Markets: NYC Real Estate Better Deal than Apple

sweet blagh

Hey Neil, since you acknowledge PE ratios have a looksy at what manahattan apartments are renting for and what those same you units are asking for sale.
With a 1000 sq ft apartment average asking 1,050.000 but offered for rent at $4000 per month with 1 month free, but let's ignore that 1 month free and still puts this ratio at 21.87 times rent roll!
When boom years were at 16/17 times (200 time monthly rent)!

Are you making a case for buying real estate or buying into a reit?
Have you looked at the inventory pace and direction for the last 2 months?
Have you sold an apartment in a day like you can a stock?

All the creativity in the world will not sell you more apartments Im sorry to say.
Lowering asking prices to (the still high) 200 times monthly rent multiple may.....

lets go back to something called the internet stock bubble. those stocks had "astounding" p/e's as well. Howd that work out? allthough that does bring us to an excellent analogy...Manhattan RE is just like amazon at 300. some fools still thought it was a great buy since it was down from 600.

We should have a thread rating system on here so I could give these kinds of threads 1 out of 5 stars.

Not so fast wad. This thread may well be a classic when we look back three years from now.

definitely a classic. not quite as good as the "bonus money will blow your mind" thread

Shhh....let the shillery shenanigans propagate.

Ha, how about that, found an example with a Bellmarc listing.

1 bed/2 bath w/outdoor space 1096 sq ft for 1,050,000
http://www.bellmarc.com/search/profile.asp?list_num=C1123795V
your calculator provides the following;
PRICE: $1,050,000
COMMON CHARGES: $1,018
REAL ESTATE TAX: $1,072
CASH REQUIRED: 10%
INTEREST RATE: 5.3%
CASH DOWN: $105,000
PAYMENT/MONTH: $7338

for rent
http://streeteasy.com/nyc/rental/591333-rental-270-west-17th-street-chelsea-new-york
StreetEasy History
05/16/2008Previously Listed by Bellmarc at $5,800.
10/29/2008Bellmarc Listing rented. Last priced at $4,600.
10/28/2009Listed by Bellmarc at $4,700.
11/17/2009Price decreased by 4% to $4,500.
11/28/2009Price decreased by 7% to $4,200.
01/04/2010Price decreased by 6% to $3,950.
02/10/2010Listing entered contract.
02/18/2010Listing rented.

Provided you can do all your tax deductions (ignoring AMT) and no RE tax hike maybe is break even at 790K?

Neil.... Thanks for your analysis. Most of us here on SE are interested in valuing individual co-ops or condos as homes for our families, not as REIT investments. What do you feel about current valuations? How about next 12-36 Months? How about rent to buy valuations. Thanks

THE REASON THEIR PE'S ARE SO HIGH IS THAT THEIR EARNINGS HAVE EVAPORATED! That is not a good story.

Avalon Bay Communities hit a high of almost 144 in 2007. It's now trading at 80. BTW, the NYC market represents only a tiny fraction of their overall activity.

I could comment on the other two - but this is just silliness.

THE REASON THEIR PE'S ARE SO HIGH IS THAT THEIR EARNINGS HAVE EVAPORATED! That is not a good story.

Avalon Bay Communities hit a high of almost 144 in 2007. It's now trading at 80. BTW, the NYC market represents only a tiny fraction of their overall activity.

I could comment on the other two - but this is just silliness.

Neil, based on your post the following would need to be true:

1) their is a clear linkage between residential and commercial real estate values / market direction
2) P/E ratios are relevant in inter-industry comparisons (Apple to Vornado anyone?)
3) The current PE ratios of commercial REIT's have priced in the spanking the industry will receive once long term leases signed at peak expire

If you can convince me that you have established these three facts in your "analysis" I will be happy to endorse your claims. If not, then I think this could be the worst attempt at stringing together unrelated "facts" into a giant, self serving conclusion.

Vornado traded at a high of 130.65 in 2007. It is currently trading at 65.88.

SL Green traded at a high of 156.10 in 2007. It is currently trading at 49.74.

Awesome.

Seriously, the more I think about this, the more I think this guy is brain dead.

To add onto JuiceMan,
4) P/E would have to be a very meaningful ratio.
5) Historical P/E would predict be very telling for the future.
6) That a high P/E means something is valued appropriately, such that the drops we have seen after every bubble were imaginary, as opposed to over priced.

The historical P/E of Enron was 69. You are one massive buffoon. And any bandwagon fan posting to thank you for your "analysis" is an even bigger buffoon. I understand that your Pizza Hut Book It! winnings fed you well in prior years but now you need to actually work for money. Deal with it.

WAD.... I had a large part of my tongue in my cheek. It was really intended as bait. I guess he didn't bite.

"THE REASON THEIR PE'S ARE SO HIGH IS THAT THEIR EARNINGS HAVE EVAPORATED! That is not a good story."

ha

is anyone surprised that a broker doesn't get the stock market (let alone his own market).

NYCDreamer you've restored my faith in humanity...or at least streeteasy. Thank you.

Is this a candid camera moment? Seriously, is Neil going to give us the punchline or just leave us to wonder? This can't be real.

I had my doubts as well, but the same post is in Bellmarc's blog page.

10 years ago gas was a $1/gallon and a nice apartment in the WV cost 800,000 times the price of a gallon of gas. Gas is now $2.75/gallon and a nice apartment in the WV costs 600,000 times a gallon of gas. Therefore, you can clearly see that RIGHT NOW is the best time to buy an apartment in the WV.

Binder, Neil - example of a late 20th/early 21st century real estate broker who made a lot of money in boom times despite the fact that he was a total knucklehead; also slang for someone using compeletely unrelated data to "prove" something that is false...as in, "I had no idea what I was talking about, so I Bindered some numbers to make myself sound smart."

One thing I've learned about salespeople is that they are typically truly focused upon making sales as opposed to scoring debating points (or advancing general financial understanding). That said, there are a few thoughtful brokers that do post on this site - from whom I have learned a chunk.

This thread has clearly not moved in line with OP's original intent.

Expect him to just move on to the next opportunity to stimulate buying/selling interest.

Wus.

When the President of a RE company makes such a desperate statement on a RE blog, you know things are baaad! This is pathetic and in no way, this is raising any of my esteem for your company !

I suspect that Mr. Binder will regret that he ever committed his thoughts to the printed word.

apt23, the sad thing is that I'm fairly certain this isn't the first time he's "shared" his wisdom.

FLMAO. Mr. Binder, plz do teach this class. I am sure your 10 yrs waitressing in the finest diners of nyc qualifies you. F'k I might have to "pretend" to need his services and have him drive me around in that british cab.... maybe we can discuss the rent/buy ratio of his wife...

I guess President Neil only wants to pontificate.

Except any pontiff would have a much easier time passing on the concept of immaculate conception than the lame disconnect of a rationale in this particular case. So, i don't think pontificate is the correct word.

With all due respect....how would you analysis have looked in Q4 2007? Was there ever a time where your (for lack of a better term) empirical analysis did not look positive for NYC real estate? Surely there must have been some indicators that were as reliable as your current analysis.

'It seems to me that investors are saying, “Given what I know right now, New York City real estate is [sic] good opportunity.”

I agree.'

The most disingenuous grammatical construct in the history of SE. Barf.

Well, think about this... broker schmucks have been saying "the market is going to go up now" for, what, 2 years... and been 100% wrong the entire time.

All that lying is bound to drive a man crazy.

"The most disingenuous grammatical construct in the history of SE."

Agreed, and that is saying a lot.

Where is Neil?

"Where is Neil?"

And how much did he get for Marc?

Welcome back 30 Years!!!! You are one of my favorite posters. Always informative, always on subject, and always professional. You seem to cut through the bullshit. I'm planning on coming to the SE meetup next week just to talk to you.

Man o man, I am a NYC real estate bull, but that original post above was truly moronic.

You may be a wizard at selling real estate, but you have a profound misunderstanding of pe ratio's. That is ok, valuation is a complicated topic and plenty of people are ignorant of it. What is astounding is that you are actually using your misinformation as the foundation of a (fallacious) argument. That is just plain stupid.

Hire a PR firm...fast. Or do your firm a favor and edit and remove that moronic post asap.

How did Apple work out vs real estate?