Interesting example of the current market

Renting at $20K or less:

https://streeteasy.com/rental/2255261

With $12K in common charges & taxes once the abatement expires next year.

30yrs, you’re missing that:

- 2011 was a peak in the market
- The neighborhood never went through a boom
- $8K per month on the rent-common/tax spread over 11 years is $1M in the bank, because there are no other expenses
- Investing the money in the stock market instead would have been a disaster

You’re making your call too soon: just give it a few more years, all will work out.

From January 2011 through yesterday, the S&P 500 rose by 124% (approx.9%/year). Not much of a disaster.

Well, it’s have been 136% since 8/17/2011, 184% if you include dividends. But who’s counting? That only works out to 12.7% per year.

If only there were someone around on this message forum in 2011 who Would have guessed on such a large divergence between stocks and NYC real estate...

I don't think any rational person would say all real estate purchases will go up over any specific time frame. This traded at almost $4,000 a square foot initially, I can tell you as a broker I had no one that would pay that kind of money for a place on 19th Street and 10th avenue, then or now.

Yes this was not a good purchase it doesn't take a PhD from MIT to figure that out. But what really is the point of cherry-picking listings out of thousands that serve your particular narrative? Honestly, it just gets quite boorish. I could easily do the same and we could go back and forth back and forth. So I won't list any counter-arguments, but you guys enjoy yourselves : )

Keith
TBG

Small new developments of 10 units or under with doorman just do not make sense. On top of that their is tax abatement expiration - essentially the original buyer upfront in price for not paying enough taxes in the future and this was somewhat close to ultra-luxury segment for its time. That is why I always think about what premium one should pay for new development over comparable resales - 10/15 percent. I think it is fair due to new infrastructure (additional for view etc), but it does not account for typically much higher that 10/15 percent taxes for new development. That is why I just stick to Resales.

For small new developments I have a worse example where CC and Taxes are more than rental eqt.
30, It is on Park Avenue. Can you guess?

Sorry fixing typos:
Small new developments of 10 units or under with doorman just do not make sense. On top of that there is tax abatement expiration - essentially the original buyer PAID upfront in price for not paying enough taxes in the future and this listing was somewhat close to ultra-luxury segment for its time. That is why I always think about what premium one should pay for new development over comparable resales - 10/15 percent. I think it is fair due to new infrastructure (additional premium for view etc), but it does not account for typically much higher that 10/15 percent taxes for new development. That is why I just stick to Resales.

For small new developments I have a worse example where CC and Taxes are more than rental eqt.
30, It is on Park Avenue. Can you guess?

That’s fair, let’s not cherry-pick. Never mind that there are over 50 listings in West Chelsea over $5M, and I personally considered renting in that specific building. (Fun negotiation story on that one.)

StreetEasy index has Aug 2011 => Feb 2020 up 20.9%, annualizes to 2.25%. SPX up 182%, annualizes to 13.0%. And that was the bottom for the StreetEasy index, but not SPX.

Mercer, I don’t get it. In your mind, what is the right price for this apartment? Great light, proportions, design, features (20’ high glass window 25’ wide that folds open to the outdoor space). Looks like an architectural gem designed by a Pritzker Prize winner. Wait, it WAS designed by a Pritzker Prize winner...

Are you objecting to the $9M price tag, saying it’s cheaper to create than $2600 per sq ft? Or are you objecting to anyone wanting such a space, saying that no one should derive enjoyment from that which $2600 per sq ft can create vs that which $1600 per sq ft space can create?

Is there a spiral staircase to go to second floor?

Sorry I see a second staircase. Spiral to roof which you probably will never use as you have a nice terrace already.

I didn't buy a home to try to compete with the SPX. And I agree if the only reason you're going to purchase a home is to do such, then rent.

Nada you're also swimming in a pool that not many do regarding price points. And that particular market is more about vanity purchases then practical economics, or at least let's say extremely more so than a $1,100 a square foot Coop purchase.

That said, there are certainly people equally if not significantly more wealthy than you are and perhaps even as intelligent that buy ridiculously expensive homes that don't make a lot of practical economic sense. To each his own.

Keith
TBG

A clients assistant just saw this post, and has requested more information. Lol.

Keith
TBG

It's useful to post examples of ppl losing their shirts. Nobody at a cocktail party brags about losing $3 million on a house, but they sure do brag about the opposite. Posts like this balance the narrative and remind people that overpaying for real estate is a good way to lose money.

Keith, it’s not so much about competing with SPX, and I wasn’t always as wealthy as I am now.

Suppose your net worth was $1.6M in 2011. That’s a lot of money by most measures, but for better or worse the pool in which a large number of Manhattan apartment buyers swim. To these people, this isn’t silly throw-away money: they are trying to live as nicely as they can.

Option A would have been to put that money in SPX, take the $240K in returns each year, and rent this $10M apartment. A decade later, you still have your $1.6M, plus any income / investments / etc. You’re living quite nicely.

What exactly would Option B have been with the $1100 per sq ft coop? Where would one have been living, and what would have been the situation with the $1.6M?

>> That said, there are certainly people equally if not significantly more wealthy than you are and perhaps even as intelligent that buy ridiculously expensive homes that don't make a lot of practical economic sense. To each his own.

I live in a building where I’ve gotten to meet and know people who are less, equally, and significantly more wealthy (celebrities, best-evers in their fields, top-XX wealthiest person in the worlds, etc.). All lovely people for the most part.

For the wealthiest, these apartments are rounding errors on their net worth and are needed for practical reasons, even if barely used. This makes sense. For the rest, it isn’t a rounding error. You have people whose net worth is equalish to the apartment value. You can tell because they give a shit when someone sells their place at a 10% loss. And you have people whose net worth is something like that $1.6M, levered up to purchase such a place. You can tell because they treat their place like an investment.

You gotta remember, about $50B of new development was sold in the past decade. There are only so many people with $100M+ to their names who care to have an apartment in NYC they barely use. The rest are more plebeian forms of rich. And they have either been spending their quarantine in a $3000 per sq ft trophy apt, a $1100 per sq ft coop, or $400 per sq ft house in the burbs / country.

Nada, For people with $1.6mm net worth, annual income would be significant factor in a purchase decision. If they are expecting to make $500k per year, probably of the $1.6mm net worth, no more than $400-600k in downpayment. $250k liquid cash type assets and remaining depending on the risk tolerance and market view in equities. I personally would have done $400k down payment and $300+k cash and the rest equities call it $900k. And for my sleep index if I didn’t buy an apartment, I would probably not buy more than $900k in equities.

Most (most) people that bought in 2011, have not lost money if they sold pre Coronavirus. There are people in this thread that fit that description. I would extend that to most who bought pre 2013 are in decent-good shape even post Coronavirus.

Also Nada you're talking about a whole different ball game, it's not so much about purchase price as it is about price per square foot. I'll never understand people that buy in what are still rather 'normal' buildings, and pay between 5000 and $7,000 a square foot. Perhaps this isn't the best example, but it's sort of like buying a Coach bag versus a Chanel bag, how materially different are they? The Chanel bag is perhaps three to four times as expensive, what's the motivation? Status. I don't work with that type of client.

The typical client I work for is not only looking for a comfortable home to live and enjoy, but is also focused on financial responsibility. A very small portion of their net worth is tied up in the apartment. And I know this because in most cases I'm reviewing their financial statement.

Keith
TBG

I'm about to go into lockdown playing some Pokemon battle with my seven-year-old. Here's something we sold in 2010. What would the value of this be just before Coronavirus? After it's a harder number to predict.

https://streeteasy.com/sale/457152

Keith
TBG

Just mix it up here is a another new development deal we did. since I started the Burkhardt group in 2009 (sales) I do have a lot of data on a wide variety of units.

https://streeteasy.com/sale/649251

Kick his scrawny little ass, Keith! And if he wins, just do arm-wrestling afterwards.

Actually I didn't so that penthouse it was another one, apologies.

Lol. Not trying to kick anybody's ass, in this Bears Den it's more about being on the defensive :)

I see you were speaking about Pokemon! Typically my daughter kicks my ass, but she's definitely playing by her own set of rules!

Of course I was speaking about your son. You gotta keep the business side professional!

Here's the transaction we actually handled. I don't need anybody yelling at me I'm disseminating false information!

https://streeteasy.com/sale/649253

@nada I'd appreciate some referrals from your highfalutin friends and acquaintances: ) my understanding is even uber wealthy people appreciate saving money coupled with an extraordinary customer service model : )

You can also look up a thread which I'll bump here next week. Looking for a whale that will buy in new development, I will donate our commission after rebate to first responders in New York City. Let's get on that please!

Keith Burkhardt
TBG

Keith, on your listing I’ll go with up 10-20%? 2/3 were bought separately in 2010 for ~$3M, combined at a cost of some six-figure sum, and sold at the top in 2017 for ~$4M. Down 10% since then, minus a bit more for the improvements?

Nada, Some comments on the listing:
- Space is very nice with double ceilings in the living room and abundant outdoor space. Take 50 percent of outdoor space - it is 4200 plus sq ft. I do not like the kitchen location far away from the terrace.
- Location a little iffy. Too far from the subway and you do not see river. Block not so great.
- Views may be gone soon if the building on the other side builds up.
- Modernist metal/glass heavy architecture in NYC has not held up value.
- You are paying $2.5 per sq ft in maintenance with no amenities. Small building issue at this price point. Taxes are in fair range.

All considered, $8mm plus minus seems fair. Appx 1800-2000 per sq ft after factoring in say 40-50 percent of outdoor space.

Keith, you know I’ll come to you if I am ever lose my marbles and buy something. For whatever reason, I am not the go-to for said acquaintances when it comes to RE. If anybody asks, know you are the person I’d refer.

Mercer, I agree: I think the price is right. I don’t think you can build / convert for less, and I’m not surprised Keith’s client is interested. Problem is that the market let’s me have it for $20K per month rather than $8-9M plus $12K per month...

Mercer, I’ll play on your Option B. So you take your $1.6M, put $500K down to buy an $1100 ppsf $2M classic six on the UWS, $300K cash, and $800K stocks.

Stocks generated $120K per year, around the same as interest + monthlies + maintenance, covering those expenses. After a decade of $500K+ income & investment, your net worth doubled to $3.2M and you’re wondering why you’re living with 2 dogs and 3 kids in 1800 sq ft with a kitchen from when Golden Girls was playing on TV. So you sell, using up the increase in value.

Option A had you sleeping in trophy $10M apt for a decade. Option B had you sleeping in Golden Girls $2M apt for a decade. At the end, you were still $1.6M richer either case. Who exactly was sleeping better, Option A or Option B? The difference in equities risk taken between the was 1/4th of the eventual net worth, ignoring the equal-magnitude substituted RE risk.

Maybe the edges are off in that comparison, maybe Option A had to “settle” for a $6M apt, etc., but you get the picture.

What would have happened if equities were flat?

3 kids and 2 dogs in a classic 6 is pretty nutty!! But people do it.

Separately, smaller developments under 10 units just do not work with a doorman. First the doorman costs get shared by fewer units and then the city taxes you more as your rental equivalent for tax calculations will be other doorman buildings with higher per sq ft rent roll.

>> What would have happened if equities were flat?

But they weren’t.

However, if you insist.... Option A would end up with a net worth that is $2M less at the end, down to $1.2M. Option B would end up in the same place, $1M because of the stocks and $1M in loss from RE in the world where equities were flat. And I think Option A would have a relatively easy path to “downgrade” to a $4M apt (at 2011 levels) whenever they felt like they were spending too much. I suppose Option B could move to a $1M 900 sq ft Junior 4 after a lot of hand-wringing about taking a loss, euthanize the dogs, and put one of the kids up for adoption.

But thankfully, none of that actually occurred.

What would have happened to the price of condos if equities had remained flat?

George,
You're going to hear people telling cocktail party stories about the silver lining of Coronavirus and how "it saved me from making the worst financial decision of my life."

It's not a good idea to live beyond your means.

Sales managers jobs are to make sure their salespeople live beyond their means.

Remarkable just how extreme these scenarios are. How about a more balanced, middle-of-the-road case?

It's been a great run in equities but no one in his right mind should have (or could have?) signed a lease on a $20k/month rental based on the hope/expectation that equities would compound at 12.7% a year. That performance is obviously far in excess of long-term historical averages.

"Flat equities" would have been an equally unrealistic expectation.

What about with reasonable decision-making under realistic, base-case assumptions. Let's say Option A and Option B parties both expected an ~8% compound return in equities, and that this did in fact occur.

In this case the Option A renter lives in a more valuable place (relative to Option B). Probably needs to move/upgrade once during this period unless they were super aggressive with the choice of the day 1 rental. The actual investment returns don't ever justify the $10MM place. As to Option B, the owner gets to live in his/her home from the start, comfortably. Not in a trophy apartment compared to the Chelsea penthouse (which is no longer even relevant in this scenario), but has a nicer kitchen than is being suggested. And while there's always some hand-wringing in life, the housing situation is not high on the list of what's causing it. Some might say Coop values would have declined in an ~8%/year equity return world -- we'll never know but I'd disagree.

I suspect the Option A renter built more net worth by the end of the period. Will leave it to other to calculate how much. Obviously , the degree to which depends on (among other things) whether they chose to rent the $3MM or $5Mm or $7MM place etc.

Nobody would have rented a $20K apt to a $500K income family. Nor would $500K income families at the home-buying stage of life In 2011 have a net worth of $1.6M. Even saving 40% of after-tax income having had that income the whole time, that’s 16 years. Really, the $500K downpayment for a $2M apt represents most of said family’s net worth that doesn’t need to be liquid / accessible.

So Option B has $500K going into the downpayment, plus another $270K in mortgage equity, since Aug 2011. Monthly nut plowed into apt would have been $11-12K per month, about half of after-tax income, as some “prudent” combination of spend & invest. Expected appreciation would have been a “prudent” 4% per year based on some silly 2011 logic bandied about on this board. So while they were “expecting” to turn the $770K into $1.6M after a good part of a decade, it’s looking pretty clear that all they have is $770K.

Option A’s prudent choice would have been to just rent the same apt for $7-8K, putting the $500K downpayment plus $4K/month difference into stocks. At 8% expected return per year, would have become $1.6M. The reality, even post-corona, became $2.5M.

In order to make this a fair comparison, need to use the same % stock allocation for both Option A and Option B. Option B shouldn't be at 100% stocks either: zero diversification is not the prudent move, not to mention liquidity considerations. I can see the case for 80-90% stocks because the market conditions were favorable and stocks were cheap. And, not everyone who bought RE was so cautious or underweight stocks, notwithstanding what a select few were saying on this board.

Sure, each of Option A and Option B kept $200K or whatever aside in cash at the outset in 2011. When you owe $1.5M on a $2M home with a monthly nut of $11-12K, it’s not like you can allocate any of that cash to stocks. You need a bit of cash cushion in both cases. Having infinite money is great, but in this reality you only had (say) $700K to start with.

Debating with Nada on rent/ buy is a losing proposition! I really don't ever see any scenario where he's a buyer, and there's certainly nothing wrong with that. If the market got trashed enough that prices came down exponentially, I would have to expect rental prices would have come down exponentially as well. Then we're back to comparing buy versus rent and investing all the extra money into SPX (unless of course the stock market is also in the crapper for a trifecta!). What came first the chicken or the egg? Lol.

The x factor here is there are people who prefer home ownership for less tangible financial reasons. Many like the diversification of owning a home, especially those who know they won't be disciplined enough to put the differential from savings in rent vs buy into equities, assuming equities happen to be doing well at the same time.

Many want to buy a home that they can customize, a place they can be in long term, perhaps even pay off their mortgage to be free from a significant monthly payment (even if some would believe that a foolish use of money)

Both real estate and equities fluctuate over short periods of time. Good timing can be very beneficial with both. Preferably if you are buying, you plan on living in the home for a long time, can enjoy it while you ride out various business cycles. I think I posted a couple of examples here that have done okay...

I happen to be a salesperson, at least by definition, although with my business model we don't engage in ever trying to sell something to someone in the traditional sense. I live well below my means and I would advocate that for anyone regardless of their financial position. I can attest that the 40 to 50 buyers we sell homes to each year, are allocating their money in a responsible manner. Their down payment is typically a relatively small portion of their net worth, and their total debt to income ratio is less than 30%, many times less than 25%.

So buying a home isn't always a simple math formula, everybody's different, and they have their reasons for either buying or renting. I think both are valid options.

As I read some of the negative comments about brokers here, something to keep in mind is clients come to me that have already made up their mind to be buyers. I've never spent a dime on advertising nor trying to convince somebody to buy a property. I think my strengths are providing clients with a reasonable analysis of property they've told me they'd like to buy. Not to toot my own horn, I happen to think I'm also a very good negotiator, and since I do live well below my means, I'm not living and dying on every deal.

Anyway whichever path you choose renting or buying I hope you find happiness in your new home maybe even some degree of prosperity. Although prosperity isn't always measured in dollars and cents.

Keith
TBG

I'm not trying to change his mind... that's a lost cause.

My point is that while his analysis is undoubtedly incisive and well informed, he pushes it to the limit on each assumption to support the view, and the result is the conclusion looks starker than it really is. Individually none of the "stretching" on the assumptions looks like a deal, but then put all the together and it really adds up. I happen to agree with the big-picture conclusion in this case. There's no getting around the fact that stocks were a better investment then Coops or Condos in the past 10 years. Just think it's closer than being presented.

An example -- the $11-$12k monthly nut. This implicitly assumes about a 4% after-tax rate on the mortgage. Virtually anyone with decent credit could have done better than that. And there would have been opportunities to refi as rates came down. Even if you want to ignore the impact of monthly principal paydown on the coop equity value, the monthly mortgage payment over 10 years would come down through a combination of refinancing at a lower rate and refinancing at a lower balance.

Another -- could you really rent the typical $10MM apartment for $240k/year? That's 42x rent. Spitballing a bit here, but I suspect rents were in the 20-25x range for a $2MM Condo over this period, and perhaps 30-35x in the ultra-luxury market. Could adept folks find diamonds in the rough rentals at 42x? Sure, just like adept buyers can find deals too.

I have averaged appx 2.6 percent in the last 9 years with 5/1 which I have refinanced a few times. Now 10/1 arm in the same range. Keith’s rebate paid for all closing cost leaving some extra for move-in minor Reno (coop).

I was just kidding with nada, he's a great guy and certainly a good sport! That said I still don't think he's ever a buyer, lol. Especially since I don't expect him to lose his marbles anytime soon : )

We’re all just busting some chops here, AVM. You make a fine point. Maybe it wasn’t as stark a difference as I make it out to be, but regardless it wasn’t even close. FWIW, I don’t think the next decade will be like it.

Keith, I actually think of NYC RE prices drop a lot, rents won’t as much. Suppose prices drop so that this place sells for (say) $6M because all this ultra-lux inventory sits for another half-decade, investors (or their heirs) throw in the towel, etc. That’s well below construction price, and I know rich people never “have” to sell, but here with this listing we’re looking at an all-cash GA LLC hoping to get out with a 25% drop relative to 2011 and a 30% lower asking price since the started listing it in 2017 at $12.9M. There’s already a $3M loss baked in, what’s another $3M? I could see that happening (not saying it’s a likely scenario), as there is no backstop buyers who can make sense of the prices from a rental yield perspective.

On the other side, I just don’t see it going for $13K rent. For this “$10M” apt to go for $13K, a “$5M” apt’s gotta gotta drop from (say) $13K to $8K. The problem is that there are exponentially more people currently renting a “$2M” apt with an $8K rental budget than there are “$5M” apts.

I am also not sure about the stock / NYC RE correlation. The last decade was a strong example of how disconnected they can get when fundamentals are out of whack. You could see a corona-exodus from NYC. You could see the stock market continue merrily as it has these past few weeks, as if we are still in 2019 with 3.6% unemployment rather than 20%-and-growing unemployment, projected to stay above 10% through the end of 2021. Again, I’m not saying it is likely, but I don’t think it’s a <1% chance type thing either.

I'm quite surprised at the behavior of the stock market. I thought for sure we would retest the lows, and the guy I follow is also leaning that way. but there are certainly others who think we put the low in late March, Ed Yardeni being one of them. Mr. Market dances to the beat of his own drum.

We've had about five closings over the last 10 days. Currently have two offers accepted, one down by around 5% the other around 8%. Negotiating another offer in Tribeca currently about 11% apart. Had a new development deal in Brooklyn, sponsor paying transfer taxes, legal and giving us a 5% discount; client not accepting and moving on.

Happy to have something going on. However I would say on a scale of 1 to 10, 10 being we're firing on all eight cylinders, we're currently at a 2. January -February we were at a 10.

Keeping that PMA! (Positive mental attitude)

Keith
TBG

Currently sale price is too high comparing to rent, so it should come down more to make buy vs rent being reasonable again

I think we are due for another stock correction. After the '29 crash, stocks sort of recovered for a while.

If you watch the Ray Dalio talk with Bloomberg from a couple of weeks back at some point he gives his opinion on why the stock market will go off the "financial economy" (Fed policy, etc) as opposed to the "actual economy."
https://youtu.be/WA1Ji-Hj1qo

Here's a recent mid-market closing close to 25% off peak price.
https://streeteasy.com/sale/1409568

I passed by today and this building is jammed at the back with new construction. While I am not a fan of modernist architecture for residences, I found the facade attractive and functional. Do not know how all the metal will age but for now it seemed in great shape.

Interesting price history. Post-covid, it's probably back to the 2005 off-plan price. Basically zero nominal appreciation in 15 years. The 421a expiration probably hurt the most recent price, but still...

That is why I stay away from new developments as the premium vs renovated resales can’t be justified and you pay much higher taxes for new developments. Basically, it makes no economic sense to have new development in NYC unless they are pre-sold before completion (developers are in it as they found stupid investors and they collect fees). Resales trade much lower than replacement cost. But there are people with a lot more money that I do who do not care and have to have a new development and views.

I think it also shows that most of the Real Estate tax breaks given developers are not really beneficial to anyone but them.

^ This.

How would you say this is going to affect different price brackets?

Fritz Frigan of Halsteads current bid/ask spreads:

Happy to report data for 43 new offers came in and today I am sharing the results. If you recall, I asked you to share data with me so we understand what buyers are thinking, when it comes to real estate values in NYC. Specifically, I asked you to share details of offers you received or sent on behalf of your buyers, since March 22, 2020, regardless if they were accepted or not. Click here to access the excel sheet with all results.

Below is the analysis from only 43 new received offers.

Average difference between offer price and ask price was 14.49% (last week it was 13.20%)
The range was from 41.62% below ask to 2.20% above ask
If I eliminate these two extreme responses, the average difference between offer and ask for remaining 41 cases was 14.24%

Now, let’s check the data deeper into more details.

For offers that were ACCEPTED, the average difference between offer and ask was 7.99% (last week: 6.52%) (14 answers)
For offers that were REJECTED, the average difference between offer and ask was 17.63% (last week: 18.62%) (29 answers)

In Brooklyn, the average difference between offer and ask was 6.85% (last week: 7.78%) (9 answers)
In Manhattan, the average difference between offer and ask was 17.26% (last week: 15.28%) (31 answers)
In Queens, the average difference between offer and ask was 11.12% (last week 6.52%) (from just 2 answers received)
In the Bronx, the average difference between offer and ask was 4.26% (just 1 answer received)

In condos, the average difference between offer and ask was 14.17% (last week: 17.82%) (17 answers)
In co-ops, the average difference between offer and ask was 13.21% (last week: 12.91%) (18 answers)
In single family/townhouses, the average difference between offer and ask was 18.35% (last week: 9.15%) (7 answers)
In new developments, the average difference between offer and ask was 18.73% (last week: 11.27%) (1 answer)

Brokers who represented BUYERS reported an average difference between offer and ask as 14.41% (last week: 16.79%) (18 answers)
Brokers who represented SELLERS reported an average difference between offer and ask as 14.75% (last week: 10.87%) (25 answers)

Listing discount pre-pause was running at about 7%, Barbara Corcoran tells buyers to run around making offers at 20 or 25% off, and now listing discount is running ... at about 8%. What a great time to buy.

You can find great deals at 20-25% off. And for that reason, I’m out.
-barbara corcoran

While the data is to thin to be conclusive it appears to be that buyers are looking for increasing discounts over time, as opposed to the concept that during "peak panic" in March the offers would be the lowest and then "a shift back to normalcy."

I liked the comment from the buyer's broker whose person put in a bid of $3.375M on a $5.25M townhouse (probably this one https://streeteasy.com/sale/1435339 ): "seller is unrealistic, says has offer in the wings, from months ago, but not A/O or Contract out." Surely this broker is smart enough to know that every seller always has an offer or a contract out, just waiting to be signed.

FWIW, seller paid $4.1M in 2014 and appears to have done nothing. What makes seller think it's worth more than the 2014 price? And what makes the buyer think it's worth offering $2M under ask? Don't complain about the seller, just move on and tell them to call you when their existing contract falls through. It's as if brokers have never been in a soft/declining market!

Then there was this broker who was the opposite - totally apologetic: "I am hopeful seller will come back with a counter. I know this is a very low offer. Thanks very much..." TH listed at $6.395, offer $4.9M - probably this one: https://streeteasy.com/sale/1458544 Peripheral location but good condition. Owners paid $5.75M. Offer seems aggressive since the property was only listed in Feb 2020...

...BUT a lot of buyers (including even Mrs George to a degree) agree with this broker's comment: "Had similar comment from 2 buyers 2 different apartments, to wit: Probably now just staying where we are and not buy in Manhattan any more but consider leaving to an easier state. Too much will probably not recover in this city like cherished special restaurants, unique little shops and galleries etc will not survive, so maybe time to forgo Manhattan."

When I used to go to my office I walked by that 18th St building a lot. It goes to show how much the entire thinking about Real Estate investing has changed because even that "low offer" is over 16X Rent Roll, and in the old days if I ever pitched someone a deal with numbers like that I would have gotten a dressing down. But even using actual ROI %, what is this property actually offering (with at this point probably a "rental upside" being negative)?

BTW when crime figures go up, townhouses are only going to get less attractive.

Urbandigs coronavirus update number 8.

Certainly one of the best places to get information regarding what's actually happening in our market. With 14,000 licensed brokers in New York City, there should be a lot more than a few hundred views of this channel!

https://youtu.be/3rXWpFlp45E

Keith Burkhardt
TBG

I'm frankly surprised that new listings are up in NYC, even marginally.

I'm SIP on the Upper West Side, but I wouldn't list anything new, because the first ten brokers I could think to call to show it to are all.... out of town. I'm moving one deal forward that I had been working on pre-PAUSE, and that co-operating broker is in Florida.

We will get back to work, eventually, but to pretend that the market is there now, at least the co-op sales market, seems a little wacky.

New listings is ppl throwing in the towel and leaving NYC. It's not the positive indicator Noah says.

Keith,
I think you're low by half on the number if licenced agents in NYC.

Ali,
My confidence level is fairly high that most of the new listings you are seeing is bored, desperate, delusional agents working sellers by way overselling the possibility of doing deals on new listings right now.

George,
If it's really people "throwing in the towel" then they remind me of an old Adam Ant song.

I thought about you 30 when I posted that number, I actually had 14 and 28 in my head. Figured I couldn't get in too much trouble with the lower #.

I know this is just one lone data point, we have recently had an accepted offer after only a zoom showing. The other two accepted offers are apartments clients had previously seen pre-corona.

Keith
TBG

AFAIK it's 14,000 just in Manhattan, 30,000 NYC.

For the Zoom-only accepted offer what are the inspection contingencies? Under what conditions does the buyer get to cancel?

Offer was accepted on Thursday with a contract out. We'll see what the buyers attorney proposes.

We have one other example of a purchase via FaceTime, however the buyers had done business with us before. The house, 68 devoe Street went into contract pre Coronavirus, and closed just before we went into lockdown. It was the last 'traditional' closing that we did.

The buyers were living in northern Europe and executed the contract while still there. They then flew back to the US to close.

Keith
TBG

For last week, 1 luxury contract Manhattan, 4 Brooklyn.

Bad news continues to equal good news for stocks!?

Don't know what it went into contract for but the price arc looks familiar:
https://streeteasy.com/building/15-union-square-west-new_york/3b

Nice apt. Also known as unit #4:

https://streeteasy.com/sale/1403620

Current ask is 10% below purchase in early 2012. Looks to be cash investors from Vancouver.

Pretty spiffy and looks like windows that you can open are included!

Baby steps:

https://therealdeal.com/2020/05/11/luxury-home-contracts-reach-highest-levels-since-shutdown/

Only down 75% YOY.

Found this one through this week's Olshan report:
https://streeteasy.com/building/43-west-13-street-new_york/4

Not sure it will actually fall into the "luxury" category (over $4 million) when the actual price is revealed. But it is pretty sure to be prime(ish) Greenwich Village at under $900/SF.

I wonder how the buyer's of 15 Union Square West feel about their purchase after watching the news tonight?

Everyone buying in Soho as well.
https://www.nydailynews.com/new-york/ny-looting-manhattan-george-floyd-protests-20200531-utmgv53kxnduxob2xt2l55w7oy-story.html

From Gothamist in mid-April:

CB6 district manager Michael Racioppo said: "Boarded-up storefronts, as many businesses struggle to survive, further dampens commercial activity. Small businesses such as restaurants and bars that have had to adapt to a take-out and delivery model shouldn’t be further burdened by a streetscape that inaccurately suggests a crime-ridden present and dystopian future."

Inaccurately?

https://www.youtube.com/watch?v=NPr460uksB0

We were in Paris last year during les gilets jaunes and it was similar. A group swept through the 8th where we were staying and it was surreal to walk around afterwards and see the shattered windows of the high end stores. I was hoping to be dead by the time the next revolution materialized, but not sure I will be so lucky.

The gilets jaunes were far more professional. They brought goggles, gas masks, and tennis rackets (to return tear gas cannisters). They built barricades. They also didn't loot nearly as much as here. The smashed windows were banks, not the LVMH flagship. They avoided damaging small businesses. Here it seems people just want an excuse to steal whatever they can carey. The gilets jaunes got some major concessions. These NY protests, like those before them, will fade away with not much changing. But it's another reason to head to the suburbs, as with the '60s race riots.

*carry. Darn autocorrect.

@George: Your romanticized description of les gilets jaunes does not match what I personally witnessed. https://www.theguardian.com/world/2019/mar/16/gilets-jaunes-target-luxury-shops-restaurant-paris-protests

Torching Le Fouquet's was the last gasp of the protests in March and helped to turn people firmly against the protesters. Overall, the damage to the Champs-Elysees stores was mostly broken glass, lost revenue, and some news kiosks that were torched -- not rampant theft for personal gain, even though France has well-established criminal networks that make multi-million dollar heists with some regularity.

The big riot near the Arc de Triomphe was on Dec 1, 2018 and targeted banks and ATMs, along with torching cars for visual effect. Windows were broken, but stuff inside mostly was not, despite media desperate to sensationalize it. In contrast, looters in NY have been quoted as saying that stuff was stolen from them, so they're stealing back. That's not a political movement; it's just criminals. Political movements can endure; criminals go to jail.

Not to get too political, but I think it is fair to say that "stuff" was stolen from African Americans. Slavery was legal from what, 1619 - 1865? And that's not to even discuss everything that has occurred since that has been technically illegal, but to which the United States writ large has turned a blind eye. Were I African American, I am pretty sure I'd be angry every single day. As matters stand, I am angry most days, but I also have the luxury of tuning out the inconvenient truths so that I get some respite here and there.

MCR,
But an awful lot of the most violent, front line, window smashing, Molotov cocktail throwing, etc have been white. While both sides of the political spectrum are blaming the other side's fringe extreme (White Nationalist's, ANTIFA) I think you've just got too many people who feel disenfranchised by the system. They may want to blame different people, groups, ideologies, etc but they want to express their anger and feel they don't have much to lose so why not bring it all down. And I think this describes a lot of people not paying rent right now for a variety of reasons. And being bottled up inside their apartments for months wanting to go outside and expend some energy coupled with the nice weather isn't helping.

@30yrs - Agree. That is why I don’t see the unrest as overly distinguishable from les gilets jaunes. Current power structure (and I’m not talking about DJT - I am talking about all of my friends who are traditional fiscal conservatives) is happy to pit the various disenfranchised groups against each other. Note, I’m no Socialist, not by a long shot, but I do feel the gap between the haves and the have-nots has gotten too wide and is not sustainable.

I think too many are seeing "Fiscal Conservativism" as "Socialism for Corporations, Brutal Capitalism for Everyone Else."
https://www.jacobinmag.com/2020/03/corporate-bailout-2009-auto-workers-recession-coronavirus

And too many articles like this one about billionaires making billions while "regular people are starving" under Coronavirus.
https://www.foxbusiness.com/money/american-billionaires-richer-since-coronavirus-pandemic-began

NB this is regardless of any truth value of either of these arguments so no need to debunk them.

One thing is certain, and one doesn’t need news articles for support and that is that our democracy is in shambles.
America is burning and no one can pin the blame because that requires facts and evidence. This failure defines exactly who we are: a nation at war with itself led by a charlatan with a digital bullhorn in one hand and a flamethrower in the other.
Curfew starts tonight at 11 issued by Andrew Cuomo.

@30yrs - Exactly. And note that one of the articles you posted is from a publication with "jacobin" in its name, front and center.

@streetsmart - Curfew in DC is starting earlier tonight. 7pm. Glad I am perched atop a hill behind a gate.

@MCR,
Good to hear you are safe.

Trump just threatened military action.
Scary, hope this doesn’t become Tiananmen Square.