Noah! Please share data behind statement for LICC

i dont have any raw data for LICC

Rhino, where is the quote from?

From here: http://www.urbandigs.com/2009/05/contracts_continuing_to_be_sig.html

for Manhattan, I dont do business in LICC

I think he means for LICComment's benefit, not about LIC.

Sorry Noah... I meant Manhattan, for the benefit of the monkey man knows on this board at LICC... Who is CONTINUALLY debating me about whether or not price to rent ratios are currently 'normal' after this pullback. My point is and has been, they have pulled back to 2004 levels, which were roughly tied with the prior high...and well above norms.

'known on this board'

No, rents have gone down by as much or more than sale prices per all the brokerage reports, so the ratio is actually about the same as 2007.

exactly, jason. and the rents are still declining, so it's still a moving target.

rhino, poor noah has just recently recovered. drawing him into your battle with LICC could cause a serious setback.

Jason you think rents have gone down by the same 30%? That sounds high. In any event, the seemingly too possibly stupid for words argument has been made by LICC that we are in the same ballpark as 1999 price to rents. He wants to look them on an aftertax and after financing basis...but either way - its a pretty ignorant assertion.

Interesting comments from rhino, the bigot who doesn't know how to support his pulled-out-of-his-pocket assertions with actual source data.

I showed you two graphs from reliable sources. You refuse to believe the graphs used actual data. Noah is probably the most well-respected person on this board. He agrees that price to rent ratios are 'remain out of whack'. What is the difference to you? You claim rent=buy here and now and you bought higher than here...in LONG ISLAND CITY. If you clearly do not analyze your own purchases...why be on here arguing?

LICC... Prices vs. rents remain out of whack... What's it to you? Seriously? You are clearly not a student of the Manhattan market and its history. There is nothing wrong with that other than you seem to want to debate students of the market. Explore that.

Maybe things are different in Queens ... who could possibly know?

This doesn't take a ream of data. This takes having been around this market for 10 years and having a pulse. No one is talking about Queens... God only knows how easy and cheap it is to rent in one of those empty condos over there at this point.

Anecdotally, I've seen rents down a bit less than the 25% median numbers for RE sales.
Median rents are tough with stabilization. And I don't know how they factor renewals in.

But, in terms of looking around for things, I've seen rents down more like 10-15%, not the whole 25-30% for prices.

That being said, ratio was so out of whack before, that that still isn't enough to close it.

LICC says its not out of whack. Show him the data. Ha.

I just found two NY Times articles from 1995. According to those articles, rents for good two-bedroom apartments in Manhattan were in the $2000-$2500 range. Prices to buy were $450-$500k range or higher. Mortgage rates back then were in the 8% range. This was in 1995, a great time to buy. So a $400k mortgage would cost around $2800 per month given 20% down, which would be just over $2000 after tax. I don't know what maintenance or common charges were back then, but add that in. That is right in the comparable rent range. The ratio was better then, but rates were higher and we are looking at one of the best times in the last 30 years to buy.

Actual rent numbers. Actual prices. Rhino is a rambling fool.

Where is the link you piece of shit?

$500k for a 2 bed in 1995 is a complete fabrication.

Bottom line: Noah agrees price to rent ratios remain out of whack. You can make up numbers all you want without providing links. You find half the ratio in a given year in some unscientific story and then make up the other half to suit you. In 1995 price to rents were far from the 16x you provide in your fabrication.

Good day sir. GOOD DAY.

oh sorry. Yes, rents have fallen and that has muted price/rent ratios with this pullback. I dont do rentals at all, other than general research reports, but from what I see, I dont think the ratio is yet where it historical norms are in-line.

So assume a $400k price and a $320k mortgage at 7.75%. Your after-tax carrying costs are still over $2000 or more. Still in range of rents. The ratio was better then, but like I said, that was one of best times in our lifetimes to buy, and it wasn't as far off as you try to make it out to be.

I still haven't seen your link... If you want to go top of head, here is top of head.

In 1999, before I went to business school, I looked at studios. You could buy a condo studio for $100-120k. Rental on such a luxury studio at that time was $1300 or so. Price to gross rent ratio on that is roughly 8x. Today, such a studio would rent for $2500 and sell for $500k (if not more - this is a condo mind you). This ratio, pure price to gross annual rent is 17x. Normal is 12x.

LICC, seriously good luck to you. I am convinced I have a handle on where the market has been historically. You have no links to share, only guesses. I do not feel like I am getting anything out of this exchange. If you think prices right now are in line with their historical relationship to rents, go with that.

I can't speak for two bedrooms, but in 1995 my doorman prewar studio was $1100 a month. Similar studios sold for $85-$100K.

You can refinance out of a high interest rate, but a high purchase price is yours forever.

How about "Price to Income" ratios? those seem to be just as, if not more, out of whack. that is playing a huge factor in all this as well.

Yeah I haven't looked at any good data on affordability. I know some of those brokerage house studies like Goldman and Deutsche have incorporated them into their analysis.

Shiller is the man on this... he basically found the correlation...
Forbes did a set of calculations on it, and we still have a while to go.

The alcove studios at 100 W 93rd renting for $1900 are asking $499k. What fool would call this relationship normal? We know what fool.

I rented an alcove studio in a condo for $1850 in 2001 on the corner of Broadway and 95th street. Reasonable comp? Not bad. Apparently the ratio of renting to owning is the same. I think an alcove in my line in that building at the time was asking $235k.

Clearly the relationship has been stable..1995...2001...2009. Yeah right.

Oh look here is one in the line that I rented for $1850.

http://www.streeteasy.com/nyc/rental/508598-condo-215-west-95th-street-upper-west-side-new-york

They want $2,100. Wow rents are up 13% since 2001. What are purchase prices up since 2001? Again, apparently the relationship is the same now as it was in 2001...or 1999...or 1995.

LICC?!?

Whatsamatter, did it finally sink in, LICC? Yeah.

Maybe I was just out on a Friday night rhino. You should try it sometime.

Just search on the NY Times website. Pop in a year and "residential resales".

Notice how rhino just babbles numbers without running the costs to compare them.

Seriously lets drop it. Believe what you want to believe about the price rent relationship.

okay, I'll bite:

"Oh look here is one in the line that I rented for $1850. [link] They want $2,100."

Rhino86 wins. His sources are current advertised asking rent price, his personal experience of having rented in the same building, same line, and he asks one to examine only the nominal percentage increase in rent, not complicating things further. If the studio rents for $2,100 today it is a 13.5% increase in 8 years' time. Interest rate changes 2001-09? Some, but not of an order of magnitude like the purchase price increases 2001-09.

Rhino86 wins. Tax advantages of ownership are the same in 2009 as in 2001.