Why Sell Now?

there are tons of reasons people sell: re-locating, upgrading, downsizing, death, divorce, disease, retirement, etc. The same reasons peope sold 5 years ago still apply today.

Upgrade upgrade, let me upgrade

Why would you not sell now? We are only six months into a downturn. The analogy is why sell the S&P 500 during the week Lehman went bankrupt because it was already down 20-25%. Reasons (1) you believe in momentum, (2) you have to, (3) you think 20% off is followed by another 30% off, (4) you think after the 30% off it might take 5-6 years just to get back to the current level of the market, (5) lost your job and the rent/own math just got miserable on you.

Thanks, guys.

So, if I don't have to buy now, better to wait another year?

Do you see something that you love and works for you? You financially stable? You expect to stay there 5+ years?

dwell - I am waiting. I don't have a crystal ball, but I think the chances of prices going UP in the next 1-2 years are very very small, and the chances of prices going down are substantial. So my upside in waiting is a whole lot greater than my downside.

Ignore UWSer. When things are still relatively expensive and down 20% from a historic peak is not the time to consider buying. Momentum is very powerful. These condo developers are going to need to do something drastic and you don't want to be ahead of that.

i'm in the UES "unzoned school district" (former PS 151), on 87th/2nd. For the past few years, despite the chaos with the DOE, at least we had hope to get lotteried into PS6/290/158/183. Of course you can get really unlucky and get sent to PS 198. I'm in a rush to sell now because, ironically, we're expecting to get a new school. Here's the catch: the so called "school" starting this september will be 3 kindergarten classroom rented from a middleschool basement, and there will be a co-ed toilet with 1 boy & 1 girl stalls. Then the following 2 yrs will be relocated to another rental site. Then on the 4th year will be relocated again. With such school rezoing arrangement, I'm sure my coop's value will fall, so i think it's best i sell now.

Thanks, guys. Yes, I'll wait. 20% below the bubble price is overpaying. I see Tromiloco started a thread about initial asks are starting to appear at 2004 levels & W81 confirms that (so ya know it's true!)

jmarrk: sorry to hear about the weird school situation. I don't blame you for wanting out.

I know a few first time own buyers, they are bidding on their first properties. These are guys that have lived with their parents for 30+ years of their lives because they refuse to rent. This is the first time when they feel that they can can afford to own. Renting is just not an option in their heads. There are buyers out there, there is a floor to every market.

None of these negative people say there are no buyers or that lower rates and lower prices do not add to the population of interested buyers. They think such a higher figure is still not enough to soak up excess supply, so prices keep sliding.

Craberry, can people who have lived at home for 30 years get loans? There will always be the emotional people who think paying interest to a bank and maintenance to a coop is somehow different than 'throwing money away on rent'. I can tell you their cranky Italian father understands that if you couldn't buy an apartment, rent it out, pay the maintenance and make a decent cash income on the investment then it is not a good investment. That cash return at current asks is probably 3%. That is for a coop (which you might not be able to rent - but it is a frame of reference). For condos, its even less. And this assume 100% occupancy. I don't see how there is a bull/bear debate now that momentum has turned.

of course i agree. its not about bulls and bears. its about sheep and wolves.

why sell now when most buyers are still waiting? b/c they have to. That is why savvy buyers are picking up bargains right now. Soon the "have to sellers" will be picked clean. What's left is stable homeowners who will wait until transactions are back to normal to sell.

All Buyers can stay put forever, some sellers can't.

Savvy buyers are picking up bargains? Bargains like buying the stock market down 25% on its way down to down 60%. There is no rational way to call these levels value.

tell us about what back to normal looks like.

Rhino, agree that there is no longer a classic bull/bear debate because even the former bulls no longer have the word "up" in their vocabulary. The bull case seems to have evolved to taking the "the market is only down 20%" end of the discussion (i.e., denial at a lower level than the previous "the market is not down" denial), while the bears take down 30% or whatever. Even more amusingly, the floor seems to have given way under the bull assertion, vintage Sept 08 to March 09, that wherever we are it's the bottom. Their new and improved knee-jerk reaction is whatever the bears say, it won't be as bad as that. When bullish comes to mean drawing lines in the sand down 20% from today and saying that it can't go lower, you know the debate is over.

Columbia said it best. What is 'normal'. It certainly wasn't prices going up five-fold in ten years. I don't know where to get the data, but I think maybe the best idea of 'normal' might be taking a composite of major cities (Boston, San Fran, Chicago) and seeing what the normal ratio of NYC price to those cities' price is. That would give me a sense of normal. I mean we all know now that the finance industry was a monster and NYC values flew with it. I think normal really is someone other than an ibanker saving money and buying an apartment. Normal is probably values in the 12x rent range. But rents are falling so maybe its 10x peak rents. I'd really like to know from bulls what is so unnatural about nice $600k two bedroom apartments that will have still doubled in 10 years.

go ahead waverly/uppereast: tell us. merely a blip...nothing can stop the march of banking geniuses on their way up.

I think the speed of the descent is sort of difficult to manage. We're always behind with some of the data, and it's pretty remarkable (although not altogether unforeseeable) that it seems to be happening so quickly, although that is typical of the Manhattan market. I've been a bear for years (lots of practice!!), and this still takes my breath away.

SteveF, don't you have a tanning salon appointment?

"2007 prices" LMMFAO

As bearish as I am... I guess no one really knows how many people think like SteveF vs. rationally. Maybe there are enough confident, flush sideline sitters to absorb all this supply. I doubt it highly, but its impossible to know. I do think its funny that SteveF claims the only reason buyers wait is because they have to...As if no one is viewing this from a value perspective, or even a momentum perspective. Its like saying 'everyone who can, will buy'.

These threads are becoming so unpleasant. I've posted a couple of days ago that I bid on 2 apartments but got outbid. This obviously means that I was bidding relatively low. But just because I think that banking will do better over the next year or so, people such as cc make me a bull and keep relentlessy posting crap about banker. And how come cc never says what he/she is doing for aiving.

I think there are quite a few people who consider themselves prepared to buy. I wonder what they'll think as this gets increasingly picked up by the MSM, though.

Well bidding kind of makes you a bull no? You can buy because the carry costs are much lower than rent, or because you think values are going up. Carrying costs are not yet lower than rent. So my guess is you think this is a good entry point. I don't think anyone is bashing bankers per se. Its just pretty accepted that banking incomes set the prices of Manhattan apartments post 2002 or so. In this way, the crux of the debate is what buyers can fill the income and employment void bankers have left during this malaise, and at what price point will they step in.

carnegie, the reason why these bears are getting nasty and always posting is because they are fighting the feeling that maybe the world is passing them by.

Ohh not jerkstore though he's just an idiot.

Every new piece of price data is worse. What is passing bears by? The world you thought was normal is passing you by.

rhino86, as I said I got outbid. I run the math and feel comfortable that the numbers are similar to renting. At least, this is where I bid and obviously didn't get hit on it yet.

Rhino, the equity markets are recovering, banks are making record profits, unemployement has stabilized, interest rates are sub 5%, apt transaction activity is picking up. Our only concern at the moment are the credit markets. But they are slowly improving.

btw..what happened to the "depression" talk. That was all over the news 2-3 months ago?

See the chart in this posting. NYC has ways to go.

http://www.vitaltrends.info/economy/housing-crisis-still-not-over.html

I'm not good at picking bottoms and neither is anyone else, but I know from personal experience people that wait and wait tend to wait forever anyway. Personally I'm a renter, and will be a renter for a long time to come because owning does not make sense for own personal situation. I have friends that have lived at home with their parents forever, and I'm really happy for them if a 25% drop in real estate gets them out of the nest. They all make decent salaries but hate the idea of paying someone else's mortgage. Three years ago everyone was saying what a waste of money rent is, now everyone is saying the opposite.

I don't know where prices are going, but from talking to people everyone loves to overpay for stuff. Everyone loved Google stock at $700, but now that is half that they hate it. Same goes for real estate, everyone loved real estate when a studio cost a million dollars, now they hate it. Seems ironic is all.

Also, cc keeps insulting people. His/her posts are way out of line and he/she seems to be on at all times of the day. Funny that he/she never discloses what he/she does for a living.

ya know why I post. yes I own investment condos that i obviously want to increase in value. But it's because of you self-absorbed little wannabees who are hoping for most of the world to experience misery so you can buy your little Manhattan apt. Why don't you upside down f-ckups join the human race and promote prosperity....or let others prosper and stfu. Enjoy.

I think that is my best post ever. The bears must be flaming those keyboards or re-evaluating their existence.

I guess the bears decided to take my advice and stfu. have a nice day.

steveF
16 minutes ago
Rhino, the equity markets are recovering, banks are making record profits, unemployement has stabilized

Are you out of your mind, SteveF?
Unemployement is actually worth that the Dpt of Labor was expecting.
http://news.yahoo.com/s/ap/20090423/ap_on_bi_ge/us_economy

LOL the banks are making record profits.

"Well bidding kind of makes you a bull no?"

I don't see how you can equate the two without knowing what the bids are.

SteveF you're funny. There is nothing about being a value investor that precludes you from being a member of the human race. Its not misery either to expect price to rent and price to income ratios to NORMALIZE. I don't think I can address you any longer after the statement that banks are making record profits.

Craberry you can say everyone hates real estate, but for the hundredth time that is like saying everyone hated the stock market when the S&P was 1200, down from 1550.

bjw2103, carnegie is saying they bid at rental equivalent price. That is bullish. Only after you are bidding at a price that saves you money monthly can you say someone isn't necessarily making a judgment of appreciation.

rhino86, yet again you distort what I said. I used the word similar. Didn't say whether I came in below or above.

This is bullish for Manhattan ->

Financial sector employment fell 43,000 in March,
representing the 15th consecutive month of decline and from the late 2006 peak,
the industry has shed nearly 500,000 jobs. The NYT article said that “even at Ivy
league universities, Wall Street recruitment has been halved”.

Yet again? I don't remember the other time. You said the numbers are similar to renting. Doesn't this by definition mean that you think its going to appreciate? Otherwise, 'similar' would favor renting, would it not? Your down payment needs to make a return right? Unless its emotional, which doesn't really bear any debate on a board. I just think in a falling market a buyer ought to expect/want better than 'similar'. But if its an emotional thing for you then god bless and good luck. I look at the momentum in place and I'd want a margin of safety, in other words, a monthly dividend of savings to mitigate further declines over my holding period. This is different than in a period of rising prices and rents, where it could feel (rightly or wrongly) like the safety is in buying.

Everyone has made good points. I partic like this from Rhino:
"Its just pretty accepted that banking incomes set the prices of Manhattan apartments post 2002 or so. In this way, the crux of the debate is what buyers can fill the income and employment void bankers have left during this malaise, and at what price point will they step in."

Carnegie: There’s a discussion about the Beresford in which people thought an apt would sell for around $4m, but, seems it’s in contract for closer to $6m:
http://www.streeteasy.com/nyc/talk/discussion/7161-the-beresford-apt-3ecould-be-a-bellweather-for-cpw?last_page=true

Here’s a hypothetical situation which prompted me to post:
2007-2008 bubble ask price: $1 mil
4-09 ask price: $850K
2002 original purchase price: $650K

Question: in view of these #s, at what price would you buy in 2009?

I'm selling. Personal timing. We want to leave our nice family apartment on the UWS (our youngest went to college) and move to a loft in Williamsburg. Unfortunately last summer when we made the decision, we were advised to wait until fall. If we can't make enough to do what we want, we can't... but since we bought in '91, maybe we can.

Columbiacounty: I love your comment, "its not about bulls and bears. its about sheep and wolves." With your permission, I will steal it.

trinity: yes, since you bought in '91, I think you'll make it. You can probly pick something up in Wburg for a song. I'm curious: Why Wburg?

I also like cc's sheep/wolves comment.

Found a real life example of what I'm talking about:
12/03/2004 Previous Sale recorded for $970,000.
10/24/2007 Previously Listed in StreetEasy, already in contract, by Prudential Elliman at $1,299,000.
12/21/2007 Previous Sale recorded for $1,299,000.
04/24/2008 Prudential Elliman Listing sold.
02/18/2009 Listed in StreetEasy by Prudential Elliman at $1,299,000.
02/23/2009 Price increased by 6% to $1,375,000.
03/06/2009 Price decreased by 6% to $1,299,000.

At what price would you buy this in 2009?

Rhino, how does buying at rental equivalent pricing make someone bullish? I just think it's a bit silly to use these black and white terms. Buying at rental equivalent is exactly what someone like stevejhx's been proposing for well over a year now, and I don't think anyone would call him a bull.

trinityparent, I also made the move from the UWS to Williamsburg (with a stop in Nolita though). Everyone's got different tastes, but I think you'll enjoy it. The only thing I truly miss is the Park, which is irreplaceable, and some of the people. Even the Fairway (in Red Hook, so you do have to have a car) is there, and less insane at that.

steveF, you're a testy little bull, aren't you?

Dwell, the way I would look at it is this. You pretend you are paying all cash. Then you subtract the maintenance from the cost of renting an equivalent apartment. You take that difference times 12 months. You figure out what return you should earn. I have played with numbers from 6 to 10%. Say its 6% to give you the highest price. My guess is $1mm bubble price is like a $4500 rental, with a $1600 or so maintenance... That gets me to about $600k. I don't see why I would except anything less than 6%. I mean you can play with any number you want. That $600k also gets you to 10-11x rent, which is not a historically low ratio at all.

Bjw, its bullish not to expect an income return on your money...Its tantamount to saying appreciation is your only reward and you are satisfied with that.

Rhino, I see what you're saying, but you're assuming a few things there. I do think rents will tick back up at some point. I haven't checked how good the data are, but there was a report linked at Curbed that showed Manhattan rental prices stabilizing after a year (!) of declines. Is it still bullish if you don't expect an immediate return on your money? That was my point - things aren't quite so clear-cut.

I don't know what the data say right now, but I doubt an uptick in rents is sustainable. The incoming class of finance analysts and associates is going to be smaller than usual. Yes, I think it is relatively bullish to need to factor in a future increase in rents to make it worthwhile. I think prior cycle lows were formed when buyers demanded a pretty big margin of safety in their monthly payment vs. renting. I can see how people would rather own than rent at the same monthly cost. It feels good. And I have even considered it... But that was went prices and rents were rising. I am saying the fact you're debating that Carnegie is taking a bullish position tells me that the average person is still not factoring in downside risk to their down payment. This seems so plain to me. Prices have been falling for six months...they had been going up conservatively what - for 15 years? When did they bottom, 1993? How long did that take? Four years? I'll buy when its difficult to find people taking the other side of this argument...

Dwell - we both lived in the Village before we got married and swore we'd move back there once the kids were grown. They're grown, but the Village we left is not there any more. It's in Wburg. Street life and quirky retail/restaurants/art/bars.

bjw2103 -- yes, we didn't care about the park when we were young and single. As I recall I don't think I had a pair of shoes with less than 3" heels.

yo carnegie: I don't keep insulting people, i keep insulting you. i'm not posting crap about bankers...I'm saying that the banks have gotten us into this mess and continue to spout BS about the real situation. you're choosing to defend them.

cc, so you know the real situation in banking? What makes you an expert?

do you dispute that faulty lending and inappropriate leverage were not major factors in causing our current financial problems?

were you in agreement with the move to 30 to 1 leverage of the major investment banks? i personally wouldn't even consider buying stocks on margin so I couldn't imagine taking those kinds of risks with other people's money.

I hear ya, Rhino. Got to figure in the monthlies, it's not just a matter of the purchase price.

Thanks, trinity. I see what you mean.

cc: what is the real situation with the banks?

i believe this was originally posted by aboutready:

http://www.pbs.org/moyers/journal/04032009/watch.html

it's a half hr. highly recommend ... don't just watch 10 minutes and figure that you got it. watch the whole damn thing and then you tell me what you think. unless you believe that bill moyers is another crazy wacko.

On the banks - my two cents - is they basically sold insurance contracts on the bonds they sold to avoid the intended limits on their leverage. As these were real estate backed bonds, they were massively overlevered to US real estate. And for the record, this real estate securitization stuff was done by a very small percentage of people at the banks.

i am so tired of "this real estate securitization stuff was done by a very small percentage of people at the banks." no shit. and an even smaller percentage of the total population. yet, we are all suffering. so, why do the other people at the bank think they should be immune? that small percentage broke the bank, literally. the bank is broke, literally. i'm not sitting around saying "hey, i had nothing to do with this, what should i suffer?" so why are the people here who work in banking taking that approach?

thanks, cc, I'll check it out. Started watching PBS's Frontline on the Meltdown (http://www.pbs.org/wgbh/pages/frontline/meltdown/view/), it's depressing the crap outta me. Now I see why ignorance is bliss.

I saw the pbs one too. As it's kind of tough to think of pbs being sensationalistic it depressed me also, but the moyers piece depressed me and made me mad.

""hey, i had nothing to do with this, what should i suffer?" I never said that. I just don't think they should be demonized. By all means, however, they should bear the collective consequences through their bonuses (or lack thereof) as they are part of the organization (up and downs). Also, while everyone is suffering now, everyone enjoyed to greater or lesser extent the collective wealth created by the credit bubble...Especially real estate owners who sold into it!

Rhino, that's my problem. People, as in 99.5% of the population, didn't enjoy anything at all. Their real incomes were flat to negative, with their discretionary income almost universally declining.

I don't know if I agree with that 99.5% figure. Clearly the economy was more robust from 2002-2007 than it would have otherwise been. Otherwise, this wouldn't be such a shocking adjustment. As always, the rich get richer, but that is a universal reality.

I'll try to find a reference for you. The transfer of wealth (or money from the debt) to the most wealthy was stunning. But my number may be referring to another phenomenon. I'll look it up.

RE bubbles tend to be a transfer of wealth from the young to the old, the biggest so far in size not only in USA but also in another countries. youngsters that were priced out also payed the wealth transfer in terms of inflated rents. crazy that no politician stood up for the young, it makes sense though given that they are not organized and fewer than homeowners and older groups.

so in that regard is true unfortunately, as the old are the holders of most wealth that it was a transfer from the struggling young starting out to the more wealthy old folks. crazy stuff that so little people complained about this orgy going non stop.

This is from the NYTs, part of a great series called Class Matters, which was later sold as a book. The whole series is worthwhile, although a bit dated. Rhino, this info is from an article dated 2005, the disparity became much greater over the next few years. But note, that income fell (fairness makes me admit since 1980-2002) for 90% of the population (but my populist bent will note that's when we moved the upper middle class into the loser category as well). I'll keep looking for my other reference, but I fear I may have to open myself up to criticism by quoting Palast. I think that something around $400k would get you into the top 1% in 2004, last year it was $1.26 million, I believe.

http://www.nytimes.com/2005/06/05/national/class/HYPER-FINAL.html?_r=1

Forgot the link. Doh.

why does carnegie always go silent when asked a question?

You continue to ask what CC does for a living, so what about you? Can we assume another drone in the banking world?
Every time a tough question is asked, you go away and hide

I may be opinionated, I may even be an asshole, but if when anyone here asks me how I formed my asshole opinion I am glad to speak up.
I push buttons in the hopes that I find someone who leads me to change my mind...not stick to my guns indefinitely.

"That is why savvy buyers are picking up bargains right now."

Savvy money losers?

SteveF and his "savvy" friends are the same ones who bought at the peak. Couldn't have picked a more perfect way to lose money.

A bargain about to become a bigger bargain is no bargain at all.

Just keep in mind that the putzes saying "oh, NOW is the time to buy" are the same ones who said it before the market crashed. Dumb then, dumb now.