Manhattan Numerology: Separating Fact From Fluff

SteveF, how come you won't go over your numbers with me showing how you're going to be up 300% by 2020. Just use approximate numbers so you don't give away your exact identity. With those kinds of returns, I might buy a bunch too.

Same reason he won't respond to the data showing major declines in Manhattan 1 bedrooms... denial.

As usual, Noah's on fire! Go Noah!

In fact, co-op boards prevented all Wall Street layoffs, and were the secret cabal behind QEII. Once the world realizes this, New York Real Estate WILL BE ON FIRE!

"Manhattan just doesn't behave like the rest of the country when it comes to residential real estate activity."

That's right. Manhattan is impervious to supply and demand, and money falls from the rainclouds. Just look at the author's website:

www.coopandcondo.com

and it will tell you enough.

Manhattan has and will ALWAYS behave like every other place on the face of the earth. Supply and demand determine prices, not that it is an island, or that co-op boards hold Magic Powers.

Oh, behave, Manhattan.

steveF, no question the overall Manhattan market has held up way better than some here predicted. But it ain't all roses either:

"In an artificially induced Fed-driven asset reflation environment like we see today, I continue to question the sustainability of the pace of improvement we have seen over the past few years... Although the Manhattan market has proven to be the most resilient market in the country following a severe credit crisis, no trend goes one way forever. If we do see unintended consequences from Fed policy actions taken to stem deflationary pressure, Manhattan likely will not be immune to the psychological forces that occur during downward asset cycles."

I would also really like to hear your response to inonada's question.

To me, the most accurate point raised by Noah is that it really comes down to specific neighborhoods and specific buildings, and that each building is really its own submarket.

We can talk about "Manhattan" - but we all know that the WV does not equal Harlem, East Village does not equal UES, and so on. Likewise, even within a neighborhood a dump of a one bedroom in a crap walk-up does not equal a renovated one bedroom in a nice elevator building. So anyone can say the market is doing good or bad or horrible or on fire, but I don't think that helps buyers or sellers evaluate - you really need to get down to the details and look at building comps.

technologic... 100% agree. all these numbers like 25% down from peak mean nothing. i will show you many 1 bedrooms that are selling at a higher price than they did in 2008. it all comes down to neighborhood and building.

Wait, wait, so what do we make of w67th's absolutely certain <$500psf prediction?

Penetrate? Sometimes I insert. Very very slowly. Agonizingly slowly. Oh so so long..... Till the nyc re capitulates in an orgasm littered with $500 psf classic 7 that no sane woman can't resist. it's almost time boyz and girlz. No QE2, 10% unemployment, bank headcount reductions.... Simple really.

Have you'all hugged a coop board member today. Well grab every member and insert, repeat.

Uhm, bjw, don't know if you know it, but technical indicators on the Dow show it heading to below 9,200. The key level to break is 11,800, which breaks the trend line from the 2008 bottom. Once that's broken, from a technical perspective the stock market has nothing to stop it from falling.

And from a fundamental perspective, either. Seems like the Fed is finally giving up on "core inflation," because no one lives their lives by it. The euro is falling apart, and the federal government is cutting spending precisely when it should be raising it.

The blip in Manhattan is due, IMHO, to QEII, which did much more harm than good (as I've been saying for months that it would). It will have to be unwound, which is going to damage the economy even further. Don't expect Manhattan to stay buoyant.

67th, personally, I can't wait. If I can grab me a classic 7 for less than $500psf, can I hire you as my borker?

steve, not sure why you follow the DOW so much. I look at the S&P first. Either way, I'm with you that it's more or less time to dump a whole lot of equities.

so, bj, that would make you one of the women that would be unable to resist.

Techo/ekartah..... -the I can't see the tide while I am on this pos $1mm w42nd studio bobbing in the the nile- syndrome. Flmaozzzzzzzzzzzzzzzzzzzz

Just cut up your ameritrade 401k stmts. Just stuff your bank stmts into a drawer. If you wear Oliver ppl glasses and get to ride first class once in awhile..... Then you be all good. Hey Noah, why did you abandon Fsteve and buy a horse farm in ct instead of his studio that's gonna rise 300% in 3 yrs??? Wha wha. Wha? I can't hear you from you laughing so hard.

Fsteve, Noah said something like short msft long appl arbitrage. FLMAOzzzzz

Bottoms, love your fantasies - really creative stuff!

bjw, I look at both, and at the NASDAQ. I just happen to remember the Dow better.

I'm an exclusive borker, so yes anyone that can pay me 6% can hire me.

W67th, I'll pay you 6% to walk a few blocks to breast feed and change diapers at 2am. I may even let you smell my underpants

>So anyone can say the market is doing good or bad or horrible or on fire, but I don't think that helps buyers or sellers evaluate - you really need to get down to the details and look at building comps.<

Good point, tech & I'll add look at pre-bubble prices too.

W67, hilarious, you're on a roll!!

stevejhx: how does the Dow/S&P effect NYC RE prices? If the stock market decreases, people have less $ to spend on RE, so RE prices decrease? Or people cash out of the stock market, take that $ & put it into RE, thereby possibly pushing RE prices up? or both?

"how does the Dow/S&P effect NYC RE prices?"

The Dow & S&P are uncorrelated (usually) to Manhattan real estate, at least directly. However, QEII feeds the beast that is hedge funds and investment banking, and therefore inflation.

"SteveF, how come you won't go over your numbers with me showing how you're going to be up 300% by 2020. Just use approximate numbers so you don't give away your exact identity. With those kinds of returns, I might buy a bunch too."

inonada, since SteveF isn't interested, I'll play for fun. seems here is the type of wacky scenario he would need to believe to get to 300%...

- Buy studio at 20x annual rents of $2,000/month
- $480k purchase price, borrow 80% at 5.0% 30yr fixed, so down payment = $96,000
- Taxes/CC/Other = $600/month (assume no tax deduction to keep it simple)
- Assume tax deduction at 28% on mortgage interest

And the big ones...

- Rent and Taxes/CC both grow 5.0% per year beginning immediately (from unexpectedly-high inflation or whatever other theory leads to outsized rent increases)
- Sell the apartment in 2020 at the same 20x Rent multiple (in a higher interest-rate environment, in all likelihood)

If my math is correct (did it rather quickly), in 2020 the apartment is worth $709k ($2,995 @ 20x), the mortgage has been paid down to $323k, and the equity is worth $386k. That's +302% nominal return on the $96k down payment.

Over that period the aggregate nominal carry is modsestly positive; negative in early years before turning positive from 2016 on. on an IRR basis the returns would go down because the negative carry is front-end loaded. The net impact is not large (under this inflationary scenario anyway) because the outer years offset the earlier ones.

And this excludes transaction costs. If you skim 10% off on the back end, the required exit multiple would be more like 22x instead of 20x.

Not my personal views here, just teeing it up...

juicy? you wife doesn't charge me 6% to suck on her breast?... she charges you? That ain't RIGHT.

seg, but in a year if I could buy the same upstairs unit from BofA for $240K and charge 1/2 the rent Fsteve charges.... well maybe Fsteve will charge the fellas to suck oh his wife's breasts.

seg, don't discuss numbers with:

a) spunky
2) LICCidiot
iii) JuiceDrivel

Letters mean nothing to them.

>juicy? you wife doesn't charge me 6% to suck on her breast?... she charges you? That ain't RIGHT.

Juicy, did you hear that "thousands of people touched [w67thstreet's] wife"? And he admitted it on streeteasy.

>Manhattan has and will ALWAYS behave like every other place on the face of the earth. Supply and demand determine prices, not that it is an island

Does that Manhattan is an island affect supply? Does that Manhattan is an island impact demand?

Fsteve with a wife? do you think he calls her dude?

>Fsteve with a wife? do you think he calls her dude?

At least he calls her.

I wonder if steve has seen any appreciation on his Ellington investment?

MMMMMMmmmmmmmmmmm... while you type on SE.. I sucka your wife's left breast.... ; )

NOW the right one......

In btweennnn now.... keep spreadsheeting your vast pretenda wealth on the FV of PV of F (rent1, rent2, rent3......).... Now do it again with 10% mortgages.... Oooooooppppppsssss....

Sensitivity analysis....

Now the right one again.....

>MMMMMMmmmmmmmmmmm... while you type on SE.. I sucka your wife's left breast.... ; )

Making up for the "thousands of people who have touched [your] wife"?

That's my breast w67th, you pulled a stewie

That's not a pillow.

Seg, thanks for playing!

What do you have to do rent/maintenance increases to catch up an additional amount for:

1) A 2007 purchase that was 15% higher than today.
2) 4 more years of negative carry.
3) The extra juice to have a 20x multiple to be sufficient over transaction costs.
4) No deductibility of mortgage interest as this is not owner-occupied.

Thanks!

Here's what my numbers say before changing the 5% assumption for the rent/maintenance increase:

1) Purchase price increases to $552k + I added in 4% up-front transaction costs
2) In this case the purchase would be negative carry every year through 2020 (would go positive 2025 i believe)
3) Keeping 10% back-end transaction costs (note- I think 14% total transaction costs are too high but seems to be right around consensus here)
4) Done

Answer: equity in 2020 now worth only $252k, and factoring in all the negative carry, the IRR (or CAGR) falls to 3.2%

To answer your question, in order to get back to 300% return on down payment, you would have to assume rents/maintenance increase at 8.75% per year. Also the negative carry eats up a lot of the return. Hardly shabby at 12.75%/year, but lower than the 300% nominal return on down payment might suggest.

(I realize you already know the broad answer, but happy to help make the point :)

"I wonder if steve has seen any appreciation on his Ellington investment?"

In fact, since to buy a comparable unit would cost 3x as much, I believe I've saved 66%. Not to mention the 24% I've not lost through declining principal values.

And there you go again, Juicy: owner-occupied residential real estate as an "investment." I thought you gave that malarkey up? Because if not, I'm still waiting for you to answer:

* If real estate appreciates faster than incomes in the long-term, where does all the money come from?

And then, I think you still need to school us about how the opportunity cost of a high-risk, illiquid asset like real estate is measured at the risk-free rate. We're all waiting to hear why.

3x as much to buy a marginal 900 sqft place in Times Square West? Don't think so. How much is your rent going to increase this year?

I remember when steve said his rent would never increase and then he moved because his rent increased

FWIW, I'm not particularly bearish overall -- but obviously agree that a +300% scenario on a studio investment is very, very unlikely.

so JM, i guess his rent didn't increase.

i wonder what the landlord got for his unit when they didn't have a tenant in place, who they likely presumed would accept the increase to avoid the hassle of moving.

AR, yes it did, because he moved to a smaller unit in an inferior building in an inferior location. Less apartment per dollar is the same as a rent increase.

silly me, i thought it was roughly the same size, with outdoor space.

i think the locations are comparable, actually.

"I remember when steve said his rent would never increase and then he moved because his rent increased"

Oh, JuiceDrivel, you're hallucinating again! I never said my rent would never increase, or that your maintenance and property tax wouldn't increase. I moved to a much larger unit in a very nice building. I would have the Trader Joe's loading dock right in front of me if I had stayed in my other apartment.

And I have no idea what the rent will be when my current lease expires, but will still be significantly less than what it would cost me to buy it. Like > 3x less.

But why don't you answer the questions, JuiceDrivel: WHERE DOES ALL THAT MONEY COME FROM?!

JuiceDribble?

I'll try. When you have to pay more rent out of the same income, you spend less on other things, like food. That's why the Fuhrman(?) Center at NYU, for example, tracks "rent burden."

'keeping up with the lemming joneses overleveraged lifestyle burden'. FLMAOzzzzz

'homeowners' with 21% credit cards balances laughing at us strategic renters! Ha.

>laughing at us strategic renters

Aren't you a commercial property owner?

@juicy.

Juicy hate to break it to ya. I think that was another man on your breasts. Mine was giving milk.

Poor steve, comps for a like unit to mine are up 20% (for me) and I just modified my loan to 3.625. It is actually getting cheaper and cheaper for me to own while steve is taking rent increases from the Ellington. Too funny.

"comps for a like unit to mine are up 20% (for me)"

Really? Show us a few.

"I just modified my loan to 3.625."

How much did that cost you?

FYI my co-op loan is at 2.5%. Nanny-nanny-boo-boo.

"How much did that cost you?"

A refi is generally pretty cheap as long as you get a rate that decently lower than what you were paying before. I know my refi costs will be covered in ~16 months from the loan date.

Loan mod, not refi. Loan mod = $500, pay back is about a month.

Ah, even better. Nice work, JM. That's like 5 translated words for Esteban.

Where's the comps, Juicy? You know, that 20% increase - since 1947.

Loan modifications are usually for people who can't pay, Juicy. Has your dental practice gone bad?

For all steve seems to think he knows about real estate he doesn't know that anyone can do a loan mod if your bank is willing to do it.

I never said any such thing, Juice. More JuiceDrivel. However, I don't think you're telling the truth.

https://www.wellsfargo.com/homeassist/loanmodification

Of course telling a falsity with respect to real estate is something that we're kind of used to from you.

Where's them 20% up comps you were telling us about?

What you think is of no concern to me.

Okay - I know you're not telling the truth.

That better?

What you think you know is even less of a concern to me!

Well, I know:

a) You can't show any of these "20% up" comps you boast about;
b) You don't know what the risk-free rate is used for;
c) You can't describe how property prices (or rents) can long increase faster than incomes, because you can't tell us where all the money comes from, and
d) You claim to have "modified" your loan for $500, when loan modifications are for those in financial distress.

No bank is going to lower your interest rate for $500 unless there's a problem. Sorry, it ain't happening. Last time you made a claim like this it was refinancing into a variable interest rate loan. That story now seems to have changed.

I have now come to realize that - which I actually knew all along - you are, like your brother LICCidiot, a charlatan.

Or should I say like malreaux, with his 15 CPW suite of apartments and post office box full of Krugerrands.

Listen, Steve, moving to Florida, other than the downside of low taxes which I know must be killing you, we all wish you well, and we recognize that you were very thoughtful about your primary home real estate especially in light of all of the transaction costs that you would face moving from NYC soon in this short period of time.

"No bank is going to lower your interest rate for $500 unless there's a problem. Sorry, it ain't happening. Last time you made a claim like this it was refinancing into a variable interest rate loan. That story now seems to have changed."

Wrong and wrong steve. I'm going to let you keep going because you are digging yourself a deeper and deeper hole.

a) I'm not going to give you the comps to my building, that would be silly
b) lie
c) yawn
d) true and not in distress. This happens all the time

Just when you think steve can't get more desperate

Oh juice. Who doesn't love juice. And really, stevejhx is leaving us, we should all be more sensitive and love our steve. I'll miss him. And I know that NYC will miss him because he won't be paying taxes here. And we want his taxes. Unfortunately for Florida, they are so silly that they'll accept our beloved steve, but won't tax him, so he'll have too much money. It's just sad, I'm faklempt.

Steve is moving to Florida?

He found a $1.6 million house for $650k. Which is pretty good.

Also, aboutready will soon be going to one of her villas.

Aboutready is now moving to her second villa.

"I'm going to let you keep going because you are digging yourself a deeper and deeper hole."

Show us some deets on a back offering to modify your loan for $500. Just a website would do.

"a) I'm not going to give you the comps to my building, that would be silly"

That would be impossible, you mean.

"b) lie"

You think it's used to price opportunity cost - ergo, you have no idea what you're talking about.

"c) yawn"

Wake up, Juicy! Smell the roses! It's not possible.

"d) true and not in distress. This happens all the time"

Show us where. Just a website will do. Because it DOESN'T happen all the time, because it costs the bank far more than $500 to do it.

Finally, not yet, Juicy, but Ft. Lauderdale is a distinct possibility.

Steve, these programs are not well advertised on the web, but they are there. Here is the one link I found with two banks that do it -

http://www.bad-credit-advisor.com/2008/12/should-you-refinance-now-or-do-loan-modification.html

Also, give Astoria Federal a call and ask about their loan modification program for existing loan holders in good standing. Ask them how it works and how much it costs. When you are done, please come back and post that you are sorry and that you were wrong. It is the least you can do for being so pompous about a subject you know nothing about.

What does it say that Juicy is hanging out on bad credit advisor?

"What does it say that Juicy is hanging out on bad credit advisor?"

Nothing, really. Maybe you should read it before judging: "The one I am talking about is the loan modification for borrowers in good standing to get a lower rate or even change a loan program." Whoops.

bjw2103,

Rude of you!

Swe, it says I know what I am talking about. You should try it sometime, knowing what you are talking about is fun. You are not having much fun these days are you?

> You are not having much fun these days are you?

Juicy, Juicy, why thanks for asking!

Check when I said I was talking money off the table... man, did I call that right. Haven't bought anything back yet.

And apartments looking like they're about to head into more problems.

How much more fun can it get!?!?

Btw, is there a little irony in SteveF starting a thread entitled "separating fact from fluff?"

http://www.youtube.com/watch?feature=player_embedded&v=0ufk8Gglw6Y

Where is steve's apology?

Apology? Sure, fine: I'm sorry that you're in financial trouble Juicy. Just the name of the post you gave demonstrates that you're in bad shape:

"http://www.bad-credit-advisor.com"

Look on the bright side: there's always Long Island City.

HAHAHAHA!

Worse, I may need to move to the Ellington where 900 sqft apartments are marketed as 1200 sqft and the bed bugs are the size of bowling balls.

steve thinks that a small 2-bedroom in a dumpy building in the Theater District would sell for over $2 million???

I see steve still lives in his bizarro world . . .

>bed bugs are the size of bowling balls

That's pretty remarkable.

Did I say that, LICCidiot? I don't think I did.

Really, Juicy, don't lash out at me because you're in financial hardship. I feel sorry for you. I still make $1500 a day - maybe you should learn a few languages, change careers, get your hands out of other people's mouths.

Eww, if you are going to put your hands in other people's mouths, at least use latex gloves.

$1500 a day? That's about two hours worth for me.

Steve, so we are all want to know, can you do a loan mod with good credit or not? So far you have tried to change the subject and insult me but we are still waiting for your answer. Is this yet another laughable steve moment?

"That's about two hours worth for me."

Really? And you still have credit problems? Because those two hours' come out to be about $1.6 million a year. Nice salary, for a guy who has to have his loans modified.

You can always bunk up with LICCidiot - nice view of the railyards, I hear.

HAHAHAHA!

I think that if Steve ever does move to Fort Lauderdale, with it's painfully low taxes and all, the two of you should arrange a meet beforehand and hug it out.

Still no answer from Steve, what a little, little man he is.

C'mon Steve, just say it, you were WRONG! LMAO

Juicy, please: I find no evidence anywhere that anyone with good credit can be given a "loan modification." You posted your source from your financial advisor:

"http://www.bad-credit-advisor.com"

All that I can find is this:

"It%u2019s important that consumers think long and hard about whether or not to apply for a loan modification. The criteria to qualify requires that you prove you have a financial hardship worthy of the interest rate adjustment. If you can still make your payment you should not apply for a loan mod simply because you want a lower payment. You should try and refinance the loan if that%u2019s your goal."

http://www.smartcredit.com/blog/2011/01/05/does-applying-for-a-mortgage-loan-modification-hurt-my-credit/

Again, I'm very sorry that you're in a bad financial way, but don't take it out on me. I'm not wrong.

Juicy means a Consolidation, Extension and Modification Agreement. See http://www.nycmortgage.com/CEMA.php

Well that is a refinancing by any other name, but it doesn't cost $500. It would probably cost triple that, plus attorneys' fees, plus recording fees.

THAT exists, but a "loan modification," as Juicy called it, is for the hard-up. I'm sorry that Juicy is hard-up, but I hope he enjoys it while it lasts.

HAHAHAHA!

Poor steve, taking rent increases from the dumpy Ellington so he lashes out at folks that are doing well, lowering their cost to own, enjoying positive comps....oh does it hurt steve so.

Little, little man.

Rather amazing how there's little inventory at the Ellington, and a 1 bedroom merely on the 6th floor of this large midtown building, with no balcony and no fireplace (despite what it says in the Google listing) is over $3500.

Lashing out? Juicy, Juicy, Juicy - I'm commiserating with you. I feel that sorry you overpaid for your apartment to the point where you had to have your loan modified. Sorry you've deluded yourself into thinking that you live in the only building in NYC (or the country) where comps are up (which comps you can't show us...). Sorry you don't understand simple concepts like risk-free rates, rent ratios, and that property prices can't increase forever if incomes don't match.

Again, I'm sorry for you. I hope things get brighter in the future.

See, what I don't get Juicy, is that in one post you brag about having a variable-rate mortgage, and in another you claim you had it modified. Share with us, did they cut your principal besides lowering your interest rate (though if you have a variable-rate mortgage as you've claimed, there would be no reason to lower your rates: they're already as low as they can go).

All we want is honest, Juicy - for a change. In the meantime, you have my deepest sympathies.

Steve's quote, in response to a comment about his dumpy apartment in the Theater District:

"to buy a comparable unit would cost 3x as much"

That would come to over $2 million to buy. Only in steve's bizarro world of course.

LICC, besides not being able to understand "Location, location, Long Island City <> Location," you can't multiply, either.

Very sad.

> C'mon Steve, just say it, you were WRONG! LMAO

Juicy, it's been years since your market won't go down 10% claims, and you still never admitted that (or countless other botches).... and you don't find it the least bit ironic that you're going after Steve for not admitting mistakes?

RU kidding, SWE? First Juicy says he has an adjustable rate mortgage. Then he said it was "modified." But you can't modify a variable-rate mortgage b/c the mortgage is variable already, and if he switched it to a fixed-rate, NO WAY the rate is 3.5% as he claims.

Then he says it only costs $500. BS. If it were a consolidation of a condo loan it would cost 3x or more that, plus attorney's fees, plus recording fees. If it's a co-op, then there's the co-ops fees, too.

Then he says that comps in his building are up 20%. Sure - from when Eisenhower was president.

Then he says that owning a home is such low risk that the opportunity cost must be measured with the risk-free rate. Then, when pressed, he can't come up with a single reasonable answer to sustain his ever-present theory that property prices only go up, and always forever, regardless of incomes.

This is why I have dubbed what he says to be "JuiceDrivel": that's what it is. Plain old drivel.

Steve, JuiceDribble would be funny. JuiceDrivel, eh. You need to master language a bit more.