all bearish threads lately...where are the bulls?? prices are breaking down going into 2010..wheres the bonus $$$ ???

I'm not as much bull as I am an observer of the market. I tend to avoid making broad statements without any facts to back them up. In light of your comment I think it is noteworthy to point out that there were about 200 contracts signed in Manhattan in the last week, arguably the slowest period of the year. Also, isn't bonus season still months away? Not that the market seems to need it.

and yet, SE shows only 11 closed sales in the last week.

It takes a while for docs to be recorded, so the 7-day count always lags. 14-day is 156, 30-day is 683, and so on.

No idea whether those numbers support one pattern or another.

It could be an anomaly because expanding the search to 30 days gives you almost 700.

slowly but surely the market tanks

When everyone shares a bearish view, that's your signal to buy.

marco_m.... People who have accepted offers at prices not seen in 5 or more years would argue the market has already tanked.

I guess there's no harm in holding on to hope though, if that's the correct term for what it is you're advocating.

Busy with their jobs? ;) I'm off today, but work has been slamming. Off to do some Christmas shopping and pump up the economy, although, the economy may be okay b/c EVERYTHING I want for Christmas seems sold out. Admittedly not real estate.....

Ho! Ho! Ho!

I'm just observing the market and tmaking my best guess as to where things are headed. given what I see..no reason for thing to not move lower. most of that reasoning os based on the fact that prices never should have gone to where they were

ummm, prices have been flat to slightly up for the past 6+ months. the best purchase deals of the year were in the spring. the 'trend' in prices is flat to slightly stronger. The trend in inventory is sharply lower. The macro's are exhibiting the same flattish to slightly improving trend. What are your catalysts for these to reverse, aside from wishful (in your mind) thinking?

we also have declining unemployment in nyc thanks to hiring in accounting and law, which usually lead employment recovery: http://www.nytimes.com/2009/12/18/nyregion/18unemployment.html?_r=1&ref=nyregion

the impact of prolonged unemployment, continued bank losses, inevitable interest rate increases (gotta be more than zero at some point, no?), and big layoffs at the state and local level as the stimulus money runs out.

MORE BEARISH NEWS:

Filed at 9:52 a.m. ET

VIENNA (AP) -- The Austrian company that was organizing a global Michael Jackson tribute in London is being dissolved and will not be able to put on a star-studded show in honor of the King of Pop.

"report abuse we also have declining unemployment in nyc thanks to hiring in accounting and law, which usually lead" ...........to gearing up for calculating companies' red ink and subsequent chapter 11s.

sorry my control copy key included some extra material "report abuse"

"we also have declining unemployment in nyc thanks to hiring in accounting and law, which usually lead" ...........to gearing up for calculating companies' red ink and subsequent chapter 11s

lol truthskr i didn't think about that but actually lawyer friend just got rehired by Fragomen the largest immigration law firm in the city. that means they at least anticipate more business as companies seek talent from abroad.

wannabuy
And so your friend is being hired to help bring in more people to compete with our unemployed now?

All these new jobs are turning into a disaster. ;)

There are always 2 sides to a coin. :)

released just on wedneday were the CPI numbers in which it showed that owners equivalent rent as well as rent of primary residence both fell. for both of these inputs to decline is a rare situation. so please printer explain this. not to mention the last few posts which I have put up have all shown negative data points for housing

Printer, heloc boy, re is not a random walk. Itz knowable and predictable. Goes up wih organic pop, income, building cost, credit growth. None of which except credit went up 300%.

> When everyone shares a bearish view, that's your signal to buy.

So, another year? two? three? And if thats the national market, Manhattan is how long behind?

"we also have declining unemployment in nyc thanks to hiring in accounting and law, which usually lead employment recovery: http://www.nytimes.com/2009/12/18/nyregion/18unemployment.html?_r=1&ref=nyregion"

Not quite.

Actually, if you remove the seasonal workers... unemployment went UP again. Whoops.
(noted in the crain's article I posted here yesterday)

"Employers in the city added about 10,700 jobs in October, but that was less than half the average increase in employment in the last 10 Novembers"

ruh row.

"the impact of prolonged unemployment, continued bank losses, inevitable interest rate increases (gotta be more than zero at some point, no?), and big layoffs at the state and local level as the stimulus money runs out."

Or that little matter of the city wacking subways, education, healthcare, police, bla bla bla because its broke. Gonna be AWESOME for manhattan re values.

the funny thing is that it doesnt matter what any of say on here..the markets is gonna do what its gonna do. the bulls give us entirly too much credit

Funny, the bulls will keep yelling, but refuse to put their money where their mouths are...

http://streeteasy.com/nyc/talk/discussion/17106-national-case-shiller-index-forecast-etf-still-tanking

somewherelse, you're one of the few around here who does much "yelling." The shtick is well past its expiration date.

Somewhereelse,

Anyone who can say where the market is going is lying to you. A recent strong dollar is fools gold. Greece worries me more. Some people only want to look at micro economics, but tell that my NYC friend's GF, who told me her BF is not getting a bonus because his financial firm is British.

Like I referred to on my first post, sentiment is where it's at for me. I'm saving, sitting, waiting for the right opportunity. I'm looking for the equivalent of GE @ $6. For what I want, we're no where close. So what if we're at 2005? That's not where I think we're going....

and what it has been doing is not at all what you've all been calling for. in the spring when i started posting you all said the mkt would keep tanking, be down 50% from the peak by now, inventory exploding, wall street imploding, rampant crime, foreclosures so prevalent that they're on the menu at your corner bodega (i recall a post about 'wait for May, then you'll see all the foreclosures).

and what's happened since then? prices slightly up, inventory down over 30%, wall street near record profits, crime down, foreclosures still barely evident.

you guys have been dead wrong on everything, and you still won't admit it. its 'wait till next year' - i guess you're all Mets fans.

bjw, you can keep following me around, commenting on my every post 30 seconds afteward, and humping my leg all day long, but... sorry... you're just wasting your time. Not going to be your friend. Sorry.

somewhere, as they say so frequently on reality tv, "I'm not here to make friends." At least, not with such a horrid curmudgeon. But I can certainly respond to some of your more shake-my-head-inducing posts. Get over it. As I've seen it, the humping that goes on on this site seems to occur mostly between yourself and steveF's leg in a weird love-hate-codependency thing.

bla blabbity bla.

sorry.

I really really really want to be a bear but a funny thing is happening. Admittedly, my search is upscale looking at $3-5M/w outdoor space penthouse and just about every thing in my saved list is sold sometimes at or slightly above asked and the few apts that get listed sell generally within a month.

I don’t feel like I’m missing the bottom and I going to wait it out but interesting?

Anyone else see this?

Printer,
Is it a glitch on my screen that I don't see a "PRO" next to your name?

What took 10 years to inflate will not crash in 1.

It's freaking cold outside! Who would have an open house in December? If I had a dog, I would rather he crap on the floor than take him outside. As for rising prices, if you could include a few comps for that, I would appreciate it. I seem to be stuck looking at the market movement comp threads that have over 1000 posts.

a broker I knew told me this last year, too...

printer please address the cpi data that I mentioned earlier. then tell me how stuy town is working out.

if there was any hint that prices were rising landlords would still not be offering months of free rent.

printer and the other bulls have been saying "prices are rising" for, what, a year and a half now?

and every quarter the numbers come out and show further declines.

Then those "there are no more concessions" thread. Better tell my landlord. He gave me a 20% discount off last year's rent + the month free.

here's two that sold before I could see them:
http://streeteasy.com/nyc/sale/473913-coop-180-east-79th-street-upper-east-side-new-york
http://streeteasy.com/nyc/sale/475813-coop-118-west-79th-street-upper-west-side-new-york

ieb, most of what I've read has indicated higher end sitting or getting major cuts left and right, so a bit surprised to hear what you're saying. Where are you looking exactly? Any examples?

Thanks ieb, you beat me to it! Impressive, but not sure 2 is indicative of a trend. But will be interesting to keep an eye on this as bonus season rolls in.

ieb

That's because your looking at a highly specialized market.
There are 236 listings in the upper east side;

We found 236 listings for between $3,000,000 and $5,000,000
Median price: $3,950,000 Median size: 2,309 ft² Median price per ft²: $1,682
Information on All Upper East Side

There are 1/4 of those listings with private outdoor space;
We found 68 listings for between $3,000,000 and $5,000,000 with private outdoor space
Information on All Upper East Side

Now weed out gorund floor apartments with yards and 80 sq ft balcony units and your left with around 5% of all listings with what your looking for.

These will likely take the longest to come back down to earth. Believe I know because Im looking for the same downtown and it's even worse in the 1 to 2 mil market.

ahh somewhere - the old strawman argument - i challenge you to find anything from me from over 8 months ago that said 'prices are rising'. if you have to make stuff up to win your argument, please stop wasting everyone's time.

ah positive- yes, everyone who doesn't think that manhattan co-ops will crash a further 30% is a broker. if that's all you've got, move on.

as for comps - hmm, i don't think someone who signed a contract in April is trying to sell it now. you'll have to wait for that. I listen to what people whom I know are actively looking to buy are telling me, and that's is that prices are up slightly since the spring, and the better inventory in their price points moves quickly. I look at the posts Urbandigs has made which confirm this.

I don't have aboutready's life of leisure to peruse every single transaction in Manhattan and post on it - i have multiple kids to support.

i love this market

printer please address my earlier points

ieb

I see your looking upper west also. I'm sure this one's on your list.
http://streeteasy.com/nyc/sale/440829-coop-17-west-64th-street-lincoln-square-new-york

ieb,

Adding to truthskr10's comments, I would assume that the rather limited $3-5 million dollar apartment market involves the very same people who benefited the most from our government's bailout plans - the hyper rich; who without government involvement during the crisis would have taken some serious losses, but instead were spared - and if anything, rewarded. (Of course, the other main beneficiary was the hyper-irresponsible who bought over-priced homes/apartments, then over spent on credit - but were rewarded with all-time low refinancing rates and foreclosure exemptions.)

It just doesn't surprise me that such high end apartments are selling near bubble high prices given that the government has done everything in its power to reinflate the 10+ year old asset bubble.

If you didn't lose millions, why not spend an extra million or two buying a top-end NYC apartment?

here's a downtown beauty that got away. was $200K apart the seller wouldn't budge and got his price.

http://streeteasy.com/nyc/sale/432792-condo-18-east-12th-street-greenwich-village-new-york

She's a beauty, yeah I find Brown Harris Stevens sellers to be less flexible for sure.

i love the bears - according to them positive movement in the lower end isn't indicative, and now movement in the higher end isn't indicative either. don't you guys get it - this is why i started posting in the spring in the first place. you are all repeating, in the inverse of course, the mistakes that the bubblers made. remember when the mkt started to correct and they said 'well, its only fringe areas, prime will never be affected'. and now you are all saying the same thing 'well, this and that area aren't don't matter, everything else will fall another 30%'.

when you need to twist numbers and make excuses for everything that isn't going as you planned, it just means you are wrong.

I really like that apartment. thats a great building. I love that block, excpet for the parking garage across the street.

But $1690 psf 'aint bad... you know these things were going in the 2s before...

printer- I've put numbers out there in this post and a couple I just bumped up. please address them.

"ahh somewhere - the old strawman argument '

Printer... you kidding here?

ROTFL.

He who wrote..."when i started posting you all said the mkt would keep tanking, be down 50% from the peak by now, inventory exploding, wall street imploding, rampant crime, foreclosures so prevalent that they're on the menu at your corner bodega"

really... tell us about strawman arguments.

lol.

ieb - the search gets even harder if you want the terrace space opening up from the living space (not upstairs from the bedroom)

" i challenge you to find anything from me from over 8 months ago that said 'prices are rising'"

um, uh, uh, how about.... right at the top of the thread.

"ummm, prices have been flat to slightly up for the past 6+ "

seriously now.

printer, you're just losing it.

I think you need a long rest, you are freaking out.

or not with terrace up on the roof -

Re. "continued bank losses"

What does this statement mean exactly? Continuation of what? There are some exceptions, but banks are very profitable in the aggregate, currently. The big banks generally turned back to profitability in Q1 or Q2, and most of the TARP money has now been repaid.

dingleberry, i mean somewhere - that would be something i said TODAY, which, unless we've hit some space/time continuum thing, is not over 8 months ago.

are you seriously saying that i can't find tons of posts from at least the spring saying things would be down 50-70% from the peak? or that crime would be skyrocketing? or that foreclosures would be overwhelming us? not strawmen at all - those are all things many were saying.

i'm sure there were people on here 18 months ago saying prices were rising, but don't lump me in with them.

"" i challenge you to find anything from me from over 8 months ago that said 'prices are rising'"
um, uh, uh, how about.... right at the top of the thread.
"ummm, prices have been flat to slightly up for the past 6+ "
seriously now.
printer, you're just losing it.
I think you need a long rest, you are freaking out.

Uh, 8 months ago does not equal 3 hours ago. Not even close. Whoops.

"are you seriously saying that i can't find tons of posts from at least the spring saying things would be down 50-70% from the peak?"

yes, find me one where I said that.

well, to be accurate, you actually have to find where we all said it.

good luck.

have fun, dingleberry...

"There are some exceptions, but banks are very profitable in the aggregate, currently. The big banks generally turned back to profitability in Q1 or Q2, and most of the TARP money has now been repaid. "

I think you're confusing (former) ibanks with the regular commercial banks. They're still having MUCHO problems with all the loans. We're not talking trading companies (ala goldman), we're talking banks.

"foreclosures so prevalent that they're on the menu at your corner bodega "

dingleberry, I'll make this one easy on you.... find me just the one...

or does this qualify as enough for the bodega?

http://streeteasy.com/nyc/talk/discussion/17093-foreclosure-backlog-estimated-at-17m

somewhere - so i'm not allowed artistic license? and you know we're talking manhattan here, right? i don't care about las vegas, phoenix, sacramento, florida, and all those other crappy places.

To side with printer for argument's sake, two things:

1. Didn't the SE Q3 report say that prices were virtually unchanged vs. Q2? Clearly down year-on-year, but there wasn't a big leg down from the spring quarter to the summer. The overall median price was -0.3%, and prices for condo resales were actually up 5.3%. Time will tell what the Q4 numbers say, but this doesn't look like free-fall right now. Slow, gradual descent at most.

2. Now this comment is unquantifiable and you can jump all over it, but there does appear to be a change in sentiment in terms of what people are seeing in the market. E.g., Go back and read the UWS comps thread, and see what the sales looked like for winter and spring contracts. It reads like there was one surprising, "landmark" sale after another. Even some bears were expressing suprise at where some sales were closing. Maybe now everyone's finally re-calibrated and eliminated all the preconceived faulty notions, so nobody's surprised by anthing anymore. Still, it does feel like the market has firmed, and there are no longer as many "desperation" sales that made me jealous I didn't get a chance to buy that apt at that price. This is not to say prices are actually rising yet - time will tell - but I do give some credence to printer's argument that the best deals we've seen (so far) were for contracts signed back in January to April of this year. just 2 cts

Flmao. Seg the 'profits' comes at the expense of suspension of all accounting rules. It's like playing basketball on stilts. One other note, not too difficult to borrow at 0 then lend to us govt agncy debt at 3%, now just so that on 1 gazillion dollars and even printer can make a 'profit'. Flmao.

Seriously, shimp cocktail, meat on stick, mint, heloc? Anyone?

> somewhere - so i'm not allowed artistic license?

thats it... all the bulls who were wrong for th epast two years weren't actually wrong... they were taking "artistic license".

rotfl

20% down is a bull market with "artistic license". got it.

and this was the guy who was complaining about strawmen.

here's a great thread:
http://streeteasy.com/nyc/talk/discussion/10494-this-summer-will-be-a-bloodbath

or this one:
http://streeteasy.com/nyc/talk/discussion/8828-nyt-condo-auctions-in-manhattan-and-brooklyn

so funny to read - 'prime co-ops will go bankrupt', etc.

> so nobody's surprised by anthing anymore

This isn't very logical.

Lack of surprise at a declining market doesn't mean its not a declining market, just that people already know its a declining market.

Flmao. Seg the 'profits' comes at the expense of suspension of all accounting rules.

W67th, please do us the courtesy of explaining what in the world your are f*cking talking about. What accounting rules, please? Name one single suspended accounting rule that is currently turning losses into profits. Just one. You can do it, we know you can.

They borrow at zero in a lot of ways. One is from their customers, in the form of deposits. Like it or not, that's profitable business. Reality is reality. You are free to express your dissatisfaction with reality. But to blind yourself to it is really rather foolish.

> so nobody's surprised by anthing anymore

"This isn't very logical.
Lack of surprise at a declining market doesn't mean its not a declining market, just that people already know its a declining market."

I thought I acknowledged that in my post, or tried to anyway. Just another way of saying that it feels like the extreme leg down already happened earlier this year. The more recent transactions are not as eye-opening, for whatever reason, largely because the rate of descent is not as great.

i take my cues from the stock market. we have had a V-shaped recovery, which nobody predicted and nobody trusts. there are dual fears out there: feeling left behind and fear that the there will be a V-shaped decline. both fears keep pushing the market higher. like it or not, whether bull or bear, our RE market follows the stock market closely, albeit with a lag. the downside lag is shorter than the upside. look at the '87 crash. RE went down pretty quickly afterwards. i should know, i bought my first condo in sept '87. it took 5 years to get back to break even. i think we are seeing the upswing in RE here in NY. nobody trusts it yet there is definitely a fear of being left behind. it is becoming more prevalent on these boards as well as at open houses. this is a sweet spot to buy.

"nobody trusts it yet there is definitely a fear of being left behind. it is becoming more prevalent on these boards as well as at open houses. this is a sweet spot to buy."

The only people who are afraid of being left behind are the realtors. Buyers are afraid to buy because they see that prices are falling. All sales are below ask.

"Just another way of saying that it feels like the extreme leg down already happened earlier this year."

If the fear hasn't fully set it, thats often a sign that there is more drop to go.

"i take my cues from the stock market. we have had a V-shaped recovery, which nobody predicted and nobody trusts. "

Historically, thats a mistake (taking it as a cue). The '87 stock market crash saw four more years of declines. And thinking RE does v recoveries... well, that just doesn't happen.

"our RE market follows the stock market closely, albeit with a lag"

not really.... but I wouldn't be surprised if this leads to more RE mistakes.

i am not predicting a V-shaped RE recovery but i do think we have bottomed. your reading of stock market history is incorrect. most assents and declines are not fully embraced until near their end. i use technical analysis to trade my own accounts. i got a sell signal in nov '07 which i stupidly ignored and finally went to all cash in march '08. i jumped back in the market in jan '09, a little early but things have worked out quite well.

incredulously you claim NYC RE does not follow the stock market. i want what you're smoking

Seg. R u fing serious? I'm busy but herez one of the top of my head.

Prepaid versus 'special' FDIC insurance premium paid. Google it you nimrod.

'blind to situation'. Like when killing Jews was called the 'final soution?'. You mean that kind of shit I should just accept and not rant on and on about. Look this is nowherez near 'that' situation, but for heavens' sake WTF is all these mkt manipulations? Gotta go spend my non heloc $$$$

So what do you do for a living Printer?

When guys like you capitulate, I'm ready to buy.

W67: I presume this is what you're alluding to, straight from the FDIC website:

"Under GAAP accounting rules, prepaid assessments, unlike special assessments, will not immediately affect bank earnings."

Please educate us - what is the relative magnitude of this issue, as compared to the billions of $'s that banks have earned this year in net interest margin, sales & trading, capital markets, and investment banking revenues?

Is it irritating that the banks are making big $'s again after many got bailed out? Yes, to most people. But that's where things are now -- for better or worse, depending on your perspective.

Try again.

In my old corporate banking days, never gave a crap about earnings. It was how do you reconcile to cash flow and the run rate ebitda going forward. The key issue is where is the cash earnings post re bubble. Get rid of riskless govt carry trade and 30% off of the re paper bundling services from bubble cash earnings and where r the banks, where is the cash bonus and => NYC re.

And yes, funny how FDIC 'manipulated' the assessment in order to band aid th earnings. I guess in extraordinary times, extraordinary insurance calls are 'prepaid.'

I am fully aware of the 'earnings' you speak of, I am pointing out from where it comez, and where it is headed. FYI, the standstill holding pattern of 'distress' loans and quickly growing prime/jumbo loans will overwhelm the banks. A 50% haircut on a $300k mortgage was round 1, the $2mm defaults are waiting in the wings that'll be round 2, I've got a little unicorn thatz telling me there will be no forbearance programs for these jewels on the bank's bs. But seg happy holidays, I'll see you on the 'comps' thread in 2010.

w67thstreet
4 minutes ago
ignore this person
report abuse In my old corporate banking days, never gave a crap about earnings. It was how do you reconcile to cash flow and the run rate ebitda going forward.

oh great, another Rhino in the making.

Seg, never mind the groupie above.... I've got quite a crusteceous following, the one final issue I have with bank earnings at the moment is the credit derivatives mkt, which basically bypasses ALL financial regulations and eliminates all natural circuit breakers in the economy. A tremendous amount of bank earnings and bonuses are derived from these equations on paper, if we do not have TRUE reform in this area, then I believe Obama is a true 'inside' the beltway guy and did not represent any true 'change.' I really hope I am incorrect.

We are in the eye of the storm, the smart ones prepare for the more vicious back end, the fools hoist the full main.

So wise

Its always seems interesting to me that people would rather applaud their skillful deal finding in an overpriced market...or objectively, a market that has simply fallen 25% after tripling in ten years. Such savvy deal finding. I'd rather overpay vs. the market when prices make more sense overall compared to alternative uses of cash and rents. What a joke.

Even more wise
From a guy who produces nothing for society for a living.
But does his share of subtracting through violence and shouting epithets.

My problem with the Printer and others more bullish analysis --basically, things kinda flat, inventory down, prices might rise, etc. -- is it implicitly characterizes the NYC re market downturn in the last year as an understandable give-back in an economic downturn, but now things are getting back on track.

The problem with that is that it doesn't taken any account of the the idiotic, greater-fool bubble element of prices in NYC (PRINTER - could there be a bubble in NY real estate?. was there one? is it over? ) ....or..adequately take into account the fact that no matter how you slice it, the finance industry is smaller, the govt finances are a wreck, etc. I don't see how you can say -- see, things kinda ok -- and ignore the dark clouds ver y much over the city.

On the other hand, to be objective about it, there is still a lot of NYC re market activity that defies the bears' logic: big developments still not officially bankrupt or cutting prices enough to clear inventory, tons of listings at ridiculous levels, anecdotal media stories about bidding wars, etc. I know the answer is -- it takes time -- but if the bears were ultimately to be wrong, isn't what is happening now how it would unfold?

Also, when the world was falling apart in late 08 it was obviously a complete no-brainer that NYC would fall, the only question being how far and how fast. Today, the bears certainly still have the better logical case, but it isn't quite the absolutely inevitable no-brainer that it was.

but it isn't quite the absolutely inevitable no-brainer that it was

i kinda agree with this because we've now seen that around the world, regulatore are willng to change any rule in order to prevent failures of any kind. if you can kick the can long enough down the road, eventually things will be ok.

i think the developers in nyc in general are hoping this kicking can (money printing, fha loans, etc) saves them......

Lets say prices dont fall further. What is your upside? You put down a big downpayment. You forget about opportunity cost. You still need the tax deductions to bring you simply to market rent. What is your motivation to buy? Can prices rise with an unresolved condo glut? As the economy recovers, the government will allow rates to rise, dampening demand driven upside. Is the bull case for buying that rents are depressed and will rise sharply, therefore locking in the current market rents on an after-tax basis (ignoring transaction costs and opportunity costs) is some great deal? What a joke. If prices hold here and there are that many dopes out there, they can have at it. The only way to feel marginally ok about being underwater, is if your carrying costs end up lower than rent. In this way, you can chip away at that loss month to month. No such luck will you likely find in this market.

Is the bull case that interest rates will remain low forever, even after the economy begins to recover, rents will rise, and the current stretched ratios will remain constant? Yeah thats a great bull case.

The bull case wouldnt be so bad if they hadnt built so many condos. There is no way they can be absorbed at 25% discounts given that we are down how many banks? Bear, Lehman, Merrill... Who am I forgetting. Three big ones are gone and recruiting is way down. Where are the generations of buyers going to come from to keep this rolling? The boundless creativity of NYers has produced many boutiques as of late, not of which seem to be paying much. And sorry but Goldman people either own already or are too smart to buy this.

"The bull case wouldnt be so bad if they hadnt built so many condos. There is no way they can be absorbed at 25% discounts given that we are down how many banks? Bear, Lehman, Merrill...:"

I totally see your logic. So maybe analysis should turn to what bullshit accounting games, bank regulatory complicity in mis-market assets, or whatever it is, that is causing this inventory to not yet move to anywhere near market clearing prices. What is going on?..It's puzzling, isn't it? To take the example of 80 metropolitan in Wmburg, it is 50% not sold (and there is doubt whether the sold contracts will actually cose) and it has been on the market 24 months. Or the wonderful Rushmore....

agreed about the thorniness of the condo overbuild. question -- are the unsold new developments such a force that they'll drag everything else down with them? seems that new condos are still the most unrealistically priced properties on the market, and still command a premium to other options -- prewar coops for instance -- in terms of both asking prices and actual closings. as long as that premium exists, is the coop buyer necessarily swayed one way or the other by what is happening in unsold new developments? is this 1 market or 2 markets or something in between? an interesting question...

jim, not so puzzling. banks, although not all, preferring to keep loans in the performing column are doing everything in their power to make them so. developer about to default? get free money, lower the interest rate, and extend the loan. can't continue forever, but they're trying to extend as long as possible. some banks are not in the position to do so, and must force the developer out. crazily i wouldn't be surprised to see more development recommence shortly. it takes a long time for new development to default, and in the meantime the banks can improve their ratio of performing to nonperforming loans by issuing more. never underestimate the power of cheap money and short-term thinking.

I agree they are extending as long as possible..hoping they can sell out at project-solvent average pricing, but if it doesn't happen, the unwitting buyers who played along. are going to not do so well.

Anecdote; Re Warehouse11 in Wmburg, the attractive, almost complete building. Today the developer of another building who looked at that place said it will likely go rental because banks won't provide financing for a sale project.....just passing that along

Aboutready: "jim, not so puzzling. banks, although not all, preferring to keep loans in the performing column are doing everything in their power to make them so. developer about to default? get free money, lower the interest rate, and extend the loan. can't continue forever, but they're trying to extend as long as possible. some banks are not in the position to do so, and must force the developer out."

Aboutready I agree that that is what seems to be going on but your wording makes it sound like it is fully at the discretion of the bank how they account for the loan asset, and that may de facto be the case, but in the old days an auditor internally at the bank. or the regulator, or the financial statements auditor would look at the situation and say this is way off schedule and reserves need to be taken etc, and would not be swayed by bs loan extensions. That is my point about a lot of manipulation going on. The perverse irony is that when you don't take proper reserves for losses you distort the true capital position of equity of the finance provider, which makes the financial system less transparent, which leads to more systemic problems..so a nod and wink is not ultimately good for the system. Even if in some cases the finance provider is something other than a bank, the same concept of loss reserves, proper "risk rating" , etc apply.

If you were an underwater developer why would you be in a rush to sell units and display the fact. Right now, there is a shadow of a doubt that you are underwater. Also there is a waiting game. They hope the market can improve. However, they are all doing that, so that doesnt seem like it ends well.

And yes, its one market. I am sure plenty of people see the Brompton and a pre-war UES as an option. Everyone doesnt have to see the two markets as options to make it one market, just enough of them.

door number one: own up to your default and suffer certain death; door number two: delay and hope for a miracle.

If you think about, hoping the government can reinflate the credit bubble, and maybe even allowing the financial industry to grow to previous site, etc, is a free option. The banks have incentive to deny. The developers have a free option. Wait what if the banks are telling developers to hold the line on price minus 25% to avoid horrendous marks on the loans... Do CDOs own condo loans? That'd be a pretty sweet wave of forced selling that could push banks down again. Ugh. Maybe we bail out all individual owners, all banks and all condo developers. Savers: the most punished class of people.

Savers: the most punished class of people

ur right..all the rules will be changed so that we can keep kicking the can down the road until things actually do get better. Bears are right fundamentally and theoretically, but the reality will be that things dont go down to where they should because regulators change the rules.

jim, in the old days they had different accounting rules. to the extent a bank is properly capitalized, yes they have the choice. and the gov't made damned sure that the us banks, at least, had access to oodles of capital, via free money and a stock market rampaging on the thoughts of free money. any coincidence that many of the defaults you hear of involve foreign lenders?