What did I tell you?

Quite simply ->

[pace of wealth creation (new demand) < [pace of condo completions + standard seller pace (new supply)]

And will be for quite some time.

it's the end of the world as we know it......

not at all.. NYRE prices will, tho, be much lower in 6-9 months

Might be the end of other-worldly Manhattan pricing compared to other major US cities.

Were the 1990s so long ago that suggesting a return to it on an affordability basis in Manhattan is to suggest the end of the world? Its really effing nuts.

as a lifelong resident of NYC i have been disappointed at the price discrimination that has gone on as we have bubbled--ny used to be affordable to families where couples worked in publishing, advertising, academia, art etc--these families represented a good piece of the soul of NY, a counterbalance for the those with much greater incomes in finance, law etc--most of these families have been priced out of recent, with many moving to the suburbs or out of the metro area entirely--if this correction makes NY again affordable to this now-miissing element, that would please me hugely--if youre long, wrong and in duress as a result; your main concern is that the market rebounds to alleviate your pain

a reversion to more affordable housing would be a big change, but for the better--apologies if you got suckered into buying into the bubble

the next bubble is starting. All you market timers better pay attention or you'll miss your chance again. Dow to 15,000 in 2 years. RE back to highs in 2 years.

Enjoy paying rent for the next decade market timers...

What we have here is bunch of people who got long RE as a matter of greed and they enjoyed making easy money for several years. Now the tide has turned and they cant take the pain. For those who just happened to buy thier place at the wrong time, I do feel for them. But such is the game of investing.

"Quick buck artists come and go with every Bull market - the steady players make it through the Bear markets."

-Lou Manheim (Wall Street)

Prime properties priced for todays market continue to sell with remarkable speed. I would argue that 235 contracts signed in the past week in the middle of summer hardly points to a second leg down. Perhaps the market is changing to the extent that buyers are now more selective and less willing to compromise on location, condition and price. Clearly the sellers that can offer all three are being rewarded. When anything meeting the three key criteria pops up, its gone.

What I think is more likely is a return of outlying neighborhoods to your 90's affordability but I don't see that translating to prime WV, UWS, UES, etc. unless the bottom drops out of our beloved equity market again. Real estate may be the least of our worries if that happens.

"Dow to 15,000 in 2 years"

with the fed printing hundreds of billions of dollars out of thin air, it just might be possible

I was being sarcastic. This site is full of a bunch of bears that love nothing more than patting each other on the back while coming together in negativity and immediately shooting down any positive news.

I always wondered what living in the Weimar Republic would be like...

"with the fed printing hundreds of billions of dollars out of thin air"

UD, do we have to go through this again? The Fed is NOT printing money. It is monetizing assets. A very different animal.

Can asset monetization cause inflation? Yes, if there is velocity. But right now there is no velocity, hence no inflation.

"Printing money" is depositing money into banks without collateral - that is, a one-sided accounting entry. That is NOT what is happening.

STEVEJHX - my dear friend, please interpret this statement from the NY Fed regarding their quantitative easing policy and buying GSE agency debt from primary dealers and money center banks on account with NY Fed and tell me what it means:

http://www.newyorkfed.org/markets/gses_faq.html

Q: Are these operations reserve neutral?

A: No, these operations are financed through the creation of additional bank reserves.

"creation of additional bank reserves." - that is the fed's way of electronically printing money

im asking because I want to learn, not debate here. I interpret this to mean to 'create additional reserves', as in out of thin air, with a mouse click, bammm, the fed buys agency debt from primary dealers with money that was not there before or without selling any asset on their side making it reserve neutral. Am I wrong? If so, please explain in idiot form so I can grasp the main difference you speak of in regards to what fed is doing with 1.3Trln of agency debt/mbs and 300bln of treasuries via OMO. Thanks

Let me take a very simplistic crack at this..
Normally when the Fed prints money it gets lent out and is put in people's hands. Now, because of the gaping holes in balance sheets everywhere and a dearth of good places to invest, it is just filling those holes. If that money doesn't get to people, it can't be inflationary. It is merely countering the MASSIVE deflationary forces created by the bubble bursting.

Inflation kills financing. Easy financing is why prices are out of whack with rents to begin with. Therefore, do not count on inflation to bolster the value of real estate. Higher interest rates will offset the impact of higher rents.

Evillager - 1000% agreed! But that doesnt mean the fed is NOT printing money out of thin air, electronically, to finance operations via OMO at NY Fed! I discussed and argued before (http://www.urbandigs.com/2009/06/nenner_deflation_now_inflation.html) the sterilization that the fed is doing by paying interest on reserves and how excess reserves are surging because of that and because banks quite simply, dont want to lend to a consumer whose credit quality is deteriorating and so many future loan losses to absorb. Add in that deflationary forces will negate inflationary forces and that the destruction of wealth in shadow banking system is far greater than what the fed is printing. Im in deflation camp. however, the question stevejhx is raising is:

a) is the fed printing money out of nothing, or
b) is fed monetizing assets, therefore not printing money out of thin air

I say the former. M1 Multiplier has plunged and our fractional reserve system is not multiplying money, creation of credit/debt, the way it normally does. That is a deflationary sign, as you say. This is why I disagree with the hyperinflationists out there and remain in deflationary camp for now. Will those excess reserves get lent out? Will fed stop paying interest on reserves? Will fed raise reserve requirements? What is their exit policy to stem future inflationary pressures if all that money sitting idle, just gets lent out. Certainly the banks would want to lend with a ZIRP policy, but creating bad loans they know will seal their fate in years to come. So they are actually being prudent. Again, not inflationary.

My question is based on steves response that the fed really is NOT printing money, rather monetizing assets

I don't know about you boys but, I have wo suits in my closet, one Bull, one Bear. It's not like all of us manic depressive bears are having 'our day'. It's those of us that changed suits early on and began shouting about it that can't stop patting our backs. allow us to wallow in our remarkable foresight. I am a bear with an itchy trigger finger. The clan has been wooing me to hold back on a purchase. Seems like good advice so far.

stevejhx? any chance you can provide your thoughts?

"the next bubble is starting. All you market timers better pay attention or you'll miss your chance again. Dow to 15,000 in 2 years. RE back to highs in 2 years"

- Perfitz, King of the Idiots (who said "Manhattan RE up 15% up in mid-2008... which is right before it went down 25%, for those who know as little as he does)

oh yeah, and he's also the guy with the Las Vegas RE "investment" he bragged about, and then we found the news that it went bankrupt

so Rhino you quote the subjective comments of a fellow bear to 'prove' your point? and i love the overall argument - its a can't lose - lots of properties trade hands and its 'well, just the last of the buyers getting filled, we're going lower'. and if volume is low its 'see, there's no demand, we're going lower'.

funny how i never heard about the W shaped stock mkts in the winter from the doom & gloomers - it was all 'we're going straight to armageddon', 4500 DOW. now that we're at 9k, the W has emerged.

try saying this 'I was wrong'. just 3 little words - i promise you, you won't spontaneously combust if you do.

I will easily say "I was wrong"...when I am wrong. If real estate in Manhattan is higher in one year, call me out on it, and I will admit I was wrong. I opened a discussion with the quote, offering my interpretation. I never said I proved anything with the quote. And I am not sure Noah can be called a bear. Also Printer, don't make the common error of equating the stock market with the Manhattan real estate market. That didn't work out so well from 1987 to 1992. So please do tell me what I have been wrong about...and while you are at it, tell me what you have been right about.

You wrote 'what did i tell you' - I don't think I'm mistaken in interpreting that as slapping yourself on the back for being proven right.

where did i equate the stock mkt with the manhattan real estate market? those are two separate comments. that being said, i do think that we'll have greater correlation this time, simply because on the downside we saw unprecedented correlation of risky assets, so its reasonable to assume that we will see some correlation on the upside as we climb out of this. that said, from a historical valuation standpoint stocks didn't get as rich as real estate, so they were relatively cheaper after the fall, so its not like i expect to see real estate reach those peak levels again for quite some time.

you were wrong in that you never predicted the tremendous pickup in activity that we saw, or the turnaround of financial earnings. i was right on both, albeit they happened more quickly and to a greater magnitude than i anticipated

Fair enough, the wording can be interpreted as a victory lap. I more so meant to initiation a dialogue.
As far as the pickup in activity, who cares? Inventories did not fall meaningfully and prices did not respond. And I don't recall you predicting that, or financials earnings. I suppose you made a killing trading financial stocks? If you did, god bless. If you didn't, what are you bragging about.

http://www.streeteasy.com/nyc/talk/discussion/10062-where-were-going-from-here-the-bullish-argument?page=1

all right here - from 3 or 4 months ago. and notice in the prediction that while i called for activity to pick up, i didn't think that inventories would drop nor would prices rise as a result of it.

i did not, unf. make a killing in financial stocks. when i bought my place 4 yrs ago i sold all of my financial stocks on the theory that i had enough exposure to finance through my real estate holdings.

So you predicted real estate activity in the typical busy season, just not as much as we saw? So you predicted the seasonal pattern. Fantastic.

And you were so confident about financial companies that you didn't put a cent behind it. Even better.

Now, please tell me why on earth you are calling me out? You are about as useful as tits on a bull, apparently.

so, printer, you lament not being long financial stox from 4 years ago?

He likes to predict real estate activity, but not prices. He like to predict financial company earnings, but not buy and sell stock.

what difference does it make whether or not i made money on financial stocks? its not like i'd have shared the gains with you.

and apparently you can't read - i didn't predict a seasonal uptick in activity, which by the way, is something no one predicted. its just more after the fact rationalizations on part of the bears as to why the market has stabilized. when the banking system was verging on collapse in the fall and winter, i didn't see anyone predicting a 'normal' market in the spring. crashes don't observe seasonal patterns. no one says 'well, i think that prices are going to drop 20% in the next 3 months, but who cares - its just important that i get in by summer'.

face it, your armageddon didn't happened.

I never predicted economic Armageddon. I predict continued decline in real estate prices. And one year into a correction, and 30% down, I don't think I need to admit I am wrong. This is particularly given the fact that most downcycles last three years or more. I think you want to call me wrong about things I have never said. Shove it up your ass. I made money on the long side of the stock market this year. You don't know what you are talking about. You bulls on the real estate market are taking a victory lap over contract activity and the S&P, neither of which mean a fucking thing if real estate continues to sink, as it has.

obviously i'm not upset that i sold the financial's 4 yrs ago, but merely pointed out that my exposure to financials (indirectly) through ownership of manhattan real estate prevented me from adding at the bottom.

Rhino, again, read that thread. in there i did, in fact, make quite specific predictions about prices. also in that thread is your boast that you are 'as bearish as the next bear'. as there are many on here who predicted that activity nor prices would stabilise, i put you in that camp. of course now that they have, you revise your theory to make it that we are plateauing before the next leg down. and when prices are up, you'll say that you aren't wrong, its just a 'counter-trend uptick in a longer term trend down' or some such BS

Try to speak English fool. I am as bearish on Manhattan real estate as the next Manhattan real estate bear. I never said anything about activity. That said, there is no evidence that activity has occurred at higher prices, or that the downtrend that began last September has reversed itself in any way. So again, what are you talking about? Don't try predict what I will say and when. Do yourself a favor and try to make money on your own predictions. I don't give a shit about your view on the stock market or your view on financials' earnings. This is a real estate board. Despite activity, prices have not risen and inventory has barely been dented. In one breath you are saying when I am wrong, I won't admit it...on the other, you are saying I am already wrong about something I never said. Get your shit together. Being right about financials is making money. If you didn't shut up. When Manhattan prices rise, I will be wrong about the downtrend continuing. Until then, I am right. Don't try to pretend that I said that prices would fall continuously without pausing. Ironically, I think the activity you are jerking yourself over actually occurred in Q2 at lower prices than Q1m but we won't know till the data comes out.

When activity leads to lower inventories and higher prices, I will be wrong. Until then, see above. The activity has abated. If it wasn't seasonal, why did it abate? If there weren't just as many new sellers, why is inventory basically flat at historical highs? Put that in your pipe.

"a) is the fed printing money out of nothing, or
b) is fed monetizing assets, therefore not printing money out of thin air"

answer is choice c, monetizing assets by printing money out of thin air. everyone keeps talking about how the fed has dramatically increased reserves and yet those reserves are in turn not being lent out. therefore no multiplier effect and therefore no inflation. and thus far, its been true because the equity in banks has been crippled. but how long will that last?

it will start to happen as soon as banks get healthy enough to repay TARP and greedy enough deploy capital to make money. both of those have started to happen. and the market is increasingly flooded with liquidity. the multiplier effect can and will start to kick in, its just a matter of time. banks already feel healthier, just look at their stock prices. what does everyone think has been propping up the debt and equity markets? they are the canary in the mineshaft of asset inflation.

rhino, i also have to think that there is a very finite number of buyers who are both interested in entering at the "corrected" price levels and who are able to obtain financing to do so. even with a mortgage contingency, not being able to procure a mortgage is not a fun experience, and could keep those who tried and failed on the sidelines for quite a bit longer. others probably had a quick chat at the bank and learned how futile any efforts to buy would be with their current situations. it takes a lot of cash to buy right now, as well as impeccable credit. only so many ready, willing and able superbuyers.

Superbuyers are what used to be referred to as buyers before the credit bubble. This is why despite a stock market rally, apartments are destined to become a lot more affordable to clear the market.

actually, rhino, i bought twice in manhattan before the credit bubble with 10% down (1996 and 2001). i had to be approved for pmi, but it was nothing like what it is today.

Really? Good. That should mean we are going lower.

wow - lots of anger in those posts - clearly i've hit a nerve. and the statement 'being right about financials is making money' is an absurd statement. so if i predicted the yankees would win before last night's game, and they did, but i didn't bet on it, i was wrong? nice logical thinking. which probably leads to your other statement that how financials do has no impact on manhattan real estate - right, i forgot, wall street incomes and employment have no impact on this market. my bad.
and again, i never stated that the pick up in activity would be at higher price levels. i know you have a difficult time following a reasoned argument, but activity at lower prices is the first step towards clearing the market out, laying the groundwork for higher prices in the future.

"

as a lifelong resident of NYC i have been disappointed at the price discrimination that has gone on as we have bubbled--ny used to be affordable to families where couples worked in publishing, advertising, academia, art etc--these families represented a good piece of the soul of NY, a counterbalance for the those with much greater incomes in finance, law etc--most of these families have been priced out of recent, with many moving to the suburbs or out of the metro area entirely--if this correction makes NY again affordable to this now-miissing element, that would please me hugely--if youre long, wrong and in duress as a result; your main concern is that the market rebounds to alleviate your pain

a reversion to more affordable housing would be a big change, but for the better--apologies if you got suckered into buying into the bubble"

Well said. I've been trying for a while to express the sentiment that substantially lower prices on Manhattan RE will probably lead to a BETTER quality of life, not a worse one.

special - yes multiplier effect will return at some point, but what about FASB acct rule changes that will reverse soon and make banks balance sheets more pressured? Nobody discusses this! Off balance sheet and M2M rule changes will be undone. BAC has 150Bln off balance sheet, C over 1Trln. Anybody wondering why C isnt participating in the rally, now you know. But markets love out of sight out of mind. Kick the can down the road as long as we can I guess. At some point, it all comes out.

http://www.housingwire.com/2009/07/23/150bn-of-assets-may-return-to-bofas-balance-sheet-in-2010/

"Bank of America (BAC: 12.69 +3.76%) may soon bring some $150bn of off-balance-sheet assets back onto its balance in Q110 with the implementation of a new accounting rule, FAS 167, potentially pressuring its capital reserves."

WFC, C, BAC, MS, JPM, all utilize off balance sheet conduits and vehicles (sivs, spvs) and the recent accounting changes to their advantage! Soon that will be over and Bill over Calculated Risk just recetly says, 'he will believe it when he sees it', because they know how bad the toxic stuff still is hiding in these vehicles! But why ruin a good stock party! Who wants to hear about this stuff. Its better when its out of sight!

http://www.calculatedriskblog.com/2009/07/bloombergs-weil-on-proposed-new-fasb.html

Printer, you are the one that called me bitter for being wrong and not admitting it...in the future. You are quite an oracle. All you can do is brag about the financials' earnings you didn't make money on and call me out for not admitting I am wrong about something that hasn't played out yet.

You are right, the activity is the first step...and it just stalled out before inventory budged. Again, see above and learn something.

I admit you were right about financials' earnings...I am just calling you pathetic for bragging about it if you didn't have the balls to bet on it. Is that clearer?

Further, I am calling your logic convoluted for accusing me of denying a recovery that hasn't even begun to happen....the first sign of which has already sputtered out in three months, per Noah.

"I admit you were right about financials' earnings...I am just calling you pathetic for bragging about it if you didn't have the balls to bet on it."

Does it matter if he bet on it or not? He called it. Admit you were wrong.

Did I make a call on financials earnings? Or are you referring to the price recovery in Manhattan real estate that hasn't happened yet that I am already denying being wrong about?

Wrong? You bought in LIC during the initial stages of a rollover. LMAO!

it's ok rhino, they've been able to rent out 40 or so of the units at the Powerhouse, and even sell 60 since starting closing months ago, out of 177. they're doing fine. a lender's dream.

Is it me or was it weird for ericho to fly in out of nowhere and demand I admit I was wrong? About what? I love how being bearish on manhattan apartments is the same as being wrong about any bullish action in any market. Insanity.

stevjhx - did you ever get a chance to read my response? any thoughts?