Only a BLEEP would buy right now!

What is the point of this post? "There will be a correction of 70%"??? Any data to back that up?

Are rental prices really still falling? From 12/11 months ago?

I think if the last time you signed a new lease was in 2006, you might not think that rents are that much lower today. I'd say from 2007 and 2008, not sure if they are down from 1 year ago, not sure they are lower than 2006.

Just my opinion from where I see things.

Day of rest: There's tons of data that suggest, to revert to historical mean levels of appreciation, NY has a Loooooooonnnnnnnnng way to fall. Residential real estate is in fact a mean reverting market. All that data has been posted here before - use your search tool; not our obligation to do your work for you! Lazy ph*ck. No wonder your name is "Sunday"; day of rest and all.

Will it fall 70% from here? I don't think so. But could it fall 50% peak-to-trough? Well, we're already down 20%, so i'd say quite possibly. Tokyo fell more. Oh, I forgot - that can't happen here. LOL. Your ilk said the same thing when a correction of 15% was suggested; we're already past that so the realt-whores and pollyanna's have been proven wrong, wrong, wrong!

NYC is different. All price drops are exceptions, not the real trend. Keep on dreaming.

And yes it could fall 70% - look at those new developments! The 1 million dollar condos should be selling for 300k.

splaken, rents are definitely lower than 2006 from datapoints I know.

Which million dollar condos are sellling for 300K????

Keynes said that markets can stay irrational longer than you can stay solvent. You could extend that thought to real estate values: even if prices will eventually revert to the mean, it could take 40 years. And what is the mean? Is it fair to look at the nadir of white flight, the low point for urban centers, as the reasonable and affordable price point?
You should really allow for the possibility you may be wrong, it will keep you civil.

maly, except it never has before. it has taken much longer to revert to mean than i would have expected, but i think it still must, and not in 40 years. this seems to be playing into the typical 20-25 year cycle. interestingly enough.

the key is demographics and foreign investment. we'll just have to see. the former is decidedly against our market, the latter more questionable. but regardless, i see foreclosures in our future.

Hugh_G, was that language really necessary? Is that how you respond to anyone who ask a legitimate question about an unsubstantiated wild prediction? Anyone who is familiar with my posts know that I also predict RE prices falling and back it up with data I found from my own research.

AR, are you familiar with the work of Piet Eichholz? He is a Dutch professor who has tracked the price of real estate in old Amsterdam over 350 years. Some of the cycles are much longer than 40 years. Mind I am not saying this particular cycle will take 40 years; I only want people to realize history takes a long time to happen, but we lowly worms won't be around in 50 years.

maly, i love esoteric history. in modern history real estate cycles tend to be 20 year periods. 350 years ago they didn't have mortgages. or at least of the sort we have today. please.

actually, maly, still disagree with the 40 or more year premise in our fast-paced world, but will definitely seek out the author. sounds very interesting.

So I take it the answer is no? His work is very interesting for the number and pattern-obsessed. Maybe you should read about his work before labeling it esoteric. And it's a bit of a simplifaction to reduce modern history to the last 20 years.

anon3 forgot to take his meds today. Please, someone help him out. Thank you.

"And what is the mean? Is it fair to look at the nadir of white flight, the low point for urban centers, as the reasonable and affordable price point?"

Real estate is not mean-reverting in an absolute sense (or the price would never increase!). It is mean-reverting with respect to levels of appreciation. That mean is 1-2% over inflation, or 3-5%/yr for the past decade. Are we up. Let's take the mid-point, 4%. Based on that, real estate should be selling at 48% more than when prices started rising in the late 1990's. So, a 1 BR apt selling at $300K back then should be selling at $444K. See any? Me either. They're at $800K. We're NOWHERE NEAR the bottom.

Regarding splaken's comments on rents, I looked in March 2008 and the things I saw then priced at $4800-$5300 now go for $3,600 - $4000. 25% down. And, sales prices are also down 20%. So, there is some symmetry. Rents can fall another 20%, sales prices another 30%.

2 short points: 1- why is the mid 90's your point of reference? Usually markets overcorrect on the way down. 2- what is the time horizon for the next correction? Sometimes markets are clearly irrational, but who's to say we have entered an era of rationality?

maly, aboutready is an expert. Notice her careful use of the word "regardless".

As someone who just bought an apt I hope you are right. If prices drop 70% I can totally afford that $2 million dollar apt instead of the $600K one I just bought. Bring on the RE apocolypse!!

Markets do usually over-correct, Maly. As far as rationality, I find that real estate prices can in fact continue an irrational upward trend long after that trend has become obvious to intelligent observers (think residential real estate 2002-2006). The trigger for a correction is usually an incipient recession (1990, 2007). That trigger has already occurred, the correction is well underway, and I see no reason to believe we are sneaking up on a bottom.

We've really made this real estate thing hyper complicated. Isn't it really simple, if the average rent for a 2 bedroom in NYC is 4K, doesn't the valuation look like this.

Total rental income = 48,000
Total expenses = -15,00
Net operating income = 33,000

Shouldn't we just ask ourselves what we should pay for a business that generated $33,000 in net income each year? I would pay 470K - 660K, which is clearly far less than the average 2 bedroom in NYC.

A business that generates $33K in net income per year is not worth anything close to $470K - 660K.

NYC real estate is CRASHING!!!

i don't know if it IS crashing, the important thing is that it SHOULD be crashing. still disconnected with fundamentals and not providing a premium for the risk of falling prices in the future imho.

I just cannot understand WHY ANYONE would buy right now....pay a million dollars so you can have thousands in common charges/month and rent the same type of apartment for less than the common charges! Some of these apartments I wouldn't take if they were giving them away! Talk about WAY OVERPRICED.

Businesses are different. They generally are not as liquid as real estate and not fair for a straight up comparison. In essence, there is a greater pool of buyers for a specific property than a specific business which is a major factor in influencing the multiple of earnings to price you would pay.

But the hard deck is $500 psft avg condos and coops in manhattan.If we found ourselves below that, we'd have bigger worries than just NYC real estate. It would be Mad Max poxyclypse.
Nobody should be hoping or wishing for that.

The rental market will continue to gravitationally pull down the sales market.

This market is going WAY below $500 psft. Try $300 psft.

anon3, it only makes sense if walking away strategically doesn't bother the buyer (after trying to use obama's cut in principal owed that's coming i'm afraid). still, this strategy only woks with absolute minimal skin in the game so that the cost of walking away is minimized. for this to make sense, piti after tax advantages should be lower than renting.

during our last search, we just didn't see that last requirement fulfilled unless you settle for bad locations and do a gut reno (in what it looked to me like ex section 8 apartments that somehow escaped the cutting up). i wouldn't try to get into the strategy if so, we were just curious about where the mkt is at this point. if i could take advantage of geithner/wall street/bernanke but not the taxpayer, it would sure give me tremendous pleasure though.

truthy... hmmmm... let's see we have $500psf, leading to ppl with more disposable income and less chance of bks and losing neighbors (i.e. more stable hood)... places are trading for $1000 psf from $2000psf... soon to be $500 psf... I don't see an increase in mad max types... but i do like leather jackets... who remembers the leather "bomber"s any one anyone?

It would be disastrous brother. The trickle effect to everything else would be a nightmare.

Don't forget the timberlands and the pocket T.

When distressed sales pick up, price drops will accelerate again. High unemployment + slow sales activity = motivated sellers.

anon3 is just looking for attention, and we are all giving it to him/her--which is fine. Sure, the market has yet to crash. You are free to state/fee/think that, although you might need a stronger reason to call a group of people names...

Hugh_G, though, the situation in Tokyo looked and felt vastly different as you may be aware, in that the sudden, abrupt decline in their market occuered literally within a matter of weeks. Clearly, that did not happen in New York, where the decline has been slow and tentative at best over the last 16 months. This would indicate that we are looking at a different "crash" than the one we saw in Tokyo. In that sense, yes, NYC is indeed different.

amuzaurieta's argument would make sense if several assumptions, including the following, can concurrently be met: (1) there are no tax incentives associated with property ownership; (2) we all purchase real estate as residences and no other purposes; (3) the rent is static, won't fluctuate, and carries inherent meanings--unaffected by external forces; (4) NYC residents and investors value renting and owning equally, both conceptually and in practice, etc. etc...

But W67th - 1965 Broadway - your dream 3 BR - for over $1,500 psf

02/27/2009 Listed by Brown Harris Stevens at $3,895,000.
06/19/2009 Delisted temporarily.
07/19/2009 Listing entered contract.
08/18/2009 Listing sold.
08/18/2009 Sale recorded for $3,300,000.

"High unemployment"

that should be reflected by now, not? sure it is in the rental mkt but lost track of how many times unemployment benefits were extended. how many unemployed are around nyc without any more unemployment benefits? no idea!

i know the benefits barely cover basic expenses, but many people seem to delay moving decisions until they expire, hoping to land in a new job.

admin, many received severance as well. unemployment benefits have been extended to close to two years, i think, in states with high unemployment rates. and of course not all people were let go in '08. many lost their jobs over the past year.

very few people in NY have fallen off the unemployment benefits roll yet. people were starting to in some states toward the end of last year before they extended it, but it was still a smallish number. people in states with lower unemployment, and thus fewer extensions, may ironically be losing their benefits more. i believe, however, that late springish this may accelerate in the other states as the last extension runs out for the early unemployed.

hey ar... wherez CC?

ph41... i've moved on.. but for the right price i'd shag her.

let's see 16B.. the most coveted of lines.. best view down bway and nice sized balcony to boot.. say 20% premium to other lines. closed 8-18-09 for $1500psf, 15.3% below last ask. let's say $24K/month carry for 30 yrs.
VS. renting all 6 of the currently available units (all 5,300 sq ft) for $26K/month? Hmmmmm... BRILLIANT seller... dumbaszz lemming buyer. IMHO.

"let's say $24K/month carry for 30 yrs.
VS. renting all 6 of the currently available units (all 5,300 sq ft) for $26K/month? Hmmmmm...."

LMAO!

shagadelic.

don't know, w67th. regrouping? communing with nature? he's not staying on my couch, that much i do know.

right w67th - but the family would be spread out a lot in the building - you'd have to get dressed just to kiss them goodnight.

Stupid comparison.

not really... would've done wonders for tiger.. hey did you hear he changed his name....... to "cheetah" hahahhahahahaa

and btw.. i have no qualms about walking in the hallways in my batman onesie pajamas... i think of the hallways as an eztension of my abode.. i do pay for cc, ; )

batman onesie pjs. f'n awesome.

Oh lord, here they go again - amusing each other

ph: curiously enough, i know ppl who rent multiple apts in that bldg

"admin, many received severance as well. "

good point. friends fired in finance got 2 months. those that work in the shadow economy don't get any severance nor unemployment benefits though. so self employed and freelancers. none of the employment stats (household survey nor payroll) capture those that work off the books.

"i think of the hallways as an eztension of my abode.. i do pay for cc, ; ) "

the hallways is easy, but what about the laundry room/mail room/courtyard/terrace?

not my problem..admin... if i decide to wear a thong on a beach... its your job to save the little ones and avert your eyes... not my problem ....

NYC10023 - sort of like Diane Von Furstenburg years ago? Kids and nanny in one apartment, parents in another? Or playroom in one apartment, bedrooms in another, grownups in yet a third?

Can't comment on the situation.

I have this mental image of w67th going to tuck in the little ones, dressed in the pjs and carrying stuffed unicorns. amusing indeed.

the question is, those people lost their jobs, are they going back to work anytime soon?

"not my problem..admin... if i decide to wear a thong on a beach... its your job to save the little ones and avert your eyes... not my problem ...."

avert my eyes? you clearly confused me with somebody else

"are they going back to work anytime soon?"

not anytime soon i'm afraid, at least not for a wage