Fed Raises Discount Rate

Thanks for correcting me, let me update my list of private information revealed by aboutready.

And not to have any missing information, this one property you own, how many toilets does it have?

I have found Thelonious Monk to be the appropriate background music for the current state of the nyc re market. Kind of disjointed, dissonant, interesting, and not sure where it lands next. The Kenny G phase is a long way off.

http://www.intellectualconservative.com/2010/02/18/scary-prospect-democrats-53-positive-about-socialism/

More than half of Democrats in a recent Gallup poll had a positive image of socialism. Over one-third of all Americans (36%) did. What gives? Are left-liberal mainstream media and the nation's educators putting us on the road to Professor Hayek's serfdom?

Cognitive dissonance is complaining is saying you love moving and then moving to a project which is in dis-repair. You are cutting expenses plain and simple.

Whats with the socialism non-sequitur? The message is the track Reagan put us on - trickle down, deregulation and cheap money - that didn't really work....so tweaking the model is in order.

Reagan's "track" worked very well for over 20 years. It was after government went off-track that things stopped working well.

RS, that is scary regarding some people's attitudes toward socialism. Fortunately the tide is turning against it now.

rs=bs. keep on insulting where i live. it shows your class.

hfs, the property i own has four toilets. as i am the owner i replace the toilet seats. as a renter my landlord replaces the toilet seats, indeed even has a collection of them at the ready. is that so hard for you to understand?

LIC,
Yes Some sanity is returning. The public is alarmed at out of control spending and railing against Democratic attempts to limit our liberties. I now realize the Supreme Court decision on free speech is part of this. Crazy how the Democrats are trying to limit free speech in the name of some pubic good.

http://www.constitution.org/fed/federa10.htm
There are again two methods of removing the causes of faction: the one, by destroying the liberty which is essential to its existence; the other, by giving to every citizen the same opinions, the same passions, and the same interests.
It could never be more truly said than of the first remedy, that it was worse than the disease. Liberty is to faction what air is to fire, an aliment without which it instantly expires. But it could not be less folly to abolish liberty, which is essential to political life, because it nourishes faction, than it would be to wish the annihilation of air, which is essential to animal life, because it imparts to fire its destructive agency.

"Unless finance recovers to peak, there will not be enough buyers to hold the market here at values never seen prior to the collapse of the cost of money that began in 2001."

rhino, why would finance have to recover to its peak in order to hold property values that have already fallen 20-25%? That makes no sense.

it's like arguing a stock should go down more and using the prior quarters earnings number and the market's reaction to it as the basis. All these things are known by both sellers and buyers and should be reflected in pricing.

"rhino, why would finance have to recover to its peak in order to hold property values that have already fallen 20-25%? That makes no sense."

It makes a lot of sense. The condo market was built for peak demand...if not peak demand + a growth rate.

"it's like arguing a stock should go down more and using the prior quarters earnings number and the market's reaction to it as the basis. All these things are known by both sellers and buyers and should be reflected in pricing."

Well then there is no sense thinking, is there? The real estate market and the stock market are perfectly efficient, discounting all information immediately. Haha.

Both of you need an education in this shit.

yes gator, I watch lost bc of momentum. And if you needed even more reason to love me, I got to be an extra on lost a couple a seasons ago. Wife knew the casting director and we timed our trip to Hawaii.

Forget finance, Florida state dude, how about just the elimination of the ninja loans, heh? How about the weapon of mass bubbble creation. Just think how much less the bubble wouldve inflated if we all actually couldn't just wish our $400k/yr income as a dog walker?

no rhino, this is basic economics and you just failed the course. Respectfully, it is you that needs to take the course. The other poster is right; you're now just changing the rules to fit your argument.

So in your view, real estate developers sized the condo market for what finance is now, vs. what it was in 2006-2007? And in your view, there has been enough time to sort out the price that will clear these condos? In your parlance, then why are there still so many for sale? Shouldn't price have adjusted already and the market for luxury condos be balanced already? If 25% down was enough, why do we still have a glut of condos? Why is Jonathan Miller forming a consortium to buy condos and convert them to rentals? If Sam Zell is paying $500/ft for rentals, what does Jonathan Miller expect to pay for condos and convert them to rentals? Do you think he might have a more bearish view then you and printer and RS? This is a joke.

The J Miller initiative would seem to only work if they can acquire new dev condos at prices far below todays asking prices for those condos, none of which seem to be anywhere near clearing prices. If his venture is serious then it presumes some massive price decreases -- if that is going to happen you would think we would start to see more building price cuts, bankruptcies, etc. I guess he is planning on going to finance providers directly and asking them to stop extending, pull the plug on the developer, and buy out the loan at a discount...just a guess. How many finance providers are ready to do that...no idea....

w67, you are not familiar with florida universities so I will forgive your inadvertant reference to me as a Florida State grad (they are the Seminoles). It is the University of Florida Gators. Huge difference :-)

And don't confuse me as some bull on real estate. I'm quite bearish. I agree wholeheartedly about the elimination of ninja loans, the deflating of the bubble, etc. I disagree only as to where we go from here. I have never suggested and am not now suggesting that NYC RE is going to start climbing the ladder again. I think NYC RE has additional downside up to about an additional 10%. But I don't see another 20-30% from here. I see stagnation for years in NYC RE. Inventory will get absorbed because little will get built here. New permits have been almost non-existent for 2 years. I could go on, but my point is don't confuse me with some bull on NYC RE just because I think there ware appropriate circumstances to buy in today's market.

"The J Miller initiative would seem to only work if they can acquire new dev condos at prices far below todays asking prices for those condos, none of which seem to be anywhere near clearing prices"

Thanks captain obvious.

"But I don't see another 20-30% from here. I see stagnation for years in NYC RE."

Why? Why should the bottom be so near to here? Is there precedent for an eight month bottom in prior downturns? Are we close to any sort of valuation support? What do you know that Jonathan Miller doesn't? Is there anything else to this other than that you intent to buy and more than 10% down from here would make you uncomfortable? Is it that you want to buy, so you need to discount the possibility that there could be a much much better opportunity? This flat dream is the thing that lets you buy with a clear conscience. Nothing more.

Rhino...why be such a jerk , geez. You have an endless need to call people stupid (and it's not like you're perfect; i cringed reading all your "vol" lingo on that thread the other day talking about re prices...it seemed so ridiculous). It discredits YOU, actually. Lighten up. Why be so needlessly contentious.

My post was not mean to disagree with you. That sentence you quote was the lead-in to my point that is basically...what is going to happen , what conditions, lead to miller to be able to do what he apparently wants to do. I'm venturing a guess that he will try to go banks, and offer an alternative to pretend/extend.

Look at least college grad dude, I use to buy condos wholesale from failed developers on NYC in mid 1990's. I have contracts in my file for $300psf, and I was the only bidder. To go from $300 psf to $2000psf in 10yrs is a bubble of epic prop. Yeah maybe it was undervalued in 1995 but even if I allow $500psf as true value and then add inflation, we are nowherez bottom. So good luck and for the love of god don't go octo mom/dad on us.

Jimmy, why do you think lemmings are only at retail level? Plenty of jmillers went bust the last mini bubble. Trust me if you can't to all cash and suck up a few yrs of negative returns, non business buying into a deflating bubble.

67..not sure i follow...I am assuming Jmiller won't buy at anything other than way way lower levels than todays ask, so i wouldn't call that lemming buying. I can't imagine any fund put together paying anywhere near current asks. ....but we'll see

How much equity do developers have a in development usually....or put differently, if the senior lender ends up taking over a property, what is the ppsf (of sellable residence space) that the loan represents...how much haircut would the lender have to take to get to market clearing prices, i wonder

w67 as a value buyer with historical context, unlike most, what would you pay for newbuild luxury condo space in a desirable neighborhood?...I exclude anything fringy, like on the West Side Highway, north of 96th street, Chinatown....you get my drift.

w67, as with most discussions with you (w67), rhino etc. this is just getting pointless. W67 so the $2000psf is going back to $300psf and the $1000psf is going back to $150psf. Possible that its the end of the financial world as we know it? Sure maybe a 5% chance. You're certainty that it will happen just makes you look foolish. People with such certainty of their position usually hit it big sometimes and fall on there face just as big others. And because you're always all in because you're so convinced of your position you end up getting nowhere.

Its you that looks foolish. To take in the historical context and current circumstances and declare we are unlikely to see more than 10% down...You'd fail the test if this were a college course. And this is not because your scenario is impossible...its that when you frame it as the most reasonable downside case, it just falls flat on its ass.

One issue about all this new dev is the frigging useless amenities. To me that is a huge negative. So, even if they discounted the asking prices in my mind I would be calculating how much negative value I attach to the perpetual liability of bs amenities I don't care about. I suppose at some point some buildings might scale that stuff back, but there is no gtee of that. I think this amenity/liability issue is more of a problem now than 20 years ago when all this crap was less common.

Notice that w67 says he would look for downside to the $500/ft level plus some inflation factor. You twist this around to say he is calling for $150-300/ft and then call him foolish for being sure of a 5% probability to make yourself feel like the reasonable party in this matter. The reality is no one would call -10% a reasonable downside case.

rhino, so what your saying is that any view of the future of NYC RE other than yours falls flat on its ass and is foolish. Whatever. I refuse to engage in such narrowminded idiocy. I'm out.

Understand this. Your view falls on its ass because you have no support. You also refuse to engage on points. Tell me again how the real estate industry sized the luxury condo market for today's finance industry and not 2007s. You have shit. You have nothing but hope based on what you've decided to do. You don't have support of any intelligent expert. You don't have historical precedent of any kind. You have shit. You have a $1 and a dream and a down payment and you're sick of renting. Read w67s comments and tell me how a debate judge would rate your side of the exchange. Zippo. Stay lost.

The only thing anyone here is certain about is that -10% as a downside case for any analysis of this situation is wildly and sadly optimistic.

Last comment. We're down 20-25% now (more in some areas, less in others) and I think we can go another 10% for a total decline of 30-35%. That's significant deflation of the bubble. It's not the 40-55% that has happened in California, Florida, Arizona, and Nevada, but its still significant and the numerous reasons why NYC RE won't fall as much as those areas have been addressed to death. You rhino don't explain why NYC RE will suffer the same fate as those states (and actually you apparently think NYC RE will suffer more than those states). The loss of finance jobs alone won't do it (California has higher unemployment than NCY) and the inventory problem in NYC is not even close to Florida and the like. I don't think NYC RE will suffer the same fate, but rhino says I'm a foolish idiot so my opinion doesn't matter.

"so tell me bjw.... thousands of ppl... just like you. Can add and subtract, may even be able to use the TVM function, maybe even went to a fine graduate institution.... so they ARE NOT getting a "deal" but you ARE?, as compared to rent....."

Whoever said you had to be so (purportedly) smart and educated to find a good real estate deal? Most of it is hard work and luck.

Rhino...you ridicule people so much..well, honestly, citing jmiller as proof of an argument is pretty thin...you keep citing that venture of his (which has done nothing) as if it means anything...that's weak, really...

rhino, just because you ignore or dismiss my and others arguments doesn't mean that they haven't been made. They've been made repeatedly. Yet you abandon the arguments for ad hominem attacks. Its my bias as a buyer that makes my position wrong. But you're position sitting on the sideline waiting for NCY RE to continue to fall before buying doesn't bias your position? Whatever. Experts? There's always an expert to support any position.

I refuse to engage in this pointless discussion. Not because I don't have any arguments, but because they don't matter to you. Nothing does except your own position. I've spent way too much time on this as it is and spending more would just be a further waste.

Rhino, as you correctly point out until rents stabilize where is my basis for judgemet. But I will say for myelf I think if me wife started twisting my nutsz id be okay from $500 to $800psf, but like you I've got $1mm + in a savings Acct and I'm not worried about being laid off. Oh and thru the magic of family love both kids have a trust fund of $400k. To me I don't see what the rush is ? This is an epic bubble, I doubt we won't fall below 'true' intrinsic value. Rhino thank you again, I never called for $300psf, good on you for reading comprehension.

Here is my final lesson. The bottom will when combos of the bubble era are broken into it's component parts. See when you are forming a bottom in any mkt, it's the 1bdrms and studios that'll start the process. Like w/o a $2k 1 carat on 47th you can get a $50k 1carat at Tiffany.

gator, in the last few days i've read about three or four new projects being planned. toll is building something with 90 or so units in downtown brooklyn, whoever is taking over the durst property in LIC is planning 900 units and already has financing for the first tower of 560 units. and a couple of others. i'll start a thread, i think.

builders build. until they can't. they still haven't totally turned off the financing spigot, that might slow down the economy, god forbid.

Interesting infographic about how all ofWall Street (or a great deal many) found new employment. Seems like only a year ago the world was over.

http://paul.kedrosky.com/archives/2010/02/turn_on_the_lig.html

it still kind of sort of is to the 14 million or so americans who don't have adequate employment. and those who don't have health care. and those who don't have enough to eat.

If this is what you are speaking of, it's not a new project
http://therealdeal.com/newyork/articles/lic-owner-may-buy-33m-note-held-by-durst-fetner-residential-at-44-02-vernon-boulevard

There is nothing of substance being planned, and we probably will not see much being planned over the next several years, which will help with pricing.

Good data in this matter would be Manhattan income tax receipts. I think we'd find that income at banks is pretty concentrated and the rank and file, even those who landed relatively quickly, are earning less. There is also a hole in their bonus history that will take a few years to patch up. This reduces the coop qualified buyer pool.

"There is nothing of substance being planned, and we probably will not see much being planned over the next several years, which will help with pricing."

This is a decent point, but is it really relevant until what is behind built from the last boom is completed and sold?

"a stalled 1 million-square-foot residential development site on the East River in Long Island City to the property's owner."

from the real deal article. so it was stalled. and not included in future inventory guesstimates. now it is not stalled and someone has financing.

i guess it's semantics, but i'm still adding this to the new and unexpected development list.

i guess when solow finally starts building on the east river you'll say that's not new also.

Never mind that the relevant supply to the course of prices over the next 2-3 yrs is stuff that is being completed now and in the next two years. The bullpologists are making the 2012 bull case in 2010....too high and too soon.

"so it was stalled. and not included in future inventory guesstimates."

aboutready, it probably depends on who's counting. Several of the inventory guesstimates in Williamsburg have included the ~2000 units that will be part of Domino, which is far from a certain thing. And even if it does get done, target completion date: 2021.

are we talking about the same thing, bjw? this project has been trying to get off the ground since the 1970s, but NOW ironically has financing.

"Just half the project will begin this year following the recent securing of $241 million in construction financing, Weisman said. The foundation construction on the northern portion of the development, with one of the tall towers and one of the short ones with a total of 561 units, will begin in June or July, he said. The balance of the project will go forward once additional financing is obtained, he said."

that's 561 more units coming on in a couple of years. and i'm seeing this all over. my point is that companies, from related to toll to etc., are already planning their next buildings. and there are all those lots with 421a abatements and foundations. funding doesn't seem to have dried up, for whatever sorry-assed reason.

Bjw. Sarcasm sarcasm my boy. ;)

I don't see related companies planning new developments. Where are you coming up with this?

http://www.ft.com/cms/s/0/0605184a-1b64-11df-838f-00144feab49a.html

"To be a real estate developer in this market today is oxymoronic," Mr. Ross told the Financial Times this month in a rare interview. "There won't be any large development projects, particularly in the US, for years so we are shifting to a fund management strategy and taking over and executing on others' developments."

-------------------------------------------------------------------------------------
At 69, Mr Ross controls $15bn in property through his New York-based Related Companies and heads a glitzy group of investors - his partners include tennis stars Venus and Serena Williams and singers Gloria Estefan and Marc Anthony - that owns the Miami Dolphins of the US National Football League.

But the financial crisis is causing Mr Ross to shift his focus. Having made his name as a US developer, he is looking to take advantage of the turmoil in global property markets by seeking overseas projects, investments in distressed properties and even banking. This week, Mr Ross and two other Related executives - Jeff Blau, president, and Bruce Beal Jr, executive vice-president - are close to raising $1.1bn capital that they, in a personal capacity, will use to buy a bank.

Mr Ross is positioned to shift gears because he saw trouble brewing in the property markets years ago. Back in 2007, he summoned bankers from Goldman Sachs to help him raise a war chest so he could take advantage of the coming dislocation.

RS, clearly i was just rattling off names of companies. yes, related has indeed been wise enough to not go full throttle ahead with hudson yards.

i'll start a thread on the new activity. and yes, if a project that's been floundering around for 40 or so years finally gets its financing and is going ahead and building (and almost 600 units in LIC for f's sake), it's new and it's news.

nice selective quotation, RS. very nice. you left out some, including the "WHILE IT WAITS FOR A NEW FINANCIAL PARTNER FOR THE DEVELOPMENT OF THE HUDSON YARDS DEVELOPMENT." mr. ross seems to have a fine grasp of oxymoronic.

"To be a real estate developer in this market today is oxymoronic," Ross said. "There won't be any large development projects, particularly in the U.S., for years." This easily-adaptable approach to business could hold Ross in good stead in the near future: Related has been named as a possible candidate to over the scandal-plagued Stuyvesant Town, while it waits for a new financial partner for the development of the Hudson Yards development.

However, the deal has been structured so that Related can wait for the cycle to turn before it begins work.

As has so often been the case recently, time is on Related's side.

The take-away point should have been, "There won't be any large development projects, particularly in the US, for years..." The only activity you may see is money coming in to finish other people's projects in various states of completion.

http://therealdeal.com/newyork/articles/toll-brothers-reaches-for-the-skies-at-new-dumbo-site-at-205-water-street

Toll Brothers is looking to build as high as it can get away with on its new 205 Water Street site in new Dumbo Historic District. The luxury home builder bought the vacant site for $8.6 million in December. Toll has a 120-foot, 70-unit tower in mind, but needs approval from the Landmarks Preservation Commission before moving forward.

Whew. This is exhausting. Time for a cold beer or two.

poorish, funny.

rs, it doesn't count if it is something revived from the dead? something left as a rotting carcass and then revived? says who? that means the units that are created weren't really "added". they were just given CPR?

Poorishlady, I'll join you for that beer.

This Toll brothers thing is actually funny, they wanted to sell apartments on a site that is/may to be designated a Superfund site. This is a developer with vision. I guess there's no law barring stupid developers.

http://brooklynheightsblog.com/archives/16553
The Brooklyn Paper: The mammoth suburban developers — fresh from a bruising withdrawal from the toxic Gowanus Canal — says it may seek to build as high as the law allows in the famously hot neighborhood between the Manhattan and Brooklyn bridges.

http://www.nytimes.com/2009/04/24/science/earth/24gowanus.html
“There’s a lot of garbage,” said Mr. Ilarraza, a longtime Brooklyn resident. “You don’t need to be a rocket scientist to know that.” The “garbage” in and along the mile-and-a-half-long canal includes pesticides, heavy metals and carcinogens like PCBs from more than a century’s worth of industrial activity. This month, the Environmental Protection Agency said that the contamination posed a public health hazard and proposed to add the Gowanus to the National Priorities List of its Superfund program, an effort to investigate and clean up the country’s most hazardous waste sites.