SE a ghost town when economic news is good

indeed?
http://streeteasy.com/nyc/sale/514372-coop-120-west-70th-street-lincoln-square-new-york
If the bottom is so near, why price at $764psf off the bat?

you are assuming that there cannot be a disconnect between a good economy and RE. So why are we experiencing a very robust stock market, optimistic forecasts for the economy and record foreclosures at the same time.

w67th: maybe they looking for a bidding war. in this market that is happening, albeit rarely.

apt23: housing and employment will be the last to recover economically. the stock market is a discounting mechanism and has been predicting recovery for the past year. so has the the bond market. the record foreclosures are a good sign. we are getting increased volume at the bottom and inventory is being worked off. all healthy. and look at the banks stocks which have been rising dramatically. this wouldn't be happening if foreclosures were going to wipe them out. and the commercial real estate bust never happened to any great degree predicted.

all the arguments the bears have at this point are looking increasingly thin. Europe was supposed to blow up; China would have rampant inflation and raise rates; our FED would be raising rates dramatically and any others you can throw out there. the fact is NYC RE dropped 20%, a healthy correction. the stock market keeps going up on all this "bad news" and that is very bullish. NYC RE is very tied into the stock market and it too is in the early stages of recovery. now is the time to buy, couldn't be a sweeter spot folks. i know the bears will be growling about now.

very well put wannabuy. i've been looking for some time, hoping that things would take another leg down. doesn't look like that's going to happen. the global and local economies still have problems but they appear to be on the mend. with that being the case, it's hard to be bearish on ny real estate (at these levels) unless, of course, you're one of the bears on SE. it's looking increasingly like the bears are just wrong, no matter how loud they growl.

Sisy, that's really silly. What's silly is "the news looks a bit rosier."

Sure, after a near collapse of the world anything would look rosy. The facts are that housing - which caused the problem (among other things) - is still dead, and dying with the demise of the tax credit. Bank profits look good, till you look at what's driving them: JPMorgan - trading. BofA - Merrill. The corporate and consumer banks are still bleeding money. Greece is defaulting, Portugal is next.

Right now you're in a cycle where all news is rosy to the markets. That will soon end.

Long-term I'm still bullish on the stock market. Short-term I have no idea what it will do. Medium-term I'm bearish. Real estate I haven't changed my mind: when owners' carrying costs = rents, we'll be on our way to bottoming out.

Why the heck would anybody have wanted to tie up money in NYC RE in the past year and missed one of the greatest stock market opportunities in our lifetime? Over the past year, stocks are have gone up 80% from the very bottom, which is certainly hard to catch perfectly for your whole wad, but there was plenty of time to pick things up at 900 on the S&P, and things are up 35%. Meanwhile, if you squint hard enough through your rose-colored glasses, NYC RE maybe has gone up a few percent, barely covering the negative carry.

Let's say you know what you are talking about, that the stock market goes up first and that NYC RE will follow. Why would you have bought NYC RE in the past year? Stocks continue to rally. Us NYC RE bears think the fundamentals there continue looking much better there. I know you don't believe in fundamentals and think all markets are linked, so how in your mind do you explain the large drop in stocks vs the large rise in housing since 2000?

On the subject of why the bears disappeared, I think it mainly has to do with the fact that the bulls disappeared. Once the bulls got spanked, they all strangely left, not wanting to eat crow I guess. The bears have always been here, just nobody left to argue with. It kinda gets boring if the same 5 people keep repeating the same lines to each other. What we need are a couple of nutty bulls, and we'll come out of our caves.

In terms of people disappearing, it's really been the bulls. I think irrational people have trouble sticking around when their irrationality has led to huge losses. Us RE bears, on the other hand, took our lumps during the bubble and kept at it. Steve, you wanna link the idiots thread?

nada - your 20/20 hindsight doesn't impress me much. Maybe people missed the greatest stock buying opportunity of a lifetime because they were trying to recover from the greatest fleecing they had ever received at the hands of the almighty stock market. And not everyone is "in the biz", therefore they relied upon "professionals" to keep them safe. So much for that. But congratulations and good for you.

67, if you honestly believe that joint is 1700 square feet, and therefore the $psf accurate, then I guess we just discovered your secret to calling the market.

oh by the way, I'm guessing bulls come and go because they put their money where their mouth is; they buy and move on from the SE hand wringing festival.

Spin - good point. It will be interesting to see W67th chase Falcogold around when Falco closes on his new place and has the temerity to post on how happy he is with his purchase. (At least Falco seemed ecstatic when he posted about it recently as he was oompleting his coop app)

Look, spinny, maybe it was all luck. I was in the market before the crash, so I felt its pain as well. The difference was that I knew what I was buying, and I knew what it was worth to me on an absolute basis price-wise, not based on what it was last year. As such, I piled a crapload more money into it. Not fun when you're sitting on losses, but you swallow and just do it. Many people panicked, especially those who relied on "experts", because they had no clue what it is exactly that they're holding and what the value of such a thing is. If you don't understand what the value of an investment is, then you probably shouldn't be buying it long-term. Even people "in the biz" cannot predict things very well, at best a slight edge over 50-50.

You don't have to impressed, but it's hardly fair to call it 20-20 hindsight. As an NYC RE bear, I put my money where my mouth was. I just got a problem with people saying "stocks are up, you RE bears were wrong" when it's polar opposite from reality.

The only hand wringing here is yours spinny, I'm perfectly happy with my setup.

Hey, ph41, don't you have to find a tear-down-walkup-replaced-by-a-condo-building comp to post to justify your purchase? Sorry, still busting your chops on that one...

I know 120W70th well. That ain't 1700sqft. The C-line went for a touch under 1m 5 years ago.

In: you can be my stock advisor. I have been more or less out of equities since 2003. Missed the ride up and the ride down. Forced to sell the loon in 2005!

inonada - no, don't have to - bought in 20000 and have made a pile in unrealized gains (especially in return on equity) even though I didn't want to sell in the go-go years, and don't want to now either.

Check out the latest UWS comps thread - did my research on that one!

In: what's your feel re: equities? My financial advisor is all about putting it in fixed income (munis, munis and more munis). I have an inherent distrust of such advisors.

Hmm, was wrong about the comp for 5C. 6C (worse condition) sold for 1.25m end of '04. And 7C sold recently for approx. same #s. So not much price movement in 6 years, though 9C tried for a 1.675m ask.

nada revises history pretty well. Most of the bears here were adamant that NYC RE was going down 50-70%. In hindsight, there were way off. RE went down 20% and has held at that point. Most of the bears have been shown to have not known what they were talking about.

Nada did not revise history on the stock market. The low point on the Dow is a well known and a firm number, so 80% rise is correct. Your 20% down number on NY RE however is fungible.

It is all deja vu for me. There were countless bulls calling the bottom in the Miami market when it was down 20% and we all know what happened to that prophesy.

Let's see where the RE market is when rates return to normal and the economy stalls due to the fact that a trillion dollar deficit is unsustainable.

There is no bottom to speak of imho, there is what you might call a "secular bull market" for appropriately priced apartments with everything going for them. Yes I am personally seeing/involved in several multi-bid situations...but an overall honest to goodness REAL bottom?

According to an Elliman svp I was with yesterday, J. Miller spoke to a group of them the other day and stated that 2/3 of the market is over priced, 1/3 appropriately priced. I don't have his credentials, but have been saying this for he last 8 months.

There is an obvious quantum leap between what is currently happening in equity markets v. real estate markets.

It took balls to get in when the dow was 7k, 8k. I think the rise is unsustainable (moot of course, bcs inny is cashing out I hope).

ph41, I saw the UWS one. You bought when values were good, so good for you. Out of curiousity, how come you hang out here? I'm trying to reconcile with the spinny comment regarding buyers leaving the ghread.

nyc10023, I'll give you my view as it relates to my personal money, which is long-term money. I think long-term equity values are fair right now. I think on S&P, $60 per share earnings is where we are at using long-term averages to smooth out cycles, so an earnings yield of 5%. Add in 2% GDP growth and 2-3% inflation, I think we're looking at 9-10% inflation- and growth-adjusted yields when 30-year yields are 4.5%, so a 5% premium. Not the greatest premium ever, but not bad.

Given the other long-term investment options out there, however, it is at the moment my favorite. NYC RE is my least favorite as it yields negatively relative to 30-year yields. I don't touch US treasuries because there is no upside potential. Best-case, you earn 3.5-4.5% over the next 10 or 30 years. Worst-case, inflation hits and you get spanked. Munis I like better a hint better, but you're still talking about 3-4% yields. Yeah, it's after-tax, but buy-and-hold equities are pretty tax efficient. Non-NYC RE could be interesting (e.g., last year I was tempted by the numbers in Phoenix), but you gotta hit the low-end, and buying in an unknown city and managing places at $100K a pop isn't worth my time. On corporate bonds, I never really followed because investments I had a choice over were not in tax-advantaged accounts, and paying taxes on yield annually is a sure way to underperform.

inonada, please do not turn into a swe clone - I so enjoyed your posts until this thread. This site occasionally feels like a relative "ghost town" because people come and go for a variety of reasons. I have to think the spamming and trolling that was out of control for so long had quite a bit to do with that. That, and there is really only a handful of frequent posters whose input I find worthwhile anymore. I wouldn't read much more into people's reasons for "disappearing."

The rise has been faster than I had hoped too, nyc10023, but I'm not cashing out. This is long-term money, and the lower it goes and the longer it stays low, the happier I will be. My personal situation is such that I have additional money to invest each year, so I'm not quite in the same situation as the retiree who can't take advantage of lower prices should things drop. I am a bit reticent at putting in additional money at these levels because I think there might be a pullback, and as prices have gone up, my scouring for undervalued stocks has certainly become much more difficult. However, I am not arrogant enough to think that I can predict what the market is going to do over the next month or year, just willing to invest for the long term, so my money stays in.

bjw, who is swe? I'm not following...

In: the rise was very fast, indeed. We were just saying that prices seemed lowish and it was time to pick up some stocks in Feb '09 and wham. Oh well.

As to why people post when they're done buying, well, why do I go to OHs? Just a hobby. I can't eat bon-bons all day.

"nada revises history pretty well. Most of the bears here were adamant that NYC RE was going down 50-70%. In hindsight, there were way off. RE went down 20% and has held at that point. Most of the bears have been shown to have not known what they were talking about."

FTR, my expectation on prices for NYC RE going forward are flat-ish for the next decade or so. I think that it is on the order 30% over-valued, but I don't think that will be corrected by a drop in prices. Rather, it'll be corrected by inflation and negative carry. I believe the mass psyche about RE prices combined with government policy will make it so.

Obviously, this is all just a guess. I have been surprised by much of the market. The thing that caught me most by surprise is the drop in rents: I really did not expect to see a 20% drop at all.

nada - "swe" must be somewhereelse

bjw - it is impossible for inonada to become an swe clone because inonada is both intelligent and thoughtful while swe is neither. Any occasional passing similarity between their posts - as you apparently see in this thread, although I do not - can only be coincidental

Holy freaking parsing mumbo jumbo BS, Keith.

"..according to an eliiman [svp!] j. miller said that 2/3 of the market is overpriced...."

Tell me Keith, if you were listing your rental, would it be for under or over market price? If you were advising a seller, would you advise her to test the market at "this" price, or go under at "this" price and hope for gold? Stick to selling apartments Keith and not parroting market shamen.

btw if you're trying to put some weight behind a comment I recommend steering clear of quoting hearsay from a mainstream broker with a 2007 SVP title. It's as inflated and meaningless as the market was then. Be your own man and please don't go down that path. I'd accept your comment at face value without the BS window dressing.

23: I don't think it took balls. I am a very conservative investor. So I took everything out at just under 1200 and started dollar cost averaging back in at 1100 down to 7. Even though I am still 50% in cash, I am about where I was before the crash. But it has made me even more conservative. I think it has made many people more conservative -- not the bold, young pros who are fueling the market -- but the average retail buyer. I don't think the retail buyer will help support the market as they have in the past -- at least not for the next few years before painful memories subside. And, I think that will fuel a disparity in the RE market. The upper end of the market may continue to fire with the huge finance incomes and bonus money, but the mid to upper class buyer will be more conservative and that will be reflected in the middle section of the market.

...and nada, I find your "negative carry" comments to rank among the most intelligent of all the bears. So credit is due, butthead.

"In: the rise was very fast, indeed. We were just saying that prices seemed lowish and it was time to pick up some stocks in Feb '09 and wham. Oh well."

Such is the nature of things, it's really hard to tell. I remember the few days the S&P was trading with a 6-handle, jaw dropped, not knowing whether the panic was going to head towards a 5-handle or not. I invested a little, but I sat around too thinking I'll have time still. NOT!

I didn't time things perfectly as my purchases were spread around, and I've done my fair share of kicking myself for having bought too early, bought too late, not going through with a purchase I was considering, etc. Such is the nature of investing, IMO. You get spanked, you miss opportunities, you get a little lucky, and the outcome has a little to do with your investment thesis. Yet you convince yourself that it was all based on your investment thesis.

FWIW, even Buffett was nowhere near catching the bottom. I think his purchases were probably 30-40% above the mythical Feb '09 bottom.

"...and nada, I find your "negative carry" comments to rank among the most intelligent of all the bears. So credit is due, butthead."

Thanks, numbskull ;).

Nice to see some folks come out of the woodwork.

I've made 30% on my equities investments in the past year; certainly less on my NYC RE investment. But November 2008-March 2009 is still a vivid memory - I saw how my money evaporated in the stock market and am very happy to have put some of it in a more tangible investment. At least now I have a corner to cower in if the whole thing goes bust again.

"On the subject of why the bears disappeared, I think it mainly has to do with the fact that the bulls disappeared. Once the bulls got spanked, they all strangely left, not wanting to eat crow I guess. The bears have always been here, just nobody left to argue with. It kinda gets boring if the same 5 people keep repeating the same lines to each other. What we need are a couple of nutty bulls, and we'll come out of our caves.

In terms of people disappearing, it's really been the bulls. I think irrational people have trouble sticking around when their irrationality has led to huge losses. Us RE bears, on the other hand, took our lumps during the bubble and kept at it. Steve, you wanna link the idiots thread?"

Bingo. Bulls were proven dead wrong. Why would they want to hang around and have that thrown in their faces?

Bears are quieter because they don't have anyone left to argue with....

buy now or be priced out forever

"Any occasional passing similarity between their posts - as you apparently see in this thread, although I do not - can only be coincidental"

sidelinesitter, fair enough, I was harsh, because inonada's posts are usually top-notch, but given the posts immediately preceding this one, I think you can now see where I'm coming from.

Spin I agree about the title stuff, was meaningless to throw that in there....like it meant something. I know it means nothing.

My intention was not to use the svp to validate what I was thinking, but I found it ironic that this svp was agreeing with me. Kind of caught me off guard ;) She happened to bring up the Miller lecture to her company...

somewhereinouterspace - "Bingo. Bulls were proven dead wrong"

wtf are you talking aboot? You sound like a Bush neocon: "we're going to 'win' in Iraq", where the term 'win' has no rational definition.

So WTF does "dead wrong" mean, spaceman?

spinnaker1 - "somewhereinouterspace"

Interesting theory. I have a very different one: I always thought he was posting from his mom's basement, not outer space.

> wtf are you talking aboot?

When you have a market crash, a bull pre-crash is by definition wrong.

Of course, bulls have been trying to change the meaning of words like "up", "down", and "peak" to not have to admit the fact...

;-)

Inonada - like so many others, I am a real estate obsessed New Yorker. I don't go to OH's,but I surf SE, both for RE and other things (I desperately need to have the apartment painted - got some good recommendations by posting on SE). Do my own comps on properties that interest me. And, I'm currently trying to help a friend find a place for her daughter to buy. I have experience in certain areas which come up on SE discussion threads, and if I feel the experience is relevant to the question or discussion, I post. And, as NYC10023 put it so well, it's better than eating bon bons all day.

spunky, stevef, techguy, countless others... RIP

EddieWilson, nyc10022...RIP. Oh, wait.

what good news - GS being charged with fraud is bad for NYC. Although I am thrilled and think it's the tip of the iceberg.

wow, there is that pimple again...

> GS being charged with fraud is bad for NYC.

definitely huge...

will embolden those going for financial reform
and will mean continued pressure to keep bonuses low like the last 2 years

http://www.reuters.com/article/idUSTRE63F3JX20100416?feedType=RSS&feedName=topNews

Too bad you can't short Fabrice Tourre's condo

Speaking of spankings, I was entertained by how I got served my slice of humble pie in the form of GS today just after my postings. Serves me right ;).

What is the good news? Unemployment is still crap, for those who have jobs cost of living is rising higher than salaries, foreclosures starting to be worked through, seems like ex-US is a disaster as well......believe me, I don't want to be a bear (I own and may want to sell in next 10 yrs) but why should I not be?

nada, the SEC is bound to fuck things up (it would be both novel and somehow exhilirating if they didn't do so this time, but i have my doubts). then watch the financials soar.

AR: I would wait to see if Cuomo files criminal charges. If he runs for guv, it would behoove him to do so as it would be a particularly popular stand with the masses. If he does, the financials might sit and wait to see what happens before they soar again.

Perhaps, AR. I'll have to read more over the weekend. Allegations seem like they might have teeth, as opposed to the drivel endlessly published by the press. I'm surprised by the fact that the highest-level individual named was just a VP, wonder what was behind that...

"AR: I would wait to see if Cuomo files criminal charges. If he runs for guv, it would behoove him to do so as it would be a particularly popular stand with the masses. If he does, the financials might sit and wait to see what happens before they soar again."

Absolutely. If Cuomo sees an opening here, he takes it.

Only thing is, its CIVIL fraud right now.

inonada, completely agree that its surprising that aside from charging GSC, a VP was the highest they went here. in this environment, one would think the sec must feel they've got a pretty tight case but agree with ar - they will probably screw it up. it looks more suspect than the Bear Stearns CDO case that was ultimately overturned. this one has smelly emails too but didnt help last time around.

i noticed that as well, nada. we shall see, perhaps i should suspend my cynicism temporarily. apt23, absolutely, i meant if and when this is resolved in the bank's favor.

i wonder if cuomo has any dirty laundry to be exposed?

This is just the tip. Brian Moynihan of BofA was on CNBC this morning and said there was a lack of "creditworthy" customers. Of course, they're the ones who determine what "creditworthy" means, and they drastically cut back on the number of loans they're issuing. LIBOR is still much higher than it should be. Housing is being propped up by the government, as are banks, which are about to be re-regulated, banning them from doing the very things that are making them money: trading. Unemployment is still 10% - the last time it was that high was 1983, and it took 5-10 years to recover.

The stock market is just way ahead of itself right now. It will correct. It has to - Cramer was talking about Dow 12,000 yesterday, a surefire indicator that it's going to retreat. I don't know what the catalyst will be - GS or not - but it will be something. The news is better, but not worthy of this recent run-up.

Regarding real estate, as soon as owners' carrying costs are equal to rent, things have a hope of improving. Right now, they're a long way off.

And the "bears" are still here - it's the bulls who have disappeared. Though JuiceMan does make the occasional cameo appearance to make a fool of himself, as does LICC to tell us how wonderful it is to have a view of the place you really want to live.

>> The stock market is just way ahead of itself right now.

Steve (or anyone) -- what is the fundamental argument that says the stock market is overvalued? Agreed with inonada's statement above that the S&P is priced at roughly 5% earnings yield + growth/inflation. To echo the point, even with the rally we've seen, this implied pricing is still not expensive compared to other alternatives, for instance 10-year treasuries at 3.8%.

Also, when was the last time that owners' carrying costs were equal to rent in NYC? Not trying to be argumentative here, but simply would like to know the answer.

remember, Steve was saying it was overpriced most of the way up...

Here's why I've disappeared. I started posting about 1yr ago, and was considered a 'bull' b/c I felt that we had more or less reached a bottom and that prices would remain in that range +/- 5% for the forseeable, so making a long-term purchase of an emotional, tangible asset at a time of high inventory made sense.

Then, all the things I predicted would happen, did - Street earnings/bonuses/employment improved, the broader economy bottomed out and started to grow, interest rates remained low, bank balance sheets improved, housing prices in the hardest hit areas of the countries stabilized, with a lot of the inventory clearing out, and most importantly, job losses in the broader economy decreased and are hopefully now starting to reverse.

Yet, with each month's passing and the environment improving, the bears still stuck to their same old story, and refused to alter their view that prices would drop another 30-50%. Everything reported was 'a sham, the gov't manipulating the #s ,etc', or they changed their tune from 'we're in a deflationary depression' to 'rates will skyrocket, independent of inflation, and that will drive prices down'. Or the most ironic 'yeah prices have stabilized, but I've been right b/c the economic and stock market rebound that I insisted would never happen or were dead-cat bounces means that you should've bought stocks instead'....
You could see how desperate they were by the increasingly frequent resorts to nasty language and empty threats (not everyone - nada is a class act). So, what's the point. The facts are clear. We bottomed out last spring, have had a slight uptick off those trades, and have traded a very large amount of inventory at these levels. There is no argument to be had.

Pathetic, printer.

What printer conveniently leaves out is that all the positive economic factors were NOT contradicted by "bears" like me. Hell, I said it would happen. See my stock market calls. See my saying over and over again "things will get better.. but recovery from a bubble doesn't mean return to bubble prices). I said over and over (AND OVER) again that economy yes, Manhattan RE bad. So he can pretend he was some magic seer, but there was a healthy group of bears who said "economy yes, stocks, yes" while manhattan re, no.

The other fact is leaves out is prices went down two consecutive quarters after he made his claims!

This is the shady tactic of the bulls left... "well the world didn't end, so I'm right".

> and refused to alter their view that prices would drop another 30-50%

Now this is just a COMPLETE strawman. Claiming that the bulls claimed 50-70% down... now thats just nonsense.

But, again, this is the last refuge of the scorned bull..... "yes, the market went down 20-30%, but it didn't go down 70%, so I was right!"

"the economic and stock market rebound that I insisted would never happen"

Wow, printer got all the strawmen arguments into one post!

When the bulls have only arguments they manufactured to argue against, you know they've been burned.

"The facts are clear. We bottomed out last spring, have had a slight uptick off those trades,"

btw, how does the existence of a bottom, if it is in fact the bottom, mean those who called the crash weren't right?

I love this circular bull logic!

--i wonder if cuomo has any dirty laundry to be exposed?--

AR: if he does, if wouldn't help that he had a rather nasty divorce. My big question is what he would mean to real estate. By his politics when he worked with public housing, you would think that he would fight for more transparency and be pro consumer. However, I am sure that the big RE interests would just throw money at the guy until he had all the spine of the NY Times RE advertorial section.

Always wondered why his father didn't run for prez. must have been a mighty dusty closet.

didn't they sort of cover that in "Primary Colors"?

1st of all, not every single bull or bear had the same outlook, so that's ridiculous. And yes, many predicted we would be down 50+%.
2nd, if you can send me the link where you predicted 1yr ago that prices would bottom out at -20/25% then I will gladly change my post to not include you. Of course, a year ago if you though that prices had bottomed out you were most definitely a 'bull', not a bear, so you are logically inconsistent.

NYC10023: since IRs will probly go up, why lock in now? I'd like to do some GO munis, but, am cautious because it's not inconceivable that a municipality could default.

"remember, Steve was saying it was overpriced most of the way up..."

Oh, somewhereelse, you are good at making things up. I made a very nice profit on the way up, thank you, I thought banks and commodities were waaay underpriced, thank you, and said all of those things.

You're becoming more of a boor than you ever were.

"so making a long-term purchase of an emotional, tangible asset at a time of high inventory made sense."

What? Why do those things make it make sense to own a property that cost 3x more than to rent the exact same one? That's why you got the flak you did - anybody who thinks buying a home is an "emotional" decision is out of his mind! Spending most of your money based on "emotion" is what got us here to begin with.

Nobody ever said those things that you said would happen wouldn't happen. Of course they will. And once they're stable without government support - which is what got them there to begin with - then things will start clearing up. Right now, though, with unemployment at 10% and the government helicoptering money in, that's not a reason for euphoria.

> 1st of all, not every single bull or bear had the same outlook, so that's ridiculous.

Then why are you making such generalizations?!?!

> And yes, many predicted we would be down 50+%.

Name them. I don't doubt that somebody shouted something like that out, but pretending overall bear sentiment was anywhere near that is ridiculous.

"2nd, if you can send me the link where you predicted 1yr ago that prices would bottom out at -20/25% then I will gladly change my post to not include you. Of course, a year ago if you though that prices had bottomed out you were most definitely a 'bull', not a bear, so you are logically inconsistent."

I made the 15-20% prediction when the prediction list was made, maybe 2.5 years ago.

I'm not asking for credit on calling the RE bottom because I don't know if we've hit it yet.
On the stock market, there are numerous calls to go long form me with dow 6s, 7s, and 8s. 5-10 days before the absolute bottom, I posted the Shiller "stocks are undervalued" piece, and said I was 90%+ in... then kept calling for SSOs buying...

Now I'm not holding myself up as a seer, even then I said "there is still irrationality, it can go lower"...

but your whole diatribe about you being right and the bears all being wrong, its just filled with nonsense, generalizations, and rationalizations.

" 1st of all, not every single bull or bear had the same outlook, so that's ridiculous."

Yes, I agree... this is rediculous...

"Yet, with each month's passing and the environment improving, the bears still stuck to their same old story, and refused to alter their view that prices would drop another 30-50%."
- printer

lol

steve - for you and many others, a home is just 4 walls and a roof - so it makes sense to buy that as cheaply as you can, and if you have to make compromises in location/quality/etc. to do that then you will - and right now for you if that means renting vs. buying, that's what you'll do and it makes sense. if you have to move in 2yrs or whenever your lease ends to get a better economic deal, then you will do it. I have no issues with that.

but for many others, it is much more than an economic decision, it is a lifestyle one, and a huge one, because they plan to live there for the bulk of their remaining life, to raise a family there, etc. people 'spend their money based on emotion' all day, every day - otherwise we'd all be wearing t-shirts from wal mart and suits from men's wearhouse, etc. housing is no different - its just a bigger purchase and a more emotional decision.

here is a newsflash - not everyone places the same value on things (housing or anything else) that you do. many people would say that you are 'out of your mind' for paying $1k more per month to live where you do than to live in a place of equal quality across the river, or for 3x what you'd pay in Kansas (I believe your work is independent of your location, if I recall). you value your city, borough, neighborhood highly, some might say irrationally.

Further, I would say that what got many people in trouble was thinking that home buying was a financial decision - that a home was just a way to place a highly (almost infinitely) levered bet.

"but for many others, it is much more than an economic decision, it is a lifestyle one, and a huge one, because they plan to live there for the bulk of their remaining life, to raise a family there, etc. people 'spend their money based on emotion' all day, every day - otherwise we'd all be wearing t-shirts from wal mart and suits from men's wearhouse, etc. housing is no different - its just a bigger purchase and a more emotional decision."

Yes, but the day folks start calling their t-shirts and new cars "investments" we'd have similar problems as the ones that caused the crisis.

Yes, agreed, its lifestyle, its choice.... problem is when folks confuse that with "investment" and use it to buy a 10x leveraged house several times their net worth.

Thats why RE. particularly owner-occupied RE was a bubble, and its why it was a horrible "investment".

"Further, I would say that what got many people in trouble was thinking that home buying was a financial decision - that a home was just a way to place a highly (almost infinitely) levered bet."

Well, now you're starting to sound like us bulls a couple years back!

If there's any doubt about where we came from, look at this:

"Wachovia to Acquire Golden West Financial, Nation's Most Admired and 2nd Largest Savings Institution"

https://www.wachovia.com/foundation/v/index.jsp?vgnextoid=18d79887b841f110VgnVCM200000627d6fa2RCRD&vgnextfmt=default&key_guid=f8ddcc46c61eb110VgnVCM100000ca0d1872RCRD

You think this is over yet?

printer, what I'm saying has nothing to do with what you're saying. I'm saying, THE EXACT SAME APARTMENT costs 2x-3x more to own than to rent.

That is not "emotional" - it's THE SAME PLACE.

Well, I agree its "emotional", just like a lot of other stupid decisions are...

Here's my favorite quote about Golden West: "The result is an astonishing 25-year track record of 17 percent compound annual growth in earnings per share and virtually no credit losses realized even in the toughest year in its history."

Things are brighter - undoubtedly. The sky is no longer falling. But no need for euphoria yet, until the government reigns in its extraordinary measures. Until banks start making money from banking, not from trading. Why should the BOVESPA now be trading nearly at the highs of 2008?

Because the price of oil has gone up to $85 a barrel.

Why is the price of oil at $85 a barrel?

Because unemployment is at 10%?

It makes no sense.

seg- steve doesn't have a fundamental argument. He never has a fundamental argument. He has made up facts, distortions, out-of-context references, and mistaken analyses. That and an unjustified obnoxious arrogance that makes him look even more foolish are all he ever has.

Steve -
Can you please show me a recent example where someone paid 3x what it would cost to rent the same apt? not what someone is asking, what was actually paid?

printer, that isn't going to fly with some people around here, because there's no data on actual rents, only asking rents. See here: http://streeteasy.com/nyc/talk/discussion/17882-an-example-of-cheaper-to-own

LICC - I have no fundamental arguments, but you live in Long Island City.

I win.

That aside, it seems that 10% unemployment is not a "fundamental argument" to LICC.

Kewl.

printer - that analysis has been done about one hundred thousand times over the past 18 months. No need to do it again. Search on the threads.

seg, i agree with the caveats listed in the article, but this is the argument that some are making:

http://www.businessinsider.com/stock-market-pe

i'm fairly certain that buying was generally cheaper than renting in the mid to late '90s (it definitely was for us). from '98 to 2000ish purchasing prices went way up, but if i recall correctly so did rents. obviously everything changed by 2003ish.

AR - that's about right IMHO: 30% overvalued.

Maybe more if we consider how much of the p/e is overstated by cheap money from the government.

There should be a pullback, not 30% mind you as stocks are forward-looking, but I wouldn't be surprised to levels close to 10,000 again.

Historically rents = owners' carrying costs. Period. The reason is mathematical: 40x monthly income = 30% PITI. Same market constraints.

if there are one hundred thousand examples of a property that SOLD for 3x what someone could've rented it for, then neither you nor anyone else will have a hard time finding one for me.

many places are indeed selling for more than they might cost to rent, but not 3x. why do you need to wildly exaggerate this claim? i don't care that some idiot flipper paid $1.2mm for a 1 bed 3yrs ago and is renting it out for $3k while still asking $1.5mm for it.

how about this - show me your favorite example of a recent sale that was for way more than someone could've rented that same apt.

How about this printer - go look through the myriad threads that do precisely that.

steve's price-to-rent analyses have always been wildly wrong. All of his flaws and mistakes have been shown, yet he keeps stating it over and over.

swe- you need to refresh your memory. The majority of the most vocal bears were predicting 50%+ declines. Printer is correct on this.

"Also, when was the last time that owners' carrying costs were equal to rent in NYC? Not trying to be argumentative here, but simply would like to know the answer."

Seg, this chart is a good source:

http://www.millersamuel.com/charts/gallery-view.php?ViewNode=1249522147RFeuS&Record=1

Gross rental yields (annual rent divided by price) are now in the 4-5% range. They used to be around 10%.

> Historically rents = owners' carrying costs. Period.

But how do you measure this exactly? Let's say there's a unit available for both sale and rent. If it's priced such that Rent = Owner Carrying Costs, then this MIGHT approximate a fair measurement of economic equivalence IF you were able lock in the right to pay that same rent for 30 years or more, and achieve some tax benefits on the rental payments.

But obviously that's not how it works. The "better deal" will depend on uncertain future movements in rents, taxes/CC, etc.

Is the prevailing view here really that the market should be priced to discount ZERO rent increases forever? On the face of it, that is what the quoted statement seems to be saying.

seg, that is not the prevailing view. That is one of a myriad of bizarre views held by stevejhx.

oh no, here we go again...

inonada: Thanks for sharing. It would be interesting to see how those historical rental yields compared to interest rates and inflation during those periods. I do not at all disagree with the fact that rental yields are currently low by historical standards.

Seg, here's a source for interest rates:

http://mortgage-x.com/general/historical_rates.asp

We're about 2-3% lower than the range over the 90's, 1.3-2% on a tax-deduction-adjusted basis.

Inflation has been and continues to be in the 2-3% range:

http://www.clevelandfed.org/research/data/us-inflation/chartsdata/index.cfm

You can also look at the yield difference between treasuries and TIPS to see what the market expectations of future inflation are, and those are also in the 2-3% range this whole time.

In short, the only fundamental change has been the 1.3-2% drop in effective interest rates.

Rents, taxes, and CCs are all obviously hitched to inflation. So in that sense, part of owning is not exposed to inflation spikes. On the other hand, if you really think the market's expectations of inflation are wrong, you could be buying TIPS and shorting treasuries. I.e., it's probably best to use the market's inflation expectations when trying to put things on an equal footing.

FLMAO... i gotta pee.

you say "bidding war", I see bidding to ask..... see the difference? FLMAO... keep em coming bullz... FLMAO... ain't over by a long shot....FLMAO

INON: about your comment way above regarding stocks going down since 2000 and RE going up. the fact is stocks bottomed in the fall of 2002 and rose steadily until late 2007. this coincided exactly with the rise in RE.

Today we finally had some sort of needed correction. pretty good volatility for a friday and made for some nice trading. do we follow thru to the downside. probably get a puke out monday morning that i would look to buy

w67th i think you should change your name to wFLMAOthstreet

"INON: about your comment way above regarding stocks going down since 2000 and RE going up. the fact is stocks bottomed in the fall of 2002 and rose steadily until late 2007. this coincided exactly with the rise in RE."

Well, sure if you leave out all parts of the data that disagree with your thesis, but the fact of the matter is that the S&P went from 1400-ish to 875-ish between Jan 2000 and Dec 2002 while the Case-Shiller Composite went from 100 to 142. A 40% drop vs. a 40% rise. Your thesis is that housing tracks stocks, but lagged. Yet last time around, housing skipped the drop altogether.

hey 67, do those glasses you wear make milk cheaper too? When the spinning of the planet makes you grab for something to hold on to, do you get embarrassed when you find yourself reaching for your momma? Does she help you with your math?

"steve's price-to-rent analyses have always been wildly wrong."

Well, LICC, if you mean that I have never been able to do a price-to-rent analysis that could convince me that a) it's a good idea to move to Long Island City, or b) it's a good idea to move to Long Island City

then you're right.

However, do the math: 40x months rent = 30% PITI. Case closed.

"then this MIGHT approximate a fair measurement of economic equivalence IF you were able lock in the right to pay that same rent for 30 years or more, and achieve some tax benefits on the rental payments."

Seg, add them in and adjust for risk and opportunity cost, and over the long-term you get the same result. When you buy you're in effect capitalizing your rent and locking it in for 30 years. Add in very high transaction costs - when you buy and when you sell - and JUST TO BREAK EVEN you need to hold a place for at least 8 years for buying to equal renting: the first 8 years (the first 15, really) you hardly pay down any of the mortgage principal.

Just do the math, get back to me. Or don't do the math, and move to Long Island City.