Supply is still being piled up, price is still decreasing, despite what the brokers are saying...

kevin,

Brokers are known for telling fibs.

Averaging the overall Manhattan market doesn't tell me much- especially when you are talking list prices and not contract prices

I've been trying to find a source for more granular data in my price and neighborhood category but I don't think it exists. It would be of great value to me if it did. For instance: what are the sales numbers and price trends for UWS doorman 2/2's between 900k and 1.2M for the past year, 6 months, 2 months? What is the average listing to contract discount for this category?

did you try trulia or property shark or zillow? All of them do that i think.

So, brokers lied all the way up, now they're getting their asses kicked with decimated volume, and we're surprised they're still lying?

With all the desperation, I'm surprised they aren't lying even more.

Well, I guess there are fewer suckers to believe them these days.

None of them seem to give me what I'm looking for. I know the data is there I'm just looking for some simple filters to focus the results.

You never know that you've hit the bottom till it's already passed. When everyone knows...it's already too late. Also, the more property out there, the less time you'll have to see it. Stick to your criteria and you'll save time in the long run. There are bargains out there and agents can tell a motivated seller from an unrealistic one. (They also know buildings better than most buyers.) Watch interest rates. Interest rates are low. Start thinking in terms of long range value. When rates start to edge up, seriously consider making a move.

H Davis, CBHK, Associate Broker/Realtor 12+ years (and proud of it.)

Oh god, properties will not go up in a week, dear hdavis. And who is telling u that this buyer has no time enough to see all listings? If I am a buyer and you tell me this, I will run away from you. You might have been 12 years in RE, but, as a buyer, I can tell you this is the wrong approach.

Agreed that unless you are in a position to buy cash then interest rates are of equal importance to the actual price as these two things together determine the monthly carrying cost of the mortgage.

The bigger question is whether things have bottomed out just yet. I think the answer is no. Whilst there remains a fundamental disconnect between the price buyers are willing to pay and the price sellers are willing to sell then there remains continued pressure for realized price reductions.

That being said, I'm not predicting armageddon in the Manhattan marketplace, nor am I predicting a quick return to 10%+ annual appreciation.

I think we'll see a further 5% cut over the remainder of the year and we'll see how this crisis works itself out at year-end. If the finance folks face significant restrictions on bonuses this will bode poorly for 2010. If profits continue in line with 1Q then 2010 could see a return to more confident buying as we put the crisis into the rear view mirror.

Mimi: Don't work with an agent you can't trust to seperate the good property from the bad property for you. I spend half my time at broker and buyer open houses, screen property, so my buyers dont' have to. If you want to see it all for yourself...go ahead.

"You never know that you've hit the bottom till it's already passed. When everyone knows...it's already too late. Also, the more property out there, the less time you'll have to see it. Stick to your criteria and you'll save time in the long run. There are bargains out there and agents can tell a motivated seller from an unrealistic one. (They also know buildings better than most buyers.) Watch interest rates. Interest rates are low. Start thinking in terms of long range value. When rates start to edge up, seriously consider making a move."

Right out of David Lereah's mouth. Or is it Lawrence Yun's mouth these days?

You know Lereah eventually confessed that he wasn't being truthful after he got booted from the NAR right?

hdavis I am saying change your speech or you'll miss the train. I am not talking about saving time, but the aesthetics (and the ethics) of an outdated speech.

HD, you're preaching to the wrong crowd dude. So you surfed the 12 year wave into a giant exploding bubble and now you bill yourself as some kind of market predictor. Tell me, what say the folks you talked into buying at the peak because they believed your prediction that the market was leaving them behind? Tell us more, please.

I would only "watch rates" as my indicator if I planned to borrow the max. Otherwise, I might use it as a counterindicator of prices.

Hdavis, you're completely missing the point on interest rates. When rates go up (which they will), prices will decline even more. You're a complete buffoon if you think prices are going to stay where they are when rates go up and monthly payments will just go up so people should buy now. The monthly payment will stay the same - what do you think will compensate for higher rates? If you answered prices you get a gold star.

Actually Mr. Mafia: I think the comment is more of a reconfiguration of "hindsight is 20/20" than a quote by David Lereah. One thing to keep in mind though, when a buyer buys into a market, good value is determined by the market he/she is buying into. Not the market 2 weeks, 2 months or 2 years later.
I knew a buyer in '94 who walked away from 2200sf for $525K because he didn't think it was good value.
Buyers set market value by what they are willing to pay. My point, however, was pointed at the interest rates. Do you agree that it is better to buy when rates are low? I hope so. Just for the record, I don't own any of Lereah's books.

hdavis... i got a car loan document right here thats' got 19% interest rate..... do you know what a 3bd in CPW were going for then? $300K...

Geitner's spread eagle naked on IR and it's go nowhere to go but up!!!!!! The last time I checked he's built like a girl and a strong gust will knock him down.... within 2 yrs when he actually says things are good enough to let IR "float" that's when NYC RE takes the upper cut you never saw coming.... stick with going to open houses as this is where you "add value" to the RE transaction :)

NYC10013: Although I agree that interest rates going up will put downward pressure on R/E prices, but your analysis is overly simplistic. Interest rates are sensitive to risk. IMHO, one of the most possible risks immediately facing the U.S. economy is the risk of inflation. The Feds continue to pump both monetary and fiscal "stimulus" into the economy, and as Asian economies stablize and grow their domestic markets, it is highly likely inflation will be a major problem, in the not so distant future. If that is the case, lenders will demand more in return (i.e., higher interest rates), but that also means that people need to get into hard assets (e.g., REAL ESTATE) that have tangible value. This will drive up the prices for these assets ... then, you're completely on the other side of where we are now.

"You never know that you've hit the bottom till it's already passed"

I hope no one is arguing with this part of the statement.

"My point, however, was pointed at the interest rates. Do you agree that it is better to buy when rates are low? I hope so."

Actually, I disagree. I think it is best to BUY when rates are sky high, because prices will be depressed as a result. You can refinance when rates go back down, but you can't "re-buy" at the lower price you would have gotten had you bought in poor market conditions. It is ALWAYS best to buy when there are no other buyers than yourself. Second best is to buy when they are few buyers, or at least many less buyers than sellers. This is much more likely in times of extremely high rates, and much less likely in times of low rates.

ManhattanKing.... uhhhhhh.....hmmmmm.....hhmmmmmmm.... where the f do i begin? hmmmmmmm damn... your statement sounds sophisticated.... but reeks of a first yr econ major at the MBA of Dominica Republic......

yes... inflation/risk return will increase in the very near future... "smart" money will go into "hard assets" (very important POINT right now coming at you and all the feeble minded econ majors) THAT CAN CHARGE MORE!!!!!.... given the over-built nature of RE and the supply of comparable rentals and expected decrease in RE prices due to HIGHER IR.... the IMPUTED rental for RE will decrease..... therefore REAL ESTATE will be a TERRRRRRIBLE hard asset to be in..... avoid MKing's advice to go into RE HARD ASSET at ALL cost.

manhattanking..if the scenario you portray comes to be, which i think in part it will...real estate will face the same issues it faces then as it does now...majority of people just dont have the means to buy. if that same scenario does really take place, we're possibly looking at the total break down of the treasury market. at that point our asian friends will no longer be willing to lend the US govt $$ for 30yrs at 4 %...and rates will be more like 8% and the dollar will be garbage.

"Just for the record, I don't own any of Lereah's books."

For that, you deserve some respect, for not funding Baghdad Bob's retirement money.

kevinchenny: as far as "Supply is still being piled up, price is still decreasing" I'm not sure that, statistically speaking, the data proves your point, given the sample size, change in numbers and any reasonable "confidence interval" or "tolerance limits" (I don't know the standard deviation of the $PSF, so it's hard to do the exact calculation, but let's say we use 200 - which I don't think is a bad guess; in that case, the 95% confidence level puts the true mean - and yes, I know you used median not mean - at between 1061.72 and 1068.28. IF you had used mean rather than median - I hate to use so many "if's", but I'm just trying to show how statistics can so often give dicey answers - they confidence boundaries overlap the conclusions).

Not necessarily in the inflation camp, have read good opinions on either side. in any event, wage deflation and supply will more than compensate.

http://pensionpulse.blogspot.com/2009/05/is-inflation-inevitable.html

Inflation will not commence until the Aggregate Demand (AD) Curve shifts outward sufficiently to reach the part of the Aggregate Supply (AS) curve that is upward sloping. The AS curve is perfectly elastic or horizontal when substantial excess capacity exists. Excess capacity causes firms to cut staff, wages and other costs. Since wage and benefit costs comprise about 70% of the cost of production, the AS curve will shift outward, meaning that prices will be lower at every level of AD.

Therefore, multiple outward shifts in the Aggregate Demand curve will be required before the economy encounters an upward sloping Aggregate Supply Curve thus creating higher price levels. In our opinion such a process will take well over a decade.
And on the record expansion of the Fed's balance sheet:

In the past year, the Fed’s balance sheet, as measured by the monetary base, has nearly doubled from $826 billion last March to $1.64 trillion, and potentially larger increases are indicated for the future. The increases already posted are far above the range of historical experience. Many observers believe that this is the equivalent to printing money, and that it is only a matter of time until significant inflation erupts. They recall Milton Friedman’s famous quote that “inflation is always and everywhere a monetary phenomenon.”

[Note: On that last point, read Alan Meltzer's New York Times op-ed article, Inflation Nation.]

These gigantic increases in the monetary base (or the Fed’s balance sheet) and M2, however, have not led to the creation of fresh credit or economic growth. The reason is that M2 is not determined by the monetary base alone, and GDP is not solely determined by M2. M2 is also determined by factors the Fed does not control. These include the public’s preference for checking accounts versus their preference for holding currency or time and saving deposits and the bank’s needs for excess reserves.

These factors, beyond the Fed’s control, determine what is known as the money multiplier. M2 is equal to the base times the money multiplier. Over the past year total reserves, now 50% of the monetary base, increased by about $736 billion, but excess reserves went up by nearly as much, or about $722 billion, causing the money multiplier to fall.

Thus, only $14 billion, or a paltry 1.9% of the massive increase of total reserves, was available to make loans and investments. Not surprisingly, from December to March, bank loans fell 5.4% annualized. Moreover, in the three months ended March, bank credit plus commercial paper posted a record decline.

"You never know that you've hit the bottom till it's already passed"

While that matters in stocks, it sorta doesn't in RE.... because you rarely get more than a couple of points in the 6-12-18 months afterward.

With the L shapred recoveries that are pretty standard for RE, you don't have to hit the bottom, you have some time afterward.

If you buy now and we have a significant rise in inflation (which I'm pretty sure means prices going up, not down) your monthly mortgage amount will still remain the same. If that is the case, better to have a low interest rate than a high one. But, I spent the last 12 years being a buffoon, lying to my buyers and supporting Baghdad Bob. So go ahead...wait.

hdavis... ever hear of "basket of goods" in calculating inflation.... gas can go up by 100%, but RE and "imputed" rents can decrease by 100%.... and the overall inflation can be 5%... and yes I will wait.... a long long time.. until such time as rents STOP decreasing b/f I even look at a purchase :)

"If you buy now and we have a significant rise in inflation (which I'm pretty sure means prices going up, not down) your monthly mortgage amount will still remain the same. If that is the case, better to have a low interest rate than a high one"

Yes, but much better to have a lower price... because the rate can change... buy overpaying is permanent.

sorry.. BUT overpaying is permanent.

Hdavis - you officially get the dumbass award for the day, but try to answer this - which apartment would you rather buy:

1) Apt A for $2mm with a $1.5mm mortgage at 5%

2) Apt A for $1.25mm with a $937.5K mortgage at 8%

Both monthly payments are the same.

1) Apt A for $2mm with a $1.5mm mortgage at 5%

2) Apt A for $1.25mm with a $937.5K mortgage at 8%

damn math!

w67thstreet: guy, what's your problem?!? Did I write anywhere for people to "go into RE HARD ASSET at ALL cost?" First of all, learn to write in English and maybe then people may consider taking you seriously. Second, I'm not an economics major and I don't have an MBA, not even in finance. I'm simply someone that is interested in real estate, and have been for a while. Personally, I own 2 properties, one in Manhattan, and the other back home in Colorado. I love my homes and don't care what the market does, because I'm in it for the long run, which is what people probably should have been doing all along ... and we could have avoided this mess. I simply wanted to remind people that inflation does lurk, and that could indeed cause a flight to hard assets like real estate, driving prices up. aboutready's point is well taken (if I understand him/her), which is probably the same thing that w67thstreet was trying to summarize, only in a more human form. If one believes that the market is still trying to find equilibrium, then perhaps prices may continue to fall.

hdavis, how many properties in NY do you think are bought with 30yr fixed mortgage? Very few, I would guess, given most loans are jumbo in NY and 30yr fixed jumbo costs a lot more than 30yr fixed conforming. That's the only mortgage that makes sense if you think inflation is going to hit hard.

Even if you do get a 30yr fixed, at say 5% for conforming. What happens when you try to sell your place to buyers who can only get 10% rates? Their interest is twice yours! what do you think they will pay? So if you have to sell, then you will lose money. You are also at risk in an inflationary environment of increased common charges and taxes, so to say your payments stay the same is not true. In fact, a renter can walk away from higher costs, an owner cannot.

manhattan king:

first off if inflation does come i buy gld and tbt. highly liquid etf's that should outperform anything else, especially real estate. secondly you say you are "in it for the long run". i think one would have learned the "buy and hold" strategy is a disaster for most people. markets can and should be timed. of course the conventional wisdom holds that i am wrong and i would submit that conventional wisdom is almost always wrong. just my trader mentality at work.

Intrest rates and pricing do not have an inverse relationship. This has been chatted about time and time again. Call me old fashioned but, I want good value at low interest rates. I'm buying a primary residence for a forseeable future. Why would I not want this? I'll miss the chance to refi at a lower rate? I already have the rate! The RE market in Manhattan is now about jobs. A quick return of Wall st. payola will stabilize the RE market at or around today's price structure. A prolonged double digit unemployment number(manhattan) will slowly erode the pricing. This was the case in 1987. 1988 was realy not that bad for RE. It was late '89 to '92 that saw the kind of deals that RE legands are made of. Buyers, like myself, pine for the double edged sward which slices the economic condition so brutaly that RE prices plumet while my own economic condition remains unmolested so that I might have the strength of will (balls) to make a brave purchase. Then there is timing. Too soon? Too late? Compared to rentals? The timing is soon. The window is opening and now is the time to spot the deals. Luck and vigulence...patience and fortitude...If you wait for hats and glasses you might wait too long.

ManhattanKIng... my apologies.

Falcogold.... LMAO... yes I want everyone else to suffer so that I can make a killing... I know of the mkt you speak of in 92'.... except.... by luck I bought a few yrs later when NOONE was talking RE....

cfranch,

don't get me started with Gold and short US LT Treasuries.

time is running out. end of summer. watch out. prepare.

cfranch:

I suppose I should submit to your idea that I should try and "time" the purchase/sale of my home. You're probably one of those people that helped fuel this R/E bubble with my money, and are now paying your rent/mortgage with my tax dollars. Look, anyone with a cursory knowledge of finance can go out and borrow themselves silly and to try and max out their yield, but as my father, who only has a HS diploma, told me, debt works both ways. It makes the high higher, but makes the drop faster. Maybe I'm out of sync with you high flying traders out there, but I tend to find a property I like, cut the best deal I can, and go to a bank and say, I'm going to put up 50% of the deal, lend me the other 50%, and lock me in for 3 decades. Then, I make good on my end of the deal by paying the bank back each month, and race to pay off my DEBT/OBLIGATION/LIABILITY or whatever you traders call it these days. What you guys do all have fancy ass names (e.g., securitization, CDO squared, etc.), but you know what it all amounts to right??? GAMBLING ... plain and simple, and you're doing it with my money!

Yes, precious metals are a good hard asset. In fact, I bought a lot of gold when Bear and Lehman collapsed, to further diversify my portfolio. I simply suggested that R/E is also a potential hard asset that can be bought in inflationary times, which could protect one's wealth steadily and god forbid, offer some appreciation.

Cheers.

Manhattan King:

Buying RE as a hedge against inflation when it is cheap makes sense. Buying RE when it is still too expensive is not. NYC RE is still inflated. I am buying in Miami Beach.

streeteasyaddict:

I got my conforming JUMBO loan for 30-years fixed at 4.875% with ZERO points. If you have the right FICO score, document your income, and put up the right amount of equity, a JUMBO loan is no more costly than a loan under $417k.

Cheers.

Inflation hedging should be the last reason one buys RE, adding onto a bunch of other unrelated reasons an individual in a specific situation wants to buy and being the tipping point. It makes a lousy primary reason, especially if nominal local incomes do not follow the inflation.

cfranch:

Yes, if you think Manhattan R/E is still overpriced, then by all means, go nuts at South Beach. I own a 1/4 acre of land that my grandfather bought for me when I was just born in 1979, in Fort Lauderdale, FL. Brokers or R/E developers called during the "boom" years and offered all sorts of ridiculous prices for that 1/4 acre. I never sold b/c I simply had no financial need to sell something my grandfather bought for me, and maybe someday, I will want to go build a house in Fort Lauderdale ... it was nice enough the few times I've been down to Florida.

Cheers.

ManhattanKing, where did you get that? and what is the right amount of equity? My credit scores are >790 and have plenty of documented income, so would love to know where you are getting that. I've heard these claims before and am suspicious.

streeteasyaddict:

I got it from Wells Fargo Home Loans - call their loan officers directly and don't use a mortgage broker ~ anytime you read or hear the word "broker" it means whatever they are brokering will cost you more, by their broker fee. My FICO score is less than your's (only 745 - lowest of the 3 reporting credit agencies - you should take your lowest score, not the highest). Your total debt to gross income cannot exceed 45% (mine was 19.5%). Then, I'm not sure of their minimum d/p, but I put down 40% of the deal. They locked in for 30 days at 4.875% and closed in 2 weeks, only thing that took them that long was the appraisal.

Good luck. Cheers.

"I got it from Wells Fargo Home Loans - call their loan officers directly and don't use a mortgage broker ~ anytime you read or hear the word "broker" it means whatever they are brokering will cost you more,"

I don't know what ever happened with it, but I'm pretty sure there was a lawsuit of some sort over mortgage brokers not offering the best products of given lenders to their clients (which were the borrowers since they were paying their fees) but rather the one's which made them the most money. I also have had so bite my lip at many "sales meeting" or other pitch by some mortgage broker when they say that the borrowers got the same exact terms from the banks when going thru them when I knew that at least in some cases it was a total lie.