so when does the next leg down start??

Are we talking about One Madison Park or the Park Madison on E 29th?

A lot of little legs down but mostly upward trending for a few years. Let's see what sentiment looks like around April 7-8 and what inventory looks like in June.

"A lot of little legs down but mostly upward trending for a few years"

Dude! What are you smoking?

marco_m - what excitement?

seemed like there was some activity. maybe i was just being suckered in by the bulls ramblings.

What happened to the recorded sales page, it's no longer available??? I couldn't create an additional discussion regarding it and I got this error message when clicking on the link..........
No service to this page.
We're sorry, but the page you tried to access doesn't actually exist.

It's like the Second Avenue Line.

That was really weird, still getting the error message, but found a link around it.....
http://streeteasy.com/nyc/process/closings/edit_search?criteria=area%3A100%7Cdated%3C60
this is of course only for those who subscribed.

curious to see what the change will be after april 15th or whenever the credit expires. not that it would apply to many who are buying in manhattan, but to some extent we are still victims of the mob mentality and it may affect market pulse...

I don't foresee the end of the tax credit having any impact, because it wasnt really something that Manhattan buyers were affected by due to its income/purchase price limitations. If anything, a change in interest rates would be more significant for Manhattan and I think it was 2/3 days ago the fed said they planned on keeping interest rates low for a "very long time."

marco_m "seemed like there was some activity. maybe i was just being suckered in by the bulls ramblings."

Here's the hard data: 1000+ contracts/mth and holding since labor day.

1000+ contracts/mth and holding since labor day.

is that high or low?

It's not that complicated marco. If ever again you feel like you're "being suckered by bulls ramblings" just point them to the data that supports your view. They will likely find it difficult to argue with the data.

Avg sales since 2000 is about 9k/yr. with a low in 2009 of 7500 sales. Even if 20% fail to close 1000 contracts/mth is well above the 10 yr running average. It's not bullish or bearish, it's just data.

Spin, where do you get this data for monthy contracts signed, thanks...

Spinnster

A fair post. Average over a year closings are around 700-750 per month with seasonality out of the equation.
I'll form an opinion AFTER long awaited closings figures for the first quarter are released sometime (hopefully) in april.
And if closings remain in the 700 to 800 average, that would be disturbing and not bode well for bulls.
You'd have to throw in price per sq ft change into the equation as well.

marco_m
From the inventory thread where I posted all those apartments that were listed in contract in January,as they approach the 60 day mark on these apartments, we have 1...that's right ONE that closed.

52 east 4th _5S__contract date 1/13 did close 1/27
52 east 4th _4N__contract date 1/21 open
52 east 4th _4S__contract date 1/21 open

53 warren #4_____contract date 1/21 open
53 warren #2_____contract date 1/21 open
53 warren #3_____contract date 1/21 open

141 fifth #9_____contract date 1/21 open
141 fifth #5_____contract date 1/21 open
141 fifth #25____contract date 1/21 open
141 fifth #21____contract date 1/21 open
141 fifth #6_____contract date 1/21 open
141 fifth #10____contract date 1/21 open
141 fifth #39____contract date 1/21 open
141 fifth #7_____contract date 1/21 open
141 fifth #20____contract date 1/21 open
141 fifth #24____contract date 1/21 open
141 fifth #36____contract date 1/21 open

15 william#44a___contract date 1/31 open
15 william#44c___contract date 1/31 open
15 william#17e___contract date 1/31 open
15 william#36a___contract date 1/31 open
15 william#24a___contract date 1/31 open
15 william#28b___contract date 1/31 open
15 william#29c___contract date 1/31 open
15 william#34b___contract date 1/31 open
15 william#34g___contract date 1/31 open
15 william#25b___contract date 1/31 open
15 william#23c___contract date 1/31 open
15 william#15c___contract date 1/31 open
15 william#33b___contract date 1/31 open
15 william#11c___contract date 1/31 open
15 william#27g___contract date 1/31 open
15 william#15f___contract date 1/31 open

That's 1 out of over 30 (which if these in contracts were bullshit to begin with) are 30+ units missing from the inventory tally.

Is that high or low?

jstreet - you can find some decent realtime data here, although UD freely admits it's not precise as his focus is on the new website. He has said recently though that actual closing figures are running higher than what is being reported on his public site. http://www.urbandigs.com/charts.html

skr10 - What's disturbing about closing figures returning to nominal levels?

spin-thanks. i looked on the UD chart and it seems hard to tell how many contracts were signed each month. How did you determine that?

It looks like October and February were similar in contracts signed and I see from the current 30 day average that was right around 1000 a month. But sept, nov, dec, and jan look a good deal less per month.

So yeah, how you determined the 1000+ a month average would be awesome. thanks

30 running avg is tabulated to the right of the graphical display.

spin-sorry if this is obvious...so you have been watching the 30 day running avg each month? and you have seen it consistenly above 1000 since september 1?

looking at the chart is seems like there were a lot less closing in dec and jan than febraury, so its hard for me to imagine if 30 day average is just now over 1000, that is could have been in those months? how do you explain? thank

sorry, should say contacts signed in dec and jan, not closing...

"skr10 - What's disturbing about closing figures returning to nominal levels?"

If contract signing are 1000 per month and closings are 700-800 that means the banks are a)still not lending based on poor income, poor valuation of property or both or b)brokers fluffing the numbers trying to disguise it as a robust market. Yes closings are lagging but Nov and Dec were championed as the most robust 4th quarter in years. As was this quarter. First quarter closings should def reflect it...or not.

I know this much..I went to 80 met in the end of january and they were pretty confident everything was going well..then they cut prices 3 weeks later. and we're goin lower from here

Expiration of housing tax credit and MBS purchases will mark the start of the next leg down in RE. RE is all about three things: (1) income, (2) interest rates and (3) confidence. Incomes aren't increasing, interest rates are only going to increase from here and confidence will decline from here when people realize RE prices still have a ways to go.

Speaking of Fed purchases of MBS: What is the conventional wisdom about the Fed ending their purchases of MBS at the end of this month? Is that going to trigger interest rates rates higher and pressure home prices downward? Or will the fed announce that they will renew the program for the "forseeable future" to keep the ponzi scheme going?

Very curious to hear what the streeteasiers think about this one. Without the Fed, my understanding is that there is no market for MBS (at this level of interest rates)....

marco: Does this answer your previous discussion topic, re: OBBP?

marco: Does this answer your previous discussion topic, re: OBBP?

???

the fed may be jawboning about morgage purchases, but no way are they going to rates spike in the face of an already weak market.

Oh, sorry, Marco: To clarify:
I'm in agreement with you. The Fed jaw-bones, buyers get nervous, and rush in. No need to rush. Prices will go down, again; at OBBP.

You also have some expiring tax abatements in the next couple of years, right? When did that program start, and when do the abatements start to roll off?

i guess if you've been around before the RE bubble you'd notice that we have a normal healthy market devoid of either insane bidding wars or panic driven firesales. foreclosures remain low, the economy is improving in fits and starts, the stock market has staged a historic comeback and interest rates remain low(and the bond market is acting as if they will stay low). yet most economists and pundits are still predicting conflagration. fine by me. as a bull i like to see markets climb a wall of worry. it's when everyone feels safe and assured of continued price appreciation that i get nervous.

wow was this a long time ago..any old school streeteasy folks still around??

I'm still here :) Boy those were much different times, I was one that thought there might be another leg down way back then. A lot of water under the bridge and perhaps one of the greatest comeback stories ever!? To those that ventured to buy back in those stormy days, the real estate gods have shined on them.

And our beloved, little streeteasy sold for $50M!! I think the popularity and intelligence of the posters here had a lot to do with making that sale happen. I also built a disruptive (correct word now) real estate company (2007) based on the comments I read on on this site. It was worth the many 'flamings' I took early on when I naively identified as a broker right out of the gate....

Keith Burkhardt
The Burkhardt Group
www.theburkhardtgroup.com

I'm a bit suspicious about this thread, given that the Truth was removed.

Still lurking

Still lurking

> falco did you get your terrace,

Still lurking

I never come here anymore.

Since I found all the old timers in one spot :) What's your opinion on the market now? Putting an offer on a alcove studio with an uneasy realization it would cost 100K less just a year or two ago.. Making a mistake?

ph41, yes I did...back in 2011

> falco

> falco - happy for you

I don't think you are making a mistake.

https://www.wsj.com/articles/manhattan-housing-inventory-swellsand-shrivels-1491426346

market still riding high. Commercial beginning to feel the pinch of an ever expanding amount of available square feet. Rentals are offering free months with one and two year leases. There is a fair amount of product coming to market on the higher end which should make for some downward price pressure. I don't know if we will see and out and out collapse but a correction is due. This is the time to do your due diligence. Find your properties, do your comps and keep the vigil. No matter what you think, it's a cyclical market.

Look at the Manhattan inventory for sale - it went up almost 500 since my last post month ago. Its up 1500 listings over the last 3-5 months.
Check Kalahari at 40 west -116th str. I don't remember when this building had 6 units for sale and 4 units for rent at the same time.. Looks worrisome to me.

Can anyone recommend any good writers on the subject (i.e., NYC real estate projections) that aren't terribly biased? I see writing from brokers/builders/developers associations, and it's tough to give them much weight. Similarly, I see writings from folks that essentially sell fear, and I find that tough to find credible (i.e., a stopped clock is eventually correct at some time). I can form my own opinions, but I would like to see the writings of others.

Team M, Take a look at Urbandigs data (with subscription) and draw your own conclusions. It is widely known that Manhattan high-end >$5mm and <$2k/per sq ft is over-supplied. Other good source of data is miller samuel website. In my opinion, only high probability forecast can be for this market segment, which is down from the aspirational prices. Just like the stock market, below $5mm and <2k per sq ft is hard to predict without any clear signs of oversupply. A lot depends on the NYC job market for this segment.

Sorry >2k per sq ft.

Economic projections over a short duration are just about impossible to predict with any certainty. The NYC real estate market is tied into the macro economy at large; how you feeling about our economy? Although people say buy real estate as a hedge against stocks, if the equity markets tank real estate values will follow. The next leg down is coming that I can tell you with absolute certainty. When it's coming I have no friggin idea. I have not been​ able to find or read about anyone discussing any underlying stresses that will trigger this in the near future. However in 2006 and 2007 there was plenty of discussion about the credit markets and the impact it would have on the real estate market. Hence I started the Burkhardt group to offer discounted rental commissions as I was feeling pretty strongly it was not a good time to purchase. Anyway in hindsight even if you did purchase the bull market that followed in the winter of 2009 brought you out of the crapper pretty quickly. Just some random thoughts, it's a fascinating subject (nerd alert)

Keith Burkhardt
The Burkhardt Group

300 - thanks. I have been drawing some conclusions, although I'd like to test them against others that are thinking on the subject. There are a lot of people writing about the subject, but a lot of them are incentivized to push for a certain conclusion rather than to look the market with a clear mind. There are some academics that do interesting writing on it, but they tend to look at long-term historical data to draw trend lines (and generally conclude that NYC is due to come down in price) rather than dissecting the current situation to challenge whether the historical situations that led to those trend lines still hold true (e.g., how does the modern economy, information age, etc. impact whether those trends are relevant anymore?). I'm not saying that the trend lines are wrong - just that I would be interested in reading material from people digging deeper.

Keith - what is your sense of it? Is now a good time to purchase in NYC or is it more like 2006 and 2007?

My concern about buying now is that it seems to me there is a lot more room on the downside than on the upside. To equate to equity markets and the concept of support/resistance/floor prices: where do you see these numbers coming in for the real estate market? Personally I find it fairly easy to come up with scenarios where those types of numbers don't kick in until about 50% off of the current ones.

I remember the 1991 real estate crash here in Manhattan. Stock prices were climbing all through the nineties, especially the Nasdaq. Alan Greenspan coined the phrase irrational exuberance. And yet real estate prices did not even give a hint of coming back. When the Nasdaq market crashed in 2000, then the real estate market started turning around. I am not saying that the Nasdaq crash caused it, but to say that stock prices going down will cause real estate to crash, I am not so certain of this. When the 1987 stock market crash happened, for awhile the real estate market was dead, but stocks came back, but the real estate market eventually crashed. This crash was by far much worse than the 2008 downturn due to the financial crisis.

As far as buying now, I would buy. One never knows what will,happen. I am concerned about what the Trump administration may do, namely privatizing Fannie Mae and Freddie Mac. That could send interest rares higher , maybe even eliminate the 30 year fixed rate mortgage. That could tank the market if it happens. I guess I am not certain, but I would still buy. Rates are still historically so low.

Interesting thoughts. Thank you. I find it to be an interesting mental exercise to imagine that the you have a crystal ball that tells you about a real estate downturn/upturn/flat performance in the next 24 months, and then construct the reasons as to why each outcome happened. Consider which of those series of reasons is most likely to unfold. My views shift from time to time as I think about these factors, but I like to see other people who have given deep thought on it.

Buy with a hold time of 8 to 10 years and buy a home that you love and will enjoy living in. You'll be fine. Acting on that imaginary crystal ball based on 24 months can be dangerous to your health :-)

I think many people here will agree that the equity markets are correlated with the real estate market here in New York City. We may have to call on our friend Noah Rosenblatt at Urbandigs to shed some light on this. In very anecdotal terms when the stock market is doing well I certainly feel like it it greases the real estate market.

Keith Burkhardt
The Burkhardt Group

FYI it doesn't feel like 2007 to me.

Very highly invested people in equities have made a tremendous amount of money since Trump won the election. Yet
I do not see that reflected in the luxury market doing any better.

That said Jeffrey Gundlach, founder of Double Line Capital told a group of investors today to be very afraid of the U.S. Stock market and to short the S&P 500. Who knows we may have our answer in the not too distant future.

I have been thinking about the reasons for high-end oversupply (beyond over building) and why the stock market rally has not helped.

Believe
1. high real estate taxes partially offset by lower interest rates
2.more scrutiny of LLCs and dirty money
3. an increase in the number of desirable areas (think Brooklyn)
4. lower bonuses in sales and trading part of banking, and
5. general decline of the hedge fund and asset management industry are big factors.

Offsets have been more two income families wanting to live in the city, private equity, and tech related money.

I think new developments will continue to have a hard time unless priced well. Fully renovated resale condos around $1500 per sq ft in good areas will be fine.

The ultra-high end is a sliver of the market. The rest of the market is firing. Keep in mind that buyers in the $2-$4M range are not exactly chopped liver, they are benefiting from equities and buying at a nice clip. To date we have never been busier. The 1% of the 1% live in a vacuum and a lot of that market was overseas money trying to hide in NYC real estate. There are a number of reasons that money is not pumping up uber NYC real estate. Bottom-line the uber-luxury market where the Jeff Gundlachs breathe the air is not a proxy for NYC real estate or the healthy or unhealthy state of the market.

I do very well letting an under the radar market timer named Dan Sullivan manage our money and have weathered all the storms and done well in the bull cycles. When these big guns get on CNBC and make big predictions I take it with a grain a salt. My guess is they are trying to prop up their own position or create one or else generate notoriety by making a big call and guessing right. We quickly forget all the nonsense 'predictions' the pundits make, but if you make the big call you have a permanent spot on CNBC to wax poetic on all things. I am still puzzled by these titans as they mostly trail the s&p but run billions of dollars??

Keith Burkhardt
www.theburkhardtgroup.com

Keith, Well said about the ultra-high end market. That said, I do see compression at $4-5mm range around $1500 per sq ft. They are not moving as fast and prices are softer 5-7% (just my gut feel from many listings I have browsed) from 2015 peak. Naturally, this is very good for the buyers you represent.

@300 yes the 4-5M market is softer, smaller buyer pool and very selective buyers. These properties don't go to best and highest after 1 open house. Perhaps readjust expectations and plan on 6 months to sell.

Thanks Keith.

perhaps a case in point: http://streeteasy.com/building/45-east-85-street-new_york/4a

renovated co-op in prime location listed at $4.375m sitting on market for two months so far. interested to see how long it takes to sell and whether there are any price cuts.

I do not see Jeffrey Gundlach as a "proxy" for the NYC Real Estate market. However he has proved his abilities in forcasting the equity markets in which people on this thread intimated that how well the equity market does will affect NYC real estate.

Cheers all! Sorry been so "quiet" lately, in a few months you will see why. But wanted to chime in here and my thoughts will echo that of Keith's sentiments: that is, the equity markets are correlated with the nyc markets. The equity markets are the stars everyone looks to...when markets rise, things from a purchasing/investing standpoint just seem rosier. when markets fall, fear sets in as a depreciating asset mentality is priced into bids...if the fall is severe enough, bids will disappear to the point that sellers that have to sell for liquidation/margin call purposes are forced to hit whatever bid there is. We went through this exorcise in 2008/2009 in a extreme way, classic 6s on park/madison with views were selling in mid/high 2's. Bids couldnt be found. They say, buy when there is blood on the streets. Easy to say hard to do.

We had another shorter, and less extreme down cycle that started in early/mid 2015 for high end and mid/late 2015 for broader market. The cycle lasted about 8-10 months, troughed in early 2016 and was followed up by a sluggish rebound. Then staring Jan 2017, as is usually the case this time of year, the market started to pick up and so far this active season has been going ok. But this last down cycle is much more price specific than 2008 one. As Keith says, whats going on in the super luxury sector (say 10m+) and the luxury sector (say 4m-10m), is much different than what is happening in the sub $2M market.

Regarding recent fears as stocks hit record highs. I think the wall street insiders are a bit concerned about future fed unwinding policy after so many yrs of monetary expansion - https://www.bloomberg.com/news/articles/2017-05-08/jpmorgan-tells-banks-to-partner-up-as-u-s-deposit-drain-looms - given where stocks are and other credit assets and how much we gained, combined with this future fear, I think expecting a stock downturn is a fear in these guys heads. Not so much for everyone outside that world. Things are moving along in the nyc markets just fine right now, and buyers gained some leverage vs what they faced in 2014/2015. How much leverage you gained, depends on price point, the higher end buyer gained more leverage than the lower end in this last cycle.

@streetsmart The reference was the uber luxury market not being a proxy, not specifically Mr. Gundlach.

Interesting thoughts. Thank to you all. Please keep them coming if people have other thoughts/speculations.

I think that an interesting factor in the NYC luxury market that's worth considering is whether sellers actually have to sell. Coop boards in luxury buildings aren't doing their jobs if people are forced to sell in most economic downturns. However, the strong activity of developers/condos and townhouse flippers might force transactions in a downturn when the market would otherwise just become semi-dormant. If not for the developers and other speculative activity, I would think that the luxury market might drop rather than significantly, but that it wouldn't show up in the numbers because the owners might just hold onto the properties. Even if the speculative investors feel a large pinch, I'm still not convinced it leads to a huge drop in the sector because I don't know that the lenders will want to force the firesale(s).

TeamM, That is why I always focus on new development driven pressure as they have to sell within 1 year or so of completion and they still have at least 20% profits at their current prices. Much easier for the developer to convince the equity holders that they did not make enough money rather than handing the keys to the bank. In addition, the developer is better off collecting fees by doing one more development. Then there are people moving to bigger places, divorces, deaths, and people who bought a long time back.

Don't forget that the residential market in NYC has almost always been largely irrational. As long as prices are going up or even remaining stable, everyone thinks that it is impossible to lose money buying. but the secdond you have one quarter which shows actual losses, no one wants to buy anything. Real Estate is the only thing no one wants to buy when it's "on sale".

Where do you think this pricing will end up? New construction 2/2, 30th and 5th, 1,200 (~1,000) sqft, $3,500 monthlies, 2.65MM.
http://streeteasy.com/building/the-noma/12a

30, What you are saying is somewhat true as the number of transactions reduce but they do happen. In fact, using Urbandigs data, contract activity in March 2009 was appx 50% of the typical level. It was looking more normal in Dec 2009.

Wamus, They seem to have many units in contract. In my opinion, at 2k per sq ft or slightly lower they will surely move it. Monthlies of $3 per sq ft are now normal for new development due to amenities and taxes. Also, there is not enough supply of small two bedrooms in $2-2.5mm range.

@30years agreed, I was definitely one of those people! No longer I'm waiting for the next sale

Thank you Keith for your clarification.