Real estate bears!!!

And on this whole urban / suburban / blah-blah discussion, please throw it all out the window. The suburbs saw the same exact story. The reason Manhattan has "held it together" better is mirrored in every affluent suburb out there: the people have too much money to just walk away, and they have to take the slow bleed.

The current buyer, IMO, is substituting themselves into someone else's slow bleed. That is government-engineered policy because the alternative to the slow bleed will put us in a death sprial.

well, nada, education kind of changes the formula, at least the near to medium-term formula.

i know many, many people with young children who have zero intentions of staying. in high paying jobs. this is different than what i saw 5-10 years ago.

>> so do you think that incomes, post-recession, exploded so much that your yorkville one bedroom shot up 40%? your studio in tudor city doubled? really?

No, I don't ... the premise is that it's hard to say what the "right" prices were to begin with: 2000, 2004, 2005, etc.. It's simply staggering to me that Manhattan is only 1/3 more expensive than it was 30 years ago, when you consider how much has changed - given how crappy the economy was in the late 70s/early 80s and where rates were I find it virtually impossible to see that as a bubble. So even when you account for the likely drop in incomes, etc., it lends a lot of suppport to current prices.

>> i know many, many people with young children who have zero intentions of staying. in high paying jobs. this is different than what i saw 5-10 years ago.

Really? I find the exact opposite. I actually know many people who left for "cheaper" suburbs who came back, cramming into 2 bedroom apartments, determined to make it work, etc. I think this is even more true when two parents work - an increasing necessity in today's world.

I was maybe slightly overselling it when I said the suburbs were a failed expirement. I don't think they are going to evaporate - especially the closer ones like scarsdale, etc. But the important point here is that manhattan has less than 1.5 million residents; the outer boroughs and surrounding areas have more than 20 million people. I certainly don't pretend all of these people work in NYC; manhattan's population only roughy doubles during the day. But, by far most of Manhattan's workforce is commuting because clearly all of the 1.5 million or so people in Manhattan aren't working (some are students, retired, young children, etc.). You only need a small percentage of these commuters to want to live in manhattan to have a huge impact on demand. The suburbs don't have to "die" to make Manhattan attractive. A small shift in the desirability of city living has a huge impact. One that I grant is priced in, but this is an arugment for flat, not up.

Anyway - good night. Yes, I do like to play devil's advocate. Generally I find the bulls on this board not particularily articuate - perhaps because there is little to articulate for reasons prices will go up. But I also find the draconian predictions of the bears way overstated. Mostly, I find the argument "anybody who buys now is a complete idiot regardless of the situation" annoying. There's no urgency for sure, but I get it, since buying is not purely financial.

"It's simply staggering to me that Manhattan is only 1/3 more expensive than it was 30 years ago, when you consider how much has changed - given how crappy the economy was in the late 70s/early 80s."

It is simply staggering to me that you take a 30-year inflation-adjusted history of home prices, which are an inflation-tracking asset over the long term, cherry-pick the top, add 30%, and call that "a-OK, can't see more than a 15% drop without a death spiral".

BTW, I don't know if you've been watching the news in the past couple of years, but this little thing of ours has been called the worst thing since the Great Depression. The economy is crappier now than it was in 1982 recession, and the late 70's were a time of well above-average growth: 1976-1979 had an average of 4.6% YoY real GDP growth.

Um ... 1981 was NOT the top .. and I'm looking at a blend of 1979-1981.

Uh, OK. The inflation-adjusted top-top was $330 in 1983. Your 1979-1981 was at $300. The 1994 bottom was at $140. The entire 1990's was below $200. We are currently at $400.

Yet you say that absent a deflationary death spiral, you cannot envision more than a 15% drop.

May I remind you that by all accounts, the 1990's were a pretty prosperous decade, much more so than the "crappy late 70s / early 80s"?

The '90s were lovely. People could afford a home and for most of the decade even had the time to enjoy it.

90s. Depends. If you graduated late 80s/early 90s, got a job right away and saved, yes.

With enough money almost any decade is ok.

Yes, but after being accused I cherry picking, I have been focusing on an average of $250 psf across this time (blend of condos and coops across these years), although I do point out that this $250 psf was an average across Manhttan sout of 96th street, so this is likely to mean places like the UES were over $300 psf (yes, there were probably more coops in the UES as a percentage of buildings than elsewhere; but I have plenty of friends who grew up in coops on the UWS, West Village, etc. so it's not like all of the inventory was on the UES).

Now, we are around $1000 psf (higher for condos and lower for coops of course - this is using closed deals in Q1 2010), so using the CPI of 3, this gets us to $333 psf. And yet in many ways ALL of Manhattan south of 96th street is nicer than even the UES was then - certainly crime is lower, parks are cleaner, public elementary schools are better, etc.

You can say this is meaningless and certainly it's debatable how much to "quantify" the improvement in life. But to say it's a non-factor is silly. Real estate value is not simply determined by the physical quality of the space; it's the value of the surrounding neighborhood. A house in Scarsdale, Larchmont, or Pelham costs way more than a house in New Rochelle. Is 33% arbitrary? Maybe. But the difference in housing prices in the example I just gave is easily this.

The 90s also coincided with the crack wars and a peak in violent crime.

Now, the 90s could happen again. But the price/rent ratio in NYC at the 90s trough was 8x - lower than almost any city in the U.S. has been pretty much EVER, except for decaying cities like Detroit. In fact, this is ABOUT HALF OF THE HISTORICAL AVERAGE ACROSS THE US.

Incomes have gone up 2x since then, real estate prices about 3x, and rents about 1.5-1.8x depending what time frame you use - all in nominal terms. I could see incomes falling to 1990s levels again on a real basis - I have said more than once on this board it's my view that a right sized Wall Street is the size it was in 1997-1998 or so. But even if this happens we would still be WELL BELOW late 70s/early 80s price/incomes ratios. Price/rents increase is compelling, but consider the national average price/rent ratio is around 16-17x. This gets you to double 90s prices on a nominal basis, and the 1.5x increase in rents gets you the extra turn to 3x.

Of course we COULD go back to 1990s ratios of 8 or 12x. But there is a very compelling argument that we should stay closer to what has been the national historical average; I think the 1990s was simply a time of profound undervaluing of NY real estate. Also consider that many cities like San Francisco have had a 20x ratio for most of the past 30 years ...

ha ha yes, not all of us had the money to buy in the 1990s. wish i had!

There's enough and there's enough. My friends who had modest-ish jobs and saved and bought in the early 90s did okay. But it was a difficult time to land a steady job.

"But the price/rent ratio in NYC at the 90s trough was 8x - lower than almost any city in the U.S. has been pretty much EVER, except for decaying cities like Detroit. In fact, this is ABOUT HALF OF THE HISTORICAL AVERAGE ACROSS THE US."

Error.

1. All reported "average" p/r ratios are based on comparing average sales to average rentals without adjusting for the fact that the quality of the average sale unit is higher than the average rental unit. NYC has an upper income rental market, and the rest of the US does not, so the national average price/rent ratios should ALWAYS be much higher than NYC.

This is not a sign of "undervaluing of NYC RE" but of the success of NYC rent stabilization and high density in producing a functioning rental market. Quality of average rentals here is closer to quality of average sales than anywhere else in the US (and still has a gap, so if reported NYC p/r was 12x, that does NOT mean that comparable apartments sold at 12x).

NYC should never match national p/r averages unless we are in a serious local bubble or de-stabilization succeeds in destroying the upper half of the rental market.

2. P/R ratio in NYC FOR COMPARABLE APARTMENTS fluctuated around 8x from, roughly, the end of the Depression until the late 90's, and was below that as often as above it.

In any non-bubble, non-panic, relatively equilibrium market, investors have to demand something around 8x for comparable units, since they need to be able to pay utilities and taxes, maintain the property, pay interest, cover the costs of the occasional deadbeat tenant and still earn a return high enough to compensate for the hassles of running a real estate operation.

3. QOL and expected future changes in QOL are largely irrelevant to P/R, since they affect both sides of the equation equally. This is one of the key reasons why this is a useful metric: it reduces the number of impossible predictions that one needs to make. (Unless, of course, you believe that QOL increases only for homeowners.)

4. I focus on equilibrium, rather than bubble/panic markets, not because bubbles and panics are unlikely. They are highly likely. But in bubbles and panics, prices become indeterminate, because investors ignore fundamental calculations (i.e., the net income they can expect to earn), instead basing their bids on their expectations about resale price, which depends on their expectations of future investors' expectations of even more future investors, in an infinite cycle of self-referential mutual pleasuring.

I assume, perhaps incorrectly, that at any indeterminate point in the future -- the relevant time for most investors and owner-occupants with a longish time frame -- this sort of herding behavior is just as likely to be pushing prices down as up, and so you might as will ignore it.

Anyone with a better theory of herds -- or a time-frame short enough to make predicting the herd a reasonable enterprise -- should ignore my equilibrium analysis. E.g., if you are thinking about a transaction soon, the herd movement for the next year or two is pretty obviously downward and that could easily trump any equilibrium analysis. In other words, there is no guarantee that we don't go below the 8-10x P/R that fundamental analysis suggests.

5. The best argument for a sustained high P/R would be a story giving reasons why investors should believe that rents are likely to go up at a rate above inflation in the future, presumably because QOL in NYC will increase faster than elsewhere in the metro region/competing cities AND developers will be able to create new units to meet increased demand only at higher prices. Increased marginal costs, then, will drive rents up, and owners of existing units will be able to expropriate the resulting renter's surplus. Recognizing this future, investors might be willing to pay more now for future rent increases. Is there such a story?

kspeak, I think you are missing two big points....

1) You seem to be assuming that the majority of the suburbs are all commuting to Manhattan or are at least Manhattan-focused. This really isn't true. I remember they did a study on Nassau County and found the vast majority of head of household jobs in the county, even at higher incomes, were local.

2) You also seem to say that 2 parents working is becoming a necessity. But this is self-fulfilling logic. Its required if you're in Manhattan, I get, but its not really required in the burbs (and is much more likely). You are spinning this as a pro-Manhattan, because if you need both to work, you want to be in Manhattan, but its actually a NEGATIVE for Manhattan... as families who don't want to do that are much more likely to hop to the burbs where it isn't required.

This is a cost argument, and Manhattan loses that one... interesting that you're trying to flip it.

http://www.bloomberg.com/apps/news?pid=20601109&sid=a8f9A4GYLECE&pos=14

"Unemployment among people under 25 years old was 19.6 percent in April, the highest level since the Labor Department began tracking the data in 1948."

Kspeak. Did you drink the lemming juice (home tax credit) ?

> 90s. Depends. If you graduated late 80s/early 90s, got a job right away and saved, yes.

Early 90s, new grads could make $40-50 at the higher end (consulting firms, banks) and you could buy apartments for $150k or less. You're easily hitting the 3x income rule of thumb.

>>> You seem to be assuming that the majority of the suburbs are all commuting to Manhattan or are at least Manhattan-focused. This really isn't true. I remember they did a study on Nassau County and found the vast majority of head of household jobs in the county, even at higher incomes, were local.

True, but I actually explicitly acknowledged that most people in metro NYC weren't commuting into the city - I actually know the figure is 1.5 million - approximately equal to Manhattan's current population. Of course, it's fair to say that not all of Manhattan's resident's work - probably only half when you count retired, students, housewives, children, unemployed, etc. - so still at least 2/3 of Manhattan's working population is commuting. So, the point still stands that you don't need everybody to want to live in Manhattan.

>>> All reported "average" p/r ratios are based on comparing average sales to average rentals without adjusting for the fact that the quality of the average sale unit is higher than the average rental unit. NYC has an upper income rental market, and the rest of the US does not, so the national average price/rent ratios should ALWAYS be much higher than NYC.

There are really nice 1 bedroom rentals and some nice 2 bedroom rentals. Not a lot of 3 bedroom rentals - and note that the PSF is as a result HIGHER in this category. Anyway - you can argue this either way. You could also say the large inventory of rentals would drive DOWN rental cost, putting downward pressure on the R in the P/R equation. But that's beside the point.

Because here is a data point that basically proves your conviction about this is wrong: THE RENTAL RATE IN SAN FRANCISCO IS SEVENTY PERCENT. NY's is about 75%. And yet SF has a historical P/R ratio of 20x. So, structurally, this is not true by definition.

>>> You also seem to say that 2 parents working is becoming a necessity. But this is self-fulfilling logic. Its required if you're in Manhattan, I get, but its not really required in the burbs (and is much more likely). You are spinning this as a pro-Manhattan, because if you need both to work, you want to be in Manhattan, but its actually a NEGATIVE for Manhattan... as families who don't want to do that are much more likely to hop to the burbs where it isn't required.

This is a fair point - isn't it refreshing that I acknowledge when others have good points??? The burbs are cheaper; you get more PSF, it's not even close. But, people who decamp for the burbs from Manhattan expect other things as a tradeoff for the location and commute: public schools, two cars, a 3 bedroom house at least, you have bigger heating bills, property taxes are higher than equivalent NYC coop, $400 plus a month in commuting costs, etc.. I have known several families who have decamped for the burbs and came back finding they weren't saving as much as they thought when all things were considered. Now, this is absolutely NOT true in families that have 3+ kids. Most people say city cheaper with 1, suburbs cheaper with 3; many a hair cheaper with 2, but if living in the city allows mom to work part time - which seems to me what most women would prefer in an absolutely ideal world - it's completely breakeven.

Of course, you CAN move to the suburbs and get a condo in, say, short hills for $500k. But this isn't what people do; people expect a big house in return for this tradeoff. Given that people have smaller families today, who knows.

Anyway - I'm having a lot of fun playing devil's advocate here. I see flat to 15% down for NYC real estate barring a double dip recession (admittedly this risk is growing). I see NYC real estate probably modestly underperforming inflation over the next 10 years.

Mostly, I just think the 1) assumption that 1990s pricing was somehow "right" is absolutely wrong and think the bears on this board should not be looking to 1990s pricing as a normalized level and 2) long-term buyers who can get a good deal are not necessarily crazy to buy now.

With absolute conviction, I think the 1990s was an anomoly where NYC real estate was profoundly underpriced. It's possible we return to those levels; ANYTHING is possible. People have a good point that we often overshoot on the way down. I still think this is unlikely to happen.

Sorry, I missed the part where "flat to 15% down" is "presenting yourself as bullish." Can someone explain? kspeak, definitely appreciate your analysis here and the ability to be flexible (an absolute rarity on Streeteasy).

"NYC has an upper income rental market, and the rest of the US does not, so the national average price/rent ratios should ALWAYS be much higher than NYC."

financeguy, so what's the variance here? Is it around 33% as you have in your example? I'd like to see some quantifying. Just not sure I buy that 8x is the threshold.

I'm bullish relative to the extreme bears! It's like 40 is the new 30!

Financeguy's argument is that NYC is a city of renters and structurally this should make the P/R permantely lower. But the SF analogy is pretty compelling - that too is a city of renters and has a historically higher P/R ratio, even before the housing boom. In fairness, maybe NYC has some more nice high end rentals, but I spend a good 3 weeks a year in SF and have seen some nice rentals. And I don't think NY has great rentals in the 3 bedroom category.

"I have been focusing on an average of $250 psf across this time (blend of condos and coops across these years)"

OK, so now you want to do a blend of coops & condos.

Q1 2010 ppsf was $1038, which becomes $346 in 1979 dollars using a CPI of 3 (217 now vs. 72.6 then). Squinting at Chart 7, I see a high of $330 for condos and a low of $140, which averages to $235. Let's call it $275 because more time was spent higher than lower. In coops, I see a high of $250 and a low of $110, which averages to $180. This looks about right in terms of amount of time above vs. below on the graph. Call it a 50/50 mix to blend at today's averages, we get to $207, not $250.

That puts us at 67% higher than average over that 30-year history. Peak on that 30-year history was 1986, which did $320 in condos and $240 in coops, so averages to $280. We're 24% higher than that. Bottom on that 30-year history was 1994-1995 at around $130. We're 166% higher than that.

We may not be going back to 1994-1995 for a variety of reasons, but you've got to have on some serious rose-colored glasses if you want to make a claim that we're a mere 30% higher than the pre-bubble average. It's more that we're 30% higher than the pre-bubble peak!

"Call it a 50/50 mix to blend at today's averages, we get to $207, not $250. That puts us at 67% higher than average over that 30-year history."

Correction, $227.5, so 52% higher than the average over the 30-year history.

History never repeats itself...it just Rhymes.

Consider simple realities
1. the Euro is toast
2.Strong dollar...good for travel...bad for business
3.Deflation now, inflation later....wait to you see what raising interest rates do for housing prices.
(can’t keep printing money for ever...no mater how many entitlements there are)
4.Job creation will be way off in the future (any idea what will employ the peeps of Ohio, Michigan, Upstate NY, Western PA?)
5.Any significant financial reform will just drive jobs from this town. You’ll be buying condos in old bank buildings the way we bought condos in the old garment district.
6.Don’t forget about the shadow inventory...it still lurks out there.

This is how a W works...you go down, then you go up, then you go.........................................

> I'm bullish relative to the extreme bears! It's like 40 is the new 30!

Wow, deja vu. Did I not call this a couple years back?!!?

Falco. Every french hooker, hunk of cheese and eiffel tower is 20% off awesome! It'll be 40% bf all is said and done. Where is my french dictionary? We're going on 'international house hunters!'

>>> Q1 2010 ppsf was $1038, which becomes $346 in 1979 dollars using a CPI of 3 (217 now vs. 72.6 then). Squinting at Chart 7, I see a high of $330 for condos and a low of $140, which averages to $235. Let's call it $275 because more time was spent higher than lower. In coops, I see a high of $250 and a low of $110, which averages to $180. This looks about right in terms of amount of time above vs. below on the graph. Call it a 50/50 mix to blend at today's averages, we get to $207, not $250.

This is getting silly, but I see a high of $325 and a low of $275 for condos. I see a low of maybe $140 for coops and $$200 as the high - average of $160. Looking at real price because we're indexing to '79. Average of these two is $267. Let's call it $250 because there are more coops. Fine, $346 in today's dollars. That's 38%.

Consider:

- Interest rates were in the teens
- Price/income ratios were worse than today (Chart 10 - we can't see before '84 but looking at the graph it's fair assumption)
- Crime and quality of life were worse, even in the best neighborhoods
- The inventory then included far more "really bad" neighorhoods than today; now everything south of 96th street is considered nice

Not worth 38%?? Yes, interest rates are going the other way, so is income, etc. i even think incomes are going to 90s levels in real terms and so are interest rates - but incomes would still be much higher than the 70s, even normalized, and rates lower.

"6.Don’t forget about the shadow inventory...it still lurks out there."

Great point - there hasn't been a peep about this in a long while, it seems. But let's quantify it before making such statements. I'm not convinced it's as big an issue as some made it out to be.

Falcogold, good points

1) Rising rates and home prices? Hmmm ... see all I said about the late 70s/early 80s ...yes, I account for this as part of the 38% increase in real prices, but I think the quality of life/inventory of bad neighborhoods/price to income story alone can account for this increase, plus, I'm not sure we'll see rates that high again. I csee 8,10,12 percent as more likely than the mid-teens. Think our methods for taming this are better.

2) Let's not lump Western PA and Michigan into the same category - Pittsburgh is actually a success story, though I can't say I look forward to my business trips there.

3) Shadow inventory is indeed a risk. I certainly wouldn't be touching the condo market right now; while on the whole I see maybe 15% downside, I see less in certain areas (UES coops, especially the "value plays" in good school districts east of third), I see much more in the condo market. It would be interesting to quantify this. But, in NYC, there is always the possibility of turning them into rentals. In theory this puts downward pressure on the rental market, but in practice I don't think it's enough of the total rental inventory to matter. I think it caps the upside at very least and is one of the reasons NYC real estate will at best probably underpeform inflation over the next decade.

4) The economy has serious problems, but people have been calling the end of the world for a long, long time. Reagan got elected largely by restoring confidence in Americans ...

The most of the most "recession-proof" jobs are taking a hit.....
http://www.nytimes.com/2010/05/20/nyregion/20teachers.html?src=me&ref=homepage

How do this fit into your 2004 "in" price....

-verizon commercial-
kspeak... "do you see your downpayment now"

3 months later

"do you see it now"

6 months later

"do you see it now"

12 months later

"do you see your marriage now?"

24 months later

"do you see living with your 70 yo parents now"

FLMAO

and finally, did you or did you not take the home tax credit?

Why does everyone keep saying the quality of life is better now than it was? The Limelight is now a shopping mall. That's worth about 2 points of QOL increases there.

Well, it's depressing for those recent college grads --- and EVERYONE under 25 ----- and what about the parents who are going to have to house them forever?
There was a funny piece about this in the recent NY-er --- the cover shows a worried middle-aged couple whose son is hanging his PhD diploma up in his childhood bedroom (where he still lives).
And then inside the issue was as comic piece about how parents should deal with college grads living with them ----- allow marijuana? work hard at avoiding pep talks? throw in the towel and drink massive beer with them?

A little something about the 'SHADOW'
A little tour of my own hood reviles much and I will admit it's anecdotal, I'll allow you to decide.
1.ISIS
2.Georgica
3.Azure
4.Miraval
5.Laurel
6.Lucida
7.170 East End Avenue
That's not all, and that's just in my hood where no one wants to live. Now add in simple turn over and all the folks that want to sell and are waiting for the economy to turn the corner. To some it looks like it has! The stark raving fear that occupied the minds of many last year has faded and the new reality is about set in. You can put the piper off for just so long but in the end you have to pay him.
Do you think the French whores take credit cards?
OH-LAA- LAA

falco, every single one of the buildings you listed have all (or close to all, if I'm not mistaken) of their units listed up on Streeteasy. By definition, that's NOT shadow inventory - it's all there! The more interesting question is how many of them are in the foreclosure process and not currently listed. That would be real shadow inventory. Unless you can reliably quantify that, I don't think much stock can be put in your claim.

sorry, bjw, definitely not the case for miraval and azure, to a lesser extent laurel.

oh, and i know it's not exactly in that neighborhood, but i don't like to have a discussion about shadow inventory without mentioning manhattan house. always like to give a shout out to dolly's projects.

yep,no shadow on any of those buildings falco.

Here's one example off the top of my head;
245 Tenth
http://streeteasy.com/nyc/building/245-tenth-avenue-new_york

And here, the worst kind of shadows,false or embelished "in contracts".

Hey BJW, remember that list of "already in contracts" from January where we playfully betting on whether they would close or not?

52 east 4th _5S__contract date 1/13 did close
52 east 4th _4N__contract date 1/21 back to shadow
52 east 4th _4S__contract date 1/21 back to shadow

53 warren #4_____contract date 1/21 back to shadow
53 warren #2_____contract date 1/21 back to shadow
53 warren #3_____contract date 1/21 back to shadow

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

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

That's 6 out 33 that closed, leaving 27 units for over 90 days detracting from the inventory tally and 27 units inflating the pending sales tally.

"sorry, bjw, definitely not the case for miraval and azure, to a lesser extent laurel."

Miraval has 49 active listings, 15 in contract, and a whole mess of prior closings. I can't seem to find how many units there are total, but that seems like a fairly large number of units that are accounted for. Azure looks murkier to me, so touche, but again, don't know total number of units. There are definitely a handful of off-market units - Streeteasy lists 13. Still, the vast majority of the list is not really shadow inventory. That's my takeaway here. I'm not convinced there's as much anymore as some seem to think.

"Hey BJW, remember that list of "already in contracts" from January where we playfully betting on whether they would close or not?"

I think we all agreed that 15 William was shady from the get-go. The rest I agree with. No question there's still shadow inventory out there - that's not what I'm arguing.

Sorry, I was unclear.
I was adding these inventories to the 'shadow'.
I was making the argument that in the supply/demand world, RE was still up shit's creek.
By the way, when the developer buy's half the inventory of a new building what do you think that does for the value of the property. In the end, you own in a rental building.
In that case, your up that creek with no paddle.

BJW
I know, I just thought it would be interesting to revisit those listings to see how they fared as some time has passed and these certainly fit in the shadow arena.

miraval has a lot of units left to go.

"Sorry, I was unclear.
I was adding these inventories to the 'shadow'.
I was making the argument that in the supply/demand world, RE was still up shit's creek.
By the way, when the developer buy's half the inventory of a new building what do you think that does for the value of the property. In the end, you own in a rental building.
In that case, your up that creek with no paddle."

falco, no problemo, I get it. There are a lot of units out there sitting on the market, especially condos. I look forward to urbandigs 2.0 so we can get our heads around the problem a bit more. As a side question, what happens when a developer decides to rent out a unit? You seem to imply that it comes across as a purchase, but I'm surprised if that's the case. Do these show up as closings? Are they for the full amount, or one of those $10 transfers that show up on ACRIS? Not sure why they would do this, other than perhaps trying to show the building's selling, which doesn't really make a lot of sense to me when they put up a rental listing concurrently, but who knows? (run-on sentence, I know)

truthskr, right on, I appreciate the follow up. Definitely interesting.

aboutready, do you know how many units altogether in the building?

actually, bjw, it says on the se building page. 365.

they broke ground today on the east 57th multi-use site. good news for sutton placers, whole foods and a new school.

also 350 new residential units. they just keep soldiering on.

at least one unit at miraval, 6H, is even a resale. let's check out how they're doing, OK?

02/27/2008Previous Sale recorded for $826,878.
02/24/2009Previously Listed by Barak Realty at $895,000.
05/07/2009Barak Realty Listing is no longer available. Last priced at $750,000.
08/06/2009Listed by Corcoran at $699,000.
12/04/2009Price decreased by 3% to $679,000.
01/01/2010Listing is no longer available.
01/13/2010Re-listed by Corcoran.
02/17/2010Price decreased by 4% to $649,000.
04/01/2010Listing is no longer available.
05/04/2010Re-listed by Corcoran.

Thanks, ar, not sure how I missed it! Looks like with published closings, listings, and contracts, there's somewhere between 90-160 shadow units. Not chump change, but not massive. Anyway, falco's clarified his point that he meant this was all in addition to any assumed shadow inventory, which is fairly difficult to quantify.

including combined units, i see 175 out of 365 units accounted for. 190 not. interpret that as you will.

"so still at least 2/3 of Manhattan's working population is commuting. So, the point still stands that you don't need everybody to want to live in Manhattan."

True, but it doesn't at all make the point you were claiming, that the suburbs aren't needed.
Because you're leaving out the more important stat. That while commuters make up a large portion of MAnhattan workers, that number isn't SO big...

And more of the suburban workers are *not* working there.

% of manhattan workers commuting is irrelevant to your claim.... the portion of suburban residents commuting in is the number you need... and its nowhere near your 2/3.

"This is a fair point - isn't it refreshing that I acknowledge when others have good points???"

Yes, well done. Note that I also gave you a bunch of props in a couple threads this week. Your points have been good, if not complete.

"But, people who decamp for the burbs from Manhattan expect other things as a tradeoff for the location and commute: public schools, two cars, a 3 bedroom house at least, you have bigger heating bills, property taxes are higher than equivalent NYC coop, $400 plus a month in commuting costs, etc.."

Yeah, bt my folks' property taxes are $10 for a big house... thats a small fraction of ONE private school education each year.

Not to mention if you have kids, you probably already have the car (you're not taking infants in cabs)... so subtract $300-700 in parking.

And food costs are MUCH cheaper.

And, interestingly enough, my coned bill is almost the same as theirs. They have a fairly efficient house, which can make the difference. And are we all paying same rates? Either way, still a far cry in difference from schools and parking and things like that.

"I have known several families who have decamped for the burbs and came back finding they weren't saving as much as they thought when all things were considered."

I get that. There are certainly other costs.
But its still a lot cheaper. That they overestimated the savings makes sense, but maybe they estimated 40% savings and it was 30%, and they don't have the income to do it anymore.

"Now, this is absolutely NOT true in families that have 3+ kids. "

Yeah, definitely multiplies.

> Most people say city cheaper with 1

Don't know who these most people are, but anyone with private school won't. I've never heard *anyone* say that in Manhattan.

> many a hair cheaper with 2
again, I don't think that one is close.

> but if living in the city allows mom to work part time - which seems to me what most women would
> prefer in an absolutely ideal world - it's completely breakeven.

again, don't think so, especially when you add in nanny costs.

Get very big very quick.

Even full time moms often have 'em.

SWE: hard to do apples to apples with movers to suburbs because families often size up when they move out.
For instance, why do people say it's cheaper with 1 kid? Certainly not because they expect to pay 35k+/annually in property taxes when they move out. When people stay in the city with 1 kid, they can live very well and comfortably in a small 2 bedroom, esp. once the kid outgrows the big-toy stage. Renting a 5k/month apt with no car + 3.5k/month for private schools is still cheaper than getting a house in Bxville/Scarsdale. I don't know what circles you run in, but many families I know with one kid say it's cheaper in the city, all things considered. As for childcare, you stop needing the FT nanny once the kid's in school.

And curious, why am I not taking an infant in a cab? Granted, it does look ridiculous when I schlep all 3 in a cab, but it's still a more efficient use of both time and money.

Your point about FT nannies is tangential. I know housewives in the burbs & the city who have FT nannies. It is not a function of where they're living, more related to how they want to spend their time.

"SWE: hard to do apples to apples with movers to suburbs because families often size up when they move out. "

Agreed.

" Certainly not because they expect to pay 35k+/annually in property taxes when they move out. "

35k in taxes? Seriously?

Now we're goig off the deep end... the kind of family that will live in a small 2 bedroom is the one buying a house with THIRTY FIVE THOUAND in taxes? Thats several TIMES the average even in nice communities.

Why not argue that the suburbs are cheaper because you have to get a ferrari for the midlife crisis?

;-)

Seriously, that is not at all a fair comparison.

Try it at $10k taxes.

> And curious, why am I not taking an infant in a cab?

First off, I think its illegal.

And you doing that without a car seat?

nyc10023 - All things i was going to say about cost of 1 kid in the city. And, you can take an infant in a cab. In fact, we do regularly. You can snap a car seat into a lot of strollers. We do so regularly; we have a car but it's because it's a luxury we can afford. Not necessary but nice to have. We never use it in the city, though, only to leave. And we have family within 1-2 hour drive so that's the primary purpose. Without family that close would be less useful.

I did mis-post earlier; I met to say, two was mildly more expensive, not mildly less expensive.

On that note you can BUY a modest 2 bedroom for less then $5k / month in carrying costs in a good school district. The quality of improvement in elementary schools in NYC is a big part of the reason people are staying ...

SWE: I meant the opposite. Private school is 35k+. Suburban prop. taxes are less, in general. So, taxes alone don't make up for the savings of 1-child families. It's the upsizing of everything else - bigger place (higher carrying costs), cars.

Cabs (in NYC) are an exception to the carseat law. Under 9 months-ish, I use a European car seat (higher weight limits) that attach to my Bugaboo frame. Above 9 months, no carseat, on my lap. No hassle. I can get in and out of a cab in 3 minutes with 3 kids.

SWE: I don't know how old your kids are, but there are many wonderful after-school programs in NYC. The after-school program at our school runs until 6-ish. I presume they do the same in the burbs, but it's harder to rush home from work to make pickup at 6-ish if you are commuting. On school half-days or breaks, the after-school program also has all-day activities to make it easier on working parents. Not cheap, but cheaper than hiring a FT nanny all-year long.

SWE: here is my cab routine.

Hail cab (with the 2 older kids helping, they love this part). 2 older kids jump in, after I've hastily memorized medallion # (can't be too careful). They get strapped in. I stick infant in carsesat in the cab, then pop the stroller frame in trunk. Then strap carseat in. I jump in front.

I don't think $35k is right for property taxes, but I think $20k is about right. Somewhereelse, your folks may pay $10k but $20k seems about right for good school districts in the more nearby suburbs.

>> No hassle. I can get in and out of a cab in 3 minutes with 3 kids.

going to need lessons from you, not that I plan on having a third. usually i'm enlisting the cabbie's help ...

"SWE: I meant the opposite. Private school is 35k+. Suburban prop. taxes are less, in general. So, taxes alone don't make up for the savings of 1-child families. It's the upsizing of everything else - bigger place (higher carrying costs), cars."

A hyundai isn't the same price as a mercedes because you buy 3 of them. ;-)

But, yeah, spending more on other things will run your bills up. But its certainly not inherent in the move.

Some folks move to crappier neighborhoods to spend less, some do it to get more for their money. But it doesn't mean the places aren't cheaper.

There are lots of options to spend a LOT less if you don't have to "make it up" to yourself with fancy toys.

My folks have a big house, two decent cars, nice spot, housekeeping, gardening, and can be manhattan in under 40 minutes (train or car w/o crazy traffic).... and they pay significant less than I do for everything.

SWE: it shouldn't be inherent in the move, but most people I know (it's all anecdotal) say it's so. They wouldn't have moved if they had 1 kid. Or to put it another way, no-one I know (who is employed) with 1 kid has left the city. Not one.

For a family of 3, the savings on consumables are much lower proportionately than for a family of 4+.

"I don't think $35k is right for property taxes, but I think $20k is about right. Somewhereelse, your folks may pay $10k but $20k seems about right for good school districts in the more nearby suburbs."

They are one of the nearby suburbs, one of the top school districts on LI, train ride in the 30s.

Again, if we're talking about having kids in small 2 bedrooms in manhattan that go for $5k (I've seen those, not a lot to work with) then picking Bronxville is a wacky comparison.

SWE: then I don't think you fully understand the mindset of families who would rent a 5k 2-bedroom doorman bldg (1 kid) but if they moved, would buy a 4br home and not go for a townhouse or condo in LI/Westchester/NJ.

But we're talking private school, no? Then you are not bound by school zone and you can get some great deals in Manhattan.

E.g., see http://www.houlihanlawrence.com/PropertyDetail.aspx?PropertyDetail=3010488

Proper house, nothing grand, on a quarter-acre. Only $1,000,000, but taxes of >$30,000.

>>> SWE: then I don't think you fully understand the mindset of families who would rent a 5k 2-bedroom doorman bldg (1 kid) but if they moved, would buy a 4br home and not go for a townhouse or condo in LI/Westchester/NJ.

I agree. It's not inherent in the move but it's the tradeoff people make - if I can't walk out my door and be in NYC, I want 4 brs and a big yard ...

Plenty of 2 brs in manhattan for less than $1 million which is less than $5k/month - east of 3rd on UES, and FiDi, probably Murray Hill and UWS though I'm less familiar with those.

SWE is no doubt right about his parents place but getting into penn station can be rough if you work in east midtown or downtown