Do you think housing prices will decline 5-10% in 2010 in Manhattan?

alright.... who's behind that mask?

prices are going to double by this summer.

Huh? I am not a broker if that's what you're implying.

kspeak, stop joking around.

hfscommie.. i can't see what you are typing.. you need to type louder... running out of IP addresses? try the motel 6 down the road....

You realize that smartphones change IP addresses extremely frequently, right?

Youngfamily, the answer is maybe. I used to think it was likely, but the pace of deals and the inventory point to a more or less stabilizing market. I don't think prices will increase until employment picks up ( no I am not guessing when that will happen.) We could see a very slow hiss for years, with prices dropping very slowly, and the values being eroded by inflation.

Clearly, I'm a newbie here... gotta learn my ropes. Maly, thank you for your guess. I think you are right about jobs. And it's hard to tell when that will pick up. I feel pessimistic about jobs market, though. Which, at least hopefully means better housing market... but argh. I wish I had a crystal ball.

look at that.. made you make up another handle... how many does that make? what a fuking lozer...

youngfamily... don't look at sale prices.... just keep an eye on the rentals go.. where cash flow so... asset prices follows... that's a no cost econ lesson for you, the next one is gonna cost you a bagel.

I tend to agree with Maly.

don't know, wasn't counting

are you suing any of your tenants?

Makes sense to look at rental mkt. Which makes me not want to buy but I'm too much of a chicken to risk rent going up every year and being priced out. Rents are nice these days but I remember being priced out of Manhattan which wasn't fun.

Thanks.

Given how rents have performed, it seems strange that you refer to being priced out by rents. This whole bull/bear debate is both illuminating and tiresome, but one basic fact seems to be that rents have simeply not kept pace with prices, and the rent/buy ratio has become basically ridiculous in many hoods. It is less egregious in some non-manhattan places, apparently, a nuance that ought to be noted but is considered either irrelevant to manhattan or no fun because it doesn't fit the program.

Rents used to be higher, so he can remember being priced out. What's the difficulty?

Oh, I was referring to the increases in rent pre-crash. Not recently, no.

And I don't mean to disrespect outer boros. But it's not fun to be priced out of your home and having to move.

youngfamily- If you can afford something that works for you for a while, go for it. I see lots of signs of stabilization.

I see some things within my reach but not quite. If another 5% drop happens, then definitely doable... Knowing my luck, though, I'll just miss the timing or something.

You're not buying the market, just one unit. Keep looking and be ready, there are always circumstances where something is better-priced.

Two things, youngfamily.

First, rents are down 30% on an inflation-adjusted basis since 2000. Even at the peak in 2006-2007, they were down 10% from 2000 on an inflation-adjusted basis. Rents nationwide go up in line with inflation because they make up 30% of the main inflation index that the Fed monitors. The uncertainty associated with rents is small compared to prices, and you should fear the latter more.

Second, if you're in a typical NYC situation, there'd need to be a 50% permanent increase in your rent beyond inflation just to break even with buying on a cash flow basis. Would you be willing to pay your landlord a 50% premium to your current market rent in return for rent stabilized increases forever? And should you ever leave, you'd have to make up the difference between what you'd signed up to pay and what the new tenant pays?

I am pretty sure the price are still on their way down, I am following the market on a daily basis and the decline is still happening.
Regarding the extra 5% : don't take on youself monthly payments that you will regret, stay safe.

maly - good advice. you can get a great deal in a seller's market and get totally hosed in a buyer's market. each transaction is unique. good luck!

We talk too much in averages and it's easy to forget these stats come from a broad spectrum of prices that fluctuate well above and below the theoretical number. Averages may be useful in determining if a property is under or over valued but only if looking at similar properties in a building or neighborhood. What does "another 10 or 15% down" mean when properties are selling anywhere from 5% to 50% off peak? If the 10-15% target is achieved through severe devaluation of trophy properties, what is the impact to more affordable properties? Also, if I'm looking at West Village 1br in a prewar coop vs a Riverside Blvd 1br condo I would not expect these two properties to move in lock step with one another. The condo may drop 30% while the Village coop remains flat, and now your 15% avg drop has been achieved without impact to 1/2 of the property values.

I would argue further average declines, if they are to happen, will be carried mostly on the shoulders of properties like the RSB condo. If that's what you're shopping for then you're wise to wait it out. But if your shopping for a WV coop expecting prices to fall into your sweet spot then I would say this is a far more difficult prediction given how well properties in this category have been moving. Judging by your handle school may be a consideration so location may play more of a role than price. You need to ask yourself would you buy a property for 10% less in a bad school zone or pay 10% more for a good school zone.

Take what you read here with a grain of salt. What may be perfect for you on many levels may seem absolutely foolish to others. Good luck.

Read what the perma-bears have to say - it's all good. And what spinny says too.

Tread with caution if you can't see more than 5 years down the road.

..and yes, time horizon has become equally as important as price/location.

Thankfully, we don't have to worry about schools... But I do have to look at the rents more closely. For the people who prefer to rent instead, where do you "park" your cash that you would have used as downpayment? Stocks? bonds? I know the stock market has recovered a lot but it seems so risky... not sure if I have the stomach for the ups and downs.

Isn't renting worth it only if you find a better investment with your chunk of cash than RE?

RE novice here... Would really appreciate your insights!

I know Jonathan Miller (not sure how people on this board view him) has said that he thinks the worst is behind, no double dip and that at worst it will be a mild erosion of a few percentage points and at best a flatline or small increase in prices. In my opinion, I think he gives pretty solid advice. He is an appraiser not a broker so a little more objective.

Youngfamily, one more thing to add. Not about RE, as I am a novice too!, but I do know a bit about investment and these days, the best place to park your cash (just in my opinion) is a mutual fund that invest in mid-cap companies. Vanguard has a lot of options. The mid-cap returns on investment are usually higher than if you go with large or small cap companies. Savings accounts are practically worthless these days, and individual stock picking isnt really a good idea either. I dont know anything about bonds, or how/good bad they are.

I've been looking/researching for a while now..itching to put my money to work somewhere, but I'm 100% convinced NYC real estate prices will go down another 10% from here. This spring it'll probably inch up a bit, when the bonus payouts meet existing/new inventory in the market, but towards the end of the year it will decline by another 10%. Then, as mortgage rates go up, it will fall further.

Weekly job numbers (bad) just came out, hinting at the big number later in the week... and the market is down a good 500 points from a few weeks ago (lost 200 today).

Not looking so good right now...

technologic - thanks for the nice comment. I have sort of said what you have summarized but not quite or its not fully in context or has been paraphrased a bit. I do believe that the worst may be behind us, in the sense that I am skeptical we will see another post-Lehman 10 day 20% drop in prices and then another 10% subsequent months like we just experienced. However I do see potential price weakness ahead and I don't recall limiting it to a few % but perhaps spread out over a few years. I've also commented about a double dip since I am worried about the back half of 2010. I think the first half is going to be a lot like the last half of 2009 - steady activity and stable pricing. My main concern going forward is 10.6% city unemployment vs. 5% 2 years ago and tight credit conditions - either condition are not expected to improve quickly and do not help housing get back on its feet. I don't mean to sound all gloom and doom here. The market performed far better over the past 7 months than most people expected and we'll take that. But its too soon to jump up and down.

inonada - "rents are down 30% on an inflation-adjusted basis since 2000" That seems a bit high. I measured a 13% inflation-adjusted drop in rents on per square foot basis from 1999 to 2009. Still, rents are down and sale prices are up over the decade. Yet you have correctly provided another reason to argue for more future price weakness since rents aren't expected to rise soon with high unemployment and a lot of discounting remaining off of face rents. In other words, a wide spread between sales prices and rental prices still exist.

spinnaker1 - while you are correct that averages are macro, we aren't seeing the wide spread in discounts from peak that you suggest. That means a common externality and I think its credit related. I agree, averages can be misleading - they are used for trending, never for setting prices on specific properties.

Hey JM, welcome to the fray! I was quoting your data actually, but was looking at median rent and at the 2000 peak, which had a good cyclical run-up from 1999. My main point was that the increases to the 2007 peak and subsequent drop all resulted in lower rents than one would have expected from the prior cycle. This is all the more surprising given NYC's "star" was much brighter in 2006-2007 than it was in 1999-2000. I am saying that the OP's fears of rampant rent increases are somewhat unfounded. Comparing peak-to-peak or trough-to-trough points, rents underperformed inflation by a margin that was 1% or less on an annualized basis. Given that rents make up 30% of CPI, and the Fed watches CPI like a mofo, rents that deviate significantly from inflation over long periods is unlikely.

BTW, much thanks for adding rent data to your site.

inonada - thanks! My data section is breaking from too much of it so I am rebuilding it now (designed circa 2002). This forum always contains constructive conversation so I check in often. Gotcha about the rent quote. I like your thinking, especially the emphasis on rental equivalent for CPI calculation. What were they smoking when that was concocted? Although the "star" was brighter in 06-07 period than 99-00, housing prices rose more steeply as % in the earlier period but it certainly was a shorter run. One other factor right now - my face rents to account for concessions such as 2 months free + broker commission so the decline in rents was perhaps 2x the face rent using net effective. The concessions grew significantly over 2009 and understated the decline, further reducing the probably of rising rents.

"This forum always contains constructive conversation so I check in often."

LOL -- that's a good one.

"What were they smoking when that was concocted?"

You gotta wonder to what extent the bubble and crash would have been avoided if the measure were based on something price-related.

BTW, do you have a link that explains your rental data methodology? I was curious about where that data comes from.

> 20% drop in prices and then another 10% subsequent months like we just experienced.

Did JM just note 30% down?

Wow, I'm just shocked that Jonathan Miller posted here. Thank you! hee hee.
Also surprised that he's renting.

RE guru was here! In my thread. I'm very tickled!!

Actually, -20 and then -10 equals -28 (1-.2)*(1-.1)=.72

depends on which base he's using.... either way, still a jump from what I thought his last analysis was, 20%