What NYC ***MIGHT* Look Like in 2019

pics from your place?

yes, the second picture of the red house is my house in NJ.

Detroit has been in a death spiral for 40 years!

yep, same with Argentina. Then the double whammy will hit: global warming rising sea levels makes the new subway line unusable as soon as there's a drop of rain.

isn't it true also for rochester, ny (and most of upper ny)? xerox & kodak once upon a time were a big deal. now you only find students or retirees totally stuck. detroit was at a point the city with the highest income per capita in USA, but that income was a transfer from every other part of USA that benefited once competition brought the price of cars down.

it would be nice to make sure one avoids getting stuck in the future detroit, rochester, argentina. it's well worth the time and energy imho.

Argentina is much better now that 6 years ago. I can testify, since I live there during the school year. It is one of the most livable cities I've known. In places like Argentina, the economy goes in cycles. It is far from ideal, I know. I've sen people lose 50 % of their wealth in a day, but, again, I've seen this in america as of lately. Argentina paid it's debt with the IMF 4 years ago, so the same geniuses that helped create the crisis bubble here stopped telling the argentine government what to do. Argentina has the highest literacy rate in Latam, has socialized medicine and private medical systems. We pay u$s 500 a month for 4 people and the doctor come to our house whenever we need it. It beats the crappy blue cross blue shield insurance we paid thousands for when we lived in the city. Just to give u some informed information.

sorry for the redundancy at the end of my rap. Writing fast, nice day out!

mimi...you make it sound so good I'm ready to book my flight...it's so hard living in Manhattan...of course it's also a great, big wonderful city...I lived in south florida the past few years and i missed manhattan so much my heart would hurt I had to come back.

I really fear that we might plunge to 1998 prices and conditions.

Mimi: What about the stuff I've been reading in survivalist forums about how bad things got in Arg. with respect to violence? People carrying guns at all times...

Specifically, http://www.survivalmonkey.com/forum/showthread.php?t=2715.

Kinda freaked me out about how bad things can get. Many "2nd world" countries (HK, Sin, S. Korea) have great medical services available for very little money, by U.S. standards. What people forget is that the average salary is much less, so that "little" money is actually a lot by local standards.

"mimi...you make it sound so good I'm ready to book my flight...it's so hard living in Manhattan..."

julia, mimi succeeds along with many middle class Argentinians in avoiding paying attention to the slums and how people live in them. livable yes, it can be, as long as you are good in terms of living in a tiny protected environment and avoid paying attention to what's going in the slum just a few blocks away. that's not only Argentina's problem, it's typical of latinoamerica, the uneven wealth distribution might never be solved.

On a related note, a former colleague of mine (originally from the proj) has told me not to underestimate the unrest that the retail layoffs are going to cause in Manhattan slums and extend to crime below 96th.

are you informed mimi about how Argentina's gov is handling the swine flu? lets see how much you like how the health care system works if it gets worse.

"Manhattan slums" people from south america's slums will not believe that you call a project a slum. a nyc project for them would be like a dream they don't dare to have.

http://www.arquimaster.com.ar/blog/wp-content/uploads/2007/06/villa31_retiro.jpg
http://en.wikipedia.org/wiki/File:Vista_Riachuelo_desde_Puente_Bosch.jpg

the first is a slum right next to the most posh area in bs as. the second is in the south part of the city. 2 million live around a river called riachuelo that's so contaminated that just touching the water brings you trouble, not only drinking it. teh whole area shouldn't be populated due to the contaminated land & water. a nyc project is not in the cards for these people.

http://farm4.static.flickr.com/3415/3225827397_6ceb8ac41c.jpg

this is how their homes look like

The Third World sucks don't get me wrong and our inequality is nothing to compare. My only point was Mimi's awareness of slum life is analogous to many Manhattanites' ignorance of conditions around the corner or ten blocks up.

yep, totally agree.

mimi is currently in our fair country considering buying in central harlem. she is staying in central harlem, as well, while she looks. i myself have walked through "lesser" parts of harlem with her. please. what do you base your comments on, some awareness of mimi's life that isn't apparent here?

Aboutready seems to be basing his comments on Mimi's claim of how great things are in Argentina.

Let's remember people always love where they're living, that's why they're still there...let's give Mimi a little room.... she's a nice person who, according to AR, is coming home.

rhino, don't get your response. mimi is saying that argentina has improved greatly, and has better social services in some areas than we do. many countries have better social services, and in some cases education, than we do, despite a much lower perceived general standard of living. and argentina really had nowhere to go but up after the IMF, chicago boys, and our prior administration decided they needed some of our tough love to "improve" their economic system.

10023, survivalmonkey? i'm judging without looking, so i'll look further, but i'm worried about you if you've traded urbanbaby for survivalmonkey.

and rhino, i think you just said "his" comments. after all this time you don't realize i'm a profane middle-aged woman?

I'm a person of many facets, AR. UB, SE and survivalmonkey. Love them all. I even go over to the Aryan Nation (stormfront) sites every now and then.

don't offense to mimi, i just try to "to give u some informed information" before you book your ticket to Argentina based on her reviews of the place.

admin, that's just silly. she lives there, not JUST in the tourist zones. and the snide comments toward a foreigner doing her best is not attractive.

i like the many facets, 10023.

piss off

anyway, i meant before anybody here buys a ticket to relocate there (worse yet: buy RE there!)

those pics of Detroit are awesome - even better than the "Broken Glass" exhibit at Museum of the City of NY, taken in the Bronx in the '80s

wowowow admin, hold your horses...why get so personal and bitter? I am a supporter of argentina's current government, which is center left. They received a total mess, beyond imaginable. They were able to hold power in a country that's difficult to govern, lower the unemployment numbers considerably, create social services that helped people out of terrible misery, etc. I saw it. I live there. I was also there with the military, and suffer it considerably. I am friends with people that live in dirt-floor huts, and with people that live in mansions. I am active in politics, and I'm in touch with people of every economic level. Please, don't judge so easily. The media over there is like fox here, constant criticizing, pouring destructive, biased information 24 hours round the clock. Which lead us to the swine flu issue: The problem in NY got better basically with school year ending and weather getting better. In Buenos Aires, a very cosmopolitan city with lots of tourism, swine flu got early on the game, when winter was starting, and in the middle of the school year, which runs from march to december. This didn't help. Schools closed, and things started to get better as of last week. I have kids in the school system, so I am very scared. The media blames it on the government, which could be, no doubt, more efficient. But winter has been brutal this year, and you can't blame this on the government.

AR, welcome back! See u this week, I hope.

By the way, people doesn't carry guns at all! Stop the nonsense! I run around town at all times of the day and I never felt threatened as in the east village on the 90s...Shit happens, but compared to Mexico city or Rio de Janeiro is like Heidi in the Alps...

mimi, is your broken English because you are not from the U.S.?

Yes, villa. I am argentine. I lived in NY for 14 years, have american citizenship as well.

admin, i use the piss off when people call me a whore or some such. not when someone just disagrees with me. of course you should feel free to use it whenever, it's your choice, but this doesn't seem to me to have been your finest moment. mimi's positive outlook and imperfect english make her an easy target, but she is a very educated and aware person.

why the need to belittle? much of the world sucks, most of it actually, and it always sucks more for many than others. and the homelessness is on the rise here, and will continue. have you found your nirvana yet?

i actually have already booked a ticket to BA for spring break. i've heard the four seasons is both lovely and relatively affordable, thanks to the actions taken by the IMF on the US's behalf.

mimi, thanks. send me an e-mail. it's good to be back, even if home is not perfect.

ur a real treat, what a sunny outlook on the world

thanks!!

Excuse me, if I might move back on topic, please do not put Detroit and Rochester, NY in the same boat. I grew up in Detroit (suburb of Taylor) and I own investment properties in both cites, they are as different Carnegie Hill and Bed-Sty.

Detroit IS in a death spiral, excellent phrase, and it is a risky place to invest in real estate, in my opinion. Last week I bought a nice single family foreclosure in Dearborn, a nice suburb of Detroit, to rent to a family member, otherwise I would not be in that market. That house will be worth a lot someday, but I will have died of old age by then.

My first investment rental property in Rochester appreciated about 8% in two years with steady cash flow. My second property is cash flowing well and I expect it to appreciate measurably within 5 years, tops.

There are many vital differences between the two communities, I could go on for hours about this, I have researched this quite deeply. But the big problems in Metro Detroit include: high cost of labor; high professional fees; high cost of materials; government officials working with starvation budgets who then fail to handle government paperwork correctly or in a timely fashion; decades of brain drain that results in subpar professionals (inept lawyers, judges, bureaucrats, police, etc.); not enough distinctive housing stock; overall poor quality of life; and of course, not enough jobs, caused primarily by lack of diversity in the economy.

In Rochester NY, if you know where to buy, you will absolutely make money renting to nice middle class people with stable jobs. Rochester has cheap labor, plenty of educated people who are committed to the place, a strong community sense (lots of festivals, lots of activity to strengthen the economy) and a municipal government that is on the ball. It also has one hell of a bad drug problem, which puts money into the economy but at a tremendous human price. Investors who get burned in Rochester, and there are quite a few of them, are the ones who don't understand the scope and patterns of the drug trade and get indirectly caught up in it.

If the New York area turned into Detroit, then that means the entire USA would be in far worse shape than NYC would be and we had all better improve our wilderness survival skills (I actually took a college course in this, I'm way ahead of the rest of you). There is hardly any chance of that happening because Detroit is a uniquely sad case.

{Manhattan real estate agent}

some of you poster,s, coulumbiacounty, President, aboutready need to be realistic about NYC.

defneu, how so?

fluter, check this out. a number of states have U6 levels exceeding 20%. http://www.nytimes.com/interactive/2009/07/15/business/economy/20090715-leonhardt-graphic.html

the percentage of our population that is employed is very low. and that matters even more than the unemployment rate.

i'm not saying NYC will become detroit. never have. i am saying that homes prices that doubled or tripled while real incomes declined was lunacy and will be corrected. that an economy that would have had negative GDP BUT FOR home equity withdrawal was unsustainable. and the correction is and will continue to be ugly, not just here but across the US.

if nyc were to lose its seat as the financial capital of the world, which is always a possibility, wouldn't it then be more akin to london? they're not looking too bad these days...

i don't think you can compare the auto industry to the financial services business. Detroit, aka the Big Three, consistently lost market share over 30 yrs to non detroit based car companies. this during a period when overall sales were growing. whether ny remains the financial capital or not--financial services as a whole has contracted drastically and the aggregate profits and compensation have dropped as well.

Finance just needs to go back to 1997 (which was considered bombastic at the time), and interest rates tick up a little and we are on the fast track to 1998-2000 price levels. We added all this condo supply to serve a finance industry that is much reduced in number and broadly less paid. Grad hiring in the industry is down 70% this season. Hedge funds played a huge role and most are not close to taking back their 2008 high water mark. Bulls can try to cheapen the argument by talking about Detroit or the burning Bronx but none of it has a lick of relevance.

We also built the condos for wealthy foreigners who wished for another home. second, third etc. homes are truly a discretionary purchase.

rhino, i haven't seen the numbers for 2009 hires in the financial services. has it been announced, or is this what you've heard? it's still better than in the law, where this year's hires are being postponed but the glut is so enormous that hiring for next year may be close to non-existent for the majority of the firms.

I read that 70% number somewhere. NY may be unique, it may be wonderful...I don't see how it doesn't get a lot lot cheaper.

clearly, that is the best option. the question is going to be how do we get there. kicking and screaming or accepting, analyzing and trying to cushion the fall as intelligently as possible? very, very tricky because of all the different constituents and the lack of precedent of how to engineer something like this.

Alpo, you don't know what New York looks like NOW, so on what basis could you possibly determine what it will look like?

nyc10022, I don't understand your comment. Is Alpine unable to watch movies or the teevee? Otherwise of course he knows what New York looks like. So would a janitor in Uzbekistan.

i see AR, i'll use "piss off" in homeopathic doses then. practice makes master.

mimi, this place is full of people pushing RE in the most absurd of circumstances (like buying now in Argentina would be). given how rosy your view of Argentina/BsAs seemed, i figured you are trying to sell there and buy here. is that right? i'm ready to apologize right away if you rent in bs as.

there's the home bias effect, but homeowners suffer it more than renters specially when they are trying to sell. in any case, it's too early to buy in harlem for many reasons, never too early to gather info though. prices are barely adjusting and a lot will go back to the bank. i took for granted that the price stickiness was in part due to over leveraged owners (harlem is full of them) but... nyt proved me wrong with the example of a UN spokesman that refuses to cut the price even though he bought 100% cash.
http://www.nytimes.com/2009/07/19/realestate/19cov.html?_r=1&hpw

hey Fluter, that's very interesting info you are providing! i honestly only know numbers about them, discretionary income per household and demographics mostly. and in both cases it's been going down from very high levels. seems that most of the decline is done in rochester and that detroit has more pain to go. the higher the previous level, the more eye catching the decline. Argentina was for a while the 7th econ in the world (not sustainable, thanks to external factors... maybe, but still, that's in part why so few saw what was coming).

"It also has one hell of a bad drug problem, which puts money into the economy but at a tremendous human price." do you mind to explain it further?

"nyc10022, I don't understand your comment. Is Alpine unable to watch movies or the teevee? Otherwise of course he knows what New York looks like."

Yes, I find you get quite an accurate depiction from Friends and I am Legend.

lol, anybody else got tired of Hollywood destroying over and over again the city you are living in?

Spoiler ALERT:

Just watched Watchmen last night... Ditto.

" don't think you can compare the auto industry to the financial services business."

Your right. In Detroit 2 of the Big 3 filed for bankruptcy. In NYC, Lehamn and Bear filed for bankruptcy. In Detroit, 2 of the big 3 got govt. bailout money. In NYC, the remaining banks and AIG got TARP. Similarities? Nah...

Bear didnt file for bankruptcy

" don't think you can compare the auto industry to the financial services business."

if only you had tell that to GMAC about 4 years ago. same to GE. a huge part of the mess they are in comes from thinking that they could run financial companies even though they had 0 expertise there. unfortunately a big part of the EPS from the last 5-10 years too.

The Detroit comparison continues to miss the mark. When NYC apartments triple in value over ten years, and everything that drove that falls apart, you don't need it to be the next Detroit for prices to fall 65%.

Right, thats the big point... its worse in terms of %s.

NYC doesn't have to become Detroit. Just moving closer to an "average" city represents a monstrous loss of wealth.

Right. The comparisons aren't to Detroit. The issue is how much closer in price we should be to Philadelphia, Boston or Chicago.

If NYC prices become more alinged with those of Chicago, then we will have a Chicago lifestyle, including a Chicago crime rate, which is one of the highest in the nation.

"NYC doesn't have to become Detroit. Just moving closer to an "average" city represents a monstrous loss of wealth."

so true! i agree that detroit = nyc is pushing it. but will love to learn how to be able to anticipate that a seemingly nice place will turn out fallujah like. getting stuck in a place with that prospects is scary to me.

The lesson behind the hyperbole of the Detroit comparison is don't buy now in Harlem or LICC!

why rhino? don't see it.

my point was that nyc will fall faster than detroit because detroit was buffered by overall auto sales going up as they lost market share.

even if NYC does not become Detroit, it does not mean NYC will not become a hell hole or dangerous. In fact, since so many people have fled Detroit, they actually have a low crime rate!

for me the lesson is that if home ownership represents a sizable amount of your net worth, you have to make sure not to end up in those places, as your mobility might end up totally impaired. doesn't mean you will want to move for sure though (you can end up staying put like "gran torino") but still, nice to have options if the neighborhood decays to that extent.

admin, felix salmon had a piece last year on research that showed home ownership was positively correlated to unemployment in recessions. i'll try to find it, he linked to it recently.

i was wrong, it wasn't just recession-related. but here it is:

http://www.felixsalmon.com/002863.html

> fact, since so many people have fled Detroit, they actually have a low crime rate!

As usual, alpo, you are a moron.

Crime rate has population in the denominator.

thanks AR! here's the link to hte paper

http://www2.warwick.ac.uk/fac/soc/economics/staff/faculty/oswald/unempap.pdf

the lower mobility that home ownership brings is not the reason for the initial high employment, but it doesn't allow people to adjust in the optimal way (they cannot easily move to areas with higher employment). it can create a vicious cycle by not allowing homeowners to adjust to negative shocks in their local labor mkt. there should then be a premium for areas with a sure supply of jobs (like DC) versus areas more sensible to technological or competition shocks (like rochester with digital photography, or detroit with the rise in foreign car makers).

there's also a citation of a paper that showed the same lack of mobility affects public housing. very true in nyc where even though a big part of the subsidy is paid by the fed gov, you cannot take that subsidy with you to an area with more jobs in case of losing your job.

i wonder whether a public policy that aims at lowering transaction costs could help aliviate the impaired mobility, as supposed to subsidized mortgages (that in the end, defeats it's own purpose as it tends to increase home prices hurting affordability).

"there should then be a premium for areas with a sure supply of jobs (like DC)"

There isn't. In fact, the DC Case Shiller Index has fallen MORE than the NY Index.

Only because DC started first.... which just means NY has even more to go.

woo-hoo!

The DC and NY Indexes both started declining at around the same time.

for that premium to exist, homebuyers should demand it. and i'm not sure if people in general think about the long term econ prospects of the area they are buying into. i feel it's more like "i got a job in x place, renting is for losers which i'm not, hence i buy".

a super rational guy with a new job might even consider to rent for the 1st year, to get to know the area better and to make sure he likes that new job before committing to the place. i don't know many doing this.

> The DC and NY Indexes both started declining at around the same time.

Wait, now you're going with the Case Shiller to cover NYC? Seriously?

You're not only clueless, you're a hypocrite?

"for that premium to exist, homebuyers should demand it."

So home buyers in areas with low unemployment rates should demand that they pay more?

home buyers in areas with possible future high unemployment rates should demand that they pay less.

as a compensation for the higher risk on their future income

AR: I emailed you at aboutready se.

back at you. mimi, call or email me if you get a chance.

"It [Rochester NY] also has one hell of a bad drug problem, which puts money into the economy but at a tremendous human price." do you mind to explain it further?

Sure. First I just wanna say, indexes and gross statistics are fine, indeed essential to review, if you're investing, but if you're not willing to get out there and do some participant observation, you just do not, do not, know the real story about any city or any 'hood. Wondering about LIC? Billyburg? Dumbo? Upper East Side, for that matter? Get out of the house and go see for yourself, at various times of day and night.

Back to Rochester:

After the University of Rochester and Strong Hospital, I believe the next largest industry in Rochester is the drug trade. (You won't find it listed on the Chamber of Commerce website.) The drug trade pumps a lot of money into the economy, which stimulates local aggregate demand just like money from Obama--the economy doesn't care where the money come from. Rochester has a history of organized crime also. So as an investor I need to know where the pipelines are and where they are not, for whatever reason. Hint: If the real estate agent refuses to go there, it is not a safe neighborhood.

{Manhattan real estate agent}

so fluter, i take that the drug biz distributes drugs to non residents (on areas close by?), otherwise it would be a 0 sum game (no $ pumped into the local econ).

for what i use the info, it's enough to get raw data, no need to visit (dont' plan to be a direct landlord, too much hassle and transaction costs at this point). for ex, if i think certain area is going from bad to worse and certain CRE company is heavy weighted there (has several shopping malls and office buildings, for ex) that provides a margin of safety to short them or to go long if it's the opposite case. i have to believe there's a case for a change in the sector per se though. that's why i've followed roughly (without visiting) some areas, kind of what robert toll does with the usa map, giving grades to each region.

"wowowow admin, hold your horses...why get so personal and bitter? I am a supporter of argentina's current government, which is center left."

very sorry mimi that you took it that way. i don't mind at all what your political views are. argentina's problems are so structural that good solutions are almost impossible to implement. a particular party in power have not only little incentives to rock the boat, they end up just "patching" an already complicated system. be it taxation, be it super decentralized health care system. systemic corruption doen't help either.

the Ks were good in terms of cutting the debt burden, that was a huge plus, but done in such a childish-irreverent way as to upset foreign debt holders without any need (remember Cristina's talk with Merkel here). still, they got a hot potato nobody wanted, and they stepped in and provided what was needed for the moment. the evil-ization of sectors (be it bondholders that were also victims of the mess, be it farmers) i cannot support and has very adverse long term consequences. the worse part is that they are unnecessary. i do not support bullying in politics, unfortunately, it's a staple in argentina. still much to learn from chile and uruguay. you are very right about the media, tv channels and newspapers are either official or anti-official and many times make their picks even during the election process.

"mimi is currently in our fair country considering buying in central harlem. "

anyhow, back to topic, buying in NYC might make you a knife-catcher, specially fringe areas. renting might be better for a while. it surprised me a little bit that given how well adjusted you are to the pampa's way of living, why didn't you consider uruguay? it's kind of the blend of both worlds: it has the nice live style of buenos aires (although much smaller, maybe this is the worse con) with the stability and respect of the rule of law that you get in usa.