Pulse on the market

Far from it. The biggest credit boom and bust in the last 80 years takes more than a year to filter through NYC real estate. It will probably take another 3-5 years for NYC to bottom. Brokers are trying to spin the data as "things have stabilized" but just wait until the tax credit expires (only impacts lower end of market but that's where a lot of sales are taking place), mortgage rates increase from their artificial lows (not sure how RE can be stabilized when mortgage rates can only go up from here - I'd buy the stabilization theory if mortgage rates were 10%+ but they're not), and people realize that the "big" bonuses aren't going to impact the mkt bc they're all in restricted stock that doesn't provide liquidity (and that's best case - it really wouldn't surprise me if the Fed or the Obama admin institute special taxes like the UK has done in the past). Brokers are hanging their hats on two things for the stabilization theory - volume has hit a floor and case-shiller is flat - I can virtually guarantee you that both of those are temporary - volume will decline and case shiller will have another leg down. 1.5mm foreclosures have closed - there's a wall of 6-7mm still to go - so 4x what's already been processed - while that may not directly impact NYC as much as FL and CA, the psychological / headline and relative value impact will continue to drive NYC down for a while. As will increasing rates (remember, they can only go up) and taxes (where do you think they're going to go find all the money to pay for the huge deficits - less disposable income means prices go down).

re: volume. I don't think the tax credit necessarily only impacted the lower end of NY RE. I know this is anecdotal but when I was fervently looking to buy this summer, in every new development I went to, I was run over by parents looking to buy for the young adult child. And I was looking at two bedrooms. I talked to a few parents and it seems they were anxious to buy for Jr. so Jr. could get the tax credit and the parents would have a pied a terre. So essentially, Jr, was forsaking his/her own apt with room mates during the course of their first job, finish the PHD, etc -- they were going to room with mommy and daddy. At first, this was incomprehensible to me. Then I thought about my first hovel in NY and thought I could probably tolerate my parents in exchange for a doorman and central air.

Mhillqt yes, the market is back to normal. Slow steady price appreciation.

yes slow steady price depreciation

steveF,
your spinning is giving me vertigo.

Spoke to a good friend today who has had his one bedroom on the market for a couple of months. First listed it at 15% below where he bought it in 2007. Now it's listed at 20% below where he bought it. It's not moving at all.

He lost his job and needs to move. He's resigned to losing all of his equity and possibly needing to cut a check to the bank. It's bad stuff.

His view is that the market is still falling and the one bedroom space is actually getting more crowded.

The market is actually looking like it's taking another leg down currently.

1. Sure, theoretically speaking, we can expect much worse to transpire (although we all know that no theory can predict the economic/RE future).
2. Sure, we all know people who have been unable to sell.

But....
3. Some types of units seem to be moving pretty fast ("correctly" priced new constructions/conversions in bldgs w/ high %age sold).
4. From what I have seen, the "slow to move/not moving" units these days usually: (a) are dated or over-renovated; (b) have very taste-specific decorations; (c) have some major undesirable traits, such as being on the ground floor, next to the laundry/trash shoot/entrance, inefficient layouts, facing a garage, etc.; and/or (d) have very high monthlies/maintenance.
5. For new constructions/conversions, low %age sold seems to be a kiss of death.

In other words, I feel as though desirable properties are selling fine (though slower than it would have been in a healthy market), while properties with blemishes are not moving at all--unless they are dirt cheap. So, maybe the levels of price decline may differ greatly across different types of properties, based on the factors noted above.

My impression from the Urbandigs website is that sales continue at a relatively brisk pace of around 800 units per month - to my surprise.

As regards price, the third quarter was down about 5% from the prior quarter. I haven't heard anything about what's happening in the fourth quarter - but I find it hard not to believe that prices are continuing down at about that same pace.

Anyone else?

looking at the graphs from Urbandigs, sales have definitely quieted down in the last couple
of months, while new listings have trended up, leading to an uptick in inventory with a
continued upward trajectory since the midle of august. that does not even touch the shadow
inventory. i predict the usually quiet fall season will lead to increased inventory and more
price drops...

using SE's recorded sales:

678 last 30 days
1,165 30 days prior

I can believe that we could have seen the bottom in terms of number of sales, but I haven't seen any reports that suggest prices have bottomed. As for whether the market have stabilized, it depends on whether you meant it won't drop sharply again or it won't drop at all. Unemployment rate in NYC is at 10.3% and likely to go even higher. Mortgages are much harder to get and with so much net worth lost in the past year or so, I can't imagine how prices can be heading up within the next couple of years.

further to above

average per month 3-6 months previously: 916

so--just based on this snapshot of number of actual sales reported by SE

current 30 days is down 42% from prior 30 days
and down 26% from the average of the prior 4 months.

not sure how anyone can say this represents a steadying of the market.

jobs jobs jobs

Not a single lease for more than 250,000 square feet in Midtown has been signed this year.

Any more questions?

jobs jobs jobs

Manhattan’s Worldwide Plaza - a skyscraper that’s 40 percent empty

Any more questions?

what is the year over year % difference?

can't get that data out of SE. only goes back a year.

jobs jobs jobs

11 Times Square, a new 1.06 million square-foot office tower that’s almost finished and has no tenants.

Just up the street is 3 Columbus Circle, the former Newsweek Building, where 417,000 square feet is available,

Six blocks southeast lies the former New York Times building, where all 644,000 square feet is up for lease

and so on

Did anyone else find the front page of the RE section sobering today? Wouldn't that give you pause if you were a buyer? I noticed buckling of floors in some of the new developments when I was looking at them this summer. I wondered at the time why they wouldn't have that fixed before putting it on the market. Now I know --- whack a mole.

The Solaria in Riverdale, a mistake from the get go, is going to auction. What's happening at Fifth on the Park in Harlem. A ghost tower looming over Mt. Morris Park? No, the bottom is a long way off.

Want to see what a market bottom looks like? Go to Miami. I just did and am negotiating purchasing a short sale. The broker I used is himself in foreclosure on his Brickel condo. Several owners who were home when I viewed their condos were very up front about their situation. Most were "pre-foreclosure", in other words they were looking for a bid to bring to the bank and tell them to take it or they would stop paying their mortgage. Needless to say the bids were going to be less than what is owed on the mortgage. Fear in Miami is gone, capitulation and resignation are rampant. That's a bottom folks. We still have a good deal of delusion here in NY. Although prime Manhattan is clearly doing better than the boro's and non-prime. It is proving again to be a different animal. Those other areas however will look like Miami soon enough.

CC: I'm not familiary with using SE for "sales."

I'd just note that accordingly urbandigs, there were 843 "contracts" over the past 30 days.

I am rooting for a bear market - so happier with your insights.

if you're interested, just click on recorded sales and use whatever parameters you choose.

SteveF you are so annoying. When stock analysts make guarantees, its illegal. When douchbags like you guarantee real estate appreciation, it flies. You are the worst.

Wannabuy did you see the Miami Hawks? They live on the top of scarcely inhabited condos.

Thanks, CC. That suggests a striking decline in sales over the past 30 days.

(That said, I wonder if the 30-day number is subject to revisions.)

I'll start watching this.

"using SE's recorded sales:

678 last 30 days
1,165 30 days prior"

"further to above

average per month 3-6 months previously: 916

so--just based on this snapshot of number of actual sales reported by SE

current 30 days is down 42% from prior 30 days
and down 26% from the average of the prior 4 months.

not sure how anyone can say this represents a steadying of the market."

Assuming these numbers are correct, I don't see any way the conclusion could be wrong.

"Want to see what a market bottom looks like? Go to Miami. I just did and am negotiating purchasing a short sale. The broker I used is himself in foreclosure on his Brickel condo. Several owners who were home when I viewed their condos were very up front about their situation. Most were "pre-foreclosure", in other words they were looking for a bid to bring to the bank and tell them to take it or they would stop paying their mortgage. Needless to say the bids were going to be less than what is owed on the mortgage. Fear in Miami is gone, capitulation and resignation are rampant. That's a bottom folks. We still have a good deal of delusion here in NY. Although prime Manhattan is clearly doing better than the boro's and non-prime. It is proving again to be a different animal. Those other areas however will look like Miami soon enough."

1. Denial and Isolation.
At first, we tend to deny the loss has taken place, and may withdraw from our usual social contacts. This stage may last a few moments, or longer.
2. Anger.
The grieving person may then be furious at the person who inflicted the hurt (even if she's dead), or at the world, for letting it happen. He may be angry with himself for letting the event take place, even if, realistically, nothing could have stopped it.
3. Bargaining.
Now the grieving person may make bargains with God, asking, "If I do this, will you take away the loss?"
4. Depression.
The person feels numb, although anger and sadness may remain underneath.
5. Acceptance.
This is when the anger, sadness and mourning have tapered off. The person simply accepts the reality of the loss.

30yrs, would you strongly recommend to wait and buy next year? What about if you can buy at 50% of 2007?

so we are at 3. bargaining?

mimi: I think from what I know about your situation, that if you can find a deal you like and you know is a good deal, that in YOUR SITUATION, you should just go ahead and do the deal and not look back. i can't say i would make this same recommendation to others, but you know what you are doing, are looking for a "special situation" and in a market which has already seen much more of a downturn than what others are looking at (so for that market, there's less potential downside since a lot of that "potential" has already been realized, whereas in most of the other markets people reading this are looking in, there's still lots of unrealized potential downside)

"so we are at 3. bargaining?"

I think the largest single group of sellers is still at stage 1. I think that people stay at stage 1 a long time, but once they start moving on to the other stages, they come much more rapidly than the transition from stage 1 to stage 2.

New York is clearly a long way from Miami.

Not sure if it will get there - but it certainly could go a good deal lower. 25% is quite possible.

Tks 30yrs!

It seems like people are still bending over backwards to find a reason to buy. Its quite puzzling. Whats being denied is that the old addage 'buying is best' has already been proven flat wrong. I'm confused at what situation other than fuck all wealth makes buying right now ok. At the very least the hopeful assumption that we have bottomed should be set to a time test of 6, 9 or 12 months.

I don't believe the market in NY has hit bottom, but I do think the rate of decrease has slowed. So say the average price might have gone down by 10% between September 07 and September 08, then another 15% between September 08 and September 09, I could see a likely scenario with another 7% by September 10, 5% the following year then 3% which would mark the bottom by fall 2012. That would be consistent with a bubble bust in real estate. This would provide cover for most everyone out there: the bears get their 40% correction, the bulls figure they can pick up a good deal now with a maximum of choice. Only the flippers and speculators should stay out.

I chose 50% from the top. The difference between 40% and 50% will come down to interest rates, but the risk to values are skewed to the downside because rate risk is skewed to the upside. I am also not sure that your year by year prediction compounds to 40%....

It doesn't really add to 40%, but my percentages were not necessarily accurate either. The declines will also vary depending on the type of properties and neighborhood. I am sure that small, nicely located 1 br are holding up better than less than perfect townhouses, because the prices for townhouses went up 600% to 1br mere 250% in the last 10 years, and also because of the relative ease of getting a mortgage for $750,000 or less.
What do you think of my scenario otherwise, with a slowing of the rate of decline over the next 3 years or so?

what are you basing it on? as far as i can see, net incomes in manhattan are going to continue down. if we can agree that re prices have at least doubled in the last 10 yrs, i don't see a decline of less than 50% and could easily envison it being greater. will this be across the board for every segment? of course not. and it will take more time for it to become apparent. note post above re: denial.

I think its too subtle. Declines vary, but I think we are generally down 30% and will go down 15% annually for another two years. If rates spike, god only knows. A 65% total decline is completely defensible. Less than a 40% decline seems to me fool hardy. Your scenario strikes me as fine, not mine, but fine.

Rhino "It seems like people are still bending over backwards to find a reason to buy"

i was in that bent backwards stance, wanting to buy. I sold in 2005 thinking the market was overpriced (I had a tax reason to sell early in the bubble). I have been waiting for the market to come down ever since. So I think that there were a lot of pent up buyers like me out there this summer. Even though I believed the market would go down a bit further, I was willing to take that risk if I could find something in the 2004 price range. Especially since I had to move anyway this December and I would have preferred to have a place of my own that I could tailor to our lives.

But, when I really educated myself on the "new" market, I decided not to buy right now. I think the market will go down more than I am comfortable with. I think there are developers that are at risk of folding. Believe me, I have seen it firsthand in Miami, and there are a lot of same signs. Even if I am wrong, there are enough variables in the economy so that I know it is too much risk for us at this point in our lives. I think we will come to know the summer bump-up as pent up demand correlating with a bounce in the stock market. When you mix that with buyers who are, shall we say, less than informed and the singular NY discretionary wealth factor... I believe you have an artificial support. If I am wrong, I will re-evalutate in a year. But if there was ever a time to be safe rather than sorry, this is it. We have the example of collapsed markets breathing down our collective necks. To say that it couldn't happen here is hubris not an informed statement.

I agree completely. Further, if the economy recovers, the fed will simply remove stimulus and rates will rise, dampening the positive impact on value from demand. Its a terrible risk/reward here. Unless you ask SteveF-ing idiot.

When rates rise, a lot more prime mortgages, especially option ARM will start to default. More inventory, higher interest rate, harder to get a mortgage/refinance = lower or at least flat prices.

Don't tell iknownada. He insisted higher rates need mean higher rents and values.

Rhino86, do you really think helicoptor Ben will ever "remove stimulus"?