Manhattan Condo Sales Slide

"Commercial Real Estate Prices Dive Sharply In October After Several Months Of Gains"

"The news dovetails with what's going on in the residential market, which is also showing signs of creaking after a summer of gains."

http://www.businessinsider.com/commercial-real-estate-october-2010-12

Shrug... it's all still too expensive.

Impossible. Real estate prices in Manhattan only ever go UP. It's an island, goddammit, don't you know that?

I found urbandigs' post much more insightful.

http://urbandigs.com/2010/12/sales_continue_to_follow_the_s.html

Steve, original content would be nice on occasion.

Hello guys. Get rid of those cassettes, you're living in the past. See Noah @ UrbanDigs and he will emlighten you to the October and November runup in sales. I see evidence in the buildings where I own. Invnetory has been halved in 2 months.

Shelly Banjo(WSJ) needs to be given a thrashing for being so behind the times. Shame on the WSJ for being so late to the party. Appalling.

I think I'm going to tell her the big mistake she made. Ya I'll tell her. Be back in a moment.

"Invnetory has been halved in 2 months."

steveF, let's not get carried away here. That's totally made up. Inventory is down about 500 from 2 months ago, but actually higher than it was 3 months ago. We've been hovering around 7500 for nearly a year now, which seems like a flatlining trend that might stick around for a while. Based on urbandigs' post, I do tend to agree with you that the market is more active than the WSJ piece would have you believe, but as usual, you're painting a far rosier picture than what's really going on out there.

bjw, just telling you my evidence. Large west side condo had 45 active lsitings(studios-2 bds) over the summer and now has 18. Listings went from starting @ 380k to now 449k. Lisitngs were halved for the number of sublets as well.

Why were so many pulled from market without selling?

bjw, thanks for your two cents. Not only are you now in charge of awards, you are now editor-in-chief and arbitrator of originality.

Good for you!

Not pulled at all. Sold or under contract in Oct/Nov. Even had 3 price increases. Haven't seen that in quite awhile.

steveF, can you tell us which building? Would be interesting to look at. Obviously, seasonality can play a factor around this time as people will pull listings during the holidays. Next month should be a bit more telling as to what's up for grabs. I've been looking for a multifamily for my parents (they're selling an investment property they've had for years in DC and are shooting for a 1031) in either Harlem or brownstone Brooklyn, and there's very little out there. Hopefully 1/1/11 changes that.

It's cold out there for sellers.

stevejhx, no need to get so touchy/defensive.

Re: "Inventory has been halved in 2 months."

A guy I know just got a job.... ergo unemployment rate is now at zero percent!!!!

bjw, would love to tell you which building but that would reveal more personal info for people to attack. 1031 huh? Good Luck. Have to get all your ducks lined up before you move on that. Smart move no cap gains with good cashflow. How's the DC market????

steveF, 1031's not that bad, really. Just have to be ready to designate a property in time, which means checking out enough properties in advance (where I come in). I don't know much about the DC market, but they've had trouble selling their house down there - had a pretty drastic price reduction, which finally drew a bid after a couple months on the market. They have renters lined up in case deal falls through, so at least they won't lose much in terms of revenue.

bjw, cool. sounds like they are in good hands. your a good son :)
I was in the process of doing an exchange but never sold. Wanted more cash as liquidity can become an issue. It's funny how I would hear the old timer investors tell me about liquidity, liquidity, liquidity when i bought my first. I'm like ya, ya, ya. But now that I've been around the block somewhat. I would tell a wannabee the same thing. Have to be organized or you can get jammed up. Keep dibs on your cashflow and the rest takes care of itself. Anyhow, good luck with that bid. Hope it works out for everyone. peace.

> A guy I know just got a job.... ergo unemployment rate is now at zero percent!!!!

lol

Here, a 9-month view of Manhattan Active Inventory (supply) vs Pending Sales (demand)

http://www.urbandigs.com/chart.php?s1=Pending+Sales&s2=Active&mindt=12%2F07%2F2009&maxdt=12%2F07%2F2010&t=Market+Trends&interval_mindt=2010%2F03%2F12

Not touchy at all. Congratulatory, rather, as you seem to have appointed yourself arbitrator general of the relevance of what everyone else on this board has to say.

Auguri!

Looks to me like some people were testing the market based on previous strong sales, then pulled them.

Yeah, I just said original content would be nice. Your response is way touchy.

evnyc - ACTIVE vs OFF MKT trends

http://www.urbandigs.com/chart.php?s1=Active&s2=Off+Mkt&mindt=09%2F08%2F2010&maxdt=12%2F07%2F2010&t=Market+Trends&interval_mindt=2010%2F03%2F12

slight tick up in off mkt trends but not enough to cause the full move down in inventory since late October. So combination of rising pace of new deals signed + off mkt together affecting inventory. At least now we can measure it with confidence

evnyc, you have to think there's always a healthy smattering of those kinds of listings anytime the market gives off a whiff of stability. It's even beyond the scope of what urbandigs has collected, but it would be interesting to measure the trends there. Anyone knows if any of the brokerages keep "reason for selling" data?

> Here, a 9-month view of Manhattan Active Inventory (supply) vs Pending Sales (demand)

I'm not so sure on pending sales really representing demand - demand would be a curve, hence elasticity.... of course one could say the same of supply - but if you go back all time in this to 2 years worth of data.

Pending sales down 14%, inventory up (but not clearly how much, as it seems like the data wasn't accurate in the beginning).

the move in active inventory in first 3 months of 2008 was the rolex system getting past the 'new dev problem' where 1000s of units of inventory finally had records created and could be measured. Alot went into pending sales too, so called those listings that say, 'Listed in SE, Already in Contract'. Nothing anyone can do about those. We did remove this poison (a bunch in Feb-April 2008) from pending side, and our flow algo ensures that a listing can only get to pending, if it came from a prior measured ACTIVE state.

But for Active, it was around April/May 2008 where I believe the baseline should start. We decided to go to JAN 2008, rather than say APRIL 2008, to show you what the data actually did. I would do same chart and start from May 2008 and see how % change is affected (lets cover the active issue, and stay well behind the Lehman issue for pending, and start after the pending poison removal earlier in 2008) - just a test.

http://www.urbandigs.com/chart.php?s1=Pending+Sales&s2=Active&mindt=05%2F01%2F2008&maxdt=12%2F07%2F2010&Update=Update&t=Market+Trends&interval_mindt=

Changes quite a bit:

PENDING: down 41%
ACTIVE: up 10.5%

Even though demand is up, its at a lower general level than it was Pre-Lehman. Prior to this we could determine that the data integrity starts to get affected for active and pending due to what I mentioned above. Thats why we cant show earlier for inventory side. Sales side will be different when we launch Phase 2 in about 3-4 months.

Makes more sense.

Good stuff, Noah. I know this was a lot of work for you.

hey, thanks for asking the question..we didnt put any of this info or methodology on the site yet..my partner in this project is very clear to me that the site is 50% done. So he will put all that up once we finish the next idea.

Thx SWE! The journey was a nightmare, Im just glad its over and now we get to build charts and other tools

"Yeah, I just said original content would be nice."

bjw, what you fail to realize is that all of steve's content is original. He is the the sole creator of original facts.

"He is the the sole creator of original facts."

Indeed, JuiceMan, I'm the sole presenter of ANY facts, at least on this board.

You certainly haven't been able to come up with any.

Read what juiceman said more carefully... he said *creator* of facts.

;-)

Of course, I think steveF is in the running for that as well.

Thank you Noah! It goes to show, actual facts have a dampening effect on crazy theories born out of a single anecdote. The charts are so great, I do hope brokerage firms are buying your stuff.

thx maly

March 12 (Bloomberg) -- Smaller bonus checks across Wall Street indicate New York City luxury real-estate prices may be on the way down.
The CHART OF THE DAY shows the relationship between average Wall Street annual bonuses, lagged two years, and the average price for luxury condos and co-ops in New York City, based on data from the Office of the New York State Comptroller and real- estate appraiser Miller Samuel Inc.
The average price for a luxury co-op or condo in New York fell to $5.49 million in 2011 from a peak of $6.33 million in 2008, according to data compiled by Miller Samuel, which defines “luxury” homes as those falling within the top 10 percent of transactions by price. The average Wall Street bonus fell 13 percent last year to $121,150, the lowest since 2008, and almost
40 percent less than the $191,360 reached in 2006, according to projections by New York State Comptroller Thomas DiNapoli.
Declining bonuses in 2011 may bode poorly for luxury real- estate prices this year and next, according to Miller Samuel president Jonathan Miller, noting a lag between lower compensation and sales and prices. “People are making decisions a year or more down the road because they’re getting their deferred cash,” he said. “We may see a little weakness in 2012,” and “next year could be weaker based on this trend of lower compensation.”
Wall Street firms trimmed 2011 discretionary pay as investment-banking and trading revenues slumped. At Goldman Sachs Group Inc. and Barclays Capital, the cuts were at least 25 percent. Morgan Stanley capped cash bonuses at $125,000, and Deutsche Bank AG increased the percentage of deferred pay.
Lower compensation for bankers means “the best case scenario for 2012 is more of the same,” Miller said. “The Manhattan housing market specifically remains one of the best in the country -- but that’s a relative statement.”

more bullish news:

http://www.nytimes.com/2012/03/11/nyregion/deficits-push-municipalities-to-desperation.html?pagewanted=1&_r=1&sq=New york city medicaid finance&st=cse&scp=1

didnt we just finish burning meredith whitney at the stake?

chk the part about the 35% of property tax revenues projected to be spoken for to fund retirement obligations by 2015

SLoooooooooooooowwwwwwwww Motion financials disasters.............

BONUSesssssssssssss down..........

Bubble poppiiiiiiiiiiiiiiiiiiiiiiiiiiigggggggggggggggggggggg........

munis...........goinggggggggggggggggggggg bankrupttttttttttttttttttttttttttttttttt.................................

GET out bf it's toooooooooooooooooooooooooooooooo lateeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeee

Curse you marco, for making me find that chart on my Bloomberg! But...interesting.

question is could you find me on bbg ?

jason10006 -- CHAR

I know how to find charts in general, it was finding the news story he pasted. Its not on the web, or at least was not this AM, so I had to look up JMill on my BBG to find the story which links to the chart.

Marco, there are 99 pages of Marco M's on BBG so I will just have to live with the mystery!

"40 percent less than the $191,360 reached in 2006, according to projections by New York State Comptroller Thomas DiNapoli."

Declining bonuses in 2011 may bode poorly for luxury real- estate prices this year and next

next year could be weaker based on this trend of lower compensation.”

Shocker..

PFFFFFFF

go to TOP - its one of the top news stories in bb today.

The only greyed out people I read are Wbottom and W67 (I am actually surprised that reasonable people not only read but even respond to some of the virulent, unhinged greyed outs).

So if you passed by W's post, this article is very relevant re: downgrades of NY munis. If for no other reason than it will certainly mean rising property taxes.

www.nytimes.com/2012/03/11/nyregion/deficits-push-municipalities-to-desperation.html?pagewanted=1&_r=1&sq=New

apt23 - yes, scary. I read that. Peruse Vanity Faire's website, a similar story about San Jose, Vallejo, and other CA cities. Bloomberg has yet another. This shit is real and scary.

Apt23 reads me but doesn't admit it, she only mistakenly references what I say every so often. Oh well. Ask her about her runin with the police after she said her husband had a gun (he didn't).

increasing property taxes with lower bonus babies spells trouble for the future of price inflation.
When you combine this data with the money velocity index it gets way worse.

Here's that chart:
http://www.bloomberg.com/news/2012-03-12/smaller-wall-st-bonuses-mean-cheaper-condos-chart-of-the-day.html

I have to agree. Wall Street money is largely off the table in NY housing. The question is how much Wall Street buying has their been since 2008. Not that much from what I can see.

Question is, how much cash cushion is left for the the Wall Street buyers of 2005-2009. Refi's have helped, but that has played out. Left with an uncertain future, looks to me like its time to sell for these folks.

@riverturd. 'not that much' omfg. No vadazzled virigns for you heathen.

What's funny is I know an md friend of my wife who thought the lack of bonus for wall street was a 'window' of buying opportunity in 2011. Flmaozzzz.

Omfg. Wall street did not drive this bubble.... Huh? How much cream cheese do you stuff in that hole man? Omfg. Riverturd. Don't go spending your SS cola adjustment for 2012 in just one place m'okay. Omfg.

No. Don't tell Ppl to sell just yet. Wait till the perfect storm of feet complete (u know that fancy French word) of higher interest rate, higher taxes/maintenance, and all your neighbors selling at the same time..... Did I forget something. Oh yeah mass layoffs for all your colleagues. Flmaozzzz

I was preaching about how lower incomes and higher taxes would bring down Manhattan RE prices when I first started posting here, but all the bulls retorted with nasty comments... stay long and wrong, remain oblivious to realty and curse the realist if that makes you the bulls happy.

the question is how much Wall Street buying has their been since 2008. Not that much from what I can see..

exactly, and what has the market done since 08'? rhetorical

I know an md friend of my wife who thought the lack of bonus for wall street was a 'window' of buying opportunity in 2011.

W67: The md's logic of this completely escapes me unless he/she thought that RE prices would go way down from lack of wall street buyers. If so, wouldn't it only be an opportunity if the RE prices went down further than the 40% drop in bonus money from 2006 which the market has not yet achieved. Can you explain his/her thinking?

Btw, I think your lemmings are still at it. Since my rental will be up at the end of the year, I have been looking in my price range to compare against my rent renewal. It seems like everyone putting their apt on the market in the past couple of months -- mostly people who bought 2006- 2010-- are not only trying to capture their transaction costs but also a nice little premium for holding an apt for a couple of years. Only one seller had a different approach -- one guy actually put his new condo on the market for approx the price he paid in 2005. And he is a financial guy. Seems he might know something especially since the tax abatement will be coming to an end in three years.

So to recap from this thread alone-- higher property taxes, lower bonuses, tax abatements coming to an end, oh my.

but wait, there is no inventory... lol

Inventory is tight at the moment. But it's not just those on Wall Street not getting bonuses, but that those getting bonuses are not inclined to spend it. Wall Street is in a worse position than in 2008, because now the gov't can no longer prop up asset prices. They have very little up-side left.

On the positive side, Wall Street money has not been a big force for four years now, and things in Manhattan are holding up, but I have to give Miller credit, that's a great chart.

"and things in Manhattan are holding up,"

huh? are you serious?

Yeah holding up. Here is a financial guy that lost about 4mm when you consider transaction costs and half million plus renovation at 50 Gramercy Park North. I could list dozens of these. Didn't you see sunday times article about resales in designer buildings not holding up except at 15 CPW? Prices are not holding up at all unless you count the occasional misinformed foreigner buyer. Didn't you see urban digs chart about 2-5 mm dollar apts on UES and UWS down 4% yoy?

01/30/2007
Previous Sale recorded for $9,062,425.
06/20/2008
Previously Listed by CORE at $11,500,000.
08/21/2008
CORE Listing is no longer available.
09/19/2008
Previously Listed by Douglas Elliman at $9,950,000.
09/22/2008
Off market temporarily.
05/06/2011
Listed by Douglas Elliman at $10,200,000.
08/27/2011
Listing is no longer available.
09/13/2011
Re-listed by Douglas Elliman.
09/13/2011
Price decreased by 15% to $8,700,000.
10/26/2011
Listing entered contract.
11/30/2011
Listing sold.
11/30/2011
Sale recorded for $7,000,000.

yes, prices holding up if you get lucky enough to find a Russian billionaire with $88mm of chump change that cares more about publicity than $20 or $30mm .. bump every broker in NY will tell you RE in Manhattan in going up after sales like that distort the Avg PSF.. just like last year when a Mexican billionaire threw some chump change around.

Brooks, The over 3-4 million dollar segment is a unique category. Normal people can't buy there. Under $3,000,000 things are slower but if priced right, the deal gets done.

RS: How do you define holding up? I am seeing condos and apts in the 3 mm range that were purchased from 05 - 10 on the market selling for the most part for purchase price or slightly below. When you factor in transaction costs, that is a 10% loss. If there is indeed a reverberation from lower bonus, end of abatements, higher interest rates or rising property taxes that loss could quickly turn down. When would you consider a price not holding up? To lose transaction costs means to me that prices are not holding up. Transaction costs are part of purchase price.

exactly

Inventory is tight for the moment....
WTF?
When did they dispense with that shadow inventory I spent sooooooo much time blabbing about?
Did they sell it when I was on Christmas holiday?
Don't tell me I missed it!
10.95,/mo and I missed it!

RS: Here is a 3mm resale at the Rushmore. After 249 days on the market, and asking 31K below purchase price, it has not sold. So, with transaction costs, if they sold at current ask -- which is highly, highly unlikely-- it is more than a 20% loss. Holding up?

10/11/2006
Previously Listed by Corcoran at $3,175,000.
09/04/2008
Corcoran Listing sold. Last priced at $3,325,000.
04/02/2010
Previous Sale recorded for $2,926,000.
07/07/2011
Listed by Douglas Elliman at $2,975,000.
10/19/2011
Price decreased by 3% to $2,895,000.

Thank you Wbottom & apt23.

Cheezus: Every paragraph in that article is more bad news. But, the way things have been going, the scenarios discussed are the logical outcome. It's a downward spiraling whirlpool.

“I think you’ll see a dropping off of the programs that many counties now view as important — law enforcement, economic development, parks and recreation. Those kinds of programs will disappear. Counties will become welfare and Medicaid managers.”

"Programs"?!?! Since when did police & parks become "Programs"? I thought that police & parks were a core function of government. This guy sounds like he's talking Orwellian Newspeak. OK, so if government doesn't provide law enforcement, than who does? Corporations? Mad Max?

Agree re: welfare, the US has become welfare nation. Too many people look to government to support too much of their needs, the latest being condoms. We need to bring back manufacturing to the US, so people have jobs, earn money & don't have to be so dependent on government. And we've got to shrink the size of government.

But, I really doubt we're going to do what we need to do to turn this around & get back on track. Nobody has the guts to do the right thing & so we're going down the tubes. We have screwed ourselves.

Around the time of Lehman, I read articles warning that what we faced could be worse than the Great Depression. Perhaps those warnings may finally be coming true.

Here is the VF article by Michael Lewis. I mean, LIBERALS should be scared shitless by this. There is no money in Ca for Pell Grants, unemployment, medicaid, and things that actually help poor people let alone high speed rail, green energy subsidies etc when all the money is going to pensions.

http://www.vanityfair.com/business/features/2011/11/michael-lewis-201111

The crisis has been forecast by financial experts for some time, in part because municipalities often lag the national economy, meaning that their troubles can crest even as problems for the state and federal governments ease..

Here is the Bloomberg one.

http://www.bloomberg.com/news/2012-03-08/billion-dollar-florida-pension-battle-shows-challenge-of-cutting-benefits.html

Thanks jason . I had seen the VF -- I love Michael Lewis -- but had not see the Bloomberg piece on Florida. I think as Americans, we have one thing in common -- we are all Greeks. We are not going to have our pension plan altered, or as in the VF piece revealed about Californians, we will vote to keep our entitlements as we rail against our leaders for profligate government spending. But if we are all Greeks, who is going to be our Germany, forcing us to change through austerity? I shudder to think.

Brooks re Munis "The crisis has been forecast by financial experts for some time,

Brooks, if that is true, where were they when Meredith Whitney was being crucified.

Apt23 found a new friend. Little does she know. Little does she know...

When someone tells you they are going to take away your toys, you get sand thrown in your face.

that's why Meredith Whitney was crucified.

"Brooks, if that is true, where were they when Meredith Whitney was being crucified. "

MW's problem was saying it would be within twelve months. This will be more like a 5-10 year period.

Silly Jason, timing doesn't matter. The "right" price is $500psf, so demands the Unicorn today.

Meredith Whitney was crucified by the market. Her sentiments were bearish, yet there was a massive bull-run in munis (for instance look at MUB) in 2011.

Doesn't matter USQ. According to Brooks, columbiacounty, w67, and apt23, you have to do what is "right" even if the market is elsewhere. Meredith is 'right" because she is negative like her audience on streeteasy .

Doesn't matter USQ. According to Brooks, columbiacounty, w67, and apt23, you have to do what is "right" even if the market is elsewhere. Meredith is 'right" because she is negative like her audience on streeteasy .

MW was making a call for investors, those who listened to her were spectacularly wrong over the next twelve months. Even 5 years from now, she may be wrong. Cities will pay bondholders first EVEN AFTER bankruptcy in most cases. Its the union contracts that will be busted up.

those who listen to her RE banks made a Sh1t load of $.