggestions? (And be civil.)"

Haven't read it yet but I will later and comment (and I am always civil)

Happy New Year to you and Rhino.

In 2009 I made over double my income from previous years. My operating costs were also dramatically lower.

I'm glad I didn't listen to you TOOLS on this board

Steve do you think the people who bought in 1990 regret that decision now? Tool

You can't use buying in 1990 at a low valuation as a pitch for buying after 2002 at increasingly ridiculous valuations. Nonetheless you try.

The people who bought Microsoft in 1987 didn't regret it. The people who bought it in 1999 do.

Rhino you tool. I am refering to those who buy now and hold fir 5-10 years will be laughing at you market timer tools who will still be living in crappy rental studios when they cash in their millions

petrfitz, brilliant businessman that you claim to be (who claims to have bought in Las Vegas) - do you know the difference between income and profit? Who cares what your income is?

I'm not talking about people who bought in 1990 - though they did regret it in 1998.

I guess only time will tell. I dont know the market for buying buildings outright. I will bet you the recent condo buyers in LIC on this board, and the recent buyers of Manhattan coops will not be laughing at anything in 5-10 yrs. I'd still like you to tell me where you got your money to start with. If you dont recognize the difference between 1990 and now, I'm doubtful you could have accumulated your own wealth to begin with.

Cash in their millions.... who is the tool? Just reading your little narratives makes me embarrassed for you.

Wasnt the peak of that cycle 1988? Bottom around 1994?

stevejhx:a half-million a year man,s opinion is valuable,and you are indeed insightful and humerous;but,you're credentials are slender as a purveyor of real estate knowledge and perspective.you too readily mock other,very,very much more wealthy,successful real estate dealers.is now a good time to buy r.e.?who knows?-not you or anybody else,but i'd guess yes,and have bought.

The better question, JRW is who the fuck are you and who on this board has been established as a wealthy SELF MADE dealer...whatever dealer means? Are you still working on English?

jrw, I don't mock people who make money in real estate, except Donald Trumps' hair (and Ivanka's big tits).

Rhino, the last collapse started in 1988 and bottomed in 1998.

Your famous specific coop data shows that? My understanding is the 1998 peak was re-achieved in 1998 but that the dead bottom was 1992 or 1993.

I think if one bought in '91 v. '93-95, depending on how picky you were, there were deals to be had all along the way. That is, you didn't have to buy in '91, but you also weren't losing that much if you bought then in your "ideal" building/location.

That's the best part about a deflated market. No need to jump on a deal, but you're also not necessarily stupid to buy if you are inflexible about location/building/space.

Yes at no point after 1991 was it stupid...and arguably great right up to around 1999-2000. 2002 seemed fair...but who could have anticipated the credit bubble that took it up to stupid and beyond.

From what I remember (the slump was global), the people who regretted buying the most who had a short time horizon for whatever reason - kids, marriage, job. The other thing to remember is the depth of an RE slump, no-one is in any mood to buy, regardless of the rent-buy ratio. The mood is pessimistic with a capital P. That is exactly why my housemates and I didn't jump on a 200k house that was renting for $2200 monthly (there was a waiting list of 20 interested tenants at the first O/H). The people with the least to lose (that would have been us, in our early 20s, with easy access to potential housemates to pay the mtge) had NO interest in buying at any price. I rented another place (2-bed house, A+++ location) and I remember its twin next door selling for 129k (down from 200k in '88). I had the fleeting thought that it would be a great deal to buy, but no interest in being tied down.

what's an aardvark?

The 2-bed house was renting for 1200 (and rented in hours).

I can tell you in the 1990s for me it was not having a big enough income to qualify and/or being concerned about renting to a tenant while I was in b-school in another city. Condo studios were trading at 9-10x annual rents.

Yeah, of the people who graduated with me from college, the ones who made out okay in the RE wars tended to shack up early and NOT go to grad school in the mid-90s.

Sounds redundant, but another feature of the past RE slump - people who HAD to buy (young family, etc.) had already bought so there wasn't exactly an abundance of buyers ready to stabilize the market.

We are so far from the stage where buying is anathema at least here in Manhattan. People still talk about real estate like the a-holes in 1998 who demanded that buying stocks with all your loose cash was the only way and the always way to get rich over time. Perfitz for example...'do the people who bought in 1990 regret it'...

I wonder how many 1990s buyers made off with the money, rather than double down and give most of it back on a larger loss from the top.

A year of SORROW ahead for ALL buyers March 2010 Everyone will realize the down Spiral for property 729k+ is here WILL hit HOME !!! SHADOW INVENTORY WILL EXPLODE BY SUMMER

If you are in a demographic sweet spot (say, empty-nesters), you might very well have made off with the loot. We have a few SE regulars who did exactly that. My friends from college are all hard-headed skinflints (they make me look positively spendthrift). Most have long paid off their mtges and are sitting pretty. A couple bought bigger places for their large(r) families.

CP: if the price is right things sell in this market....

I came late to this thread but may I just add a note as I sit in Miami. In Miami, after a precipitous drop of 25%, there was a short lived pick up in sales. Things also sold at 40% down, Things really sold at 50% down. Bulk buyers came in at 70% down. There were even some bulk buyers at 90% down (nice apts in Bal Harbour!). Lots of new entrepreneurs rushed in to buy up foreclosures at low, low prices to fix them up. (This is the promised land of RE infomercials) But now, I notice that even foreclosed property is slow to move. That is universal bearishness.

Point is, you do not know the bottom till after it has happened and the book has been written. But rent/buy ratios, affordability, unemployment, inventory all suggest a lower NYC market. But it takes time. If there is a pick up in 4th quarter sales it will indicate nothing except that you will hear a great deal of blather from brokers. It is not over and will not be over in NYC until it hits magazine covers and national tv news. I agree with Jim, bearishness on this site indicates nothing. Most people in NYC are not aware the market is overvalued.

That is nuts, apt23. I suspect that if apts are 90% off here, that there will be bigger issues than the RE market. Who knows? 50% off doesn't seem crazy though (and I'm an "owner").

Here should be 40 to 60% off.

Question for bears. What do you think the appropriate opportunity cost on the down payment should be in order to appropriately capture the risk. I have been playing with numbers, and the mortgage rate appeals to me. Here is why - no matter what I assume for the down payment %, the after tax opportunity cost on the down payment dollars offsets the difference in after tax mortgage interest. I also assume the same tax rate on interest income as I do for the tax deduction on interest expense. Also looking at an overvalued market, the interest rate on a mortgage seems like the lowest reasonable number. I do not want to make the same mistake others do by applying some small rate of interest that carries such less risk than a levered equity investment in a home.

10023: That 90% down was a vulture fund who bought bulk in Bal Harbour from a bank. It was a really sweet deal. Not the norm. But get the right level of stress in a seller and someone will make some serious money. There will be more of it here in Miami because there are whole buildings that are empty. I am not suggesting that would happen in NYC. Only pointing out that an uptick in sales after a drop signifies nothing.

Juicy, you promised an answer!

I'm in the demographic sweet spot (empty nester), and I'm enjoying it!!!
However, folk like me all have the same worry: we'll continue supporting our college-age kids or college grad kids FOR YEARS to come in that they cannot find decent jobs (let alone afford buying a place).
Empty nesters pay their 20-something kids rent. Or the 20-something kids live at home with the parents.
And of course at the same time we're handholding our OWN elderly parents who are another fine kettle of fish .......

Do you pay their rent because they cant afford to live...or is it because they cant afford to live how they think they should live? I say no to this whole concept. The staying at home is okay. The writing rent checks is too much.

Rhino ---- do you have kids of this age? Sometimes paying their rent is worth it in that you're buying some peace and quiet. It's pretty blasted taxing having 22 year olds living with you ------ they are CRAZY mofos .......