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

I've only owned the coop I'm selling for a handful of years. People don't drop acid anymore, Juiceman. They take salvia divinorum. You should try some!!!

Ah yes, good old C-23, H-28, O-8.

Just wanted to note we're past post 1,300. Egads!

malraux, I love something like 98% of your posts, but stop pimping this thread!

The year is 2038. A kindly, gray-haired malraux lights his pipe and leans back in his easy chair. "Did I ever tell you grandkids about the thread I started on StreetEasy..."

The kids in unison: "Yes, grandpa!"

By 2038 malraux will have sold his 15 CPW property, bought streeteasy and renamed it pseudoraux, and will have a leggy French model type his posts for him under his new screen name, WAATIWMT2DP. The grammar will be terrible and the posts will focus on where to shop on the Champs Elysees, but none of us will care as long as he continues to tell us stories about the leggy French model.

Shit, man, by 2038, I'll be dead (probably).

And I only do unrelated 'counting posts' when the double zeros click by. I don't need to pimp anything as long as urbandigs, spunky, tenemental, JuiceMan, and others are around!

Spunky - if you're still around I wanted to see what was your reasoning in going long merrill and citi at the time

I'm still disappointed that MER and C aren't dropping quickly enough. I mean MER is only down like 6% right now.

his logic was that it used to be a $60 stock, and now it is a $28 stock. He fought with all his might against what the credit markets were telling us about the severity of this crisis. Very hard to catch a falling knife. I must admit, I bought some C at $22 yesterday and covered a good amount of shorts because I think we are very close to another aggressive fed rate cut and/or gov't intervention to ease the distress in the secondary mortgage markets. I wonder if the destruction will come before either of these events though. Bear market rallies are sharp and ferocious as shorts scramble to cover; but they are wonderful re-shorting opportunities if you believe in the macro warning signs.

urbandigs all the luck to you and your 28 share long position in C.

Here's an article that's not interesting

Manhattan Real Estate Market Bucks Trend

By JULIE SATOW
Staff Reporter of the Sun
March 6, 2008

The Manhattan real estate market is bucking the national trend in home prices, according to the latest so-called beige book, released yesterday.

"Districts that reported home prices all saw overall declines; one exception was the Manhattan coop and condo market, where prices increased 5% compared with a year ago," the Federal Reserve writes in its publication summarizing national economic conditions.

The beige book, which consists of anecdotal information from all over the country, is published two weeks before each of the eight annual meetings of the Federal Open Market Committee. The group is scheduled to meet next on March 18, when it is widely expected to cut the key interest rate by 0.50%. The book is meant to inform the FOMC members of the state of the American economy, and this issue uses information gathered between January 16, when the last beige book was published, and February 25.

"Anecdotally, I see prices increasing at a moderate pace," the president of the appraisal firm Miller Samuel, Jonathan Miller, said, adding that he would not be surprised if residential prices in Manhattan increased 5% to 6% year-over-year in the first quarter.

In the fourth quarter of 2007, the latest data available, the median sale price for Manhattan coops and condos increased 6.4% compared with that period the year earlier, according to Mr. Miller. The luxury apartments that make up the top 10% of the market, or those priced at more than $2.8 million, increased 28.4% over the same period. Median prices are more accurate indicators than average prices, as they exclude outlier data, such as the ultra-luxury apartments at 15 Central Park West and the Plaza, which skew average prices upward.

The rest of the country is not as fortunate as Manhattan.

excellent answer to the question Spunky!

Spunky, that's hysterical. With the overall median up 6.4% but the upper 10% of the market up 28.4% - accounting for a very disproportionate increase - the median price for the lower 90% of Manhattan WAS DOWN in Q4 07 compared to Q4 06. Actually, it was down for the whole year. Remember Jonathan Miller's own chart explaining this?

http://curbed.com/archives/2008/01/24/three_cents_worth_luxury_market_disconnect.php

Ms. Satow is clearly ill-informed, as median prices certainly don't "exclude" the ultra-lux apartments (though ultra-lux will have a greater impact on avg prices), especially when a couple of large ultra-lux developments close a significant number of units.

By the way, any thoughts on the approx 30,000 units worth of building permits issued for Manhattan (approx 90,000 throughout NYC) in the past 3 years?

http://www.nyc.gov/html/hpd/html/pr2008/pr-03-03-08.shtml

spunky, please pick up the phone, this is a margin call. If we can't reach you soon we'll have to start liquidating positions in your account.

zizizi unlike you I don't buy stocks on margin. My dollar cost averaging of mutual funds that are similar to the S and P have worked out well over the past decade. It's times like this that afford me to buy more shares of my mutual fund. I do beleive that my Mer and C positrons which are a very very low percentage of my overall stock portfolio holding in mutual funds will wok out well over the long term.
Judging from your posting I do think you should keep continue to keep your coins and cash in a canister. The short term flucuations in stocks, bonds, RE, etc is much to stressful for you to handle.

The tune keeps changing. One day it's C & MER, then it's index funds, then when index funds look like crap it's "dollar cost averaging"...

Not buying on margin is a pretty silly proposition, someone wants to lend you about 4x your money at a very low rate - you'd have to be pretty foolish not to take advantage of that.

zizizi remember it's long term investing. I am not a day trader. I don't buy stocks on margin.

zizizi, remember, spunky is an idiot. He thinks time will mend his bad decisions.

ok. that was wrong. I apologize.

dmag2020 please don't take this personally because I have the highest respect for you but you must realize that you truly are an asshole.

oops so so sorry.

Long term investment is day trading gone wrong.

I finally bought a few hundred shares of C yesterday, so now I'm as much of a "long term" investor as you are, except I saved myself a chunk of change in becoming a "long term" investor. I also bought some shares of ABK, I sold them towards the end of the day for a 6% profit. Had I waited, I would have made another 5% after the close, but I have no long term opinion on ABK, I just had the short term opinion that there's a liquidity problem there, and there was one.

Unrelated, I don't know where Mr. little black arrows went, but unlike last year, those arrows are pointing about 95% down, and the deals I see closing lean more and more towards just the extreme low end and extreme high end. Those $1.5mm crap condos aren't moving anymore. In some specific coops that have weak finances, I've seen 15 of the last 17 closings fail. Not good signs.

(the above is not investment advice or a recommendation to buy or sell securities)

zizizi, can you elaborate regarding the failed closings? Which buildings, and why would you guess the closings are failing?

yes O Wise One. Zizizi please elaborate for dmag2020, the classical moron wants to know. While you take some time to to creatively falsify your figures please enjoy the following article.zizizi sounds like you're a very successful stock trader knowing exactly when to get in and get out. Why own for the piles of money you make trading stocks you can afford to get the best rental that money can buy.

Manhattan Real Estate Market Bucks Trend

By JULIE SATOW
Staff Reporter of the Sun
March 6, 2008

The Manhattan real estate market is bucking the national trend in home prices, according to the latest so-called beige book, released yesterday.

"Districts that reported home prices all saw overall declines; one exception was the Manhattan coop and condo market, where prices increased 5% compared with a year ago," the Federal Reserve writes in its publication summarizing national economic conditions.

The beige book, which consists of anecdotal information from all over the country, is published two weeks before each of the eight annual meetings of the Federal Open Market Committee. The group is scheduled to meet next on March 18, when it is widely expected to cut the key interest rate by 0.50%. The book is meant to inform the FOMC members of the state of the American economy, and this issue uses information gathered between January 16, when the last beige book was published, and February 25.

"Anecdotally, I see prices increasing at a moderate pace," the president of the appraisal firm Miller Samuel, Jonathan Miller, said, adding that he would not be surprised if residential prices in Manhattan increased 5% to 6% year-over-year in the first quarter.

In the fourth quarter of 2007, the latest data available, the median sale price for Manhattan coops and condos increased 6.4% compared with that period the year earlier, according to Mr. Miller. The luxury apartments that make up the top 10% of the market, or those priced at more than $2.8 million, increased 28.4% over the same period. Median prices are more accurate indicators than average prices, as they exclude outlier data, such as the ultra-luxury apartments at 15 Central Park West and the Plaza, which skew average prices upward.

The rest of the country is not as fortunate as Manhattan.

Spunky, you're pushing that article again? Julie Satow is either clueless, biased, or doing the bidding of a biased editor. Jonathan Miller, one of the article's sources, found prices in every quarter of 2007 to be below 2006 for Manhattan, excluding the top 10% of the market.

Since I guess you missed it the first time, I'll repost:

"Spunky, that's hysterical. With the overall median up 6.4% but the upper 10% of the market up 28.4% - accounting for a very disproportionate increase - the median price for the lower 90% of Manhattan WAS DOWN in Q4 07 compared to Q4 06. Actually, it was down for the whole year. Remember Jonathan Miller's own chart explaining this?

http://curbed.com/archives/2008/01/24/three_cents_worth_luxury_market_disconnect.php

Ms. Satow is clearly ill-informed, as median prices certainly don't "exclude" the ultra-lux apartments (though ultra-lux will have a greater impact on avg prices), especially when a couple of large ultra-lux developments close a significant number of units.

By the way, any thoughts on the approx 30,000 units worth of building permits issued for Manhattan (approx 90,000 throughout NYC) in the past 3 years?

http://www.nyc.gov/html/hpd/html/pr2008/pr-03-03-08.shtml"

Spunky, a "classical" moron? That's a malapropism.

no it's not, but if you like being referred to as a "village idiot" I'm fine with that as well.

tenemental what in the world are you talking about. That graph is nonsense and your trying to prove what. That adjusted for inflation prices have gone down. Gee why don't you get MMafia to chime in here and compare his Gold vs Manhattan Real Estate analysis as well.

Dickens, Swift, and Twain would all love this thread. Spunky has sex appeal and that's why all you other blokes dump on him.

spunky, I think you are getting hit on by a neurotic hippie from upstate Manhattan. I would be careful. You may get past the under arm hair, but the smell of marijuana infused body odor can be tough to take. I understand that listening to her give real estate advice based on what she is learning from reading the instruction manual of her black and white television is very entertaining, but I would still advise you to watch your step.

Talking about blokes who by the way are my favorite people here's a cute little story.
An Irish bloke goes to the doctor, "Dactor, it's me rear end. I'd loik ya ta teyhk a look, if ya woot".
So the doctor gets him to drop his pants and takes a look. "Incredible" he says, "there is a $20 note lodged up here"
Tentatively he eases the twenty out of the man's bottom, and then a $10 note appears. "This is amazing" exclaims the Doctor. "What do you want me to do?."
"Well fur gadness sake teyhk it out man," shrieks the patient.
The doctor pulls out the tenner and another twenty appears, and another and another etc...
Finally the last note comes out and no more appear.
"Ah Dactor, tank ya koindly, dat's moch batter, how moch is dare den?"
The Doctor counts the pile of cash. "$1990 exactly."
"Ah, dat'd be roit amount. I knew I wasn't feeling two grand."

What a compelling argument you don't make, Spunky. So Jonathan Miller's chart is nonsense when it refutes your argument, but his use as a source in an article that gives incomplete information is valid. You are a riot.

As for inflation adjusted value, don't you measure all investments that way? You've certainly chided MMafia's gold positions using its inflation-adjusted value compared to the 80's. Also, if 90% of Manhattan isn't even appreciating enough to keep up with inflation, clearly it's not performing well.

And what about the coming inventory that you've now ignored twice? You don't find it significant that the Bloomberg administration, as a matter of policy (it's in the press release), has been issuing a tremendous number of building permits to increase inventory and lower prices?

So your using inflation adjusted figures prove your point. I see. You are also focusing on building permits as opposed to actual inventory which is lower than last year and the year before. Boy talk about manipulation of numbers and looking at the glass half empty.

tenemental please view the following chart. Inventory level for Jan 2008 is lower than 2007. Wouldn't it be great if all potential sellers would hold of selling their apts for the next 3 years.

http://www.millersamuel.com/charts/gallery-view.php?ViewNode=1168399259Jmtnq&Record=11

90% of Manhattan didn't appreciate well enough in 2007 to keep up with inflation, and you think that's OK?

Yes, inventory is still historically low, but it's rising quickly and steadily, with tons of new development in the pipeline. You don't think that will affect prices?

You accuse me of manipulating numbers by quoting an official government document?

Spunky, if that's your best argument, I'll just leave it at that.

tenemental all I'm asking you to do is look at the current facts. You can't guarantee that Manhattan invnetory is going to spike up or even increase for that matter. The fact of the matter is inventory is at historic low levels in Manhattan and I would like to see those contemplating selling to hold off for a year or two if they can afford to do so.

Yes, it's a fact that Manhattan inventory is at a historical low. It is also a fact that Manhattan inventory is on a fast and steady upswing, and that parts of NYC have a considerable number of as yet unaccounted for units at some stage of development.

It is also a fact that more building permits were issued for NYC in 2007 than in any year since 1972, and that the preceding two years were similar.

So no, I cannot guarantee a spike in inventory, but I can comfortably state that further increase is very likely, and that a dramatic increase is a possibility.

tenemental well there is where I strongly disagree with you. I don't believe there will be dramatic increase in inventory. In the near future will there be an increase in invnetory in Manhattan? Who knows all one can look at is the inventory levels now it's low. I'll leave the crystal ball minute by minute forecasting and to the likes of zizzi.

Juiceman: I do not have a b & w tv. I do not have tv service AT ALL. I rely on DVDs via Netflix. Lately, I've been on a Jennifer Jason Leigh thing -- watching all of her films. One of my pals noticed this and was disgusted: "you lesbian stalker." But thank you for the compliment, Juiceman. It would be kewl to have a b & w tv.

Actually, Spunky, one can definitely do more than just look at inventory levels now. One can look at recent inventory developments, moving steadily up as time on market increases. One can also look at stalled sales in heavily developing areas of Brooklyn and Queens, which have tons of additional inventory in the pipeline and will be an even greater lure to potential Manhattan buyers as prices continue to drop. One can look at our city government's own intention to increase inventory...

One can do these things and very reasonably expect inventory to increase.

Doesn't inventory typically climb in the spring as more units go on/back on the market?

I feel like I am kind of in a school by myself here. I think tenemental makes a good point - we're already being impacted by the national economy/housing-credit bubble burst, etc. and have been for the last year or so.

Where I disagree, I think, is that the market here is so strong at the core, that it's withstood the challenges and remained stable, rather than declined. The next six months will offer even greater challenges, but I think the low inventory numbers and the other frequently mentioned factors will keep things from slip sliding into a decline. Could be some corrections in some parts of town, but nothing severe and nothing we won't recover completely from in the next 3-5 years.

Great!!! So I hope I get multiple bids tomorrow at the OH for the coop I want to offload.

Will, this chart that yournamehere pointed out shows inventory going down 4 of the last 7 years in both Jan and Feb. Though some years went down in one month and up in the other, it’s still down 4 out of 7 in both, and this year both months have shown an increase.

http://www.millersamuel.com/charts/gallery-view.php?ViewNode=1204831603HmXFR&Record=3

Many parts of the outer boroughs are already seeing a decline in price. If you were the first to buy in a LIC or Williamsburg building (or some other parts of the boroughs), there's a good chance your neighbors, buying later, will have paid less than you. If you went further out on the fringe, where foreclosures are real, you have good reason to be worried.

I'm looking in prime neighborhoods (primarily East and West Village), but not at super-prime properties (non-lux 1brs around 600-800 sf). Some of what I see is stable/flat, but some is down or soft, brokers are expressing more flexibility, and truly marginal properties that would have done well in recent frenzied times are back to being treated as marginal and would sell at a loss this year over last.

I do agree with you that Manhattan prime will fare better than any other part of the city (though that's relative as I expect some parts to be hit hard), and that a long enough timeline will solve most problems (I think many parts will need more than 5 years, especially w/ the looming expiration of tax abatements by then), but I'm very glad I didn't get caught up in the frenzy, and feel confident that I'll get a better deal in 08 or 09 than I could have in 06 or 07.

tenemental I've been hearing your type of predictions and rational for the past several years. Please o please let there be price drops in condo's in the West Village, GV, Soho and Tribeca. I am still looking for your prognostications to come true.

tenemntal, I think you are right that you'll get a better price and more bargaining power in 08 and probably 09. Just not sure it will amount to that big a difference and it's hard to say what will happen with interest rates. You'll also be going a couple of more years not building up equity.

Got to admit this is a nerve-wracking time to buy given the national economic outlook.

Spunky, I know you hate not having the last word, but when you resort to that kind of nonsense it's like coming out and admitting you're wrong. Will asked a question about Spring inventory and I showed him the facts. I'm not prognosticating: there are properties in my neighborhood (East Village) that I can buy for less than last year's comps. There's new construction in the outer boroughs I can buy cheaper than it was going for when it hit the market, and there are West Village properties in my range sitting on the market for a very long time, in some cases steadily price-chopping away. I never said ultra-lux is down, but average is soft.

What's next, a reminder that my rent is due? I write the check each month, then smile as I transfer into savings the large difference I would have paid in mortgage interest and maintenance. I intend to buy, but I have no reason not be be patient.

tenmental one sticking point that I disagree with and that is your statement "I know you hate not having the last word". For some reason I think that is your major weakness. Am I right or am I right?

Okay tenemental so far so good now let's just see if you can resist having the last word on this one. Bet you can't.

Manhattan Real Estate Market Bucks Trend

By JULIE SATOW
Staff Reporter of the Sun
March 6, 2008

The Manhattan real estate market is bucking the national trend in home prices, according to the latest so-called beige book, released yesterday.

"Districts that reported home prices all saw overall declines; one exception was the Manhattan coop and condo market, where prices increased 5% compared with a year ago," the Federal Reserve writes in its publication summarizing national economic conditions.

The beige book, which consists of anecdotal information from all over the country, is published two weeks before each of the eight annual meetings of the Federal Open Market Committee. The group is scheduled to meet next on March 18, when it is widely expected to cut the key interest rate by 0.50%. The book is meant to inform the FOMC members of the state of the American economy, and this issue uses information gathered between January 16, when the last beige book was published, and February 25.

"Anecdotally, I see prices increasing at a moderate pace," the president of the appraisal firm Miller Samuel, Jonathan Miller, said, adding that he would not be surprised if residential prices in Manhattan increased 5% to 6% year-over-year in the first quarter.

In the fourth quarter of 2007, the latest data available, the median sale price for Manhattan coops and condos increased 6.4% compared with that period the year earlier, according to Mr. Miller. The luxury apartments that make up the top 10% of the market, or those priced at more than $2.8 million, increased 28.4% over the same period. Median prices are more accurate indicators than average prices, as they exclude outlier data, such as the ultra-luxury apartments at 15 Central Park West and the Plaza, which skew average prices upward.

The rest of the country is not as fortunate as Manhattan.

Spunky you continue to disrespect the current credit crisis! That is my main disagreement with all your points. Months ago, you kept arguing that what me & others were saying (streets, even eah agreed with it) was isolated, contained, not to infect Manhattan because it is so different here. Look at where we are now!

Do you really think that all this has no effect on buyer confidence? Do you think that some buyers in contract for $1500/sft+ new devs, who signed BEFORE the credit crisis, may have an issue getting that loan? Do you think there will be sellers that will decide to sell due to uncertainty in economy? Job Losses? Lack of bonus pool next year as 2008 proves to be an awful awful year for banks & brokerages?

I am starting to see contract assignment requests and advertisements by people who signed a non finance contingency contract for a new dev or conversion and cant secure financing! I am actually in process of doing one of these deals now for a buyer client! Are you saying this is fantasy and NOT a result of the credit crisis?

Mortgage markets are messed up, capital is big time restricted, underwriting is very tight, and there is risk aversion everywhere. What do you think this will do in the next 2-3 quarters for GDP and employment #s? Geez, look at NFP on Friday! Even the bulls cant argue against the recession now. Everything slows down, stocks correct (with bear market rallies here & there of course), economic data comes in weak, negative wealth effect all at the same time that de-leveraging is occurring from an unsustainable credit bubble for past 5 years that allowed housing to inflate to levels it never should have inflated to.

How can this NOT have any effect on inventory in Manhattan? As much as you like to, you cant just turn around these macro pressures overnight. It will take quarters if not years. And housing is fueling the fire and the disease is spreading; its now margin call time. If you understood all of this, you would NEVER have bought C at $28 and MER at $55 or whatever. Thats my point. Manhattan real estate, as great as it is, is a market like any other and is NOT immune to these pressures. However, due to the design of this market (70% co-op, int'l demand, low inventory, financial center, plenty of $$$, livability, etc..), the slowdown is likely to be just like any other; lagging to hit, leading to recover. That is why the argument of 'buy now or be priced out forever' is so absurd at this very time.

As for the inventory argument, I live in the now. And what I see now is a clear rising trend in the past 3 months. If streeteasy's data is accurate, well its the best thing we go to monitor these things right now, inventory has actually jumped about 28% or so since lows in DEC...

DEC - about 4600
NOW - about 5930

Now lets take into account the fact that there must be active listings that are really in contract and just not picked up yet, and other listing flaws like this. But this is a consistent time delay problem, which makes these numbers useful in monitoring trends only. If the jump was only for about 200 or 300 listings, it wouldn't be significant. But a rise of 1300 units or so in 90 days? Clearly, this is a misleading bonus season; active w/ demand out there but cautious at the very same time.

Unfortunately, its still too early to call this a trend; so Ill just say confidence is waning and inventory is reacting. What I want to know is: WHAT WILL THESE INVENTORY #S LOOK LIKE IN JUNE/JULY WHEN TIME HAS CAUGHT UP AND WE CAN LOOK BACK AT HOW HEALTHY THIS YEARS BONUS SEASON REALLY WAS!

we have to wait another 3-4 months. But if we are at 6,500, or even still around 6,000 or so by June, I think it would be safe to say that buyer confidence affected the 2008 bonus season. time will tell

Urbandigs that's very misleading why are you comparing Dec to NOW why not Jan 2008 inventory compared to Jan 2007 inventory which is down. You know that historically com[paring the month of Dec to the next month Jan has always been an increase in inventory so there should be no surprise here at all.

Let's go off a topic for now. Urbandigs I want your opinion on the present Bond yield curve and what you think it's telling us now. I realize it's not 100 accurate predictor but as you know it shouldn't be ignored. Just curious on your thoughts about this.

Urbandigs, I agree with you that the 'buy now or be priced out forever' is silly right now, but do you think it really pays to wait if someone is looking to buy a home, probably to stay in 7-10 years?

spunky - the yield curve has steepened significantly in the past month or so as credit markets deteriorated further and macro pressures intensified; short term, their is a huge flight to safety. Both 3 & 6 month T-Bill yields have dropped about 60 bps in the past month alone, while 10YR dropped 8 bps during this same period.

It tells you:

a) short term expectations are deteriorating
b) short term uncertainty rising; short term risk aversion via flight to safety
c) expectations of fed easing in very near term
d) longer term inflation expectations rising as fed stimulates

Its def a worthy indicator. But we are in unchartered territory here facing problems that are self-defeating. Because of this, no one knows how bad it may get or how effective stimulus will be. But taking a step back, one must ask themselves this and I think you will see it in the next GDP number: If we went from rapid leveraging via credit to all-out stop in a matter of months (June/July/Aug 2007), what will the economic implications be from this period of adjustment/deleveraging/write-downs/etc..? Lets face it, its not like we are in 'spend like there is no tomorrow' mode right now. Quite the opposite. Because we are dealing with de-leveraging, the process will self-defeat itself (starting to see it in margin calls and how that triggers other margin calls and problems) showing us who the survivors are and who the losers are.

If your question is to get a sense of the near term, the very idea that we are in the middle of this correction process brings with it the unknown. I wonder what would happen if Washington Mutual flounders? Think of the secondary effects of this kind of situation occurring? Stocks at 12 year low, losses are still being realized, secondary markets working against them making matters worse, S & P cut its debt ratings to BBB, and the firm is actively seeking capital injections. The chances of a big name going under increase dramatically with each day that passes with the secondary markets deteriorating. This is the unknown. This is why we just don't know how bad it may get.

I am hoping that consolidation occurs instead of margin calls and/or bankruptcy protection against a big name like WM.

Tony - If the buy vs rent criteria are met, then no! But certainly adjust your risk tolerance and/or your willingness to throw around cash to products that are overpriced considering the environment. And know what overpriced is!

I never said dont buy now or that prices will crash, I simply discuss what I think is going on in the economy and how that may or may not affect us. If your job security, salary, liquid, and timeline to own are all in line, then buying makes economic sense. But at least know the environment around you so that you can take best advantage during current property valuation and negotiating the terms of the deal.

urbandigs thanks for your reply. I was also wondering that if you look back historically on a steep yield curve as similar in shape as to one we have today isn't that potentially telling us that we are setting the groundwork for the e beginning of an economic expansion. I realize that this may be way premature at this stage but if history is any indication this steep curve may be telling us that in the long term we may be setting the stage for strong economic growth.

Thanks Urbandigs. That was my thinking as well. I actually already bought but have been second guessing myself all over the place since I closed in September. Also have a colleague going through a possible offer etc. right now.

And thank you, Spunky. Finally, someone talking about strong economic growth. Keep hope alive!!!!

spunky - well, its telling us that the long end of the curve is reacting to stimulus and expectations for higher inflation...generally two macro factors that are present when the economy is growing.

I look at it different thought, because your quote "...if history is any indication this steep curve may be telling us that in the long term we may be setting the stage for strong economic growth."...assumes the fed wont take any moves back down the road! I look at it from the point of view that the fed is setting the stage to PUT A FLOOR ON THE DOWNTURN AT THE EXPENSE OF FUTURE INFLATION! If the fed overshoots, which they generally do, and inflates too much in reaction to this mess they will have to hike interest rates rather aggressively to combat inflation. That would be an unwanted scenario that very well may result from their current actions.

To be honest, I focus more on short-medium term for my investment decisions. I know that goes against many mantras, but its just how I think. Given all the stimulus, I certainly would expect us to get through this mess; the question is when + how bad will it get! When the fed clearly signals that inflation is now the primary bias, it should be a sign of restored confidence in the sectors that are currently troubling them (housing, credit markets). For now, its a matter of crisis management in my opinion and that deserves extra attention to detail. Not only do they need to do the right things, but they need to avoid doing the wrong things, or too much of the right things. Out of my hands what they do, but their latest injection of up to $100Bln in repos + $100Bln in TAF is VERY interesting considering they expanded the repo time on it (to 28 days from overnight to two weeks) and broadened what securities could be used as collateral!

What are they up to? Quietly cleaning the balance sheets to get hte mortgage markets functioning again? Hmmmm..

Read Steve Waldman's peice, a GREAT read: http://interfluidity.powerblogs.com/posts/1204920896.shtml

Urbandigs, re inflation, isn't primarily being driven by the price of oil, which is driving up energy prices in general, including agricultural products being used for fuel? (Which of course, drive up prices for other products by increasing costs).

It just seems like there's no easy way out on this mess in the short term, and medium term, and our choices are (1) active government intervention (via Dodd/Frank efforts etc) and growth (albeit sluggish for a while) with inflation or (2) inflation with a contracting, stagnating economy -- stagflation. Frankly, I'd rather pay the "tax" of inflation until we develop alternative energy sources, OPEC changes course, etc.

I know the market can do wonders in the long run, but as Keynes said, in the long run we're all dead.

urbandigs without going into detail difference between the economy of Oct 2002 to that of today. I do find the similarities in the bond yield curve quite remarkable. As you are probably are aware Oct 2002 the S and P was oversold. Look what has happen to the S and P since Oct 2002.

poorishlady, was curious how your OH went today. Did you remember to hide the bong collection and remove the tie die comforter?

I would NOT compare this environment to that of Oct 2002 simply because both periods had at one point a steep yield curve; that is very narrow sighted.

What we are experiencing now differs in the following ways:

a) pop of national housing bubble; ILLIQUID
b) pop of credit bubble
c) financials at center of storm; as opposed to dot coms
d) the use of leverage to inflate the bubble
e) the use of securitization to inflate the credit bubble
f) de-leveraging process
g) commodity inflation as economy weakens
h) spread of credit cycle unwinding (muni market, ARS, student loan market, corporate credit spreads, hedge funds, etc)

The top of the market was early 2000 in the dot com boom and you are discussing a steep yield curve some 18 months AFTER the top of a dot com bust where the use of leverage was fairly minimal. Now, we are 6-8 months after the pop of credit bubble and about 2 years or so after pop of housing bubble which is illiquid and getting worse. Calling now a bottom because of the yield curve doesn't hold much water in my mind. You cant compare now to Oct 2002 because of how different the macro conditions are.

We will get out of this of course, but your thinking is consistently biased towards optimism as it has always been since I have been reading your comments. You went from this is not such a big deal to the light at the end of the tunnel in one whole swoop. fact is, we are right now in the middle of the storm. So I am more concerned with how bad the storm will be and how damaged it will leave our economy. Then I'll get on board the optimism camp when credit & housing markets stabilize. Doesn't seem we are near that yet

digs, most of the "experts" believe we should be out of the credit mess by years end or Q1 2009. That seems pretty near to me.

Additionally, I would be inclined to compare this environment to 2002 in terms of the consumer. How many stories did you hear after the dot com bust about personal wealth being destroyed, failure to meet margin calls, wiping out of paper wealth, and my favorite, huge tax bills for granted shares that were worth nothing. My opinion is that consumers probably faired a bit better during this bust than the dot com one. A lot of consumers lost houses, but most had very little equity to begin with. Those that haven’t lost their house, still have a place to live and have time to wait for the market to return. Speculators, however, got their lunch handed to them in both instances. Regardless of the bust, the impact to the consumer has been similar.

interesting Juice. The only difference I can think of outside what you are saying is the contraction of the credit market, pullback of HELOC availability, and the coming credit card carnage that may bring with it changes on that front..what effect will distress in credit markets have on availability of credit over the next few quarters?

As for timing, it keeps getting pushed back. A few months ago, it was supposed to be 2nd half 08. Now its Q1 2009. Honestly, I think this will be a slow process that will take more time to fix. Its not like there is an on/off switch to the credit markets, whereas when things look better everything just goes back to the way it was during the period of 2002-2006. Those days are over and gone for a loooong time. I would think that early 2009 will start to see the real effects of monetary stimulus and by then hopefully the balance sheets of banks/brokerages are cleaned compared to now. Normalization by that time sounds fine by me, but what does NORMAL mean compared to what we were used to?

HELOC availability had an impact on discretionary spending since most people who took HELOC’s over the last couple years where buying boats, BMW’s, and new kitchens. I don’t think that it is any different than buying a new car with your Pets.com proceeds in 2001. So if we agree that discretionary spending has equally tanked when comparing now to 2002, we should take a harder look at mandatory spending. I believe that based on comparison of the bubbles, the consumer is in better position to handle a downturn than they were in 2002. The is especially true based on :

1) Retirement income devaluation – getting your 401k wiped out 5-10 years before you planned to retire was devastating blow in 2002. It was even more devastating for fixed income earners who still had market exposure (which most did). Yes, you can argue that most people of retirement age feel their house is their biggest asset, but most retirees don’t move, and their house doesn’t provide income. Most retirees are in similar positions now than they were before the housing bubble.

2) Ability to speculate – I would argue that it was much easier for an individual consumer to speculate on stocks than to speculate on housing. The impact was also much deeper. In 2002, grandma’s were trading stocks on the internet with cash (and margin) positions. Everyone had an e-trade account and everyone was well, playing blackjack. It was much harder to speculate to the same degree on housing, and the exposure was minimal. Most people that lost their house lost little to nothing in the process and most only had one house. Now they are renting and their net worth / spending habits have changed very little. Consumers that speculated on stocks faced personal bankruptcy, margin calls, and huge tax bills. This was a much larger hole to climb out of in 2002.

What we really need to watch (and you have highlighted this many times) is the credit crisis impact on credit card’s and commodity inflation. The deeper consumers get a hole based on these issues, the longer it will take to get back to a place where discretionary spending is “cool” again. In the meantime, I feel that today’s consumers are much better positioned to snap back once liquidity returns to some sort of normalcy.

Juiceman, my OH went fair-ish. You flatter me by referring to my bong collection. One does not equal a collection. i keep it happily perched on a closet shelf; potential buyers cannot see it unless they scan to the left. It actually belongs to a friend of mine who left it here, and I considered giving it to Goodwill or the Salvation army, but because it is fragile, I just kept it . . . .
Good lord, Juiceman, why this resentment against Phish and Grateful Dead aficionados?

fed goes nutz with liquidity this AM..great news. As I wrote yesterday, these TAF and repos and widening of collateral allowed is having a much greater effect on markets.

Urbandigs --- what's your reaction to the Spitzer imbroglio?

Agree, Urbandigs. This is great news. Think the Spitzer stuff is an irrelevant diversion.

http://www.cnbc.com/id/23573249

my reaction to spitzer is HA! The guy made it his business to erode credibility in the business world. Not that I care about what happened as its a non event as far as Im concerned. We have bigger fish to fry, and the fed fried a bunch of them this morning.

In addition to urbandigs' list of items of how today is different from 2002, here's another factor that's very interesting.

http://www.nysun.com/article/72659

If you look at the end of the article (p. 3) it touches on how the big banks have a vested interest in playing chicken - hoping that one of their big counterparts will fail (so they can then be vultures on the defunct bank's clients). Recall, we haven't had a big bank merger in years, and squeezing a big player out would make life easier for the survivors. The result is an unwillingness by the (at the moment) healthier banks to shore up the markets for the troubled credit product of the moment -- in a sense, each of the banks is going short on their competitors, on the (Russian?) roulette-wheel bet that it won't be the one that fails.

This also strikes me as unprecedented in our lifetimes, and I don't see any end in sight over the next year or two unless the government essentially forces them to work together to save each other. I think that day is coming, but until it does, it makes it very hard to predict whether we'll have widespread layoffs in small numbers per firm (a mile wide, and an inch deep) or whether we'll have a massive meltdown that'll concentrate the pain. The worst possible scenario is hemorraging that doesn't stop. But I think it's impossible that the Fed will let that happen, as long as foreign banks/funds/debt-holders don't somehow interfere.

hrdnitlr - if you recall when LTCM melted down the Fed did pile in and make the banks work together.

digs, did I sense a hint of optimism on your blog today? Are you feeling ok?

Don't disturb him Juice he busy deciding whether or not to cover his short positions.

covered my shorts last week spunky!! except for a few hundy shares of EEV. Nice try though. Hows your C & MER doing? Trust me, I will be on watch to get short again after the next rate cut drug effects wear off a few days later. I doubt this rally takes us back to the good days!

Yes, I think its important that they are targeting their actions and likely to lean less on rate cuts; to strengthen dollar and help ease commodity prices. But we are by no means out of the woods and news will be bad for a while; we havent seen the economic damage from 4-6 months of distress.

Lets call this a 4-6 quarter plan that starts with finding a way to help without taking FFR to below 2%. Fix credit markets, show who didnt survive and who becomes insolvent, get weak data out of way, so that housing can finally stabilize down the road. Get credit spreads narrower. Its not a quick fix, but I just like the direction they are going.

I do still see an event happening, now rumor is BSC, that will trigger future down runs in stocks. Just not sure what it may be

spunky - remember this from 4 days ago? I even told you what I was doing and why!

"I must admit, I bought some C at $22 yesterday and covered a good amount of shorts because I think we are very close to another aggressive fed rate cut and/or gov't intervention to ease the distress in the secondary mortgage markets"

Digs did we just set a one day record in the Dow today? Once again I bring up the steep bond yield curve which as I mentioned two days ago looks almost identical to the Oct 2002 bond yield curve. We know what happen to the S and P after Oct 2002. I realize this is just one tool but you can't deny the fact that it's an important one nonetheless.

spunky, are you really talking up the Dow after one big day (with an obviously reactionary rally), while ignoring what it's done the past few months? I guess that would be acceptable if you didn't insist on bashing zizizi for mocking your C and MER purchases by parroting the "long-term investment" defense. I am consistently entertained by your bravado and hypocrisy.

What we may have here is a bunch of doomers that are a little nervous right now. Maybe seeing a little light at the end of the tunnel? A bit of optimism in the air? Seeing a bit of resiliency in the world’s greatest economy? Could it be that Manhattan real estate may hold strong through the credit crisis? Ghast! No 25% correction!

I think it's all going to be just fine.

I am strongly recommend anyone who is considering selling their Manhattan property to wait until next year if you can afford to. I would like to see a drying up of any type of inventory.

I am strongly recommending anyone who is considering selling their Manhattan property to wait until next year if you can afford to. I would like to see a drying up of any type of inventory.

Interesting ain't it!!

Foreign companies become NYC landlords due in part to weak dollar

by lily hindy / associated press writer

MAR 9, 2008 12:10 PM EDT

NEW YORK (AP) -- For foreign companies in New York, it's a huge cost of doing business: Employees move to the city or come here on assignment, and the company has to put them up in temporary corporate housing that routinely exceeds $4,000 a month.

But a growing number of foreign firms are buying up high-end Manhattan condos and taking on the role of landlord themselves, brokers say. The companies, many from Europe and Asia, say the strategy makes perfect sense because of the booming Manhattan real estate market and the favorable exchange rate.

"The companies used to say, we're only going to have people here for so long, so there's no need to purchase. But now there is a change from that direction," said Daniel Baum, COO of The Real Estate Group NY. "They think, even if our people aren't there, this is a good investment opportunity for us in New York City."

The trend mirrors what is happening in the larger New York real estate market among foreign buyers. With their currencies hitting record highs against the sliding U.S. dollar, Europeans are snatching up Manhattan apartments and essentially getting twice the value because of the exchange rate.

The New York real estate market has been on a roll for a number of years, despite the turmoil around the country. The average price of a home in Manhattan in 2007 cost $1.26 million, up 11 percent from the previous year, according to the Real Estate Board of New York.

But for some overseas companies, New York is a relative bargain. A survey last year showed that New York was the 15th most expensive city in the world, behind places like London and Moscow.

Foreigners are purchasing nearly twice as much property here as they were two years ago, helping the city survive the nationwide housing crisis, real estate watchers say.

"The exchange rate has really made the economics one of the driving factors here in the condo market," said Jonathan Miller, the executive vice president and director of research at real estate research company Radar Logic.

Now the trend is spreading into the corporate world.

The Real Estate Group NY sold four condos and made plans to sell eight more to an Irish investment firm for corporate housing in 2007. The Corcoran Group is working with a South Korean company hoping to buy blocks of apartments downtown for employees, and is discussing options with various Moscow firms.

The circumstances couldn't be better for overseas companies who regularly have employees in the city on business. Rather than paying more than $4,000 per month in rent for condos in Midtown and the Financial District, they are opting to purchase units for $1 million a piece and allowing the brokers to sublet when their employees are not around, helping subsidize the high cost of the apartments.

"It's a win-win for them, if they've got to move people here anyway and housing prices are so good. And there's a weak dollar. They can kill two birds with one stone," said Baum.

Neal Sroka, a broker at The Corcoran Group, said an increasing number of his clients would rather have an empty apartment in the city with the option of subletting to one of the ever-growing number of interested renters, than pay rent or costly hotel prices for employees on short trips.

And hotels aren't a cheap option for companies either, with mid-range hotels costing $200 to $300 per night.

Many also see it as an investment in a booming market, with a strong chance that their investment will hold up better than real estate in other cities.

"People are looking to other avenues to take advantage of the New York real estate market," Sroka added.

"The companies want to save money, but they are also interested in investing in the future, putting their money where they feel it's going to be safe," agreed Baum.

It would be interesting if owners who weren't sure about the market's future took Spunky's advice and held off selling for a year. Then the price would be set by the battle of the desperate buyers and deperate sellers in the non luxury market. I bet the desperate sellers would blink first (laid off workers, people relocating, newly divorced, long term owners taking profits) and the market price would correct to levels from a year or two ago.

But alas I don't think they will Spunky's advice.

I predict no drastic changes in the Manhattan RE market this year re prices. Generally flat, lots of stalemate, more negotiation, slowly building inventory but nothing severe enough to affect prices overall. Some price drops, some price increases. No reason to wait but no reason to rush.

Interesting, as this was the first Fed move in recent memory that helped the dollar's value.

Keep in mind, Pez, much of non-luxury Manhattan already is selling at last year's prices (or earlier), some of it below. The above figures are average, not median, and are heavily skewed by luxury sales. In the outer boroughs, many sales are below last year's prices.

Urbandigs - how about writing about Brooklyn? This borough seems to be in deep denial, too. My husband and I are looking at co-ops just outside Park Slope (Windsor Terrace and Kensington) and we can't get over the prices sellers are asking. In a building where the most recent sale on a comparable aparatment (similar condition and identical layout) was $349 K 15 months ago, the seller is asking for $460. In another building where two apartments sold for $479 and $475 in October, another unit (again, similar condition and identical layout)just went on the market for $549. We're wondering if we should just take a six-month hiatus and start looking again after reality sets in. If that ever happens.

I dont do enough biz in bklyn to talk intelligently about it. I would love a bklyn specialist that has a passion for writing unbiased pieces and will take the time to do it often. But its not easy to find that type of broker who believes that their participation will 'pay off' over time.

those types of sellers are in Manhattan too. I was on 4 sales pitches in past 3 weeks and 3/4 were unrealistic and expected 15-25% appreciation based on sales 12 months ago. If they dont get it, they dont sell. Thats not worth the time and me telling them what their place is actually worth in todays market is a agreement killer right there. So, ignore those listings because even if you realistically bid, it prob wont be accepted.

I predict continuing rising inventory for Manhattan as the economy realizes the damage done with 4-6 months of distress in credit markets. Im going with the current trend. We'll have a bit of medicine, but it wont be as bad as many think; at least I dont think so at this point in time.

tenemental said "Keep in mind, Pez, much of non-luxury Manhattan already is selling at last year's prices"
tenemental I think you are on the wrong thread this thread is titled

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

You really need to go on the thread tiled "We are in a recession, sub prime mortgage meltdown and maybe worst economic period since the great depression and yet much of non-luxury Manhattan is still selling at last years prices" thread

Don't worry if you can't find that thread for I can't find an apt that's has a decent layout, with nice views, in a nice Manhattan neighborhood at 2007 prices either.

Ah, come on Juice, I'm no doomer (I'm about to go into contract on a 2BR actually, pending my attorney's comments), just having a bit of fun with spunky's rah-rahing. He also sounds a little desperate pleading with sellers to hold off so he can be "right" about all of this.

tenemental said "Keep in mind, Pez, much of non-luxury Manhattan already is selling at last year's prices"
tenemental I think you are on the wrong thread this thread is titled

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

You really need to go on the thread titled "We are in a recession, sub prime mortgage meltdown and maybe worst economic period since the great depression and yet much of non-luxury Manhattan is still selling at last years prices" thread

Don't worry if you can't find that thread for I can't find an apt that's has a decent layout, with nice views, in a nice Manhattan neighborhood at 2007 prices either.

Damn, I knew that last post would be a buzzkill. Just heard a great band, enjoyed a couple of IPAs...

Well, Spunky, since you certainly don't mind repeating yourself...

For the benefit of Pez, and anyone else who just tuned in, the following is a chart assembled by the illustrious Jonathan Miller, which clearly demonstrates that in 2007, for all of Manhattan excepting the top 10% of the market, median sales prices, adjusted for inflation, WERE LOWER THAN THEY WERE IN 2006.

It is titled, appropriately enough, Luxury Market Disconnect:

http://curbed.com/archives/2008/01/24/three_cents_worth_luxury_market_disconnect.php

Please enjoy, and good night.

Congrats on the new place bjw2103. Don't let the doomers try and convince you that you made a bad decision. This time next year, you will be doing just fine.

digs, sounds like there are some opportunistic sellers taking advantage of low inventory. These folks don't need to sell, but will for the right $$. If there are a lot of those out there, true inventory is actally much lower than we all think. Especially if your advise is to ignore those properties.

tenemental please view the following chart. Inventory level for Jan 2008 is lower than 2007. Tenemental I like this chart better than your chart. It clearly shows inventory decreasing. February 2008 inventory lower than last Feb. Guess what March inventory 2008 will be lower than March 2007 as well.

http://www.millersamuel.com/charts/gallery-view.php?ViewNode=1168399259Jmtnq&Record=1

I would like to add the chart shows inventory of Jan 2008 lower than inventory for 2007 and 2006 and 2003 as well.

spunky you keep bringing up the same chart, and everyone keeps agreeing! Its the trend that you are choosing to ignore. Its very simple.

In DEC 2007, we were 15-20% lower inventory than DEC 2006. Since then, inventory has risen rather quickly. Now, we are only about 7-10% lower than at this point last year. TREND!! Comparing the environment today to that of last year is rather ridiculous. Lets at least be current & unbiased when we analyze these datasets. My streeteasy widget, showed total inventory rising from 4600 to about 5950 in past 3 months.

When I review, it appears that 5950 is right IN LINE with total inventory in March 2007. So, we went from being 17% lower inventory 4 months ago, to being almost even four months later. Putting predictions aside, how could you ignore this trend as a result of current economic conditions & confidence? Who the hell cares about 2006 & 2003. We are at now now and what is happening now affects people who are buying or selling NOW! Am I wrong? You know I believe in buying longer term, but the question is whether short-medium term will be pressured, NOT 10 years down the road. Most people do not have 10 year timelines to own, and if you believe they do, I give up.

oops, sorry my line "Now, we are only about 7-10% lower than at this point last year" was meant to say "In Feb, we were only about 7-10% lower than that point last year". Now we are about even compared to March 2007.

Juice - always opportunistic sellers in any market. Its the "if we get our price we'll sell" mantra. Exists in good markets & in bad so I wouldn't discount it now just because inventory seems to be rising. We still should have mls system for Manhattan, I dont get why that would be such a hard thing to do so we can get a better idea of whats going on out there

"In DEC 2007, we were 15-20% lower inventory than DEC 2006. Since then, inventory has risen rather quickly".--Urbandigs

Urbandigs that's negative propaganda and you know it. Inventory for the past 20 years probably has historically increased for Dec the prior year to Jan the following year. What you keep on continuing to purposely neglect is comparing Jan of 08 to Jan of 07. Feb of 08 to that of Feb of 07.

ha negative propaganda. I forgot that I am trying to take down Manhattan re so I can buy back in real cheap. Ooops.

OK so lets see here.

JAN 07 --> JAN 08 = 6000 down to 5600...so we are down about 8%
FEB 07 --> FEB 08 (n/a, so Ill use what my system says about 5750 or so) = 5900 down to 5750, so we are down 2%

Now, March 07 ---> Right now = lets say 5875 compared to 5950. So we are up a bit. Now, I ask you, do you see a RISING or DECLINING trend in past 3 months?

Yes digs, there are always opportunistic sellers. But 3 out of 4 properties? Not to mention all I hear on this board is, prices are unrealistic, prices are unrealistic. Seems to me a large % of the market is filled with “opportunistic sellers”, which is bad news for buyers and if true, distorts the inventory picture even more.