Where did all the buyers go?

wow, that certainly puts things in perspective.

Separately from this data, I note that when I see a deal close on Streeteasy these days that's basically in my price range (<$500k), I look at the closing data and it seems that pricing is in line with late 2006-early 2007 levels.

Which is weird. It means that the deals that are closing are still in line with near-peak bubble pricing levels.

Did the peak in Manhattan real estate actually occur a bit later than elsewhere? Maybe in early 2008?

I thought in most other parts of the country they hit the peak of the bubble in 2007.

thanks for any insights.

gg, are those you have saved? because i've just started noticing prices falling dramatically at the lower end in manhattan.

$300k for a sponsor studio in the Park Vendome, etc. lots of properties selling in the $500-600psf range. and finally, prices in the 2004 range. although for some perspective, at the Park Vendome the same line studio sold for $155k in early 2004. It's like someone just hit a switch in late 2004/2005, which i would guess coincides with the demise of underwriting standards.

I'm still here.

I'm sorry, aboutready, I haven't been saving the closings I've looked at.

But your info about the Park Vendome deal is very interesting, thanks for that. It speaks to my point, ie the buyers are not demanding price concessions that reflect the pre-bubble runup. They are still paying bubble prices. Early bubble, but definitely still bubble.

And as you say, the bubble was created by the loosening up of underwriting standards. So if we are going to return to a market that is "anchored" by reality, in which prices are determined by the amount of *qualified* demand, then it seems to me we're not anywhere close to bottom yet.

Of course maybe the bubble won't really burst, maybe it just deflated a little for awhile in late 2008 adn 2009 and now it is getting ready to inflate again.

I hope not, because I think that's a recipe for disaster in the economy in the long run. But I don't know. Real estate developers run this town, they have done so for a long long time.

I don't think this puts much into perspective either way. I would say that most people took August off and we will see which way things are going in September. My saved lists are definitely showing an uptick in new listings over the last week or so, which confirms my belief (and many others) that a lot of that pulled inventory will be coming back on in the next month.

malthus, i do think that many of the younger savers decided to go forth and purchase. there are only so many people who've been priced out and yet able to save the amount needed to purchase, and most of those are in the conforming market. the question is how many more are there? i think there are many potential sellers, including distressed ones, but the interesting portion of the equation is how much pent-up demand is there?

the purchasing rate for the early summer was quite high, indicating some unusual demand. the inventory certainly declined, but there was still plenty of it out there for someone who was interested.

gg, the bubble is still being propped up, particularly at the lower end. if it doesn't burst, the problems will just keep on comin'. but i am seeing 2004 prices, which are often significantly lower than 2005 prices. studios were one area where prices became simply insane. i personally feel that prices would be rational at a 1998 or 2000 level. we shall see.

aboutready, why do you feel prices would reach 1998/2000 level?

we've had a couple of bubbles. get rid of the bubble activity and look at where real incomes are in comparison to prices historically. then look at inventory increases and decelerating demand due to unemployment and lack of mobility into the city, distressed sales. and underwriting standards. if allowed to do so, prices have the potential of overshooting 1998, but the powers that be won't allow it. they'll try their best to prevent any further fall. but we shall see.

Aboutready: There's a huge difference between early 1998 and late 2000. I can easily imagine late 2000 levels for some sub-markets, just based on changes to fundamentals (credit, income, wealth) that have already taken place but are not yet reflected in apartment prices. 1998 is a different story altogether, especially if you mean nominal rather than constant dollars.

real dollars. 1998 was the start of the economic bubble. we'll have to see where wages go to. i don't think many people contemplate wage deflation, but it is happening in the law, i can see it happening easily in tech and finance, particularly once the bubble-propping activity concludes, and it's virtually a further certainty in medicine. plus the debt that is now necessary to get the advanced degrees required by those areas will guarantee that most early buyers from highly paid professions will have huge debt loads, unless the family is wealthy. and there are fewer families with that kind of discretionary wealth. it will be interesting to watch.

AR: I am not in denial about purchasing activity early in the summer but was more responding to the original chart that was posted. Whether we will see a return to that early summer activity has been one of the main topics here for the past couple of months. I know what I think but I also think that August results will prove to be a poor indicator of anything. I have not followed the submarkets as well as you have.

To the wage deflation point, see the WSJ article today on how corporations are pushing back on billable hours for lawyers. Pfizer expects to cut its legal bills by 15-20% this year by going with flat fees. You can be sure that a large portion of their outside firms are in Manhattan. And Pfizer is probably one of the firms that is current.

flat fees aren't always a bad idea for the law firm. but they lead to higher productivity, which leads to less demand for employees. unless we can come up with some groundbreaking areas for expansion, we're not looking so healthy.

Seasonality........that simple.
Been to any OHs in August?
If you have a good property youre going to wait till after Labor day to have an OH.
I've written this B4. The fall will tell the tail. If we see a large up tick in closings in October/November this may indicate that the 'price componet' of the market has stabilized. If the season shows a lack of luster we will be in for another correction. I really can't get a fix on the future. I really comes down to the glass half full/half empty senerio. If the fall brings around the W in the equities market that everyone has been expecting than the RE market will tank. This summer has seen the combo of pent up demand coupled with an equities rally that has breathed the air of confidence into the the lungs of buyers. The stock market is not the economy but it serves as a future barometer. Like I said if the equities market takes a dive it's going to suck the air out of RE buyer.
This leads to the final question on every buyers mind. Do I pull the trigger now or do I wait?
I'm a buyer and I just don't know. I have a dream apartment in my sights, in fact 15 and 30 yr interest rates are low low low. Imagine a 30yr at 5.250%(1 point) and a 15 at 4.5%(1.125 points). That is historiclly crazy low. The economist in me tells me that rates are gonna go up up and away, not in 5 min. but, soon enough. I predict that we get back to my youth when a loan could be 18%! There are alot of opinions on this site about this exact topic. I hate to be so elementry in my thinking but, if your going to take a 30yr fixed the lower the rate the better. This is an interesting window of time. Desending RE pricing and low interest rates. Am I going to be a garvone and punish myself...can't decide.

Falco, Its hard to argue with dreams but it would be quite an anomaly to see prices holdup if rates go up along with joblessness. NY mag asked five experts on NYC's economy their outlook. It is interesting that the most bullish of the five comes up with "people have learned how to cope."

http://nymag.com/guides/fallpreview/2009/businessmedia/58454/

nyv_observer, why did the Rushmore trade at $2000psf in 2007? It think it all started with MTV's Cribs... it's the first inkling I can recall where people starting looking at these crazy assed Football players "homes"... and the mania started to spread...

$500psf... no problem... LMAO... people have such short horizons as to be moronic... I did trades at $300psf all the time in the mid late 90's... there's no reason the greatest asset bubble deflating won't undershoot to those trades... fuck WWPlaza traded at $300psf and change... or was it $400and change... no matter the $1000psf is DEAD long live.... (fill in blnk)...

If you try and analyze risk and downside out of the equation, you end up chasing your tail until it's time for assisted living. When interest rates start ticking up, how long will you have to wait until prices moderate in response? When the "bottom" is in, will the world stand by while you select your perfect home? It never ends, but in the meantime you have to live somewhere. The obvious answer is to rent and let someone else deal with it. But I'm not a renter and owning 7 properties since the mid 80's has provided me with gains that when put into perspective have allowed me to live free and bank $$. But above all else it has allowed me to be my own master. So you use your best judgement and rely on some gut instinct. It hasn't failed me yet, but I'm keenly aware there's always a first time. So you live modestly and always imagine a worst case. If you can live with the worst case or see yourself able to scramble out from under a collapse, then you know that whatever you're looking at might be your new home. If you can't see yourself living in the kind of apartment that dovetails with your cash and income, then wait and take a chance that prices will moderate enough for you to get into what you want.

Oh, and who knows about that UD graph. Could be they have changed some parameters and it's no longer graphing averages. Looks like it just plotted the Sunday numbers.

67, you are so right, perhaps it's because so many brokers/sales agents are so young or new to the trade, or they are just blowing smoke. I found this recently, price/sq ft on the UWS:

95 - $341
96 - $320
97 - $460
98 - $445
99 - $469
00 - $633
01 - $734
02 - $803
03 - $842
04 - $1,015
05 - $1,181
06 - $1,216
07 - $1,352

Now granted, the housing stock has change a little (ie, more high end, perhaps larger units), but it is clear there is plenty of room to fall. Compare that to compensation. I am also looking at a chart of investment banking compensation from 96-08. Guess what. In nominal dollars, at most levels, compensation is flat(was higher in 06-07, but it's back down). And avg comp throughout the 90s is also higher than avg throughout 00s, at most titles from low to high performers. Again, I understand that it is just one piece of the puzzle.

Where's the bottom? Who knows, but I don't think we are there yet.

spinniker.. as much as I agree with you and that we have a limited time on our blue marble... I just don't think 12 months since (not even) lehman is what I would call anywhere near bottom.. I think you may have deluded yourself into thinking it was bottom b/c you have been looking for so long and were SE educated... that's totally cool.. you held out more than a ton of people.. but from my prior experience in these downturns (which is like a magnitude smaller)... the the first jumpers get eaten by the sharks... gotta wait till the sharks are pretty full, bf you dip in.... IMHO (w/ 20 yrs experience in NYC RE).....

Pleazzzzz... there will be tons of more sellers that are licking their chops at the activity and think allz clear this fall... just wait and see....

looks like i was off by a year. 1999 or 2000. i recall vividly the run-up, as i had sold my unit and was looking for a place to buy post-closing. every month prices just seemed to fly upward. $469 to $633 in one year. that was some jump.

once again.. I will point out a "home" ceased to be such in 2003 (or thereabouts)... just think what a $1MM buys you... a college fund, trips around the world, retirement etc etc etc... vs. a studio at $1500psf.... now every persons story is different... but you can't convince me that a dog walker/massage/back room techie guy/ barmaid/ double down RE borker.. .can support a $5000/month carry... not for long when income stop growing.... just a slow monthly bleed until the keys get mailed or seller gets religion... the first choir sang a 12 months ago.... plenty of non-believers here in NYC RE... .

c'mon 67, you can't fool me. I know you're looking hard. I'll give you till Q1 2010.

absolutely.. but you gotta remember.. my wife just went private 2 yrs ago (it was always a stretch on a faculty position at $175K/yr and my income).... in addition, I made some investments in 1999 that just paid off ( on the magnitude of $100Ks), plus we banked our savings in the interim over the 20003-2009 period (you can ask Aboutready, I own 1bdrm coop on w67th... that is a "home" for my parents and a little place for my kids if they get into Columbia/NYU/Julliard).. so I am looking... "MY" situation is different... my wife can get 30 jobs in an instant.. I'm locked in till 2014... so I'm looking for the distress that needs cash in a 50% down bldg.... and I will not pay 2003/4 prices.... i'll do 98' to 02' price on distress for 3brdm.. on UWS... i still don't see it... but give me a holler when you see it...

"so I'm looking for the distress that needs cash in a 50% down bldg.... and I will not pay 2003/4 prices.... i'll do 98' to 02' price on distress for 3brdm.. on UWS... i still don't see it... but give me a holler when you see it..."

nice situation to be in! my gut feeling says you will be able to chose between a few units within 2-3 years. there's not gonna be a fast capitulation here as in other mkts plus we started going down later than most areas.

One thing no one's mentioned is the European component to the NYC RE scene....if the dollar and the euro get too disparate, there will be that added to the mix to keep the market propped up...unfortunately....

180 - Is that 180 RSB??? Some truth to that if fed keeps interest rates low and dollar tanks as a result. 80 RSB (Rushmore) just saw a white knight Parisian drop $1500psf on a 2/2 in a pretty distressed development.

Ahhhh. The French baker will save us line. May I get a side of French fries wit that? Lmao

The buyers are here. Just waiting for the sellers to get real before we buy.

For information - what would an UWS classic 6 or classic 7 have sold for in 2000? (leaving out CPW)

the buyers have not went anywhere. This is the summer, which is normally the slowest time of the year.

"absolutely.. but you gotta remember.. my wife just went private 2 yrs ago (it was always a stretch on a faculty position at $175K/yr and my income).... in addition, I made some investments in 1999 that just paid off ( on the magnitude of $100Ks), plus we banked our savings in the interim over the 20003-2009 period (you can ask Aboutready, I own 1bdrm coop on w67th... that is a "home" for my parents and a little place for my kids if they get into Columbia/NYU/Julliard).. so I am looking... "MY" situation is different... my wife can get 30 jobs in an instant.."

Wow, the profile of you and your wife sound impressive. Your profile would be even more impressive if it was half true. As I recently mentioned in another thread, people who brag about having tons of money usually don't have anything. The best way to show that your a pauper is to play the whole "I'm richer than you" game...

ph41, I remember looking at some classic sixes at around that time and I believe the prices started at around 700K

What a relief!

"the buyers have not went anywhere."

So a range for a classic six even back then (wide variances for location, condition, price) would have been between $700K - $1.1/1.2)? And location back then would have been even more importantant re: good vs. bad?

El_P, wife and I consider ourselves bottom quarter from her graduating class... now I know it's hard for you, but forget the "an anonymous poster getting angry at an anonymous poster's "puffery"" craziness for a moment. WTF do you think I am on here for? It's to point out the insanity that was/is NYC RE in 2004-20009 (yes still is). When I and the mrs (i claim no rights to her assets or income, who knows maybe she's banging the new male nurse for all i know? ) couldn't afford NYC and decided to rent all those years that f'n speaks volumes about the shit you and your ilk were selling and still are.....

May the GOD OF CASH FLOW have no mercy on these lemmings who bought in NYC in the last 5 years....

yes ph41.... $600psf.. so 1800 sq ft c6/7 would've been $1,080M... welcome to the RE BUBBLE OF THE LAST 150 years!!!!!! Anyone arguing differently, owns or is a borker... THIS WAS THE ONE BUBBLE.... and the lemming are printing at 2004 prices and then jerking themselves off again... LMAO... get more popcorn. This porn movie ain't over... here comes the pizza delivery guy right on cue, 5 minutes into the moive.... Nice nice...

"the buyers have not went anywhere. "

the buyers have not gone anywhere.

as someone who moved to NYC in 2005 and has steadily watched the housing market since then, i can add the perspective of a "newbie". do prices feel much more appealing than they did 1 - 2 years ago? sure. but in the back of my head, as i run the mental math of a banker's corporate manager's combined monthly take home versus the monthly cost of a nice 3br in an area i want to live, i just can't make it work.

my wife and i joke about it all the time - how can we make what would be an ungodly sum in nearly any other city in the world, but basically feel like we're being priced out of the city. doesn't make sense, which is why we wait in a rental apartment.

not that paying 5k in rent feels any better, but it's a lot less risky than the alternative, which if i had bought, i wouldn't have had a good night's sleep from basically March 2008 to April 2009...

w67thstreet you always make me laugh. Save me a slice of that pizza, I just can't bring myself to break away from the movie right now lol

PH41: We bought a pre-war in prime UWS in Jan. 2001. It was a sponsor apt & needed complete renovation but we got it for 799K. It wasn't quite classic 6 b/c no "formal" dining room but it had 2 generous BRs + maids room, 2Bath & a large living/dining area w/space for eat in kitchen.

w67thstreet is my hero !! Crush with your logic these buffoon owners..MAJOR CHOPS coming to NYC by this winter...

Thanks Lases - in many prewar 6's the dining room could be the third bedroom or the dining/family room. So, even then, (renovation hassles and pain, as well as expense, and believe me, I do understand that)you are close to or over $900K? And if you were looking to sell it, which, I am sure you are not, what would you think is a "reasonable" price?

I could have spent another $70k (or 7% of my purchase price) on rent for another year, take a chance on interest rates and hope that my target apartment will drop more, or just buy now. For me the decision was pretty easy.

Wow spinnaker1 70k a year for rent?!?! Where do you live? I don't spend anywhere near that!

is that net of your monthly carrying costs?

well, i would be paying at least $70k to buy right now (it would have to be better than what i rent), and as amortization schedules don't give you much the first few years, i'll take less than $50k to rent. if and when i buy it will be a 15-year loan. for me the decision isn't hard. but then again i don't mind renting.

'people who brag about having tons of money usually don't have anything.'

Pres,
If I wasn't on this chat board for such a long time I might be inclined to agree. In this case, IMHO, I think your wrong. 67 has been on board as long or longer than me. You know I'm here almost every day. I have never heard bragging form this poster and after such a long time to reviel tiny personal tidbits must be taken as truth. If he was new or constantly bragging that would be another story. Here it's not the case. By the way if you read 67's post the 'tons' of money don't come to my mind. I picture a guy and his brainy wife working their asses off saving pennies for the monster score. The longer your on this board the more familiar you are with the regulars. Prehaps you have read posts where I have defended you? It's not that I agree it's just that there is plenty of room here for alternative ideas.

Spin,
I here you. I want to buy so bad I can taste it. I'm tired of looking and I'm ready to move. I can spot a place thats right for me in 2 seconds. Allow me to share a personal RE nightmare. 1986 finds little falco finishing his fellowship and ready to join his father's very hugh and successful practice. Little falco decides that rent for losers so...he buys over his head, in the Corinthian at pre-constrution prices. He moves in 1988 upon completion. For a few short moments little falco is on top of the world. Then the RE crash. Little falco hates working for daddy, struggles with the RE payments and is now trapped. My bullshit one bedroom that cost $329,000 in 1986 I can't give away and for the same money in 1991 could buy a palace. I tried to unload that place like it was plutonium. There were no takers. So, I sucked it up, rented it out and moved in with a buddy and slept in the living room. I ditched my fathers practice, scraped some money together and opened my own show from scratch. It was a monitary nightmare. How ever long you think things take, they take longer. Jump forward 20 plus years, I have a business that casts a shadow on my fathers business (size wise), I still own that bullsit one bedroom and have rented out ever since. The value did recover and then some, all paid off and a revenue stream.
In the end it worked out but for a while there I seemed like the gang that couldn't shoot stright. I always wonder what would have happened if I had taken the time in 1986 to the RE market. Prehaps I would have waited and ultimatly made my life easier. People who tell you it's not about timing make their money from fools.

I really don't mind renting either AR. I would just like to have a place of my own but it isn't necessary. Which is why I've walked 3 times from negotiations when sellers tried to get me to offer more. Unless I get a great deal, I'm not budging. Owning is a want not a need.

taken the time in 1986 to educate myself to the RE market.

Holy cow! I'm so damn wordy today...sorry folks.

I enjoyed your post falco. Thanks for telling us about your 1st experience in NYC real estate.

falco, love the personalized touch. but you do realize you hit pay dirt (albeit late) at the Corinthian, no? that is my poster child for excessive appreciation since 1998, along with the St. Tropez and 333 (or so) East 79th.

do you have a nice rental? i don't know if i'll ever buy again. and i've taught our daughter well. she is 12 but realizes entirely that owning and renting are two alternatives. she looks for properties and does the numbers and has sadly reported that she still doesn't think it's a good time to buy. although i've given her a couple of rooms upstate to renovate, so that might be keeping her content.

just think of the awesome freedom, retirement with a cheap rental, and 3 to 6 months of the year spent travelling. i'm looking ahead, and i don't see any real appreciation from buying, so, freedom here i am!!

Ooo 3 to 6 months a year spent traveling sounds like a lovely way to retire AR, good for you for keeping your eye on the prize. You're right owning isn't all it's cracked up to be. There is definitely more freedom in renting:)

ph41, we ended up buying 2br coop in 2000 not a classic 6. We sold it last summer and bought a classic 6 condo. Total got out reno needed and not prime UWS (110th and Broadway) which we love but we didn't even consider such location in 2000. We paid 990K +the renovation costs. I have no idea how much it is worth today. I suppose you can just subtract whatever the % drop there was in one year. I would really hope at least 1.1 but probably not.

streeteasyaddict, do you have the link for this?

I found this recently, price/sq ft on the UWS:

95 - $341
96 - $320
97 - $460
98 - $445
99 - $469
00 - $633
01 - $734
02 - $803
03 - $842
04 - $1,015
05 - $1,181
06 - $1,216
07 - $1,352

glamma, i can say as someone involved at the time it seems right. although prices for coop are about 6-12 months lagging, which may explain why i thought prices were escalating in 1998-9.

i'm not doubting it, i want to look up other neighborhoods

Thanks for posting this glamma, where did you find it?

falcogold1: great posts. Hitting lots of nails on lots of heads. I could write a detailed response, but it would get boring seeing "I agree" 25 times.

Ph41: alas, I'm a rare lucky gal. Sold it last year pre-Lehman collapse to move downtown. Rented for a year + Looking to buy now. Guess my stars were aligned.

oh, sorry didn't see your other question... it was closer to 1,500 sqft. Great bldg in the W70s.

Lases- great timing - hope you do well downtown.

streeteasyaddict posted it - i am asking the same question!

thx. I sort of miss the uws though & loved my old place...you a buyer? I have lots of opinions about my old neighborhood so ask away if you're interested.

Glamma, unfortunately I don't. I have it in hard copy, in a presentation I got from someone who works in development.

glamma, this is from 2003, but it is an interesting report nonetheless. doesn't discuss prices by neighborhood, just generally for manhattan.

http://www.manhattan-institute.org/html/cr_39.htm#12

there is similiar data on trulia

Here are UWS $/sq ft numbers next to annual CPI figures (found at http://www.inflationdata.com/Inflation/Consumer_Price_Index/HistoricalCPI.aspx). Wow.

Year UWS $/SF %ch CPI annual % ch
1995 341 152.4
1996 320 -6.16% 156.9 2.95%
1997 460 43.75% 160.5 2.29%
1998 445 -3.26% 163 1.56%
1999 469 5.39% 166.6 2.21%
2000 633 34.97% 182.2 9.36%
2001 734 15.96% 177.1 -2.80%
2002 803 9.40% 179.88 1.57%
2003 842 4.86% 183.96 2.27%
2004 1012 20.19% 188.9 2.69%
2005 1181 16.70% 195.3 3.39%
2006 1216 2.96% 201.6 3.23%
2007 1352 11.18% 207.34 2.85%
% change 95-07 296.48% 36.05%

maybe this will look better...

Year $/SF % CPI annual %
1995 341 152.4
1996 320 -6.16% 156.9 2.95%
1997 460 43.75% 160.5 2.29%
1998 445 -3.26% 163 1.56%
1999 469 5.39% 166.6 2.21%
2000 633 34.97% 182.2 9.36%
2001 734 15.96% 177.1 -2.80%
2002 803 9.40% 179.88 1.57%
2003 842 4.86% 183.96 2.27%
2004 1012 20.19% 188.9 2.69%
2005 1181 16.70% 195.3 3.39%
2006 1216 2.96% 201.6 3.23%
2007 1352 11.18% 207.34 2.85%
change 95-07 296.48% 36.05%