Renters Win: long term grim, short term grimmer

nyc is a very different market then the rest of the country

"that more people are choosing to spend more on housing,"

this one is definitely changing, but who knows whether it changes permanently. young people might prefer to save by minimizing spending in housing and building a portfolio with those savings, the way people in Switzerland do it.

"Dean Baker, co-director of the Center for Economic and Policy Research, estimates that it will take 20 years to recoup the $6 trillion of housing wealth that has been lost since 2005. After adjusting for inflation, values will never catch up. "

20 years!!!!??? many of us will be death by then...

"nyc is a very different market then the rest of the country"
Some variation of that phrase has been the mantra of many a sheep. NYC is not immune from economic fact. I hear that same argument now applied to prime Brooklyn, which hasn't yet dropped as far as Manhattan: "Brooklyn is different than Manhattan, it's more desirable" All local markets are different, and aren't going to behave exactly the same, but a (relatively) small number of wall st. types making absurd salaries cannot make up for the average person having less, nor for 9.5% unemployment.

NYC has ALSO had decades in row with stagnant or even declining (in real terms) housing prices since 1800 and even since 1950.

Sustainability.

Real estate is not going to power the economy anymore. But you know what will be the growth industry, that WILL create jobs and income to educate kids and keep the economy going?

Sustainable business practices. Every industry that already exists is trying to figure out to re-tool to lower its energy consumption (and cost) and thus lower it carbon footprint.

Ya know why? Energy savings is good but also many far sighted people in business can see that pretty soon now, the government is going to start REGULATING CARBON EMISSIONS.

This is a good thing, since it will save biodiversity and water systems, and oh yeah, humanity, but if you want to keep your business going in the midst of it you'll have to a) figure out to measure your carbon and b) figure out how to cut your carbon.

And a huge industry is going to spring up to provide those services. We're all going to be working for, or near, sustabinable business practices in the very near future.

As an exaample I would point to the city council's recently passed "Greater, Greener New York" plan which will force all property owners (with a sign. size, I think it's 50k sf and up) to start measuring (and reporting) their carbon footprint by 2014.

Interesting, in the last 2 days the NYTimes has led with articles proclaiming 1) The death of equities and 2) The death of housing. I guess we should all just buy 2.5% treasuries. It certainly would fit well with columnist Friedman's constant desire for the gov't to borrow hundreds of billions/trillions more. Excellent synergy.

I think Manhattanites tend to have blinders on as to the reality of the real estate market. Kind of like that New Yorker cover a number of years ago that viewed Manhattan as the center of the universe, or at least the only part that really mattered. I have a family member who has lived in Manhattan for 40 years, her entire adult life, who seems to believe that. About 20 years ago she collapsed on a subway platform, and as she lay there a train came in and people stepped over her to get to the train. Not one person stopped to help her. And yet she continues to love everything about the city and can't understand why people would not want to live there. I think her subway experience was unique and hopefully most people would miss their train to help someone in need. But there does seem to be a disconnect between New Yorkers love of the city and reality.

> nyc is a very different market then the rest of the country

Yes, but different might mean... worse.

We were the most expensive market by far, we have more to drop.

""Interesting, in the last 2 days the NYTimes has led with articles proclaiming 1) The death of equities and 2) The death of housing"

well, because its an article on RE not in the RE section.

RE section is an advertising section.

This is the economy section, so might actually be journalism.

And my family member also believes that her co-op is worth $250,000 more than Streeteasy says. But as long as you're not in the market to sell you can delude yourself all you want.

Pelican. I'm sorry I didn't stop, but I had a haircut appt. The appts are hard to come by that early in the morning. So you understand. Tell your sis, the next time would she be so kind as to drop away from the exit doors. So rude to faint near the doors really. But seriously, I am happy she didn't faint and fall into the tracks, I would have to taken a cab, and cross town's a bitch that early in the morning.

Pelican
Many years ago, I had a classmate that came from a very wealthy family. This guy had a personality defect on him the size of the Louisianan Purchase. It just so happened that he lived in my building. Little by little I hung with him a bit and got to know him. He was still a monumental nozzle but, I found the few good things there were to like and we became good acquaintances. He became a highly respected doctor and an astute investor subsequently flourishing financially. On a personal level his life still sucked because he was still socially an asshole. Two years ago he passed out and fell on subway tracks breaking his collar bone, wrist and ribs. A single Hispanic mother of two leapt to the tracks and dragged his very large body to the platform edge where a group of bystanders hauled his broken body out of harms way narrowly avoiding the disaster of an oncoming train. It was a big newspaper story.
Either New York is a very changed place or your family member is less intrinsically likable than this cad.

OMG Falco - thank you for that hearty laugh.

I'm not sure how likeable/unikeable people are when they are unconscious. Although I'm a nurse and I guess if someone had Nazi tattoos I might not like them unconscious either.

The difference between real estate as a get rich quick ponzi scheme and real estate as a practical alternative to renting is vast. Flip arbitrage is a thing of the past, but that doesn't mean home ownership doesn't make sense. Funny how many people confuse this.

how will the affect the rental market in manhattan within the next six months..right now rents are going way up again.

'right now rents are going way up again."

If you mean the REBNY, Citi, Prudential and other such reports, then you mean rents in Manhattan are going up YOY at about the rate of inflation, after being down about 20-25% from their peak...and are down about 20% in inflation adjusted terms over the decade. is that what you mean by "way up?"

See this chart from JM for the inflation-adjusted rents since 1999 in Manhattan:

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

I know the place I lived in in BPC/Fidi is the same rent now as it was 2000, and its market rate, doorman, and new in 2000.

if all this is true about manhattan why is a one bedroom apartment still out of most peoples price ranges

"if all this is true about manhattan why is a one bedroom apartment still out of most peoples price ranges"

Because they were crazy expensive THEN, and also the demand for studios and one bedrooms is higher now than it was before. People not only used to have roommates more frequently than now, but its not that long ago that most single people in manhattan lived in boarding houses.

and the silver lining... rents up.

so why have prices not gone down more in manhattan if this is the case

Buyer11: ... wait for it .... http://www.youtube.com/watch?v=rIE2GAqnFGw

Ownership, probably after some greater decline, will move from a speculative way to make outsided returns, to one of a few sensible ways for the average family to save modestly for retirement, SLOWLY by paying down principal through regular loan amortization.