Housing Market Slips Into Depression Territory

What about "prime" Manhattan, say from FiDi to 96th Street, for comparisons sake?

The Depression was far worse in "real" terms as the Consumer Price Index "declined" 23% from the end of 1928 to the end of 1933. That is deflation.

Manhattan below 96th Street never goes anywhere but up.

Silly question.

What Steve said. Also true for Williamsburg, LIC and Park Slope.

Especially LIC.

Topper, your analysis is not quite spot-on: in the Depression housing deflation just about matched general deflation. Now, though general deflation is about 0%, housing is 26% down.

Much worse.

> What about "prime" Manhattan, say from FiDi to 96th Street, for comparisons sake

Not much better. Worse depending on how you look at it.

Studio - 24.8% down from peak (this is the lowest point)
One Bedroom - 22.6% (23.3% at low point)
2 Bed - 25.8% (28.8%)
3 Bed - 39.9% (48.0%)
4 Bed - 55.0% (67.3%)
Overall - 17.6% (21%) - less than individual types because of changing blend

NYC office rents are up for the first time since 2008.

The rent rise is one of several signs of recovery in the
Manhattan market, Joseph Harbert, Cushman’s chief operating
officer for the New York region, said today at a media briefing.
Fourth-quarter office leasing totaled 7.5 million square feet
(696,770 square meters), the most since the third quarter of
2006, as renters sought to make deals before prices climbed.

Oops. Not even close to spot on. Thanks for the catch, Steve.

stevejhx: It's not a silly question, asshat. Don't be such a douche.

I was initially asking a serious question, and not trying to be combative when I asked it. If national indices indicate that "...Home values have fallen 26 percent since their peak in June 2006..." I am simply asking what the comp is for '"prime" Manhattan during the same period for comparative purposes.

If you don't know, you don't know. If anyone else does, it would be interesting to see.

I could be wrong, but i don't think that there was a 300% rise/bubble in the decade before the depression. So, hard to compare to current circumstances.

Actually, apt, there was a huge increase in property values in the 1920's, much as preceded the Depression. In fact, the parallels are frightening.

Hey matacojones - chill. Thou dust protest too much.

stevejhx: So stop protesting, then.

somewhereelse: Very interesting, indeed - thank you! Where did these numbers come from?

272 CPW...studio $350k in '06, currently studio $580k..

They can ask what they want....

In my old building, 350 Bleecker, they're down to 2007 prices, approx. They need to go down to 2003 prices to equal rents, and there they're headed. In my old apartment, 2-br 2-ba, 800 square feet, the maintenance is currently $1,400 a month. When I moved there it was $800 a month. At 6% interest, the unit would have to cost around $400,000 for mortgage & maintenance to approximately equal what I am paying in rent where I currently am, which is much larger, much newer, much everything.

That is a more than 50% drop in price from today.

It will be slow & painful, but it ALWAYS happens.

julia/stevejhx: Individual examples, helpful as they are, can show any result by finding the one example that supports your particular pov. I'm sure I can find examples myself to bolster either side of the argument.

But is somewhereelse's numbers come from a reliable source, represent a broad sample, and are current and accurate, they're fascinating.

So the question is, where should/will the bottom be? Who's gonna call the bottom, if we're not there yet?

w67th has shown some willingness to discuss bottoms.

ahhahhaaahhahahahahha! Suh-weeeet, west67!

not if rents move up

? WTF? And rents would move up Bc unemployment checks are set to increase next year?

Flmaozzzzzz.... U Fking idiots playing checkers, we be playing 3 dimensional hologram chess. Popoff idiots.

Fking a'. How dumb are the re bulls on here? You know hookers don't 'love' you?

Pssssss. Pssssss. Pssssss. I've got another secret for you. If she swallows, you're not special..... She's just used to swallowing.

a rather oblique discussion of the bottom. but i sort of see the nexus.

So call it already w67, and stop kvetching. Where's/when's the bottom?

Now? Or if not, what should be the potential marker for the bottom?

A certain PPSF price? A particular unit price average? A specific percentage drop? What?

At least someone gets me.

$500psf. 5 yrs, but they pumped a lot of stoooopid juice into the market. I'd say 7 years now. 2014

Obtw, yachts are a Fking bargain. 60 foot Swans for $200k, holy fker Thatz cheap. Don't be so myopic lemmingz, it's not just RE, stock, bonds, gold..... There are always good pockets of value.

$200k around the world 'home' or a $1mm studio on 42nd and 12ave? Flmaoz.

i originally called 2012 as well. but i agree with w67th that the powers that be have postponed the natural progressions of disaster (i disagree with him in that i think that SOME of the postponement has been beneficial, although certainly not all).

it would be interesting to debate the benefits of a gradual decline vs. a sudden drop. or, what i really fear, the return to positive mentality that refuses to recognize our current issues and leads to another "financial crisis" in a couple of years. the latter is what i suspect, so i'm no longer calling a year.

Matsonjones - I prefer to look at Miller Samuel's PPSF data for co-op and condos in Eastside, Westside, and Lower Manhattan. I'd say we're right at '06 pricing, and about 15-20% below peak. Obvi 2008 is a bit skewed given that it included closings from many new developments, but it probably represents peak pricing. Seems as if prices have stabilized, but the spring should tell a lot.

Year Studio 1-BR 2-BR 3-BR 4+BR All
2009 842 954 1,168 1,390 1,929 1,094
2008 1,019 1,113 1,407 1,808 2,834 1,284
2007 944 1,008 1,250 1,586 2,330 1,148
2006 864 934 1,127 1,430 1,900 1,047
2005 804 861 1,062 1,338 1,910 975
2004 641 703 863 1,071 1,504 792
2003 555 610 734 993 1,356 686
2002 486 522 656 981 1,054 607
2001 473 527 659 954 1,204 608
2000 382 455 594 890 1,209 536

Well, it looks like I'm renting until about 2013......!

Who is tired of this crap?

You got peanut butter in my chocolate...

No you got chocolate in my peanut butter...

Lets move on from this nonsense. If your a bull...TODAY is your day...go buy the Taj Mahal!
If your a bear...sit tight your reward awaits.
Or we can just continue this waste of time instead of investigating interesting real estate
Agree to disagree and MOVE ON.
My ass is all laughed off...I can barely sit down.

see any interesting new properties?

As the years pass in this housing crisis, demand will continue to go south for all the regular reasons - rising mort rates, inflation, older demographics, the young alarmed as their parents go broke due to housing purchase etc. Demand will fall off a cliff if any one of dozens of black swans come to the surface. New ones appear on the horizon every day. How bout this one? http://www.cnbc.com/id/15840232?video=1737278951&play=1

Manhattan Apartment Rents Increase 5.9%, Citi Habitats Reports
2011-01-12 05:01:00.16 GMT

By John Gittelsohn
Jan. 12 (Bloomberg) -- Manhattan apartment rents climbed
5.9 percent and rent concessions fell in the fourth quarter as
rising employment helped revive demand, Citi Habitats reported.
The average monthly rent rose to $3,127 from $2,952 a year
earlier, based on transactions by the company’s brokers.
Concessions such as a rent-free month or payment of broker fees
were offered on 22 percent of apartments in December, down from
60 percent a year earlier, New York-based Citi Habitats said.
“Overall, 2009 compared with 2010 is a complete 180,”
Gary Malin, president of Citi Habitats, said in a telephone
interview yesterday. “It went from a tenant’s market to a
landlord’s market.”
New York City’s unemployment rate fell to 9.1 percent in
November, the lowest since April 2009. Private-sector employment
rose 1.6 percent in the 12 months to about 3.2 million, with
financial-services jobs rising by 5,900, according to the New
York State Department of Labor.
The apartment vacancy rate in Manhattan fell to 1.3 percent
in December from 1.8 percent a year earlier, Citi Habitats said.
Vacancies are typically higher and rents lower during the fourth
quarter because fewer people want to move to New York during
colder months, Malin said. The rate was just under 1 percent
during the third quarter, usually the most active, he said.
In addition to the rise in employment, apartment demand is
being boosted by people relocating to shorten their commutes and
those taking advantage of rents 9 percent below the peak of
2008’s second quarter, Malin said. Also, lenders are demanding
bigger down payments and better credit for apartment purchases,
spurring some potential buyers to rent instead, he said.

Apartment Sales Drop

Manhattan apartment sales dropped 7.2 percent in the fourth
quarter from a year earlier, when tax credits for homebuyers and
pent-up demand after the 2008 financial crisis created a surge
in sales, New York appraiser Miller Samuel Inc. said Jan. 4.
Among rentals, the cost of leasing the average studio
apartment rose 6.2 percent to $1,840 a month, one-bedrooms
climbed 7.2 percent to $2,512, two-bedrooms gained 5.2 percent
to $3,467 and three-bedrooms increased 5.7 percent to $4,690,
according to Citi Habitats.

My LL raised my rent 1.2% on a 2-year lease..doorman bldg., alcove studio.

Also, I'm paying much more than $1840 a month so that might account for the small increase.

"Especially LIC."

Beside yapping off and getting smoked by shorting commodities and the stock market, has Steve ever gotten anything right? I have to say, Steve is probably the biggest buffoon on this board.

Have anyone looked at peak prices and the number of units that exchanged hands during the height of the housing bubble in LIC? I would say that majority of new development in LIC (hunter's point water front) sold for about $680 per square foot. There were a few units here and there that sold for 900-1000 psf but majority of the units sold over the past 4-5 years are in the 600 psf range. Currently right now prices are in the 600s. What has changed? Nada.
A few units does not dictate prices of 'every' unit.

I have a report of all the units sold in the following buildings over the past 5 years to back my claims.

CitLights
The Powerhouse
The Foundry
The View
Hunters View
One Hunters Point
LHAUS
Protege
Gantry
Batch
10-50 Jackson
Murano

Ericho75: "What has changed? Nada." - which means that prices are still in bubble territory.
There is a Murano thread in discussions. Would you mind posting your Murano report there?

Why do people say The Great Depression worse than The Great Depression II and it's not?

Look around NYC today and how people live and NYC c. 1932. You think it is worse today? Are you serious?

ericho- exactly right.

steve is the streeteasy joker. Seldome right and usually wrong. His rent ratios are always way off.

somewhereelse is fudging the numbers in his post. He is cherry-picking the time periods for each apartment size. If you look at the overall market peak, or the June 2006 period that was the topic of this thread, and the results differ greatly.

KW - if NYC was still the bastion of manufacturing, like it was in the early part of the 20th century, rather than the nest of elite financial raptors like it is today, I wonder if the depression era comparisons wouldn't be without some merit. It seems we are an island in more than just the geographical sense. Similar to a thermal battery, which provides a large volume of mass that heats up in the sun and gradually gives up its heat to maintain a constant ambient temperature when weather turns cold, New York has an economic battery. It's deep well of financial strength sustains the local economy in times of economic stress and tends to skew our picture of the real world. Living within the zone of relative comfort, I wonder if we can really comprehend the depth of despair over the horizon.

"Demand will fall off a cliff if any one of dozens of black swans come to the surface."

This one is still my personal favorite: http://www.bloomberg.com/video/65822094/

Stay with it to the end for the money quote from the developer.

black swans dont happen when governments change the rules.

Malthus, the developer reminds me of that old joke: we lose money on each unit, but we make it up in volume.

Sorry - never shorted commodities. However, if I were to, now would be the time.

"Seldome right"? I guess LICCdope is studying Shaquesperien speling.

And - LICCdope, ericho is doing the same thing. Now the bubble money is going into commodities, gold, & stocks, rather than real estate. Do we think that the economy is 20% better than it was in September?

No. Hence this bubble will burst too, and it won't be very pleasant. The Fed is flooding money into the economy, but it isn't going to where it's needed: it's causing inflation in areas that they don't count as inflation, just as happened with the housing market: home prices aren't counted as part of inflation, so there wasn't any. And they strip out food and fuel to look at the "core" inflation rate, which of course is 0. Food and fuel, on the other hand.....

This is truly bad economic policy. Pure Freidmanism, and very, very bad.

A very lucid and thoughtful observation Stevehjx you are alright in my book.

The other fktards are plain stooooopid or too self serving to pull their heads out of the toxic sand beach volleyball court

I will say, though, that it's difficult to maintain some short positions in a market that is acting the way this one is. But I follow my instinct; I've been hearing the experts talking about a "top" in the stock market for the last thousand points. To me, you have to look at the fundamentals: in housing, when prices were so out-of-whack with incomes & rents, & when they came out with the 40-year mortgage, I said that it wasn't right. It was tough not getting involved in the real estate feeding frenzy at the time, but it was the right thing to do.

Now, gold and stocks have NEVER risen simultaneously, and so much. Why is gold worth 50% more than a year ago? For no reason. Ditto oil - why is it worth so much more than it was a year ago? For no reason. The last jobs report said 100,000 jobs were created in December, about a third of the number needed just to keep up with the population growth. It will take years for the job market to return to anything like normal unemployment.

I just keep on saying - this is not right. What caused the 2008 crash were margin calls, and where all the money the Fed is pumping into the market is going is into margin. This is a pyramid scheme right now: it's not caused by retail investors, who have net withdrawn money from the stock market in the last year. I don't know when it will crash, but the higher it goes, the worse it will get.

Just my opinion.

kylewest,

How does an international "recession" occur? In 1932, USA was a poorer country, without contingent plans for a depression. Due to that great depression, contingent plans were created and expanded, assiting people today. Today, contingent plans are in place and being creatd to assist people. People today, have lost more money than in 1932. Everything is more expensive today than it was in 1932. People pay more taxes today than they did in 1932. More expensive housing exist today than in 1932. Inflation is bananas today in comparison to 1932.

Here's a great analysis:

http://finance.fortune.cnn.com/2011/01/12/how-a-housing-slump-will-slow-the-jobs-train/

So where do you put your money? How much stocks, bonds, cash, etc?

metrocards

I am having trouble listening to the pundits who claim the economy is now cooking. Isn't the economy "cooking" because the Fed has lit a fire in the stove that could burn the whole house down? Are people spending because of the wealth effect of 80% up since March? How can that be sustained when the Fed pulls its money out? Is it the economy or insanity. There will not be QE3, so is this one of the few bubbles in history with a definitive, telegraphed end?

I must say that I have enjoyed this ride and I'm slowly pulling out of the stock market. For me, it really began in earnest when David Tepper put himself on a television camera on CNBC because he had gone "all in" when the Fed announce QE2 and yet everyone was too dumb to know that the Fed had the biggest put in the market in history. So his investment went nowhere and he got on TV to wake up the lemmings (me included). But if the market anticipates 6 months, then we should all be out right about now, yet the talking heads are still saying come on in the water is fine. Buy the dips or be priced out forever! We are a shameless society.

In the double irony department, the lemmings that made Tepper kajillions by jumping into the market on top of his investment, voted Tepper Stock Guru of the Year. I wouldn't be surprised if he has already left the building. In the words of a famous SE blogger: There is a lemming born every minute.

spin: nice analogy re: economic battery

>>Living within the zone of relative comfort, I wonder if we can really comprehend the depth of despair over the horizon.

how true. the riots over food prices are heart wrenching. and more to come.

A word about the street.
The money is flowing. After 2 years of bonus withdrawal and cautions concerning conspicuous consumption folks are out again with their retail wallets open. I speak of those in Manhattan at the slight upper end. The mood has improved, the fear has subsided. I too, am trapped in the chicken little philosophy...'the sky is always falling'. That's not the read on the street. My ear is to the ground and I hear spending. How this effects RE, I can't tell you. The mood has improved.

Things are no doubt better, and my business has been swimming for the past 2 months.

But is gold worth $1400 an ounce?

falco: the money has to be flowing. the stock market is up huge. I'm feeling really wealthy ---except do i trust this up surge or is it a trick of the fed to get the market up and save the banks for a few more quarters. are we all just cannon fodder for the Fed/banks? Rather like those poor souls that got an $8000 tax break on a property that is probably down 10% since purchase.

I think you need to realize that your government is just not that into you.

stock market is overvalued and gonna crash...
commodities are too high and are gonna crash...
real estate is over valued and it's going to double dip...
art isn't liquid...
cash it's a bad idea because cash is devaluing...

so, uh, what DO you invest in, geniuses?

I think the plan is similar to a steroid injection.

Hey doc, My shoulder's killing me. My new job (thank you ben) chocking the monkey really makes my shoulder hurt.

So, the doc injects my shoulder with this magical anti-inflamitory. My shoulder feels better and I'm back at the monkey factory.
Hey doc, how does that steroid work long term?
Answer: We inject and hope for the best...

So that's the deal with QE2...inject and hope for the best.

steve: i think gold is worth it. china did an oil deal with russia and by passed the dollar in the purchase. india did an oil deal with Iran and paid in gold. china is offering to buy the bonds of spain and portugal but the return favor is to strengthen the recognition of the yuan in the world market. there is a shadow currency war going on and the dollar is going into the battle with serious wounds. Plus middle classes are growing in third world countries and they generally have an innate distrust of their govts. So buying gold is the equivalent of hiding cash in the mattress.

If i am wrong, i am going to melt it all down into some serious bling and see if any rappers could really go for a cougar.

"I think you need to realize that your government is just not that into you."

"If i am wrong, i am going to melt it all down into some serious bling and see if any rappers could really go for a cougar."

On a roll, apt23. Very funny.

"...If i am wrong, i am going to melt it all down into some serious bling and see if any rappers could really go for a cougar..."

I think I'm in love. :-)

You folks really need to pay attention to what's happening around the world.
Inflation is cooking all over Asia and the fed have said many times that QE2 is going to run until 'they' feel it's time to stop. Ben also said he expect job growth to be slow for the next 5 years. QE2 might run to 2016? It's possible....

USD currency crisis? It's not a matter of 'if', but 'when'.

I made a big pile shorting the USD today

I still haven't figured out where to put the nest egg.

ericho--you are quite alone in thinking that the fed's indication that they adjust tune qe2 refers to extending it, or exceeding the amt to be bot as defined at inception--fed has stated they may end up reducing the program if evidence of reflation and a strengthening economy presents--they have simply never said a peep about extending or increasing

i have good and bad days trading all sorts of instruments and markets--decades into this, net, i have done ok

the only big pile produced by nicercatch is plentiful, stinky fecal, but thanks for the update!!

Wbottom,

In the last FOMC meeting, Benanke made it clear that QE2 is going to run as long as it's needed. The economy is now officially a crack junkie. There's simply no going back unless the fed is willing to face the consequences.

The market will continue to hang around here for a few more weeks. It's due for a nasty mean reversion play very soon. I can't see how this market can power past 12K on the Dow and 1300 on S&P without relieving these extreme bullish sentiments.

"I still haven't figured out where to put the nest egg."

How bout treasury short term and then back into emerging markets?

ur welcome big bottom.enjoy the stinky pile (i'm not too much into sphincter play)

> somewhereelse: Very interesting, indeed - thank you! Where did these numbers come from?

Miller Samuel.

> But is somewhereelse's numbers come from a reliable source, represent a broad sample, and are
> current and accurate, they're fascinating.

The source is fairly reliable, even the brokerages use their data (and augment with stats from only their own sales), it represents a broader sample than anyone else.

Current and accurate as long as you get they represent closings.

> Matsonjones - I prefer to look at Miller Samuel's PPSF data

Challenge PPSF is.... brokers can just make up the PSFs. That is much less accurate data.

agree...sq ft based data is useless

No, WB! sq's da figures that the Juicy uses!

when are we going to hit that 500 p/ft target 67? the world waits guru.