New York prices to collapse?

If stock market collapses take months to form, housing market collapses take years. They take two forms: stagnating prices, increasing inventories and value eaten away by inflation; and outright price reductions.

Manhattan, by all accounts, has seen a 20% collapse in prices since 2008. That's pretty far pretty fast, in housing terms. It's by far not over, however, and could take many more years.

2012 will see significant price drop in NYC real estate. For past several years people have been able to carry their overpriced apts (purchased 2006-2007) bc a) did not want to sell for a loss and b) the rental alternative would cost roughly same amount as the monthly payment - so figure stay in current place and try to ride out the storm, sell for flat, smaller loss or maybe even gain in a couple of years and reassess. It's been 4 years since the height and the $10k-$20k/month payment on the $2.5-$3mln apt is making a serious dent into savings, economy not picking up significantly, unemployment getting worse with Wall St. layoffs coming, wall st. bonuses will be down and larger stock portion. My prediction is that many will be reaching their threshold/comfort level and will be willing to take the loss now in fear that the loss could be significantly larger if they continue to wait. I expect a lot more supply to come and even though mortgage rates are low and may go lower it isn't easy finding jumbos - which is a huge portion of nyc re. Also how many buildings were built in 2002-2006 with the 421 tax abatement? Those are ending and the maintenance/tax portion of many of these apts has doubled/tripled. An apt in 2006 that sold for say $1,200/sq ft with a monthly tax of $500/month cannot sell for same px per sq ft in this mkt environment/economy and now a tax bill of $1,500-$2k/month now that the abatement has ended (and taxes going even higher). NYC prices have come down already sure and some apts are trading. Look it is NYC there will always be a market, a buyer, a seller at every single price point in every single environment but my prediction is 2012 will see an increase number of transactions at overall lower prices.

He referred to TansUnion and New York Fed data. I found this:
http://data.newyorkfed.org/creditconditions/
Some cool data there but it's a bit stale due to lag (3rd qtr 2010). Queens does look like shite 9.6% delinquent vs NY county 2.9%. Would love to know what the current stats are!

So I'm thinking about that 9.6% mortgage delinquency rate in Queens (and that was back in late 2010!) - no wonder the guy was compelled to write an article about it. Looks like there could be a huge real estate fire sale in Queens happening any day now. Good thing LIC isnt part of Queens. ha ha ha

""Manhattan, by all accounts, has seen a 20% collapse in prices since 2008.""

By which "accounts", exactly? Prices have bumped up nicely since the lows of the post-Lehman crash.

Re: By which "accounts", exactly? Prices have bumped up nicely since the lows of the post-Lehman crash.

oy vey, Miller Samuel, condo index, etc etc data has been plastered all over this site in multiple threads over the past few months. Take your pick. every credible data set (other than SteveF's mysterious anecdotal "comps") shows 20% down from 2006 peaks.

West34, I'd agree partially with your assessment. However, certain niches have held their value. 2+ bedrooms/2 baths come to mind.

emma63: Although the author may be right about a looming crash, the logical leaps in the article from Queens to the wider market are quite large. The few statistics offered for NY County seem, if anything, to support the argument that Manhattan is different. It's not clear for example, that the low number of reported foreclosures in Manhattan reflects lax servicing. A simpler explanation might be that delinquency rates in Manhattan are quite low. In fact, that's the only plausible explanation for the foreclosure rates in one borough being so much lower than the others.

In short, there just isn't much substance in that article that addresses prime New York real estate, positively or negatively. I'm not saying the situation here isn't precarious - it probably is; but foreclosure overhang is probably not a good metric for Manhattan.

Isle_of_Lucy -- is your statement based on data, your own gut, or anecdotal evidence? Here is the Miller Samuel data. Please tell me what YOU see? I see 2BR prices peaking in 2008 at $1,680,000 and in second Qtr 2011 at $1330000. My calculator pegs that at -20%.

QTR 2 BR
2011 2 1,330,163
2011 1 1,294,898
2010 4 1,342,835
2010 3 1,324,502
2010 2 1,223,320
2010 1 1,208,255
2009 4 1,244,534
2009 3 1,164,780
2009 2 1,224,939
2009 1 1,414,559
2008 4 1,680,558
2008 3 1,568,177
2008 2 1,641,764
2008 1 1,663,847
2007 4 1,622,386
2007 3 1,429,212
2007 2 1,389,037
2007 1 1,305,483
2006 4 1,243,166
2006 3 1,296,229
2006 2 1,491,128
2006 1 1,327,986
2005 4 1,349,817
2005 3 1,240,353
2005 2 1,210,441
2005 1 1,152,180
2004 4 1,064,907
2004 3 1,038,286
2004 2 1,004,337
2004 1 955,352
2003 4 912,991
2003 3 876,909
2003 2 871,856
2003 1 798,608
2002 4 853,658
2002 3 748,995
2002 2 735,189
2002 1 735,525
2001 4 761,720
2001 3 802,268
2001 2 699,893
2001 1 761,216
2000 4 750,356
2000 3 847,138
2000 2 786,275
2000 1 708,259

And by the way, if you take that $700,000 2000 price (start of the housing bubble) and inflation adjust up to 2011, you get about $1,000,000. So one could argue that prices "should be" about 25% lower than current...

"Prices have bumped up nicely since the lows of the post-Lehman crash."

Not really.

Actually steve the MS data does show a 10% bump up for 2BR apartments since 2009. No real bump for studios and 1BRs. I think people just really forgot how expensive the 2BR submarket was back in 2008 and given the recent RELATIVE strength in that market think "there was no correction."

West34, it's actually just over 14% if you want to get technical, but I wouldn't put too much stock in the exact percentages (there's always going to be some mix issues and such) - the general trend is what should matter most to potential buyers/sellers. Definitely was a significant correction and perhaps a slight bump up from 2009 lows. I can easily see those being retested soon.

west81?really? really? you think the COOP force field is so strong in manhattan that there is a 600bps differential in foreclosure rates in queens and manhattan?

OR OR OR, could it be the old adage "owe a bank a million, the bank owns you, owe a bank a billion, you own the bank?"

I have been hearing whispers from ppl in the know that the major banks, Fed and regulators are not "pushing" jumbos. So as always, push the old lady with a $300K mortgage in Queens but let's whistle dixie when it comes to a $1MM mortgage on a 2006 Studio on 42nd and 12 to a dog walker.
you know it's coming....

FLMAOZzzzzz

Re: I can easily see those being retested soon

emma - I think this is the big unknown -- the difference between "collapse" and retesting of lows. So what's your definition of collapse? If we see 25% down from current prices I would argue that's a correction to historical averages give or take. Probably not a "collapse" relative to today but you could argue it would be relative to 2009 peaks (-45% total).

I can't stop laughing about some of the comments, especially the over analyzed data. The reason New York (Manhattan) maintains its prices and doesn't have foreclosures and huge price drops as in the rest of the country are two reason. 1. - NY has limited land and people always moving in. 2. You can always rent your apt. and still cover your expenses.

When I lost my job for two years, I rented my apt. and got a cheaper place. When I got another job, I moved back in. However, if I was in Las Vegas or Arizona there is no rental market to maintain the prices and help people out if they are in a financial bind.
NY has always had ups and downs, but always came back higher. Look at the average apt price in 1999 to now and let me know if real estate is a bad investment. How good have your stocks done in comparison?

I want to buy a condo/condop in Manhattan below 42nd street, where will I get the biggest bang for my buck since I agree that manhattan prices are up there

W67: Read the article. The lynchpin of Jurow's argument is the discrepancy between delinquency rates and foreclosures. he makes a very strong case with regard to Queens, the Bronx and Brooklyn. He could have left it at that. Unfortunately for Jurow, most readers don't give a crap about prices in Whitestone or Jamaica, so he sneaks Manhattan into the article by listing the ludicrously low foreclosure figure for NY County. What's missing? Delinquency rates for Manhattan. The problem is, without that delinquency rate as context, the foreclosure number is meaningless. Maybe there's a big backlog, or maybe there just aren't many delinquencies.

I don't know whether Jurow intentionally cherry-picked the data. What's clear is that he (or his editors) wanted a sexier headline than "Why Home Prices in Queens Are Still Headed For Collapse."

Every once in a while someone chimes in with the "Manhattan is different" nonsense. Thanks hamptons for not only continuing the tradition but also busting out those two silly classics - they aint making any more land (its a vertical city) and rents always support carrying costs (they often dont). bwahahahahahah!

I agree Manhattan is no different than say Miami, or perhaps, Commack Long Island or even Detroit. All are exactly the same. Okay enough BS. Every local market is exposed to variables that include levels of development, depth of buyer pool, depth of seller pool, crime rates, amenities and lifestyles, levels of speculation, types of products for sale, etc. and etc..that list can go on and on. One market may outperform or underperform another. But the fact remains, NO market is immune to general macro forces, especially deflationary forces after a credit bust. However, Manhattan may be one market that outperforms another. And actually, that is the case. The depth of demand for Manhattan property is just different than the depth of demand for Phoenix or Detroit real estate. Manhattan's housing stock is 70% or so coop, as opposed to Miami's 70% or so condo, and we all can agree that levels of speculation can vary greatly for markets comprised mostly of condominiums as opposed to coops whose stricter buy side policies limit so called speculative investors. The nonsense is only true when someone claims Manhattan to be different because its immune to general macro forces. It is not. But the data does in fact show a reflation in volume and general median price trends that not many other larger markets enjoyed.

forgot to add rental equivalents in the list, but stevejhx knows I meant to put that in there...

Actually digs, you forgot another - extent to which local wages/economy are being supported [temporarily] by massive and unprecedented infusion of capital by benevolent central bank ;-)

"Median Male Worker Makes Less Now Than 43 Years Ago"

"While the fact that a record number of Americans are living in poverty should not surprise anyone at this point, what should surprise many is that according to Table P-5 of the Census report of (Lack of) Income, the median male is now worse on a gross, inflation adjusted basis, than he was in... 1968! While back then, the median income of male workers was $32,844, it has since risen declined to $32,137 as of 2010. And there is your lesson in inflation 101 (which we assume is driven by the CPI, which likely means that the actual inflation adjusted income decline is far worse than what is even reported). The only winner: women, whose median inflation adjusted income over the same period has increased by 188%. That said, it is still at 65% of what the median male makes. So injustice all around. "

http://www.zerohedge.com/news/median-male-worker-makes-less-now-43-years-ago

So everything is inflating, except salaries. And this is sustainable how?

Thanks, UD!

Agreed that Manhattan has held up better than other areas, and, because of its economic structure, it was a bigger recipient of the QE-Stupid largesse than other regions: let's face it, when oil is $90 a barrel even though demand is down and supply is up, something is happening other than pure "market forces," and IMHO that "something" is speculation based on lots of free money courtesy of Uncle Ben. Ditto my favorite, the spot price of corn, though every financial asset has experienced the same astronomical rise in prices over the past year.

pulaski is right - it's not sustainable. In fact, the violent market swings we're current seeing attest to that: extreme volatility is common before crashes. When that happens, Manhattan will be hit worse than most places, because the opposite occurs. Let us not forget that the last housing bust - 1989-1998 - hit later in Manhattan than elsewhere, took longer to work through, and was more devastating here than elsewhere.

Someone at the Fed seems to have wised up that stagflation is real - confirmed by today's import price report, and recent unemployment reports. Cutting payroll taxes won't do a damned thing: though I welcome it, it won't get me to spend more. In fact, I'm doing my damnedest to spend less.

yep thats another

The biggest factor of them all.

"Actually digs, you forgot another - extent to which local wages/economy are being supported [temporarily] by massive and unprecedented infusion of capital by benevolent central bank ;-)"

But I do remember the 90s. Those were tough times for NY real estate. What with Dinkins and Giuliani creating all that extra land ...

malthus, totally! I mean, Harlem didn't even exist til '99 right?

"NY has always had ups and downs, but always came back higher."
Maybe Manhattan prices eventually come back higher due to inflation?

"$1MM mortgage on a 2006 Studio on 42nd and 12 to a dog walker" lol!!

New York = the five boroughs. Prices for NYC, not Manhattan alone, are down more than 20% from peak.

In addition, Manhattan is down 20% from peak.

"Manhattan is down 20% from peak"
That may be true, but 20% off a crazy bubble price can still be over priced.

And yet, I currently see listings where the last sale was like $867,000 in 2005 & now, the ask is around $1.6mil. OK, maybe there was a reno, but, still seems delusional

what the slurp??!!

here, now, NY may, in fact, be on the brink of underperforming the rest of the country-there's a first for everything--benny has benefitted all RE with cheap money--he's benefitted NY uniquely with continual lining of banker pockets (and all their lawyers, accts, etc)--shit be over--without benny, it's about bankers trying to keep their jobs, not clamoring for bonuses--tis the clamor for bonus season, and all my friends are hiding under their desks--and these are people who have been very well paid even in recent years

I appreciate all the comments above, but I will take the other side of the bet on this one. (As someone who closed on a Manhattan co-op purchase in Feb 2009 and now sits on a co-op board). First, as UD points out, Manhattan is 70% co-op. Simply put, the co-op boards have traditionally done an outstanding job (much better than the banks have)of ensuring that propective tenant/owners have the cash, income and financial resources to afford their housing investment. Obviously, the national distressed markets stem from improperly applied and excessive leverage. This may exist in some of the busted condo developments, but has little application to established Manhattan co-ops with their strong boards. Finally, as a long time renter until just recently, I did not until recently appreciate that many of the long-term co-op owners actually purchased when their rent stablized or controlled apartments buildings went co-op in the early 1980s. They bought at even then discounted insider prices; and their only outflow today to live in their apartments is the pass-through maintenance of the building operations (always a lower cost then renting a similarly situated apartment). So, I predict there will be no distressed selling of Manhattan co-ops(contrast that to Queens where especially immigrant communities leveraged their purchases and their financial picture has significantly changed, leading to default); and I also predict a rather orderly flow of price clearing over time. Could prices go down from here. Well, I guess so but (and finally), we are in a cycle (a deep, dark part of the cycle). Some of you who have seen this before should recognize it. My personal biggest regret was not buying a 2BR/BA primo UES apartment being sold in 1989 for $200,000. I would have easily made a 5 bagger even at today's prices. But I wouldn't bet on it. As a commentator points out, prices are down about 20%, I took that trade in February 2009.

So co-op boards act as a kind of credit rater for the co-op itself. Kind of like a ratings agency without all the free time. Only the really strong candidates, let's call them AAA candidates, can get in.

I don't see how anything could ever go wrong with that model.

"Simply put, the co-op boards have traditionally done an outstanding job (much better than the banks have)of ensuring that propective tenant/owners have the cash, income and financial resources to afford their housing investment."

Completely untrue, and without support. Unless co-op boards have the power to stop layoffs, they are powerless to do what you say. They can hold up sales if they don't like the price, but (besides being illegal) it's sort of like King Canute & the waves: there's only so much an obstinate board can do.

We're seeing the unwinding of the Benny Bucks. A massively stupid idea that took a perfectly good recovery and tried to get it to fit a PhD dissertation. Didn't work. The problem was never one of liquidity - the problem was one of TOO MUCH liquidity. Adding More to Too Much doesn't help, and this didn't help.

Again, every financial asset soared with the advent of QE-Stupid. Oil today closed up 2%, at $90 a barrel, despite dismal economic news. Until that price - and commodity prices - goes down, the economy will continue to grow weaker and weaker.

Throw in Stupid Europe - raising interest rates when they should be lowering them, and forcing Greece into Weimar Republic-like reparation payments - and you have a recipe for impending disaster. How they expect Greece to pay off its debts by imposing an austerity on it that is causing its economy to shrink at 5% per year is beyond me.

What is currently going on is extremely unstable - stocks writhing 3% per day every day in both directions on the way down. Food and rents astronomical, the former because of speculation, the latter because no one can get hold of any of the cheap money that the banks have, to buy housing (that still has another 30% to fall) because all of that cheap liquidity has been piling into financial assets, driving down the economy.

So, the economy reacts naturally: by shedding jobs, by reducing output, by raising prices.

2007 was only the start of something that is going to last for a long time. Nothing the Fed can do will do anything but a) postpone the inevitable; and b) make the inevitable worse. People have to deleverage. Europe has to either fall apart, or become a single country. Half-ass measures won't work.

oldgreyhait-- you are kidding right? did you see this thread?

http://streeteasy.com/nyc/talk/discussion/5465-chasing-the-market-down-our-favorite-price-choppers?last_page=true

And that is what makes a market.. There is always a bid and and offer. What's your bid? If you don't have a bid then you are not playing in this market. Move aside, there is someone else who is.

So, Steve: will the US default on its debt? Even if it just keeps printing, US could still, in effect, default, no? I dunno.

Unexpected unemployment. Divorce (more likely during hard economic times). Devastating illness w/ concommitant medical bills. No coop board can completely foresee these. And of those elderly coop owners now paying only the "pass through maintenance" - that is going up lock step w/ rising taxes, labor and energy costs. And thse seasoned citizens can rely on their hefty 1% return (before taxes) on their savings. So, agreed, an attentive coop board can limit financial distress in the building, but not avoid it.

i bot a six room in 92---the world was in much better shape then than now--completely different circumstances

there is a bid and an offer--what's your bid? if you don't have a bid there's another--problem is it's lower

there are plenty of legacy tenants in ostablished coops with very discrimnating boards, whose finances are not nearly as secure as thiose who have bought recently--in fact, many board members couldn't get into their own buildings--don't delude yourself thatcoop owners are all financially secure--many are fixed incomers biting on zero return--another of benny's unintended consequences

sjtmd: these are all "one-off" owner distresses. Do not assume that this type of event translates to "financial distress in the building". A senstive board will work with a tenant/owner who is ill/elderly, etc. But as for unemployment, if the maintenance is not being paid, a board would be aggressive in pursing collection. Again, from where I sit I am not seeing distressed sellers. Have prices adjusted, yes. But that is just my point. It's up to the buyer to decide what is the bid.

West34, those are all very beautiful numbers, which support your theory, but those numbers don't tell anything at all. For starters, where are all those 2-bedrooms? Are they all in Flatiron? Secondly, it's fine to assert "2BR prices peaking in 2008 at $1,680,000 and in second Qtr 2011 at $1330000", but without knowing exactly which apartments your speak of, your assertion is meaningless.

For example, unless you are talking about the exact same apartment, in the exact same condition, you cannot generalize that some unnamed subset of 2-BRs selling at $1,680,000 in 2008 is the exact same subset of 2-BRs selling at $1,330,000 in 2011. Indeed, the 2008 amount reflects four apartments, and the 2011 amount reflects just two apartments. How can you make a -20% generalization when you're not even comparing the same housing stock?

"ensuring that propective tenant/owners have the cash, income and financial resources to afford their housing investment."

never ever understand this argument. what you present to the board is what you have at that time. what people have fluctuates all the time as their lives progress.

"I did not until recently appreciate that many of the long-term co-op owners actually purchased when their rent stablized or controlled apartments buildings went co-op in the early 1980s. They bought at even then discounted insider prices"

not sure if you're really sincere here, but those are not the buyers who fueled the bubble and set the largely prohibitive prices that exist today. obviously. people who paid market prices in the last 8ish years will be the "distressed sellers"......yes?

>>Isle_of_Lucy
did you see the thread i just posted here?

here is just one example of one posted there--
purchased in 06' for 1.15mm on the market and having trouble sellina5 $849k. in decent shape with a new bath!

http://streeteasy.com/nyc/sale/575541-coop-433-east-51st-street-beekman-new-york

I don't understand how the entire world collapses around us but Manhattan real estate still stands...it's feels rather strange. Manhattan alcove studios over $500k.

lucille: 1. think of it as similar to a mortgage underwriting. For a banker, there are income to loan servicing and debt to equity ratios. The loan/mortgage underwriting decision is made only once at purchase for the mortgage loan. Same exact thing for board approval. The only difference is that the "underwriting" process for the board approval is much more difficult. As you know, some banks were lending up to 95% of purchase price and NINJa loans galore. Did you see any of that at established Manhattan co-op boards? don't think so... documentation is intense even when banks were not. Sure things fluctuate, but the bigger financial "cushion" you have, the more you can absorb the future shocks. 2. Of course I am sincere. Of course, distressed sellers are those that not only (i) bought in the last 8 (or so years) but (ii) that also EXTENDED themselves to purchase. Again, related to point #1.

" Again, from where I sit I am not seeing distressed sellers."

because while people's finances fluctuate as their lives change, when the bought the co op, they did have enough to float them for several years.

Isle of Lucy -- point taken. But go to the MS database yourself. You can run the numbers by neighborhood, by coop vs condo, by median sale price, by average sale price, even by ppsf! The results are almost ALWAYS the same. Random skew doesnt not affect the underlying cost pattern of Bubble -> Correction -> Blip up. See for yourself.

OR, it could be, as you say, that the 300 2BR apartments that were sold in 4th qtr 2008 were all on CPW and Gramercy Park, and the ones sold 2nd Qtr 2011 were all in Hells Kitchen. That the price patterns EXACTLY track the economic, social and political contours of the credit bubble 2000-2008 - that's just pure coincidence.

lucille: Exactly! Not the entire Manhattan co-op marketplace, mind you. But defintetly a characteristic of Manhattan co-op market that is different than what you will find in Nevada, Orlando or even Queens.

"Did you see any of that at established Manhattan co-op boards?"

so now you are limiting your manhattan safety zone from just co ops to established co ops. ok.

"distressed sellers are those that not only (i) bought in the last 8 (or so years) but (ii) that also EXTENDED themselves to purchase"

for this to be an effective argument to make your point true, there would have to have been NO distressed co op sales in manhattan, when we all know that is not the fact. that there HAVE been distressed co op sales in manhattan means that there can BE MORE distressed sales in manhattan. and as you pointed out earlier in the this post, the board ensured that the buyer will have adequate reserves to maintain their financial obligations to the building for several years. it's several years later.

"will the US default on its debt? Even if it just keeps printing, US could still, in effect, default, no?"

Only a fool with a printing press would ever default.

Go Michelle Bachmann!

>>lucillebluth

nice job prosecuter

julia herez one and ...seriously SHUT The bleep. I'm done handholding a ninny.
http://streeteasy.com/nyc/sale/607427-coop-303-east-57th-street-sutton-place-new-york
$427psf. $1.4K maintenance.. .2003 prices...... and I bet they'll do $250K w/o blinking.

Oldgreyhair... does it go to your pubes? I got one the other day... WTF? Never mind... a 2009 "winner" and now a Coop Board member...drank the Kool aid twice.. too sugary for me. More of a gin and tonic guy, pour me another.

w81, well there you have it in a nutshell... our pure and utter difference in mkt read. I see, fk that, I KNOW there is a huge backlog. You think otherwise... and so let the Games BEGIN!

wbttm is correct. Most of my still employed banking friends are coming to the realization this Feb bonuses will suck, but they are still happy to have a job at all. They know their high water mark was 2005-2008. Just as $1000psf will be a hilarious sidenote to an epic bubble.

101 w 23

$500psf....

http://streeteasy.com/nyc/sale/480485-condo-354-broadway-civic-center-new-york

$512psf... duplex tribeca..

http://streeteasy.com/nyc/sale/629031-coop-417-e-90-street-yorkville-new-york
yourkville $524psf...

I can DO IT ALL NITE LONG...

http://streeteasy.com/nyc/sale/552028-coop-101-west-23rd-street-chelsea-new-york

101 w 23.... they thought I WAS SPAMMING W too many links....

Does it matter, I'm already grey?

Hit em hard west34

Re: Again, from where I sit I am not seeing distressed sellers.

Cuz Ben's been paying their salaries for the past two years. Looks like the checkbook has been put away.... [insert little smilie of guy chomping box of popcorn]

West34, I understand where you're coming from. I'm not necessarily disagreeing, I'm just saying that people need to take a step back and assess what they're actually looking at. I get tired of people making vast generalizations about "housing as an investment". It's nearly impossible to look at it in such a one-dimensional manner (as you might, say, the price of a share of United Technologies).

For example, Brooks2's price chopper on Sutton Place cited above should be valued at closing cost only. Why would anyone compare "market value" then vs. now based on the current asking price? If the current asking price for that apartment were $8 million and it sat on the market, would Brooks2 conclude that housing is up 10,000 percent? Of course not.

If it doesn't sell, you can't conclude the market dropped 20%. Investments don't go down unless you sell at a loss. PERIOD. If you don't sell it, there's no loss, regardless of what you paid for it and what you want to sell it for.

Anybody who looks at housing as an investment --- nothing more --- needs to strip away all those lovely things that make it *not* an investment (location, condition, size, features, and the fact that it keeps you from being homeless) before drawing sweeping conclusions such as "it's down 20%."

"http://streeteasy.com/nyc/sale/607427-coop-303-east-57th-street-sutton-place-new-york
$427psf"

w67th, how is $1,400 in maintenance anywhere near normal for a studio? They're going to have to compensate with a low price for that kind of monthly nut.

"http://streeteasy.com/nyc/sale/480485-condo-354-broadway-civic-center-new-york
$512psf... duplex tribeca.."

Not Tribeca. That's City Hall area. It's also a pretty unusual live/work setup, which probably explains the lower psf. Still, relatively low maintenance, so not a terrible find. Don't think I'd want to live there though.

"http://streeteasy.com/nyc/sale/629031-coop-417-e-90-street-yorkville-new-york
yourkville $524psf..."

Much better. Yorkville's always been kind of a below-the-radar secret as far as price-to-rent ratios go in Manhattan. I imagine some of that is due to the schlep to Lexington to get to the train, but whenever they get 2nd Ave done, should be a big deal for Yorkville residents. Doesn't seem that's priced in much at this point.

>>Isle_of_Lucy -- the apartment is a 2bd/2bd- ~1300 sq foot updated apartment with a renovated bath that was purchase in 06' for 1.15mm. It is offered for $849k now in 2011'. The owner is having trouble selling it at that price. Not sold yet! Do you think there are bidding wars in this buyers market? Here is the link, you can see for yourself. I calculate that to be ~25% lower and not sold and that's for 06', a little prior to the 07'-beg 08' prior to Ciaoffi(BEAR STERNS) blow up!

I am also hearing through some goods broker that some are having trouble getting finacing on "good coops" from FN and Freddie because their reserves are too low. so I guess Olegrayhair is that token co-op, knows better.

http://streeteasy.com/nyc/sale/575541-coop-433-east-51st-street-beekman-new-york

or go thrigh this link and see a bunch of others!

http://streeteasy.com/nyc/talk/discussion/5465-chasing-the-market-down-our-favorite-price-choppers?last_page=true

"housing as an investment"

Housing is not an "investment" in the sense of something you get a "return" on. It is a capitalized stream of rent payments. Sometimes, when the amortization of those payments is below rents, it's a good idea to capitalize them; other times, when it's not, it's not.

Even with the bump in rent in Manhattan in the past few months - dying, but still exists - it's been far cheaper to rent than to buy. Eventually this will work itself out, but it will take a long time.

o 'yea- its PRE-War in the exclusive Beekman Place neighboorhood.

lucille: "for this to be an effective argument to make your point true, there would have to have been NO distressed co op sales in manhattan"

Your logic does not stand. Think about it. A single distressed sale can happen for many reasons; a board is not a guarantor. Nothing in my discussion supports your conclusion. Read it again, if you wish. Do with my perspective what you want with it - including ignoring it. If one is seeing distressed sellers out there, then hit the offer. Or sit back and wait for it to get worse, if that is your perspective. That's what makes a market.

I tend to agree with oldgreyhair. I sit on my board and we have had to take some hard action against some of the older tenants who had gotten used to more lenient boards. We are lucky that we're able to buy out most problem people and rent the units or sell them. Most of you already know I am on 157th St. An area you might expect to be doing poorly with the downturn in the economy but in my experience it's actually held up very well. I suspect that's because when people were rushing to refi their paid off apartments in the boom times the coop board refused to allow it to go through because the fundamentals weren't there. So, I agree with oldgrehair that it was a strange thing to have banks willing to lend but boards seeing too much risk. So, we have two types of people in my building. The old timers who were essentially handed their apartments in the 80s and only pay maint. and new buyers who are in solid financial shape who purchased in a relatively cheap area.

oldgreyhair, of course my logic stands. your argument rests entirely on the definitive superiority of the co op system in the approval of candidates for purchase of shares. ergo, by allowing in your argument ANY distressed co op sale, even a singular occurence (which we know is not the case, many sales have closed below their peak price and many more are still lingering on the market at those "discounted" prices) disproves your case. if you concede that number X of distressed co op sales have surfaced in these several years after a hypothetical peak purchase, in a system which required the buyer to show an adequate reserve to cover their obligations to the building for several years, you also have to concede that this number X is highly likely only small tip of the iceberg. if you include in your forecast (1) the current as well as reasonably foreseeable future umemployment trend for high earners in manhattan and (2) ordinary life changes which force people to change their housing conditions, it becomes clear that your position is just not one that can withstand a detailed factual examination without mutating at every point of dispute. either the co op system is infallible, or it is mortal. you can't have it both ways.

oooh, peak COMP price.

eliz - actually you probably have 3 kinds of buyers:
1. The old timers who were essentially handed their apartments in the 80s and only pay maint.
2. new buyers who were in solid financial shape when they purchased in a relatively cheap area.
3. New buyers who were in solid financial shape when they bought but could be unemployed or underemployed when the poo hits the fan

Not to mention the old timers getting .5% interest on their savings and starting to wonder how bad cat food really tastes

Of course there will be SOME distressed sales of coops. But oldgreyhair has valid points. It's been helpful that coops have probably kept the % of overextended borrowers in this city down. I think it's pretty indisputable that this has worked to NYC's benefit in the housing crisis. I'm happy I live in a reasonably selective coop (for Brooklyn). We've weathered the downturn well, and no one's has even been behind on their maintenance. This means people generally have the means to maintain and improve their units and time sales well, which helps prices. Contrast to Foreclosure, USA where people trash, cut, and run.

Wow. Lots of good feedback. Thanks, all. I agree with oldgreyhair that co-op boards probably provided some cushion to the Manhattan market against as rapid or deep a decline as was in other markets. That said, I know many, many people who have been out of work for a very long time and have run through their savings, 401k and anything else they had. At some point, something will have to give. For those who bought at peak, it could be selling at a huge loss (if they are in a building with strict subletting rules). For those that bought much earlier, they could still sell below current market and end up with a decent pile of cash with which to rearrange their situation. Europe is a complete mess right now, US banks—which have plenty of exposure to Europe—are shedding jobs and who knows what other shoes are ready to drop. It will affect Manhattan, it's just hard to tell how soon, how deep and for how long.

>I don't know whether Jurow intentionally cherry-picked the data. What's clear is that he (or his editors) wanted a sexier headline than "Why Home Prices in Queens Are Still Headed For Collapse."

So basically, like the talking dirty hairy ape on west 67th street, this is just a ploy for attention and extrapolation of irrelevant data to the Manhattan market?

Honestly, I wonder, when w67thstreet's monkey mommy and gorilla daddy came to the U.S., how did they get past the customs and immigration officers? Was their little ape son distracting and pick pocketing like the thief he is today? Did the whole family just smell so bad that they were just waived through? What exactly happened?

>there are plenty of legacy tenants in ostablished coops with very discrimnating boards, whose finances are not nearly as secure as thiose who have bought recently--in fact, many board members couldn't get into their own buildings--don't delude yourself thatcoop owners are all financially secure--many are fixed incomers biting on zero return--another of benny's unintended consequences

Yeah, and if their monthly cost is the maintenance, not mortage and maintenance, what do they have to worry abut until they choose to sell when they only have to worry about loss on their otherwise unexpected windfall?

so don't rush to buy or give a very low offer!

again, well put lucillebluth!

Hunter - again Brooks2 is definitely AR - notice that need to post an "attaboy" to another post - just to insert HER approval? Signature AR

Nah, the tone is too different. AR wouldn't say "px" instead of "price" in that affected way, and she'd shell out the $10.

Board members protecting the building against price increases? Board members were seduced by rising prices just like everyone else in the country. They were looking at their own asset go up in price. Lever up your existing assets! Wait a while and become a landlord in Queens!

Have you guys seen a lot of co-op boards turning down buyers because the price was too low? Because they don't want a low priced comp being established in their building?

If that is the case, then how are buyers able to liquide their apartments even if they're willing to take a major loss?

leecube - yes, I was selling one of those units in 2009 in E87th and the buyers were more than financially qualified, but the price was pressured due to the times and another broker marketing a similar listing that supposedly 'knew' the board told me that the board will never let that deal happen..and they didnt..ultimately they let a higher deal go through.

west67...you are nuts...$1400 in maintenance and it's on 57th street..who wants to live on 57th street..the only studios/one bedrooms that are lower priced are apartments with very high maintenance.

leecube: with all deference to UD who is not only one of the best but also a very nice guy, my answer to your question is different. Sure it can happen, I guess, but our board would never philosphically block a sale based only on price. We know where prices have gone; most of us are attuned to the market. Simply put, there really has been very little turnover of units (and again I have not seen distressed sellers from where I am). But, I do see some owners "warehousing" their apartments. I estimate that 10% - 15% of the units in my building are owned by out of towners or as pied-a-terres. Older residents are aging out and the units are being gifted/left to family members -- more of these have happened over the last couple of years than actual sales in my building. The very few sales that have happened cleared at market price. Finally, there have been a handful of refi applications, most of these owners have actually decreased leverage, now at lower rates. We require full financials on refi's and the refi's suggest to me that the tennts that have refi'd are very well capitalized. This is again only my persective. I'm not suggesting people should run out to by real estate! And, things could get worse from here -- I'm expecting for example the European sitation to get very ugly.

lucille: "either the co op system is infallible, or it is mortal. you can't have it both ways." Notwithstanding your use of "ergo" your logic is off base. Leverage is a matter or degree, not absolutes. When Dimon says his bank has a "fortress balance sheet" do you think he is stating an absolute that his company is infallible and will never have a liquidity aqueeze? When Fuld said his securities firm has a "strong capital position", do you think he believed his company to be mortal? The two companies are in different places now because of degree of leverage. This is not a matter of absolutes. Just my point.

ph41, I'm still going with Brooks2 as MidtownerVirginEast who is recently absent from posting. MidtownerVirginEast, who lives in a smallish 1 bedroom apartment, was also a poster during most of the day when he was on a coffee break from the paralegal job - that accounts for the frequency of what you see now.

When MidtownerVirgin showed up originally 6-9 months ago, it was columbiacounty who pointed out how he wasn't new.

>>Wall Street’s woes may take a $2 billion-plus bite out of The Big Apple’s dwindling tax revenues

http://www.nypost.com/p/news/business/these_cuts_sting_S5DWYuI9TJJSaBpVbp8GAM

but dont worry Wall Streets woes will have no effect on RE in Manhattan... yea right..

Hi MidtownerVirgin. Better start looking busy before the associates come in and get you in trouble.

I understand the theory behind coops as gatekeepers making a large correction less likely in Manhattan, but I don't think the theory is borne out by reality. Prices in Manhattan deflated in the '90s, even though back then coops were even more dominant in the market - it's mostly just new construction that is condos. If coops were going to prevent a loss of value then they should have been more effective back then. I might believe that coops helped slow down the local market's reaction - which might help explain why NY real estate kept going down until 1998, long after the rest of the country was in recovery.

Also, for the theory to work, coops would have to restrain price growth on the way up to the peak, and that clearly did not happen in NY. If anything, the price bubble in NY was even worse than other parts of the country, perhaps excepting just Las Vegas and Florida.

Post87:Prices will inflate and deflate and co-op boards have absolutely no control over that. No one has control over that! Coop boards can not "prevent a loss of value". By the way, the 70s were a worse period than even the 90s for NYC co-ops. An anology: the huge financial markets sell-off in 1Q2009 was forced in good part by forced liquidation due to impoper and excess leverage. There is no price "restaint" that boards exercise. My point: Manhattan real estate is very different that Nevada, Orlando, Queens and Phoenix due to the restraint that co-op boards exercised in their approval processes. They did not allow NINJa loans, 95% financing, nor for the most part allowed over-levered tenant/owners to extend themselves. (The board was self-interested in this because they did not want a work-out situation with a tenant who might default on maintenance). Mortgage underwriters/banks had no continuing interest in the relationship. They just packaged the loans (CDOS) and moved on; therefore allowing excess leverage and inability fof the owner to service the debt.

oldgreyhair- "restraint that co-op boards exercised in their approval processes"
you assume all co-op boards act in unison and are immune to greed. That they did no accept excessive leverage and were smarter that then the "smarters guys in the room". come on. I know for a fact that buyers financed with ios and put little down oon some co-ops. But, I guess yours was the token Co-op board that was samrter than everyone else.. Are you Hank Pauslon? You try to appear like a wise old man, but you are probably be long and wrong like most of the buyers over the last 10years.

oh, sorry maybe John.

Brooks2: don't flame me personally. Put your anger away. If you/other readers want this board to be a discussion, I am willing to add something to discussion/opinion. I will hear from others if they want my input or not. If not, I will be happy to walk away. Of course, I am not Hank Paulson. I have made many investment mistakes. But have also made many good choices. I have bought commercial propery, have bought and sold residential property, and know what a PAR is in relation to an MCI. What is the cause of your anger?

"Income Slides to 1996 Levels"
"Median Household Earnings Fall for Third Year, Census Says"

"The income of the typical American family—long the envy of much of the world—has dropped for the third year in a row and is now roughly where it was in 1996 when adjusted for inflation.

The income of a household considered to be at the statistical middle fell 2.3% to an inflation-adjusted $49,445 in 2010, which is 7.1% below its 1999 peak, the Census Bureau said."

"For a huge swath of American families, the gains of the boom of the 2000s have been wiped out. "

http://online.wsj.com/article/SB10001424053111904265504576568543968213896.html?mod=WSJ_economy_LeftTopHighlights

Coop boards won't be much help in keeping prices up and "riff-raff" out when folks are not making money and the economy is collapsing.

>What is the cause of your anger?

He's a virgin living in a smallish 1 bedroom rental in midtown east. He's saved up money to buy but still feels priced out so he's trying to talk the market down. He went to law school but couldn't make it far in a firm so instead is now a senior paralegal at a midtown east firm he walks to.

just not buying what you are trying to sell. not believable

No, Hunter - she's a renter in PCV, recently grayed off SE, so now posting as Brooks - same anger issues, same way of starting fights,and then keeping them going. And that "for insiders" blocked thing is really a very funny ruse.

Well, either way, a coward.

MidtownerEast: http://streeteasy.com/nyc/talk/discussion/24949-virgin-post-calling-all-finance-geniusestrolls

Its kind of disheartening that certain posters are salivating over the prospect of a massive economic crisis/huge price collapse and talking about owners having to eat cat food.

The market is still bloated, and there is no recovery in sight. Banks are about to start large layoffs. I no longer buy the int'l city excuse for high prices, b/c Ldn and the rest Euro lands are in the crapper.

"Notwithstanding your use of "ergo" your logic is off base. Leverage is a matter or degree, not absolutes. When Dimon says his bank has a "fortress balance sheet" do you think he is stating an absolute that his company is infallible and will never have a liquidity aqueeze? When Fuld said his securities firm has a "strong capital position", do you think he believed his company to be mortal? The two companies are in different places now because of degree of leverage. This is not a matter of absolutes. Just my point."

what is your problem with my use of the word ergo? i like that word. i can't say it in conversation because who says ergo? but i like writing and reading it. the rest of your post not only lacks any reasonably appropriate response to what i am saying, it is also a somewhat disturbing indication that you may truly not understand what i am saying. this may be my own fault for failing to communicate my point effectively. so let's try this again in short clear sentences.

(1) a co op board package is a snapshot of a person's current finances

(2) this snapshot is deemed acceptable by the board at the time of purchase

(3) people's lives go on after buying. people lose their jobs. people's businesses suffer losses. people make unwise financial decisions after buying. people sometimes borrow against their homes.

(4) this is all in addition to the possibility of divorce
(a) as well as the possibility you or your spouse, whose income is necessary to maintain
your lifestyle, suffering a debilitating career ending injury defending your family
from flesh eating zombies
(b) as well as the possibility that you or your spouse have a come to jesus moment and
decide that you hate being an office monkey and want to do something worthwhile with
your life

you introduced "absolutes" when you suggested and then repeatedly insisted that a one time vetting and approval of a financial snapshot somehow secures and guarantees the integrity of the contents of that snapshot for all eternity.

what you wrote in your posts, though factually accurate i guess, has nothing what so ever to do with our conversation. it is in no way related to the issue we are discussing. again, to reiterate very simply, you cannot maintain that co op boards protects their shareholders by only approving worthy applicants. the existence of existing distressed co op sales disproves this. i think this is the best i can do.

lucille: "the existence of existing distressed co op sales disproves this". To the contrary: the lack of a meldown/distressed selling (a la: Nevada, Miami, etc) proves my point. Have a good day.

"By the way, the 70s were a worse period than even the 90s for NYC co-ops."

is this.....because most co ops did not exist in the 70s?

"My point: Manhattan real estate is very different that Nevada, Orlando, Queens and Phoenix"

i thought this was your point

"Simply put, the co-op boards have traditionally done an outstanding job (much better than the banks have)of ensuring that propective tenant/owners have the cash, income and financial resources to afford their housing investment."

and then this became your point

"Did you see any of that at established Manhattan co-op boards?"

so your point went from co op system being the guardian of manhattan property values, to established co ops probably weeding the undesirables, and now your point is manhattan is not phoenix. that about over it?

"proves my point"

you lost me. what's your point again?