where are all the idiots who made the 2007 doomsday predictions?!?

They are taking some time off to work on the Mike Gravel presidential campaign.

there are changes...nothing major...I recently bought an apartment but now I'm getting calls from realtors who had clients that would not budge and they are now willing to listen....too late for me but a slight move to sanity.

Seriously . . . I haven't seen a post from those folks in the last six weeks.

Maybe these boards can now move to some more realistic discussions and less "doom and gloom" crap and tips on how to buy gold futures.

It's the specific, local and mundane stuff that really helps the most for people who are trying to make decisions . . .

New York MSA (metropolitan statistical area) is down 6.6% from this year highs on 6/28 and only up 2.5% year over year as of 10/31/07 sales data with a pronounced downward trend..no crash here, just common sense coming back...

discussing macro red flags and seeing the ultimate effect on manhattan is a lagging process! Wait until layoffs are announced, people realize their job is not safe, wall st reacts to slowing economy, data shows a recession for any sig impact on housing here in Manhattan.

Confidence is definitely down and sellers are seeing that activity is somewhat slow. No way sellers are getting the 5-10% above last years comps for their units right now. Inventory is way down too as if sellers removed their listings for NOV/DEC to be put back on in early 2008. Lets see how much inventory increases with this seasonal adjustment.

In my opinion, the next 3 months will bring major layoffs in financial sector. That will affect confidence, sales volume, and inventory here. I don't forsee anything like is hitting markets like Miami, or Phoenix, but a small correction and pockets of distress certainly seem likely given macro fundamentals.

Still looking for a good deal in the GV, Tribeca and W. Village for investment. Don't see any downturn in this pocket of Manhattan and in fact I see an uptick in prices.

urbandigs in all do respect your posting is a mimic of like posting and forcasts in August. September, October, November and December of 07.

I thought we would hear reports on the Wall St. bonuses. Since we've heard no gloating, does that mean that they were lackluster?

Umm, what happened in Aug spunky that started all this? Name any other broker that is publicly discussing this stuff, as it occurs, and what may happen as a result. And for the record, all I publicly stated since then is a drop in buyer confidence! I never said Manhattan is down yet. Inventory is so tight, until that changes, there will only be pockets of distress for overpriced properties that uninterested and unconfident buyers arent chasing.

Lets talk again after layoffs come and economic data comes out showing we are in recession. Are you saying Manhattan will not be affected at all by job losses or recession? The psycholgical effect alone from job losses will make many so skiddish, that they will either put off buying, sell their apt, or not buy as much house as they would like. Confidence will get hit and that is the first step in any asset cycle.

Also, put me down for:

1. foreigners having to sell new devs at a loss
2. new dev closings be pressured by changed lending environment, appraisals not coming in, and/or buyers cant get loan commitment.

I think its naive to think 15,000-20,000 units will close smoothly with no problems at all, and only few being resold on open market. Sure, these guys are in contract and off market now, but we still have worry about banks lending for properties purchased at over $1,400+ a sft AFTER a credit crunch began!

oh no more doom and gloom predictions. This time is foreigners wanting to get out and appraisal issues.

plus, developers going under, oil at 150, banks stop lending altogether, land rotting away, east river mega wave knocks out east end & york ave, 2nd ave subway defaults on bonds and stops construction again, fidi becomes insolvent, bloomberg resigns, and consumers cant afford property taxes. Oh, and Katz's deli shuts down.

other than all this we are fine

urbandigs, I think you found the ideal target market for your new site - all those folks who think the world is going to end. They are easy pickings and you can certainly rile them up with all of your catastrophic bullshit. Not sure how that helps your broker business, but the site will get plenty of hits. Shouldn't you be helping to restore confidence?

Interesting article in NYTimes.

http://www.nytimes.com/2008/01/03/realestate/03real.html?_r=1&oref=slogin

It appears to me those who are predicting price in Manhattan to go down are really wishing and praying for it to happen. I was watching Suzie Orman last night on Larry King who said "for those of you who think Manhattan prices will not go down you just wait and see what happens this year". As if she's pissed off at people who believe that apt prices in Manhattan will hold up. How freaking sick is that. That's the feeling I get from Urban digs.

That woman scares me

when did I predict a crash for manhattan? Show me the post? You guys totally diss macro environment and think it will never seap into manhattan real estate. Trust me, if there is a recession and job losses and stock corrections, there will be pressure for manhattan re and buyer confidence. Or, do you think this market will just go up forever!

I always said manhattan LAGS in recessions & leads in recoveries! You call me doom & gloom, but in my mind, Prof Roubini or Robert Shiller is doom & gloom. Let me ask you this, do you know what the market is like in Suffolk County, Connecticut, upstate New York, New Jersey, miami, las vegas, phoenix, etc? I have contacts in all these areas and the market SUCKS! Do you really think Manhattan will never ever go down ever again. That enthusiasm makes me bearish in and of itself.

Plus my sales business has surged in 2007 as a result of urbandigs, and already lining up to me sig better for 2008 with buyer clients lined up and sales clients expected to come in. Your comment that it hurst my sales business couldn't be more wrong. Don't put words in my mouth, I discuss the negative macro trends because they ARE HAPPENING. Its real! You think Im making this up and just pulling a prediction out of my a$$?

No, I shouldn't be helping to restore confidence if I think we are headed for slwong economic times ahead. But I guess you don't care about the economy, as in your mind Im sure it doesnt apply to Manhattan, cause we have foreign buyers. And that NY Times article, has lagging data from brokerage firms who can present data any way they like! You do know that dont you? You should hear some of the things brokers and higher up execs say to me, that I will not state publicly! Trust me, the smarter guys who run big development firms and the like are very very concerned!

Wait until job losses are announced and credit crisis & nat'l housing slump lags hit the economy and the consumer...thats all I ever said and it is happening. Dont be in denial! At least acknowledge the warning signs!

I found an interesting site re national housing prices/trends. Seems like all agree that Manhattan prices/market have/has a strong foundation and will stay strong in the long run. Even the brokerage folks in the NYTimes admit things could be flat for a while, which will also likely mean that there could be a quarter or two where things actually drop. So it seems that there could be some small, short term correction or flatness in 2008, but both the NY economy and housing market seem fairly strong and resilient. I don't think we're in store for a housing bust, though a national downturn would impact the financial sector in NYC and could lead to a some decline in housing prices. Not like the last crash -- probably less severe than 2001-2002 or 2005. One thing a lot of people lose sight of is that it has not been all boom in Manhattan since 1995 -- we've had some downticks before.

http://www.realestateconsulting.com/metro_statistics.htm

Urbandigs isn't it true that you want to buy an apt in Manhattan and you and your clients (buyers) would benefit form a Market correction in Manhattan RE.If I were a seller I wouldn't want to list with a blogger who writes about how and why Manhattan prices must and has to correct. I certainly am not naive to think that Manhattan RE will go up indefinitely but I am not as smart as you when it comes to forecasting a downturn for a particular time frame.

also Juiceman, I hope you will believe me when I say this, the market has already slowed I dont care what any lagging reports from deals that were signed in July-Aug and closed in Oct-Dec...we are at now now. It is NOT easy to get the price that sellers expect! The market has slowed and we are entering the bonus season when so many people in this industry are very nervous about their jobs.

Do you think I'm lying when I say this? Transparency Juiceman, I think people should know this information rather than be SOLD an apt by a car salesman broker. Doug Heddings believes in this too, and has been in this business for 15 years and is a top performer and even he publicly discusses the slowdown and affect of credit crisis/bonus,job concerns on his site:

http://www.truegotham.com/archives/market-insight-my-first-wall-street-bonus-casualty-of-2008.html

http://www.truegotham.com/archives/a-brokers-job-quietest-october-in-a-decade.html

Yet you guys would rather believe a NY Times article about what brokerages are reporting from deals that were signed 4-6 months ago? I just don't get it. It's like, you don't appreciate unbiased information yet at the same time you prob think all brokers are lying, unethical salesman that screws people. At least I say what I feel, whether its positive or not. I just don't get how you can be so bullish if you truly understand what is going on under the surface.

will - that article and data report is a great example how info can be misleading. Do you really think the NYC market is up 17.6% since last year? Honestly now, you guys are smarter than this. Sell a few $15-50M apartments and realize profits at this scale and all of a sudden the lower end median price spikes!

Even the article states "The reports noted, however, that average prices were being pushed to record levels because of the increasing number of apartments selling at the top end of the market, above $10 million."

Im telling you, don't believe the hype of lagging misleading reports as it is NOT indicative of the current market or near term! 2007 prob saw annual price gains between 3-6% or so with the higher end coming early in 2007 and lower end coming near end of 2007. Not bad considering the deteriorating macro environment. Eventually, macro will catch up.

spunky - tough to answer cause I would prefer to own but for my situation the clear investment decision is to rent. If I bought this apt, not only would payments be right at the very top of my affordability, but the apt wouldn't be enough to grow into and I would eventually have to sell to upgrade making transaction costs eat up profits. Again, reality. It cost money to buy & sell you know, and when most buyers / sellers go through this, they realize how expensive it really adds up to be.

Also, I'm not doom & gloom. I am not predicting any type of crash or depression; thats Roubini & Shiller. Not me. I'm just dissecting what is going on and trying to explain it to people who dont understand why it is happening. Things are just negative now. Look, Im an honest guy and am trying to build a business based on honesty, and ethics. EVERY seller I worked with has been very pleased with price I delivered and service. I go out of my way to accomodate every showing request, and am very good in consulting with the seller on low cost options to get their place in proper condition to appease most buyers and get top dollar. Not everyone reads urbandigs, and if they do, and they want to buy they still will!

By saying what I truly believe, I am trying to add credibility, honesty, and ethics to a job whose industry is scarred with a horrible reputation. I'll tell you this, my last seller used a highly public broker at elliman with an established group. He hated his aggressiveness to give him the listing, and when he did, he said he never showed the apt; maybe 5 times in 4 months. I got the listing, showed it 30 times in first 2 months, got a great bid, and did the deal. I work harder servicing the listing and negotiating for my sellers, then I do on selling the prospective seller with sales tactics to dupe them into working with me.

And just so you know, take a look at this:

http://www.corcoran.com/property/listing.aspx?Region=NYC&ListingID=1046395

I had this listing in early 2007. It was also listed at 2.2M, and I got my client a bid of $2.3M, some $100K over ask that they refused after 3 months on market, and about 40 showings. I was told that he wanted more, (I delivered $1,277/sft for a co-op on 96th st! that needed some work but had good views) and they said my company couldnt service a high end listing. I told him he was making a big mistake because this was one bidder bidding against himself and that we are about to have a subprime credit crunch; he laughed at me. Now, the property is listed with Corcoran $100K lower than I delivered and its been almost 5 months. They even started at 2.595M as the broker told them they could get it.

I hate those lies and the brokers that lie to sellers just to get a signed listing agreement. I don't do this. I wont take the listing. But I will work my a$$ off and service the listing and deal with the seller/co-brokers honestly, ethically and deliver weekly reports so that strategy with pricing or marketing is ahead of the curve, not behind it!

For the record, I never said prices "MUST" correct. I just said I believe they will correct and that a correction is a healthy short term event that will help ensure longer term sustainable growth. Again, please do not put words in my mouth.

spunky - disclosure for you..I bought my condo in Nov 2001, closed April 2002 (due to tight lending standards at time for a equities trader) for 500K..Sold in July 2006 for 935K. Now there are lanes shut down with 3 heavy CAT tractors in front of my apt re-aligning piping, electrical for 2nd ave subway. I had a 2nd floor apt between 93rd & 94th facing east onto 2nd ave. I do not plan to rent forever!

Integrity, honesty and ethics are all necessary if you are going to be successful in any business for the long run. I am not questioning that for you already proved yourself in those categories. What I disagree with is your predictions and forecasts. Is the market slower today than it was 3 months ago possibly but let's not forget that it feels like 25 degrees below 0 outside and we are in the dead of the winter so I am not expecting a robust market at the present time either.
A far as your apt that you sold in 2006 I would have to assume even with the construction going on it's worth more today that in 2006

Thanks Urbandigs. To a great extent, I agree with you. I think we are already in a soft period and have been so for a few months. It does take a while for stats to catch up. Other than the usual reasons for Manhattan's uniqueness (the capital of the world, limits to 23 square miles, foreign investment, etc), I really wonder if the corrections we've already experienced the last 10 years have offered a hedge against too much of a decline -- notably Sept. 11, but also the soft period in 2005 just as the national housing bust was first unfolding.

My guess is that the "stealth softness" will continue through 2008, with listed prices flat or declining slightly and buyers having much better bargaining power, though with no drop so severe that it would be worthy of grabbing any headlines. Then I think things will uptick again in 2009.

I agree with Spunky that we should avoid "sky is falling" talk (unless it really is!) since that could scare off buyers and lead to a more severe downturn. Right now, the sky is not falling, though we may experience a series of light drizzles in 2008.

Re Suze Orman,this is double hearsay, but I heard her position on Manhattan real estate is that it is fine to buy to live here if you're going to be here for a few years, but not a good time to invest or plan to rent, etc. Not sure about that but it would make her views and behavior seem more consistent.

Yes but that apt was costing me $5,200/mth to maintain for a large 1BR with a terrace, unrenovated, on 2nd floor. Maybe I could have got $30,000 more, but it would have cost me $83,000+ to hold onto the property to get that. Of course, you have tax benefits and the cost of renting to deduct. I pay $2900/mth now for the same size/type apt on 84th & 3rd, so I did pay out 46,400 in rent, but then my money was making money for me rather than in equity in the apt. So many variables. But my point is the place was expensive to maintain, I did cash out $75K in HELOC, and in the end, any extra profit would have been cancelled out by cost. And that is assuming all that construction work STILL would have netted me $30K more, which I do not think it would.

I respect your predictions, I really do, but I just can't ignore the macro environment. I talk to 15+ ex traders, hedge fund managers, and others employed at firms like Merril, Goldman, CS First Boston, Credit Sights, Lehman, etc..and all of these guys are very concerned. Some are concerned for their jobs, others are concerned about the drag on the economy and ultimately re here..These are very smart people whose job it is to know whats going on. Weather is always cold in Jan-Feb so we cant use that as an excuse if bonus season is slow. I worry it will be slow because of uncertainty and confidence in financial industry. I worry about a recession. I worry about job losses. I think the next 2-3 months will be judgement day for job cuts. If people lose jobs, economy dips into recession, it will have an affect.

The way it will work is sellers will realize that showings are not as active as they hoped and bids are not so quick to come in, and when they do, they are lower than expected. This is already happening, I can tell you that, and I do tell this to my sellers (I have no listings now cause I just switched firms and had to cancel all agreements, so please don't use that against me) so that they are at least informed of whats happening so they can act. Never an easy thing to ask a seller to lower price because what you thought it would sell for was wrong.

And another thing that public doesnt know, you would not believe how many eblasts I get from brokerage community trying to get more exposure for listings that cant sell. This is a great thread, and all I want to say is that manhattan is a market like any other, although better positioned, and can go down. Not the end of the world, its actually healthy, but sellers HATE to hear this and so do homeowners. It hasnt happened yet, there is no inventory out there so that must correct first. But even with no inventory, bids are still not coming in as you would think for a market with so little supply.

will - Honestly, deep down, I think 2009 will be the down year. I think 2008 will be the year that inventory reverses course and starts to grow back to 5,000-6,000 units. We are under 5,000 right now according to streeteasy data I have on the site. I think it will take time for effects of economic slowdown to fully hit, so for me, I expect 2009 to be the tougher year.

All just thoughts and who knows what will happen between now & then. Im not doom & gloom. I do not think a depression is coming and 30% price crashes, although some local markets have had a 20% price drop in past 2 years, commack LI for one where my mom is trying to sell her house and the market SUCKS!

I love Manhattan re, I love doing business here, I think its a great market, but I also think its a market and as such can certainly have some down time. I'll try to buy back in when an opportunity presents itself, otherwise, Im stuck renting or will be forced to move out to afford a place to grow into.

Urbandigs said "I talk to 15+ ex traders, hedge fund managers, and others employed at firms like Merril, Goldman, CS First Boston, Credit Sights, Lehman, etc..and all of these guys are very concerned. Some are concerned for their jobs, others are concerned about the drag on the economy and ultimately re here..These are very smart people whose job it is to know whats going on."

These people are very smart and know what's going on-- well if they are so smart why have they lost billions of dollars for their clients and in the mess they are in now. I am quite confident that they too like yourself have made predictions and forecasts that haven't worked out.

It now appears to me the new buzz word or hedge is "lagging numbers" It's a heads you win tails they lose situation for your predictions. If in fact Manhattan RE falls this year and next year as you predict than you are right but if it stays flat or goes up you are right againo because you can always blame bad statistics, or lagging numbers.

Spunky, it doesn't necessarily matter whether the finance industry is smart or incompetant or correct or totally wrong about their predictions... Their concerns are what ultimately matter, and as urbandigs said, they are definitely concerned about jobs and the economy. They also have pessimistic views regarding investment banking fees during H1:08 and possibly longer. This drives down their 2008 bonus expectations which alters their purchasing behavior - some may adopt a "wait until next year" approach, while others will revise their budgets downward... Real estate purchases and pricing are driven off of future expectations, and a large contingency of bearish views in the market place could trigger a self-fulfilling prophecy, especially since a) finance industry professionals have historically fueled demand and supported much of the pricing growth and b) non-finance people pay attention to the finance industry's perspective, however right or wrong... Personally, I'm not overwhelming bearish on manhattan re, but given this, I seriously doubt this year will see any considerable growth.

Your kidding right? I never said these guys are the heads of trading departments that are responsible for taking on billions in positions in mortgage backed securities! You really do interpret things to extremes spunky! I don't know why you are so angry, but you certainly seem to want to take it out on someone out there in public domain.

No one thought the secondary market would deteriorate as quickly as it did, except Goldman who is above everyone else, but Im sure the higher up execs saw this coming way earlier but were helpless to do much because it was already too late. They were stuck holding the bag and the music stopped! It happens.

If Manhattan goes UP, then I was wrong! I will not cover up. I have no problem saying I was wrong on a call. And just so we are clear, who the hell wants a flat re market? So you pay 4.25% of purchase price for a condo, and sell it in 4 years at a cost of 7% of sales price yet price stays completely flat! Does this make economic sense to you? And it does cost sig more to own than it does to rent! At least agree with that. Whatever, you just want to fight.

How about this, your right, Im wrong. There is no credit crunch, lending standards are just the same they were in 2003-2006, rates are lower, and prices will go up! Can we be friends now?

Sure but keep in mind that I own several apts in Manhattan and live in the W. Village. My outlook is 20 years plus. I am not that smart to know where the market will be this year or in 2009 but I feel there is a good chance the market will be higher in 2025 than it is today.

20 years is a long time away and I always said re investing should be a long term decision. That said, I have problems discussing the negative sentiment out there that buster accurately describes. Did you happen to catch Dottie Herman's quote in the NY Times article:

She blatantly said she doesn't expect much appreciation in 2008, and expects a flat market. Very courageous and admirable that such a public figure who leads one of the biggest firms that does biz in NYC, acknowledges the environment/risks and takes a more scaled down vision for 2008. Props to her for being honest and not babbling like other high brokerage execs do.

oops, mean to say "That said, I have NO problems discussing the negative sentiment out there that buster accurately describes"

forgot the "NO"...

Urbandigs have you found the condo market to be negative or flat in GV, WV, Tribeca or Soho? If so can you list some examples?

Noah - waste your time with this guy if you want. The rest of us learned long ago to ignore him.

faustus 100% of all your posting have been personal attacks.

Fautus please accept my apology for not reminding you to get your rent check in. It's January 3rd you're two days late. I also must remind you to get your credit score from 515 to to 550. That should be your New Years resolution.

Some of the young turks this blog on this site are nuts! - of course there will be a slowdown of sales and a build up of inventory here, resulting in lower apartment prices in 2007 and maybe even 2008. You can't rely on a NY Times report that is talking about statistics that are months old and that is off because of CPW and Plaza sales. Try talking to the people who work in the financial sector - they are very concerned and several are scared of losing their jobs. We will be in a recession soon, if not already, and that will affect us! THANK YOU NOAH for your honesty, and the hard work you put into this site. There are many of us who read it daily, appreciate your thoughts, and are not trying to prove we are smarter than you when it comes to these analysis. Keep up the good work.

Manhattan Condos vs. Co-ops: Condos Win This Round
by Lysandra Ohrstrom | January 3, 2008
| Tags:

* Real Estate
* Housing market
* Prudential Douglas Elliman

Here's a look at condo and co-op sales in the fourth quarter of 2007 from the Radar Logic-Prudential Douglas Elliman report.

* Though co-op sales still edged out condo sales in the fourth quarter of 2007, the average condo price increased 17.8 percent from the fourth quarter of 2006 to $1,750,634. The average co-op sales price during the same period rose by 9.1 percent to $1,439,909.
* The median sales price for a co-op was $675,000 in the fourth quarter of 2007, while the median condo sales price was $1.1 million.
* Between the third and fouth quarters of 2007 the number of co-op sales declined 29 percent from 1,811 to 1,286. The number of condo sales in the same period decreased 27 percent, from 1,688 in the third quarter to 1,232 in the fourth.
* Co-op sales in the fourth quarter of 2007 dropped 11.5 percent from the same period in 2006, while the number of condos sold increased 24.7 percent year-over-year.
* The inventory of unsold co-ops on the sales market shrank 26.2 percent year-over-year in the fourth quarter to 2,254. The inventory of unsold condos on the market did not change from the fourth quarter of 2006 and the fourt if 2007.
* Between the third and fourth quarters of 2007, the inventory of unsold condos on the market increased 5.4 percent, from 2,732 to 2,979. Co-op inventory dropped 8.8 percent percent between the third and fourth quarters, from 2,472 units to 2,254.

"Do you think I'm lying when I say this? Transparency Juiceman, I think people should know this information rather than be SOLD an apt by a car salesman broker."

For the record UrbanDigs, I never said you were lying or that you were a car salesman broker. I in fact read your blog weekly, think it is very well done, and feel that you have changed the game when it comes to providing NY real estate services. I respect this immensely. However, I would challenge that what you feel is impartial and unbiased information regarding macroeconomics is painfully jaded by the media, “wall street experts”, and maybe even Suzie Orman (ok, maybe not but I saw her name in this thread and couldn’t believe it).

How about posting some threads about increased U.S. retail and service activity by our Canadian neighbors? What about the increase in U.S. manufacturing based on strong demand for cheap exports? Doubling of foreign tourists in NYC? Foreign real estate investment in NYC? How about European car manufacturers plans to add plants in the U.S.?

Urbandigs, you are quick to state that we are ignoring macro indicators, but by ignoring positive and potentially offsetting trends in the economy, I feel you are contributing to the overly negative sentiment rather than providing truly unbiased advice. This is of course different than providing your opinion (which you are obviously free to do) but please don’t mask it as impartial.

I agree that there has been some softening already in the RE market in Manhattan, but aren't things usually a little softer from November-January?

Seems like the overall RE market in Manhattan is still very strong, and though prices may be flat or even drop a little bit in 2008 if there is a US recession, a year from now things will be about the same as they are now, probably a tiny bit lower on average (1-3%), and with slightly higher interest rates. With no recession, I think basically the same thing but with prices a tiny bit higher. We'll have a better idea of whether it's going to be a recession or a mild downturn when the job numbers come out today.

For the record, I predicted Obama and Huckabee would win last night. :-)

Next week, look for the comeback of John McCain!

Juiceman - Thanks for the suggestion and I will try to incorporate items like that in future posts. Also, did you guys see the jobs report today! AWFUL! It is very possible we are IN a recession right now.

Im telling you guys, sentiment changes very quickly when jobs are getting cut. Sentiment now is one of major concern, not an ideal situation to maintain high prices. Expect pressure. Thats all Im saying. Forget what happened 6-12 months ago, we are at now now. We must be forward looking. Jobs are a big concern, and layoffs are coming.

PS: thanks lindclaire

The bottom line anyone who is renting and posting on this site is not going to be positive about the Manhattan RE market. Why would they?

and everyone who owns a home will be very bullish about the market. Why wouldn't they?

Probably true-Case and point-- you rent you're negative, I own and I'm positive yet I believe we are both realistic as well.

Urbandigs once again can you provide an example of price declines in the condo market in the neighborhoods of Tribeca, Soho, GV and the West Village.

g

NOah, given that you are a broker, i think its incredibly brave of you to tell us what you feel...MOST brokers would lie and say that manhattan will never fall...thank you noah!

spunky - very busy today, and still learning the new systems at Halstead, but my gut is telling me those areas did WELL in 2007, with most of the appreciation coming in the first half of the year. I certainly expect those areas to have showed price gains for '07. However, as you know from reading the site, I don't care much about that, its in the past. I care about '08 now.

Those are very safe areas, in my opinion, and offer a neighborhood unlike any other in the city. It will always retain sales value and rental income value, but it will adjust with the market if a slowdown hits. I wouldnt consider those areas high risk. I would consider Financial District more higher risk on downside because of the lack of people that want to live there, the amount of bldg that was done there, and the adjustment this neighborhood will feel with rest of the market.

I wish I can get data for all this and all these neighborhoods to put on the site for you guys, but that involves alot of money and partnerships. Maybe something I can pull of this year, Ill try

I am still looking for a good deal in those areas. I am not to confident that 2008 will show any price depreciation in that neck of the words but we'll see.

if I were you I would get very interested later 2008, 2009. You wont be able to find any deal until inventory corrects, and for that to happen, psychology needs to adjust downward more than it has so far. If job cuts are bad in coming moths, that should push confidence low enough to restrict sales volume on buy side and increase sales listings on sell side.

I don't think it is possible to overstate the seriousness of the credit crisis. The entire financial apparatus that has led to easy credit, low interest rates and the housing boom has been shaken to its core. And the secondary mortgage market was at the epicenter of the quake. Economically, almost nothing else matters until everybody figures out how deeply this is going to cut us.

Now, the Manhattan real estate market is unique. It could certainly keep humming along blithely unaware that the rest of the country is in a real estate crisis. But there most definitely is a storm cloud on the horizon. Maybe it will miss NYC. But to deny that it is there is to deny reality.

clouds do eventually clear up and the sun will shine again. I'd rather be a buyer in cloudy times.

I'd rather not get all of my friends together for a barbecue if the forecast calls for rain. I can wait until next weekend.

Yup and I'd rather plant my garden and seed the farm if the forecast calls for rain as well.When the sun shines then I will reap the rewards.

Spunky is the Chauncey Gardiner of this website

No one has denied the impact of the credit crisis billshiers, I'm not sure why not being pessimistic equates to denying reality. What you and others fail to acknowledge is some positive indicators that MAY help offset some of the downturn of the economy. If you look at the issue from both the bull and bear points of view and take time to form a balanced opinion, you may gain some confidence that the "stealth softness" could be short term thing and that these clouds will eventually clear up. I think this article from the journal nicely sums up both the challenges and opportunities for 2008. We are not in a crisis.

http://online.wsj.com/article/SB119936944809564859.html

urbandigs, have you considered that 2008 is an election year when researching your economic forecasts?

faustus did you get that rent check in this month. Remember if you can get your FICO score up to 550 you may be on your way to ownership.

Looking at smaller 1brs in the West and East Village, I've noticed a significant change. Early in 07 the less-desireable properties - high-floor walk ups, in need of major reno, sketchier blocks, etc. - were going fairly quickly and often at asking. Now these are sitting, getting price chopped, or pulled off the market. I've also seen what appears to be a last gasp of sellers who bought in 04-06 hoping to turn massively unrealistic profits, with the same results.

Spunky -- dude -- do you really think it's a good idea to buy an investment property now if prices will remain flat or fall for the next year? Even if they appreciate long term, that's a lot of mortgage interest and opportunity cost down the potty over the next 12 months.

Can you hear the giant flushing sound, Spunky?

If I knew for a fact that that they were going to remain flat or fall in 2009 no but are you making that guarantee or are you just listening to a day trader who turned into real estate blogger over the past few years.

If you have the luxury of a very extended time horizon (such as 20 years), go ahead and buy NYC real estate. It won't be the best investment you can make, but you will be fine. If you are looking to buy an apartment as your primary residence with a 5-10 year time horizon, it's a very different equation.

Let's say I decide to say "Damn the torpedoes, full speed ahead" and buy one of those awesome two bedrooms in a new development that gets you 1400 sq feet on a middle floor with mediocre light. Those seem to be all the rage nowadays. But suddenly it's one year later and the market is down 10%. Now, that bothers me because (1) I could have bought more apartment for my money, which sucks from a quality of life perspective, (2) I paid more than I had to for my apartment, which sucks from a financial perspective and (3) all of my equity has been destroyed, which also sucks from a financial perspective. In short, this sucks, no matter how you slice it. If I can wait out the downturn and stay for the planned 5 - 10 years, the market will probably come back enough that I can get out at least flat, after expenses. So I make it out of NYC real estate unscathed, but not much richer for my troubles, and with a few more gray hairs.

But, if the markets goes bad after I buy and destroys a good part of my equity, I've lost all of my financial cushion. Let's say that before the market recovers, my wife or I lose our job or somebody gets sick or after 10 years on Wall Street, I realize that there is no more of my soul left to suck and that if I don't get out immediately, I will have to resort to drinking the blood of others to sustain myself. What do we do then? We can no longer afford our apartment, so we have to get out. But we have a mortgage in the neighborhood of $1.8 million to pay off and after we sell our apartment and pay expenses, we are left with less than $1.7 mil. So we can only sell if we have the extra $100k to kick in. Which we may or may not have because we just spent the vast majority of our savings to buy a frickin' $2 million apartment. If I'm lucky and I have the money, I can get out. And what I have to show for the privilege of owning NYC real estate for a few years is a net loss of around $400k, after expenses (down payment, closing costs, etc.).

This is certainly a pessimistic scenario. But even if the market is flat for an extended period, the expenses incurred in buying and selling property make it very expensive if you have to get out sooner than you hoped. There just isn't any reason to jump into the market now when there are significant negative indicators and the real estate market hasn't yet even priced in the risk that the negative indicators will affect NYC. I'd be paying the vast majority of my life savings and giving up whatever flexibility I have to adjust my lifestyle if things go bad to get a living space, which, frankly kind of sucks. And yet, I actually would very much like to do that in the near term. But I won't do it at a time (such as right now) when the risks of that decision are higher than they have been in some time and the sellers haven't adjusted their asking price to reflect that risk, because they think the very fact of owning an apartment in NYC makes them morally superior individuals who are entitled to 20% annual appreciation on their property.

And if the prices never adjust to a level with which I feel comfortable, that's fine. I will have been wrong and I will have missed an opportunity to own my own apartment in NYC, which is something that I would very much liked to have done. But I rent a nice place right now. It's reasonably inexpensive, my savings is invested in other assets and I can sleep at night knowing that if the economy is negatively impacted by the credit crisis to the extent that many feel it might be, I can weather the storm. I can live with that.

Holy crap . . .this is the never ending thread. It started in January 2007, and none of the predictions came true, so now it has been restarted in January of 2008 with no change in the arguments or the logic. All those prognosticators who would "eat their hat" and "bet their bankrolls" on their predictions have seemed to have disappered -- only to be replaced by a new crop that will spew crap, never really put theoir money where their mouth is, and disappear at the end of '08.

Any one who would have taken any of their negative advice last year would now be looking at the same apartment priced 15% higher after their money sat in a stock market that appreciated 6%.

Not a good trade off.

What is that saying about doing the same thing over and over again and expecting different results?

markznyc in defense to the nay sayers I beleive 100% of the negative forecasters and the doom and gloom come from the renters.Renters in Manhattan will always have a bitter view on owning Manhattan RE. They will always view buyers or owners with disgust.They will always poke fun at owners and come up with reason why buying is not prudent. No rocket science here.

markznyc, the difference between Jan-07 and Jan-08 is that the finance industry is in trouble (credit crunch, layoffs, recession fears etc.) and has a bad outlook for the upcoming 1-2 years - this will have a tangible effect on real estate pricing. I do think you make a valid point about real estate versus stock market returns - I think manhattan real estate will be flat to slightly down over the next year, but whether or not it will be outperformed by the major indices is anyone's guess... If you are looking to buy this year or next, I would have the downpayment in something liquid and safe!

what was the difference between 06 and 07 or for that matter 05 and 06 or for that matter 04 and 05 or for that matter 03 and 04 or for that matter 02 and 03. Oh I forgot this year it's different. Ho hum another renter coming out with a dismal forecast how surprising.

Um, those were all years with positive outlooks, with the possible exception of '02 & '03. In fact from '02-'04 financial and real estate markets were recovering from 9/11, driving pricing up. Additionally, I'm not a renter - am also looking to invest. I don't think buyers are stupid, even now depending on their investment time horizon. I just think it's unwise to heavily discount facts that don't support your thesis or base an opinion on past experiences that were affected by totally different market factors.

MUWAAHAAHAHAHAHAAHA!!!! this dumb thread STILL going on... and of course, we have the usual suspects involved. BUT.. BUT.. the FOREIGNERS! the FOREIGNERS!!!!! puaaahahaha

Well, well, so what has changed since the last waste of time and energy regarding this topic? Hmmm... let's see.. Recession? even the perma-bulls are p00ping in their pants now... wall st? major p00p action going on there... wait for the massive LAYOFF announcements from Citi and friends in the next couple of days. people are very nervous about losing their jobs. urbandigs is not BSing.

Stock Market? NOSEDIVE! check.
Gold? THROUGH THE ROOF! check. (hey, pass me that brewskie spunky! thank God I bought that gold instead of that overpriced 1bed shi3thole manhattan apartment)
Job Market? NOSEDIVE! check.
Consumer Spending? u kidding me? check.

So, if any of you remember my old post on BUYING GOLD on the DIPS and accumulating, well, guess what? You would have made a lot of money. MUCH MORE MONEY than you would have if you bought an overpriced apartment in Manhattan.

To any of you THINKING about buying right now, chew on this: if you took your hard-earned downpayment money and followed my advice months ago and invested it in GOLD instead, you would have made a LOT more money than any of the real estate shills and overleveraged homedebtors will have you believe.

Why not save up more, invest wisely (since we are heading towards a recession as today's job numbers confirmed which is why the stock market tanked hard, long-term short/put positions may be worth considering) and end up with MORE downpayment to buy MORE house later when Manhattan prices either stay 'flat' or 'dip' than buying now?

Duh?

The sky is not falling. Recessions are NORMAL and are HEALTHY to clean out the GREED. There are ways to take advantage of what is going on right now. Let's face it- buying an overpriced Manhattan apartment right now is not on the top of the list folks. Sorry real-estate shills and overleveraged homedebtors.

I love this clip, sorta reminds me of the two camps in this forum. The well-informed and the emotional/defensive. Guess which is which? =D

http://www.youtube.com/watch?v=h4dOh8--rN8

Spunky, is there any economic occurrence that you believe would negatively affect NYC real estate?

I'm not trying to be snarky, I really want to know.

dirty.bomb.midtown.

that would be bearish for nyc r/e

Little Black Arrows continue gathering. Tanning salons implode. Lexus dealership leasing offices go empty. "They said it was different here," the voices cry.

Actually, I am not super bullish or bearish, just your normal homeowner who is in it for the mid-long term and thinks that alot of the discussion here is irrational on both sides of the fence.

All of it tends to scare people who are new to the market and are not looking to buy and flip, not looking to play the market, but are looking from decent advice.

Yeah, there will be short term bumps, but Manhattan real estate is slowly getting out of the grasp of many people, and chances are it will continue over the long run, outpacing salary growth due to a list of factors. Sitting out too long places too many "non-investor" types who have little chance at timing the market out of the chance to own a home.

To me there isn't much constructive about that.

I am not a real estate professional but have become increasingly interested in New York and national real estate trends the past few months. I recently bought a place and it was not without angst and hesitation. It was a great time for me to move, though, and I got what I perceived was a good deal, with some hedge built in if there's a minor drop in prices. I am planning to stay where I am 7-10 years or more, so hopefully if things do drop at all, they will go back up in my timeframe.

I have to say that while I admire all of the ventilating of views on this board, I probably would not have bought had I read all this prior to buying. While I think that Manhattan is a strong and resilient market, the differences of opinion can get downright scary and I am not sure I want to live through it.

I guess two summary observations I have are (1) those that are predicting a protracted and no insignificant decline really may be precipitating a self fulfilling prophecy because of laypeople like me who stumble upon the board and get a little scarred off -- this is admirable but I am not so sure how smart for real estate professionals, and (2) I really can't see things in the next two years being anywhere near as devastating in effect than the combination of a recession and Sept 11 we had 7 years ago.

Will for the past 50 years or so there have been negative views on Manhattan Real Estate. Just ask Donald Trump when he bought a building in Manhattan for a one million dollars a while ago when everyone was enormously negative on the RE market. Today it's worth over 400 million.

Dear spunky, a 50 year time horizon is out of scope for many people here, although I DO agree that in the LONG RUN, real estate is generally a good investment (ex-Japan which is still suffering from it's bubble bursting more than a decade ago).

Those who are looking to buy now or in the next 1 year, the chances of getting a BETTER deal in a year or two outweigh the chances of being 'locked out' of the market in a year or two.

That's the bottom line.

Remember, housing cycles are multi-year events. It takes many many years for housing cycles to permeate throughout a country as large as the US and work itself out.

Manhattan, given it's very special characteristics will be one of the last places to be affected, but you would be a fool to think that it is completely impervious to a national housing bubble bursting leading to a nation-wide recession. This is not something you would want to bet a downpayment on.

Again, I am not saying that the sky will fall and the world will end. Recessions are a good thing and are necessary (the Fed needs to realize this instead of trying to prevent it and in turn creating more bubbles in different asset classes, but politics always get in the way). But seriously, why risk it now with all the headwinds the nation and Wall St. are facing?

If you're willing to take that kind of a risk, you might as well go play craps at the casino.

MMAfia,

Most of what you say makes perfect sense.

I guess what I am troubled by the insufficient context of "But seriously, why risk it now with all the headwinds the nation and Wall St. are facing? If you're willing to take that kind of a risk, you might as well go play craps at the casino."

You are not distinguishing different types of purchasers and in a sense you are saying to all WAIT AT LEAST A YEAR. I think there's a bit of self fulfilling prophecy in that if everyone takes that to heart (or even if just a helluva a lot of people), we will have a housing crash because a lot of people will just sit on the fence for a year. Things may go up again, but I am just puzzled why real estate professionals would want to fascilitate a downward spiral, unless there's some motivation to drive prices down so that speculators can buy them up and get rich.

will - do you think a major financial commitment should be decided based on DISCUSSION BOARDS? No more than marriage. You see what you like and can buy it.
Boards are best for references (contractors, designers, etc.). It's getting childish and silly.

MMafia, I wouldn't get overly excited about your track record for predictions. Yes, you said buy gold. You also said Q3 was going to be a disaster. Then you said Q4. Then you said Q1 2008. Now you say it won't be that bad. An idiot could have predicted gold up ticks based on the dollar plummet. You have missed every other prediction you have made by a long shot. Do us a favor, go back to your gold trading and leave the forecasts to someone who has a clue.

Inquirer -- The Blogosphere can be pretty serious stuff. I certainly don't believe everything I read on the Web but I have no doubt about its influence and the impact it has on opinion. I agree that it should not be dispositive in individual decision making, but it can influence opinion, and opinion can in turn influence behavior. Individual behavior in turn influences macro-trends.

In short, we all can make a difference.

oh boy I give up

will -Well, it's called rumors. That's too bad that adult, reasonable people any other way. Anyone can read hard data (numbers, prices, etc.) and INTERPRET it any which way he/she desires. How is your interpretation inferior to the next guy's?

Inquirer -- We all have every right to express our opinions. My point was more that people should realize that their words have influence -- perhaps they should choose them more carefully, but I recognize that they certainly have the right not to.

Given the subject matter, I have been a little surprised by the amount of hyperbole and ad hominum attacks. Maybe it's just fun between old friends. I know it is not unusual for the blogosphere.

I feel as though to say that prices haven't come down is like saying Enron wasn't trading cheaper while the stock was halted. The fact of the matter is there is no real market right now, and hasn't been for the last month while everyone sits on the sidelines. Most market participants are waiting to see what Bonus season and job cuts will bring, buyers (hoping for weakness) and sellers (hoping for a resurgence in the event that buyers shrug off their unanticipated pay cuts) alike, even though we all know what the future is going to bring. Hope and wishful thinking never helped overly optimistic sellers at the end of a strong bull market.

In fact, prices may never appear lower to an observer (although unlikely), because sellers may never lower their offers that much. However, that isn't to say that you can't go out and negotiate lower prices for the same apartment than you could a year ago. I don't think there is a soul who would deny that that is not currently the case. Looking at last month's medium or the mean or even the mean price/sq ft. of current offerings does not tell you what prices have done. Prices, imho, have come down, and will continue to come down more so in the future. And not by 1 or 3%. I think you could argue that prices are off approx 5% currently from the highs of last year (Price/sq ft on same neighborhood comps, depending on the hood), with another easy 10% to follow.

The reality is that we are long past the affordability point in Manhattan for most of the non-trust fund babies, and the big earners on the street will for sure step aside as they watch their colleagues get the axe and their own bonuses cut by 40%. No one source (i.e. foreign buyers and/or GS employees) can support a market that is over priced. It can't happen. And what isn't going up eventually comes down. The posters on here who argue how meaningful it is to buy 10% or 15% lower on such a highly leveraged asset for most buyers couldn't be more right, and those who don't believe it still won't understand why the pain is so excruciating when they watch as the debacle unfolds before their eyes.

Throw on top of this a failure of a major bank or two, and the domino effect that this has on every other institution as counter-party obligations go belly up on credit derivative swaps, and the effect this has on compounding the net capital requirement issues facing the major banking centers, and you have all of the ingredients for the remaking of an early 90's scenario in NYC real estate. Maybe even worse.

my fingers are crossed that you're right...i recently closed on a small (450sf) studio but would love to move up to a one bedroom. I was able to negotiate a good price for the studio...the owner had moved out of state and the place was vacant.

um . . . Julia, for your own sake you should hope he is wrong, unless you don't plan on SELLING your studio!?

Spunky: Case IN point, not case and point. idiot.

"I feel as though to say that prices haven't come down is like saying Enron wasn't trading cheaper while the stock was halted" Popsy Wopsy

Comparinng enron to the Manhattan real estate market now that's idiotic. BTW Popsy your rent was due last week.

Case in point

Right Case in point.

You truly are an idiot. Use American Home Mortgage as an example then. I didn't think you'd recognize the name, though.

Folks, tell me what you think of this scenario. I'm an owner but at the very bottom of the Manhattan market. I'm selling and buying. My one bedroom co-op is too small for me; it's on the market and likely will sell for $325K.(No mortgage on it; I own it outright. I'm hoping to buy a 2 bedroom for $490K. I will pay cash for most of the $490 and only get a mortgage for $190K. I plan to stay in the two-bedroom FOREVER, and I've made sure it'll work for an old lady tho I won't really be "old lady" until twenty years from now. Does this seem safe and secure and wise? Remember, I'm talking about real estate but I'm mostly talking about it as a place for me to live! It just so happens to be in Manhattan.

Look asshole that's still a ridiculous analogy that makes absolutely no sense. Why don't you keep you stupid comparisons to yourself. Instead use your energy in making sure you get your rent checks in on a timely basis.

You're hoping to buy a two bedroom in Manhattan at at 490. I think Pops the town jerk would probably be more than happy to show you his tent under the Triboro. It's a FSBO so you can save on commish.

Listen, the fact that you can't understand the simple analogy of a market without volume not being a meaningful indication of what level assets should be trading at, doesn't mean that you need to use profanity. Grow up, realize the rent check joke is getting a little old, esp. from someone that says "case AND point," and thank your parents for buying you the NYC apartments that you own.

Spunky, you are being rude, but I'll let that pass. It is not kind to ignore folks like myself who DO live in Manhattan and actually OWN their abodes, humble co-ops though they may be . . . no doormen, no full-time super, no fancy-schmancy part of town.
Anyone else with comments for me? Yes, Virginia, some people live in genteel poverty in co-ops in the 250-550K price point . . .

But you are humorous, Spunky . . . I'll give you that. And I too (like Pops) smiled at your "case and point" malapropism.

Profanity give me a break. Pops tell me no one has ever called you an ass before. I would guess if no one is calling you one they are a least thinking you are one once they meet and talk with you. That's a no brainier. You're just are too full of yourself to realize that.
Pooririshlady please do accept my apology and I do hope hope you can get good sound advice from Pops he'll be more than happy to talk about his gains in penny stocks while he pours you a glass of Thunderbird from his fine wine collection.

Spunky, thank your parents.

Pops looks whose getting repetitive. Now go have your nightcap.

Ahh I get back from vacation and the same debate rages on. I was having brunch today and in the short time I was in the restaurant, I saw at least 2 tables looking at floorplans. It seems now that the holidays are over, there are already people looking around. Time will tell.