Bloomberg - No recovery for RE as speculators dominate sales

This sounds very Yogi Berra... nobody goes there anymore, its too crowded. There's no housing recovery, too many people are buying up properties and expecting prices to go up.

The key question is whether rents will hold up. If they don't, it makes sense to think investors will eventually dump properties that have negative cash flow.

More broadly, this trend suggests a further decline in home ownership. Despite the glorification of ownership, in the U.S., a swing toward renting isn't necessarily a bad thing. The two biggest drags on workforce mobility in America are probably real estate and health insurance.

West81st: I admit I didn't read the whole thing - didn't seem terribly useful - but look at the numbers in the last paragraph:

"In November he bought a three-bedroom house for $25,000 in Longwood, Florida, and hopes to rent it for $900 a month, about six times his $150 mortgage payment."

You honestly can't expect rents to go down so much that this becomes negative cash flow.

"You honestly can't expect rents to go down so much that this becomes negative cash flow."

tech_guy finally agrees with me: housing is overpriced when you can't make money renting.

Tech guy,
That's not why I posted it. Right now, people with NYC real estate are renting out invesment units and not even covering their monthly expenses. What this article shows is how over priced NYC is. I am in no way saying we're going down to $25k for a unit, but that there are better opportunities elsewhere at the moment. So what if a new construction unit drops from $2000k sqft to $1000 when you can make so much more elsewhere?
Logic (for me at least) dictates that if you want rental income properties, look elsewhere.

positivecarry: Is this news? Its been true for about a decade at least that some other area in some other part of the country will have more attractive investment properties, on a pure cash flow basis (or pure profit expectation basis, whatever measure you wish to use).

I don't know why people buy condos to rent in NYC. It doesn't make any sense to me. I'd much rather "rent to myself" tax free than have to pay taxes on the rent I receive from someone else.

With a roughly 75% coop market, though, explaining that investment speculators are looking elsewhere doesn't really mean much. They haven't had access to the bulk of our inventory all along, and they still don't. This is the best you can come up with for spreading doom and gloom? I'm feeling very reassured.

"I don't know why people buy condos to rent in NYC. It doesn't make any sense to me. I'd much rather "rent to myself" tax free than have to pay taxes on the rent I receive from someone else."

It worked great here in NYC until prices inflected in 2002-2003. I have a friend who rented a West Village studio she bought for $50k, intially for $1200/mo and over time as much as $1500-1600.

Renting to yourself is great, unless you are overcharging yourself on a pre-tax basis. The tax benefit is barely compensation for tying up your downpayment...Unless of course the property appreciates, or you shield yourself from rapidly rising rents, which brings us full circle. Buying a rental property isnt an alternative to owning your primary residence, its an alternative to other cash flow investments.

positive carry.....manhattan is 75% coop market, which means "no investors allowed". The other approx 25% condo market has a 20% down requirement for investors. So this means 2 things:
manhattan has:
(1) very small investor owners
(2) very small subprime loans- that is why manhattan foreclosures are almost non-existant

That is also why prices are holding up in the midst of this unprecedented media doom and gloom. The problematic fundamentals are just not there. Only small desperate sellers getting washed out as buyers wait to hear from the media that things are getting better.....

"tech_guy finally agrees with me"

I already know that you misinterpret everything around you. I don't need you continually giving me more and more evidence of this fact :)

SteveF, with the numbers of unsold developer held condo units, its about to become a much larger investor market. Those condo units may need to get cheap enough to make them attractive as buy and rent vehicles, which will be tough as rents will likely continue to fall.

"Buying a rental property isnt an alternative to owning your primary residence, its an alternative to other cash flow investments."

I know - I was showing how there are benefits to owner-occupied real estate that don't exist for investor-owned real estate. Or more directly, that talking about investors buying up cheap Florida homes really doesn't phase NYers any more than the price of tea in China.

If anything, it helps NYers - when nationwide housing stabilizes (and these investors are helping, not hurting as the article suggests Yogi Berra style) the nationwide economy will do better, and that helps Wall St.

Issue is, finance is a late cycle business. Only after businesses are doing well for a while do they want to raise money and expand. When housing stabilizes it will help everything. They ought to just let it fall low enough that investors get interested. The government just slows the inevitable and creates additional unforeseen problems in the process [see Greenspan, Alan].

Rhino: The article above is all about investors being very interested (and spinning that in a bad light). You seem to be talking past everybody else...

Well I guess the point above is, if "fast money" real estate investors don't get the quick pop they need, then they may give up quickly. Sort of like some of the people in NYC who bought in 2007, put a lot of renovations and now are trying to sell for what they paid, what they spend, and then some... A double dip is not out of the question...but I generally agree that the article above is overthinking. I don't know, but I would guess that people taking a shot on real estate on a national basis would be doing so with a longer time horizon rather than betting on a quick recovery. Like if I bought a condo in Miami tomorrow, it would be to use for 10 years and then maybe sell into the next strong market, then flip next year.

'rather' than flip next year.

The speculators will only sell if prices appreciate. If anything, according to this article, they will decelerate the upturn but soften the downturn, in effect reducing volatility. Doesn't seem like a big deal.

Tech guy,
Were you living here in 2000? It used to be a good place to have rentals as income. That's where we are going back to. I'm not "spreading doom and gloom". I'm simply posting articles I find interesting. I am by no means a housing bear. I'm a realist. After the bubble in NYC housing from 2002-2008, we're due for a pullback. To say otherwise is to ignore history. If you want to be in that camp, good luck to you.

"I am by no means a housing bear. I'm a realist."

Perhaps you shouldn't be accusing others of denial. "Realist" is also not a term I'd describe for someone incredibly bearish who denies being a bear.

Everyone hates a bear... I think positivecarry is saying that he doesn't expect real estate to recover any time soon. In a world where hope is the standard position, maybe that's bearish.

licc,
that's exactly what steiglitz is saying--they are softening the downturn (which is happening now) and will slow the upturn. in other words, the upturn will be slower and take longer than people might think because speculators will shed properties if prices start to rise. that's the point of the article, and yes, it is a big deal.

"In a world where hope is the standard position".....huh? I work in finance. Maybe you're a teacher, but I research trends. Should I have been "hoping" the economy didn't go to shit in 2008, or should I have moved most of my clients money to bonds? I'm glad I didn't listen to you. When it's time to be bullish on RE, I'll be there. Now is not that time.

I wasn't saying you should hope. I don't hope either. I was saying most people do, and the fact you don't is going to make people call you a bear... People like tech_guy read you saying real estate isn't going to recover any time soon, and essentially call your neutral position bearish.

that's the problem. Tech guy doesn't understand economics. When you see the worst holiday retail sales in 40 years, you have to be smart enough to know this is not the time to buy property. Then again, he bought when? Last year? Ha

What you also have to keep in mind is that if real estate values were not in line with incomes in 2007-2008, how far do the have to fall now that wall street has been taken over by uncle sam? The mean keeps sliding down, which indicates you'll keep chasing the market with your listing.

You mean incomes didn't triple in Manhattan from 1998 to 2008? Ha.

You work in finance and don't understand that "bear" means someone who says things like "this is not the time to buy property"? I didn't make a judgment call - its pretty plainly obvious that a bear is someone who predicts a bad outcome (regardless of why, regardless of right or wrong).

Then again, positivecarry, weren't you the one who didn't understand how mutual funds work? On another thread a few weeks back. Specifically, didn't understand (in fact, argued against) that a US mutual fund that exclusively buys foreign stocks would benefit from a tanking USD? Are you *sure* you work in finance? Perhaps you shouldn't be questioning my knowledge - this is a hobby for me, a profession for you, and I've shown I know it better than you.

Saying things are not going up any time soon is neutral, not bearish. Bearish would be saying you expect downside. The article above is basically neutral. It points out that specs are going to anchor the market in a sense.

Smartmoney this month notes that 4 out of 10 sales are foreclosure sales...

I think the bigger point is, inventories are up, and the few sales that there are aren't showing any sign of America getting comfortable with real estate...

In Manhattan, sales are down 75%. No matter who the buying is being done by, that there are 75% fewer of them is not a sign of good things to come.

Saying "buy now because it is down" is similar to saying "buy now" when 14k on the dow became 12k. Yes, its a "discount". But when it was only the beginning of a panic, it was certainly not the time to be doubling down.

When will that time be? Well, we have to shake out the weak first. We're nowhere near that, that has only started.

"What this article shows is how over priced NYC is"
"So what if a new construction unit drops from $2000k sqft to $1000"
"we're due for a pullback"
"this is not the time to buy property"
"how far do the have to fall now that wall street has been taken over by uncle sam?"

If you read positivecarry's messages as neutral, you're in just as much denial as he is.

This is indeed a hobby for you techguy, because while you're buying real estate in 2007, I'm shorting it via commercial reits. Getting anyone to agree with you is laughable. We both put our money where our mouth is. You went long, and lost. I took the other side of your trade, and am enjoying myself quite well. I'm not a bear, I'm a trader. A simpleton like you can't understand how that works.

As for your mutual fund comment, you've shown me nothing. You understand nothing about currency risk. It's not even worth discussing.

positivecarry: I don't delude myself into thinking I'll get you to agree with me. But its plainly obvious to any neutral reader of this thread that you're a bear in denial, and the farthest thing from a "realist". As for RE, I'm doing just fine. As for your investments, after hearing how little you know about mutual funds (and laughing about how you refuse to discuss it again now) I really don't think you can compete there either.

Have fun being made obsolete by ETFs. I hope you have another line of work lined up for you.

"Have fun being made obsolete by etf's".

Uhhhhh, who do you think trades them for clients? Brokers. Give clients all the tools you want, and the still won't know when to buy or sell. I'm not going anywhere.

Care to tell us what you paid per square foot for your place?

"Uhhhhh, who do you think trades them for clients?"

Discount online brokerages. For free.

"Give clients all the tools you want, and the still won't know when to buy or sell"

Neither does Wall St. The stats show 80% of actively traded mutual funds trail benchmark indexes. I'd bet the stat for less regulated entities like yourself shows even more failure. More and more people are realizing this, and instead grabbing target date retirement funds, or other index funds. With the Internet's maturity comes the free flow of information to all, including the information that people like you are obsolete.

Still waiting on the price per square foot....................

Keep waiting. I don't discuss my purchase anymore. Its always the exact same conversation. Here, I'll play it out for you to get it out of your system:

"Did you make a smart purchase?"
"Yes"
"Prove it"
"No"
"I don't believe you"
"I don't care"

Proving it would require me to reveal too much personal information. Besides, I honestly don't care what you think. You don't understand your own field - why would I trust your advice outside your field?

I'm not tring to give you advice, you can't afford me. I'm just asking for the price per square foot. I could care less about the purchase price. If you paid $400,000 for a 300 square foot studio, I think you're just as big of an idiot as someone who overpaid for 15CPW or the Plaza. If you're going to start a pissing match that I don't know what I'm talking about, then have the guts to back it up with your self described "hobby" price.

"If you're going to start a pissing match that I don't know what I'm talking about"

I don't get the correlation. If my psf was $2000 for a crappy studio in upper Harlem, do you suddenly become an expert in mutual funds? If I paid $100/sf for a penthouse in 15 CPW, do you suddenly become an idiot in mutual funds? Lets keep the discussion on topic - how little you know about mutual funds ;)

(Or, less snarkily, I'm done with this thread)

pc, try the ignore button.... I see you going back and forth and stating to what me seems the obvious....my motto, never argue with a drunk or a fool.

NYC,
I just find it hilarious that someone who says RE is his hobby won't say what his price per square foot is. You start to get an understanding as to why some people have the viewpoints they have. I profit from public perception, so why wouldn't I be bearish on real estate? I'm bearish on commodities, because of the global slowdown. That doesn't mean I won't be long after we bottom. Some people have used leverage to make their biggest concentration of wealth in real estate. Some of us haven't. I too would be bitter if I bought at whatever stupid price per sq/ft tech guy bought at, not understanding just how illiquid his purchase is. If only he had a stockbroker who could have shown him how out of range prices were relevant to incomes before he bought......

Not to incite a riot, but tech_guy was in college in 2000. And the 90s are like the lost decade. The real estate firms destroyed all evidence of it in the written and electronic record. When you can buy a luxury condo one bed for $500k and rent it for $3500

"If only he had a stockbroker who could have shown him how out of range prices were relevant to incomes before he bought......"

"And the 90s are like the lost decade. The real estate firms destroyed all evidence of it in the written and electronic record"

You guys can't possibly be so stupid as to think this data is gone, or unobtainable by anyone other than stock brokers. Miller Samuel has a ton. Here's a lovely bit that I used quite a bit before coming to my conclusion - from 2004, but I used it for historical perspective (it goes to the 80's, which I think is key to understanding the 90's):

http://www.millersamuel.com/research/gallery-view.php?ViewNode=1096034424rIMRe

"so why wouldn't I be bearish on real estate?" "I am by no means a housing bear"

Thanks for contradicting yourself (and proving me right) in such a short span of time.

Wow, calm down. Just because you're not funny doesn't mean you need to scream at me.

Why do you keep talking? Your monthly after tax payment is equal to rent (by your own admission), you have nothing but downside. The question isn't why wouldn't anyone buy in order to have a payment equal to rent...its why would anyone ever pay more. And rents are falling. One beds suck as an investment to begin with and you bought one at the top.

Why do you keep logging in to defend what has been proven in a mere two months as a bad investment. Hell if I bought something in 2008, I wouldn't log in here and defend it. I would say to myself, wow that was a mistake, hopefullly I can stay here for a long while or eat my loss on an upgrade to a bigger place down the line. I wouldn't introduce a bunch of shitty math to defend a poor emotional decision.

If the data was there all along, then why didn't you use reason when you bought? Then again, how would we know, since you won't man up?

His reason was that buying bought him a payment = to rent. He believes this will limit his downside, because he denies that buyers have ever demanded deep discounts to rent. This is the basis of my sarcasm to him about the 1990s, which he denies are relevant. In the end we basically know he paid around $1000/ft for a one bed coop....Call it $700k for a 700ft place that would rent for $4000.... Actually maybe he paid more because he has said he paid 18x rent...but he has a weird way of calcing it.

"Why do you keep logging in to defend what has been proven in a mere two months as a bad investment. Hell if I bought something in 2008, I wouldn't log in here and defend it. I would say to myself, wow that was a mistake, hopefullly I can stay here for a long while or eat my loss on an upgrade to a bigger place down the line. I wouldn't introduce a bunch of shitty math to defend a poor emotional decision."

The psychology of finance studies pretty clearly show that people will spend more time rationalizing bad decisions than avoiding them.

If folks who didn't feel good about their purchases kept it to themselves, there would be no curbed and this board would be dead..

I'm a trader...so I have no real patience for when investors buy something, it goes down, and it is called anything other than an error. Steve, the hardliner of real estate, does the same with his miserable purchase of emerging market stocks. Psychology also says people don't have to be rational in the application of their logic...

Rhino: I enjoy the freedom of ownership. I do plan to upgrade in a few years and can easily eat a loss to buy bigger at a cheaper rate - I didn't stretch at all. When my broker saw my coop package, she told me I should have bought a 2 bedroom now. I'm also insulated against strong inflation (via a low fixed rate mortgage) which a lot of people worry will come of the economic mess. Plenty of positives.

positivecarry: I used plenty of reason. Read the report above - it even mentions and graphs average Manhattan incomes to property values. Your "reason", in prior threads, led you to believe the USD was going to become literally worthless. That banks will refuse to exchange any amount of USD for Euros or Pounds. If you're judging me based on that "reason", I'm proud to be a failure in your eyes.

"When my broker saw my coop package, she told me I should have bought a 2 bedroom now."

Why would you even write this? Just because you could afford more doesn't make your purchase wise. The fact we are down 15-20% makes it definitionally unwise. And the idea that your one bed has held better than larger apartments is just denial.

"I'm a trader...so I have no real patience for when investors buy something, it goes down, and it is called anything other than an error. Steve, the hardliner of real estate, does the same with his miserable purchase of emerging market stocks. Psychology also says people don't have to be rational in the application of their logic..."

Absolutely.

My favorite rationalization for mistakes is "long term". 'Yes, I took a 50% loss, but I'll compound it with a 1% nominal return for 25 years and call it breakeven... because I'm in it for the long term"

nice! i want home prices crashing and rents also falling. this is finally pay back time for renters :-)

An investment is just a trade that hasn't worked yet.

Also, I said my after tax payments are *cheaper* than renting. Not by a huge percentage, but its cheaper. Part of that pays down principal, making the effective cost even cheaper. Its only equal when you consider 8% lost opportunity cost on the down payment. Realistically, however (due to blind luck) I sold a lot of stock within 5% of the all-time high to get that down payment. I'm not upset about the opportunity "lost" by my down payment.

Here I go talking about my personal purchase again. Let me finish the conversation:

"Prove it"
"No"
"I don't believe you"
"I don't care"

Yes you sold stock, you avoided a 30% decline. Now your downpayment is worthless to negative. You are now a graduate of the school of leverage. Your major is denial.

tech_guy you are "over water" now, but as rents go down your investment will be "under water", right?

as long as you don't have to cash in though you are just fine, as Rhino says, ... it's about timing

Denial? What do you call saying a 15-20% decline is fact, when the published statistics show a <4% decline?

He's actually not fine. He has what is likely a permenant capital loss because lifestyle will likely demand that he sell under his cost basis.

> An investment is just a trade that hasn't worked yet.

lol

Problem is, that covers most trading.

And his piddly monthly savings can't hope to overcome the capital loss.

And how is his downpayment worth anything unless it was more than 25%.

> And his piddly monthly savings can't hope to overcome the capital loss.

x 10

admin: Yes, if rents go down substantially, I will have made a bad choice to buy. That may very well happen, and plenty of news articles like to spin it as if this is already fact... but there too, the published statistics show about a 5% decline.

I disagree that as long as I don't have to sell, it hasn't lost value. That's not true (it just means I won't be forced to sell low - doesn't change the fact that it is low). If Miller Samuel numbers show a 20% YoY decline in resale price per sqft in Q1 or Q2 (or any quarter, but those are the ones the bears say will be bad - its always 1 quarter away, it seems) I will very readily admit I made a mistake. The numbers aren't there yet, and I still don't believe they will get there. Only time will tell.

Tech_guy, how do you respond when a guy like Noah from Urbandigs tells you his best assessment is the leading edge market is down 15-20%? I mean if you need to see it in print so be it, but the whole world of investing is about imperfect information.

back to the original point.... I think this anecdote gives a hint of the truth in the original assertion, that the speculators will drag this decline out for a while, and slow any recovery that might happen in a few years...

http://www.nypost.com/seven/01082009/realestate/plan_b__rent_149134.htm

to tech_guy about denial,

in RE it's key to keep in mind indicators always have a lag, that will help you understand why you see a 4% down while people already talk about a 20% down, from the report:

"Sales contract activity showed evidence of a decline in activity of 40% to 75% compared to the same period last year. Contract price levels showed an average decline of 20% from August 2008. As a result of the 45-60 day lag between contract and closing date, a decline is anticipated in both the number of sales and closing price levels in the first quarter of 2009…"

I love it that tech_guy didn't read far enough into the report to see that paragraph. Classic.

anyway, i think you are about to notice how bad a transaction (financially) you are in. i would only consider it a "sentimental" transaction from now on if i were you, that's the only way to make sense of it from now on. things are getting uglier by the day.

Admin are you the admin or is that just a witty handle?

Tech guy,
Why do you bring up my position on the dollar when we're talking about real estate? You're fighting so hard to defend a purchase of a couple hundred thousand. I'm putting tens of millions of dollars on the line with my view. Who do you think is doing more research?

As for the direction of rents, go look at 95 wall street and their offer of 3 MONTHS of free rent.

tech_guy, I don't know much about your investment, but it's a bit pathetic to see several other people on here waste so much typing on trying to beat down you and your investment. This personal stuff is just not necessary.

He won't admit that because free rent doesnt show up in the rent statistics.

Rhino: I don't trust any real estate broker, and noah/urbandigs is no exception. Wasn't he talking about giving up being a broker in the traditional sense, and instead doing "a la cart" negotiating for buyers, paid for directly by buyers regardless of purchase price? In other words, the only broker who has a vested interest in price declines is talking about price declines, while every other broker is more optimistic. Shocking.

Nope, I distrust the whole profession, both the bulls and the bears.

Ok, so just enjoy the idea that the market is only off 4% while you can.

I think tech_guy is a bull because he has to justify his investment or at least hope, it won't tank. In which case, he is on major denial and people are trying to open up his eyes from wishful thinking. That's my take. If you're a bull cuz you've got vested interest to protect, then I don't think you've got objective views. And his investment will always come up because that's obviously why he's arguing.

cleanslate: I try not to involve my personal purchase, but people opposed to me keep bringing it up. Its natural for those without a leg to stand on to resort to ad hominem. If values tank and in 5 years I can buy much bigger for much cheaper, I'll be very happy. That's probably the best outcome for me in the very long term. Unless you think it'll tank even more and never recover, in which case why are you still living in a city you believe is going to hell?

I'm just here because I like debating, and the actual news doesn't paint nearly as bleak a picture as the bears make it seem. Its a great position to debate from. I never joined in to the bullish debates a year ago because circle jerks (like you see above from the bears, and you add to yourself) don't interest me.

rhino,
to say that an investment is a trade that hasn't worked yet is absolutely ridiculous. i agree with a lot of what you write, but that is the craziest thing i have seen in a long time. it's fine that you have a trader's mentality, but to raise your way of making money to the status of the only way is myopic in the extreme. there are all kinds of investments that are never intended to be trades at all. that's not to say that i would not sell some of my long-term investments at a price, but the purpose of the long-term investment is often not to sell it but to make money by holding it.

i also totally disagree that any investment that goes temporarily under water was obviously a bad investment. the market is unpredictable over the short term. the point is to always buy securities (or anything else, for that matter) that represents a good value. if i buy coca cola at 10x earnings because i believe it should be worth 20x earnings, why should i care if it declines to 5x earnings. in fact, i'd LIKE it to decline to 5x earnings so i can buy more.

i agree with you about tech_guys apartment, and i basically agree about nyc real estate. but to dismiss all investing as some sort of failed trading strategy is just not accurate.

I exagerrate for effect. However, this statement "in fact, i'd LIKE it to decline to 5x earnings so i can buy more." is total bullshit... Averaging down is bullshit. Mental capital is precious.

So you meant you did not join last year before you purchased your investment? You joined afterwards? That makes sense actually. :) It even makes more sense to argue more about it when all the indicators are down. At least, you got reasons to be bullish (albeit a personal one), and not just because you wanna debate and oppose people for the heck of it (cuz that's pathetic and untrue). In the end, we know why you are arguing...and it has nothing to do with facts or stats. It has to do with your investment, which would always come up in any discussion because that's the main reason you are arguing.

I'm here cuz my family is here and my job is here, and I could care less if it goes to hell cuz I'd still wanna be here. I hope someday I get to retire to French Riviera. Maybe I should just save for it than throw it in the NYC RE, don't ya think?

Out of curiosity -- when do you think is the best time to buy NYC RE? Would it be wise to buy now?

> Ok, so just enjoy the idea that the market is only off 4% while you can.

Except even that one isn't true... that analysis is YoY, so its comparing to pre peak. The same report notes the market is down double digits from peak, even factoring in the old higher contracts closing now...

"i also totally disagree that any investment that goes temporarily under water was obviously a bad investment. the market is unpredictable over the short term. the point is to always buy securities (or anything else, for that matter) that represents a good value."

Exactly what I was trying to explain to stevejhx the other day - thanks for wording it better than I did. The point he was trying to make was that you only buy if rental income >= carrying costs at the moment of purchase, but in reality, you don't care so much about the moment of purchase as you do about the expected differential. If rents sink, it's no longer looking so good, and vice versa.

"i also totally disagree that any investment that goes temporarily under water was obviously a bad investment. the market is unpredictable over the short term."

I think buying at the peak is a totally bad investment no matter how you slice and dice it.

rhino you can call it bullshit if you want, but i can think of several examples of just that off the top of my head--this is from my personal investing before i got my fund so i don't mind sharing the example:

progressive insurance, which i first bought in 99 for today's value of about $7 per share. it promptly crashed and i tripled my position for an average of 4.75 per share later that year. then i sold the whole thing for around $25 per share in '05. and guess what? right after i sold it shot up over $30. a trading mentality would say i did terribly: i bought right before a decline, and i sold right before a price increase. but from an investing standpoint i did beautifully. why should i care if the stock price declined while i owned it or rose after i sold it? i made money by buying when i thought it was a buy and selling when i thought it was a sell. am i glad that the stock declined to 4.50 after i bought my initial stake? of course i am glad! i am thrilled! it let me make way more money.

and today the stock trades around $14 a share.

cleanslate,

of course buying at the peak is a bad investment--by definition, if it is a 'peak,' that means it is going down. that has nothing to do with the question of whether investing is just poor trading.

bjw,

i would agree with you, of course, except that you provide no evidence to support the claim that rents will be going up, or how much they will be going up. sure, if you know that rents will be more than carrying costs next year by all means buy regardless of current rents. but in fact you do not know.

happyrenter, was not my aim to talk about what rents will actually do. My point was, if you feel confident rents will increase over the next few years, and you acquire a property where you're underwater, it's not a bad investment (provided the net after x years is positive). Is this easy to do? No, but it's not impossible. Likewise, if you feel rents will be decreasing, and you're getting close to equilibrium on carrying and rents, you may feel inclined to sell.

"if you feel confident rents will increase over the next few years, and you acquire a property where you're underwater, it's not a bad investment (provided the net after x years is positive"

I don't agree at all, not if you properly define "investment".

Buy a stock with a dividend. You get 2%, great. There is a postive cash flow, and you get a definite benefit to it, great.

Then the stock cuts in half. You get the same benefit, the dividend, great.

But you can't call the first purchase anything but a bad investment, no matter how long term you look. You get the same "benefit" in both cases, but you get a MUCH bigger return in the latter case, and you have an actual loss in your portfolio in the first case.

Yes, great that you still collect a dividend in scenario A, but that doesn't change the fact that you have a loss... and a lousy investment.

nyc10022 you misunderstood his example. read it again.

something is not automatically a bad investment if it temporarily decreases in value. i've bought plenty of stocks that declined in value only to rise again and turn out to be very profitable investments. if you buy based on value rather than on speculation you shouldn't really care about short-term market fluctuations.

cleanslate: "So you meant you did not join last year before you purchased your investment? You joined afterwards?"

I know you're smart enough to understand "not posting" is different from "not join[ing]". Which means you're intentionally misinterpreting what I say. Not the M.O. of someone who believes their arguments are correct.

Dude, let's get to the point.

"I'm just here because I like debating"

Kinda pathetic and silly to argue for the sake of argument...but we know there's more to your argument than you wanting a debate. And forget coming off as being objective with a line like that.

"I try not to involve my personal purchase, but people opposed to me keep bringing it up."

I'd say it a fair game because the main reason why you are arguing is because you have an investment to protect, so you should not cry foul if people bring that up. Unless you're just a whiner. :)

"something is not automatically a bad investment if it temporarily decreases in value. i've bought plenty of stocks that declined in value only to rise again and turn out to be very profitable investments. if you buy based on value rather than on speculation you shouldn't really care about short-term market fluctuations."

True... but does anyone actually think there will be a positive real return after 10 years on peak prices?

Thats quite a huge assumption, and to me a completely unlikely one...

"I'd say it a fair game because the main reason why you are arguing is because you have an investment to protect, so you should not cry foul if people bring that up"

My main goal is actually to learn information, and to debate. But, if you're going to split hairs, *everybody* here has a vested interest in Manhattan real estate - either current, or wishing to buy soon. Either that, or they're just plain stupid for wasting their time discussing something they don't actually care about.

So your point is that I want real estate to go up, and you want real estate to go down, but I'm biased and your not? I know I'm sounding like a broken record, but your argument is really pathetic. Don't you have anything substantial to use? Is ad hominem really the best you've got?

No, I think you're overlooking facts for someone looking for information and you still think your investment is sound which is debatable but you won't debate it. This is coming from a guy who sounds like he likes to debate anything under the sun. I'm just pointing out why talking about your investment should be out of the argument when I think it should be a fair game.

You wanna call me out? Fine. I sure as hell won't be denying facts when they come...which I think is the big difference here. You tend to overlook them for your own benefits or for the sake of your argument (whatever your poor excuse is), I don't. If one day, things become peachy, and I missed the boat, I won't be here arguing things are looking down. I'd be admitting that fact, not denying it. Geez!

Obviously everyone has some sort of agenda, why else waste this much time on a freaking message board.

The only real difference is whether or not folks are attempting to hide the facts or not.

There will be glee, there will be bitterness, there will be acrimony. But it gets awful clear who is in denial...

"I'm just pointing out why talking about your investment should be out of the argument when I think it should be a fair game."

If there was a way to debate it without revealing personally identifiable information, I'd happily do it. But there isn't, and my privacy is more important to me. You don't have to like that choice - you've already shown that you're only interested in ad hominem, not facts, so I really couldn't possibly care less what you think.

"You tend to overlook them for your own benefits"

Overlook what? Data shows 3.6% down. Warnings of 20% down that don't give any substantial information - condos, coops, resales, new sales, at the extreme or at the average. You prefer the 20% number despite the obvious flaws, I prefer the 3.6%.

You prefer 3.6% yet in the very same report they discuss the fact that prices are down 15-20% vs peak.

Rhino, did you stop reading at exactly "3.6"? Exactly 3 words later I mention the 20% comment. This is so ridiculous its comical.

Yes, I read that you dismiss the 20% even though it came from the same source as that 3.6%. That is what's comical. You prefer to imagine that prices have fallen 20% even though you embrace the 3.6% that comes from the same author. What's not comical?

Rhino: If Q1 numbers come out and do not show a YoY decline of 20% or more, will you admit that you're wrong?

tech_guy, so you're obviously overlooking the other data and doing selective reading for a guy who supposedly wants to learn information? This is pointless if you cannot even fully understand the articles. You're obviously reading articles and then dismissing the points that do not agree with you and even openly admitting it. I'm astounded you did not dismiss that 3.6% down either. You chose instead the lesser of two evils, but they're both evils nonetheless. This must be the way you ended up buying at the peak, right? At the least, you should acknowledge all data.

Dude, you know what you're doing? It's not called gathering and learning information, nor are you even properly debating, you're basically cherry picking. You should know the difference, and quit pretending and denying. GEEZ!

Yes, but call it 15%...I have said 15-20%. 20% if we isolate one beds and studios.

"Sales contract activity showed evidence of a decline in activity of 40% to 75% compared to the same period last year. Contract price levels showed an average decline of 20% from August 2008. As a result of the 45-60 day lag between contract and closing date, a decline is anticipated in both the number of sales and closing price levels in the first quarter of 2009…"

"Sales contract activity showed evidence of a decline in activity of 40% to 75% compared to the same period last year. Contract price levels showed an average decline of 20% from August 2008. As a result of the 45-60 day lag between contract and closing date, a decline is anticipated in both the number of sales and closing price levels in the first quarter of 2009…"

"Sales contract activity showed evidence of a decline in activity of 40% to 75% compared to the same period last year. Contract price levels showed an average decline of 20% from August 2008. As a result of the 45-60 day lag between contract and closing date, a decline is anticipated in both the number of sales and closing price levels in the first quarter of 2009…"

"Sales contract activity showed evidence of a decline in activity of 40% to 75% compared to the same period last year. Contract price levels showed an average decline of 20% from August 2008. As a result of the 45-60 day lag between contract and closing date, a decline is anticipated in both the number of sales and closing price levels in the first quarter of 2009…"