More Serious Rental Declines

*burp*

NEXT.

september / october I think will be a major breaking point for the market. one way or the other

LLs...realty check...renting dumps for $2500 a month isn't go to work any longer..they made crazy money and now they'll make money but jus not as much.

"*burp*.. NEXT" = "Yes, you did tell me so. Whoops"

correct me if i'm wrong, but don't new hires generally start at the end of the summer, early fall? at least in finance, consulting, accounting and law? and i've read that new hires are being deferred up to a year, not just a few months. there is a tremendous amount of slack in the rental market, and it's just going to keep piling up.

I was paying $2700 for a 1 br doorman back in 2000 - I thought that was outrageous back then. Let them fall - the landlords made a killing over the past few years.

aboutready, the May/June timeframe (coinciding with graduations) has always been considered new hiree season. Didn't happen this year though.

"correct me if i'm wrong, but don't new hires generally start at the end of the summer, early fall? at least in finance, consulting, accounting and law? and i've read that new hires are being deferred up to a year, not just a few months. there is a tremendous amount of slack in the rental market, and it's just going to keep piling up."

Yes, correct.

Which also means hires from 1 and 2 years ago will be seeing their leases end... IN DROVES.

hejiranyc, i don't think that's when the majority of new grads start, at least in the higher-paying professions. many go poncing off to europe, etc. and start later. i remember being the only one i knew who started in June, because i went to work for CBS publishing after graduating, and didn't go through an on-campus recruiting program. when my husband graduated from law school he ran into a partner at a Yankees game who asked him to start early because the firm was swamped. he started in August and was the first to arrive.

Wonderboy, you really are a worthless little prick aren't you? You are on every thread yawning and burping. WTF is your point?

When I graduated undergrad, all of us in the analyst programs (consulting and banking) started in late August / September, with a couple of exceptions.

Remember, these guys have the MBA summer interns to get rid of. Same for law.

Meaning the pain has only started.

rhino, couldn't have said it better myself. wonderboy is a jackass.

Right, outflow continues at a normal or accelerated pace.... But the inflow is not going to be this year or next. In fairness, however, August or Sept move ins would already be looking for places. This may be what we're feeling, rather than more to come. But it will snowball over time.

Yes the one beds for $2700 in 2000 have round tripped back to there. Now all the purchase prices need to do is half from here to get to 2000 levels.

"Wonderboy, you really are a worthless little prick aren't you? You are on every thread yawning and burping. WTF is your point?"

Whenever he does that, its because something he completely disagreed with for months has been proven 100% right. I take it as "yes, you did tell me so".

I've never read him take a position, other than to stick his finger in his ass and lick it.

"Which also means hires from 1 and 2 years ago will be seeing their leases end... IN DROVES."

excellent point.

The incoming classes for law firms and banks are told to get a lease 1 month a head of start at the most places. Most of these people sign leases to start Aug 1 or Sep 1 at the latest. A bunch of the law firms are paying this years class to not start until next year. The city is losing more jobs every day and there is no way to fill the buildings up. Rents will be lower next year

And people start threads about what they should bid for one bedroom coops... DISASTER. In two-three years they won't be the usual bunch of recent grads who a 'sick of throwing $3000-4000 a month away'.

> I've never read him take a position, other than to stick his finger in his ass and lick it.

Even in the past few weeks, he's had some gems... like "The NY housing recession is over."

Listen no academic analysis will matter if there are more people out there with dough and a willingness to buy than we believe...I just can't see how that can be so. We need to clean up the willing buyers who made money during the boom and see what's left after that.

IN DROVES? what's the point? Does that mean more inventory will hit the market if they leave town? Or that prices will be forced lower when they renegotiate lower rents and existing inventory still can't find tenants?

The point is that in the normal course, some of those people will decide to leave the city...And this year there won't be nearly as many new tenants to take their place. You have unemployed. You have others getting pushed on the margin to cheaper lifestyle decisions. And the young dumb grads are just not there in the same numbers. Honestly, and not to make people's heads explode, but with all the new condos and NYCs reliance on finance...You could paint a case where NY should converge with Chicago or Boston in price, or even overshoot.

Chicago is a high crime shit hole. NYC will never be comparable to it in price.

100% correct. question is, how long does it take? Not to get the bulls wet, but I wanna get somethin done sooner than later. I figure alot of damage will be done by fall. figure the severity of this downturn should accelerate the deflation compared to other RE corrections.

Nordstrom is pushing out all the retail: http://www.crainsnewyork.com/article/20090721/FREE/907219986

Marco its going to take another two years. You need seller mentality to break down. You need buyers to get over the idea that real estate is always a great investment. Its too sticky to complete by fall or even Q1 2010.

Its tough because so much damge has been done..at least im getting in closer to the bottom than to the top. figure come the fall we'll have better visibility as to how much lower we go

"IN DROVES? what's the point? Does that mean more inventory will hit the market if they leave town? Or that prices will be forced lower when they renegotiate lower rents and existing inventory still can't find tenants?"

I'm not sure if you're being sarcastic or what... but this is the big point here. All true, and all very relevant. Reduced demand, same (or increasing) supply. Continued downward pressure on rents.

I am not sure 30% off peak is closer to the bottom than the top. I don't think one year into the last correction was closer to the bottom than to the top, was it? This really only started last September.

given that we're 2 years behind the rest of the country, and they're still falling...
and last crash took 4 years to bottom.

its pretty amazing that folks are predicting that we already hit bottom.

no, we are not at bottom, but it took a few years for 20 city CS index to fall about 32%. manhattan fell about 25% or so in 6 months. so while we are behind the rest of the country, we did do a lot of catch up awfully quick. my guess is that rising interest rates and persistently high unemployment will cause a slow drift down from here.

There will always be some. If it was the majority, the inventory would be declining more meaningfully. I think it all boils down to rents = 2000, prices = double, and financing = difficult (actually back to normal). Maybe we don't have to 1/2 to a full 65% decline..but I'd think 1/2 off is easy.

im with marco..hoping that i will have seen sufficient puking to buy 1st half of 2010...just want to buy well down into the trough..will own for at least 10 years so should be OK...as irrational as we have seen bull markets of recent, so will be current bear markets...prices were stupid rich in RE and STOX...clearly are not yet stupid cheap

I find this interesting. Why did you sit out a long bull market and now one year into a decline you are anxious to pick a bottom?

for me, i just didnt have the money until now

I didn't have the money until 2006, and I considered buying for the same reason thru 2006, 2007 and into 2008....But at least then rents were rising not falling. Once it gets moving down, what's the downside of wait for it to stabilize and tick up?

I'm hoping to buy 2010 Q4.

Hopefully, we will be about 90% through the correction by then.

I'd prefer to be an owner. But for now rental makes the best sense.

> so while we are behind the rest of the country, we did do a lot of catch up awfully quick

Thats like saying the guy who jumped off the building is "catching up" to the elevator.

"Catching up" also implies that somehow Manhattan is guaranteed to decline no more than the average, despite a much frothier peak.

"hejiranyc, i don't think that's when the majority of new grads start, at least in the higher-paying professions. many go poncing off to europe, etc. and start later. i remember being the only one i knew who started in June, because i went to work for CBS publishing after graduating, and didn't go through an on-campus recruiting program. when my husband graduated from law school he ran into a partner at a Yankees game who asked him to start early because the firm was swamped. he started in August and was the first to arrive."

Historically, August has been the busiest month for RE rental Agents with September 1st being the number one move-in date. I know when I graduated and started at Arthur Andersen, it was September 12th or something like that and there were plenty staring around the same time.

Yeah, my analogy wasn't perfect.. I was going to add something about the guy falls to the floor when you are only going down to the 5th floor, bla, but you see why I just went for the briefer but inaccurate analogy.

But, yes, "catching up" makes the huge mistake of not being open to the possibility that NYC might slingshot past the rest. Thats usually what happens when something is going at a faster pace.

So, cleaner analogy.... the guy going 120 mph who just got behind you is "catching up".