Wall street rise & fall! Welcome to reality 2012 !

good article. And, true.

So I still can't understand why anyone would buy RE in Manhattan. Silicon Valley, not Manhattan.

Excellent article. Thanks sledgehammer. Yes I think that this affects pool of high end property - perhaps it they will need to come down further to adjust to this ongoing shift. However, I fully expect that another industry will fill the void left by finance

Anyone who makes a living in service to wall streeters already knows the bonus money has yet to show. We all live on Trickle Down Island and the trickle has been fickle this year especially as compared to last year. Mahattan re is going to take a beating this spring without all that fresh money.
Makes me wonder why all these properties are begining to resurface at 15-20% increases over the last price prior to pulling them off the market. I also see new to market re priced at it's 2007 high water mark.

Information bases optimism or wishful thinking?

I'd wait to buy an RE in Manhattan until I saw what those industries might be--

Excerpt, "It’s certainly true that Wall Street’s money played an important part in New York’s comeback, helping to transform the city from a symbol of urban decay into a gleaming leisure theme park. Consciously or not, as a city, New York made a bargain: It would tolerate the one percent’s excessive pay as long as the rising tax base funded the schools, subways, and parks for the 99 percent. “Without Wall Street, New York becomes Philadelphia” is how a friend of mine in finance explains it"..

Wall Street and the banks have always gone through these cycles, what "newbies" don't quite get is that cycle doesn't mean 3 years but can mean longer, as in look how long it took for Wall Street to really take off after peaking in the 60's and troughing in the early 70's.

I agree that "New" wall street money isn't likely to be entering the real estate market anytime soon and that the era of speculation is not coming back for quite some time, but we still have foreign capital, retirees selling their homes and moving to Manhattan , normal housing turnover and people who just happen to be in what ever business that affords them the opportunity to buy.

Anyway, Wall Street is definitely hibernating, but is not dead and buried.

yea, those retirees on fixed incomes will propel Manhattan RE higher. Especially when they can't sell their homes.. and yes those foreigners are always chopping at the bit(an old favorite).. ok..

I think purchasing a home has more to to with affordability..

AM I THE ONLY ONE WHO CAN READ AN ARTICLE? Riversider... WALL STREET was dead for 19yrs, then came the bubble, then another then another.. .a series of bubbles which cumulated into the most magnificent bubble based on RE.. the MOST LEVERAGED the MOST HIGH OF HIGH. A KING OF KINGS of bubbles....

AND YOUR THESIS IS the RETIREES from BUENA VISTA will SAVE NYC RE on their SOCIAL SECURITY CHKS? WTF?

Hey I HEAR 15K forced GREEK public employees are moving to NYC. FLMAOZzzzzzzzzzz

Brooks, let's put it this way, you have a 5 million dollar home and wish to sell it and buy a 2 million dollar home and believe real estate is going down further.

What do you do?

Answer, you sell now, and buy the Manhattan condo, knowing you've reduced your exposure to real estate, and have more cash to live on and give the grand kids...

Interestingly enough this is the opposite of how a young growing family sees it, properties are going down, you sell you r two bedroom at less than you hoped, but know you bought the three bedroom at a bargain price and will be in the new home for a while.

Bottom line, housing turnover will drive a certain amount of housing transactions regardless of market expectations and market direction.

are you really this stupid? do you think this is an example of the fucking problem?

how about this one?

you're now making half of what you used to make....still in the 1% but that doesn't really work if you live in manhattan.

what are you gonna do?

hey inonada, what was your opinion on people like columbiacounty who complain about being in the 1% in Manhattan?

Free new2RE!
what industry might that be?

huntersburg: S.O.S.
You know how inonada isn't interested in the interpersonal disputes here on se.
Unless he is demanding "tranparency" on their grey-zone status.

English?

*transparency".

What does that mean?

Clint Eastwood's commercial with Chrysler was effectively made grey. And as a result, it's on the front page of many online news sites, and everyone is looking to watch it.

Where does your wife's "being touched by thousands" fit in to the binary scale?

where does the fact that you are useless fit in?

0.5

$500psf. Hilarious...... Raise of hands, how many borkers told their clients to list their properties around bonus season?

Oooooooopppppppssss. Bad advice. Like 'come back in 6months for that blistering amorphous mole that's gorwn 5 cm in 2weeks'.

Oooooooooppppppssss. Pssssssszzzzzzzzzzssszz. The bubble deflates. Psssssszzzzzzzzz.

Sometimes the bubble deflating makes farting noises......

oh no. caps.

how about a couple of sclammo's?

Woah, Truth, relax.
http://streeteasy.com/nyc/talk/discussion/14926

shit...can't blame her.

that's what happens when you sniff glue.

call 911

What are you now Dr. Oz?

you need to read her what i say.

I need to?

http://streeteasy.com/nyc/talk/discussion/17221

enjoy your moment. it won't happen again soon.

My moment? I didn't think anything here was particularly notable. But I'll take your compliment.
http://streeteasy.com/nyc/talk/discussion/18080

is truth your kind of person?

huntersburg: Before my time here on se.
I'm very relaxed. just gonna give the stinkape and his ass-kissing cc. some input.

w67th is a pussy who commented against ph41 by way of crying about his childhood: the child of immigrants...boo hoo. The 5th ave ladies were not nice to him. Boo-hoo.

my kind of person? Does she have two arms, two legs and a head on her shoulders? If yes, then yes, she's my kind of person.
What is your kind of person?

not you.

not her.

I have two arms, two legs and a head on my shoulders.

Now, I acknowledge, apes do to, if that's the direction you are going in next.

huntersburg we're not discussing basic evolution here.
I'm just following up on the w67th breakdown -- ph41, of all people; made him cry early-childhood poverty.

It wasn't on-topic on that inonada thread, which wasn't about poverty.

He didn't have enough to eat because he wasn't a likable child. If he was; the neighborhood store-owners would have helped him out. And/or his neighbors. Somebody, anybody.
And he's angry at ph41 for that which she wasn't personally responsible for. And he cried like a baby about it.

I had it worse than him, but I never used that early-poverty card here on se. I once mentioned that I grew up living in the projects, it was on-topic; commenting on a thread about the projects.

wow!

And, poof; that dirty stink-ape is gone.
He can't take the reality. Of anything.

reality?

"Where did you go, you dirty ape" (huntersburg)

do you define reality, truth?

propositioning every one here?

really?

truth? or nuts?

Just buy anything in NYC. Anything.
Add 30% to the price.
Wait for someone to buy.
Repeat a few times and retire.
It's just that easy.

Forget it cc. Someone didn't take the 'how to handle anonymous online forum rejection' course at deVry.

Thanks for the article, sledge. Good read.

Was w67 a TA at DeVry?

WoW! I havn't logged in since yesterday and i'm glad to see this article has generated some action. Aside from the drop of revenu for the city, i'm rather glad we see this industry shrinking...Half of it do not contribute to society and is rather self serving... I'm hoping to see a more balanced NY in 10years from now. Enough with this arrogant attitude "Not everyone is entitled to live in Manhattan!". That is bullshit! Those who say that deserve to be smacked in a face with a reality check a la Paulson & Co who lost $billions last year!
So yes, we will see $500/square feet again. You just have to be patient. Buying a condo where maintenance costs equal your mortgage payment don't make sense, same as buying a new construction with a tax abatement who only serve builders...This whole debt enslavement is not worth it! How can people be ok with the idea, of seeing their monthly charge rise from $500 to $2500 just after they free themselves from their paid in full mortgage after 30y or so...Ridiculous! There're no real benefit buying in NY. Better rent or search for a rent control, and buy retirement house in some other state or country.
Unless i don't see a major correction happening in the next 5 years, i'm giving up on buying in NYC, i decided to wait until Euro collapse and buy something on the cheap in Spain or France instead... The concept of "Owning" a piece of NY is all bullshit! Once you end up paying your bank, you pay the city instead...

Another good article, this one from Crains, talking about the shift by industry of the makeup of NY RE market participants (less finance, more healthcare, media, tech, etc.)

http://www.crainsnewyork.com/article/20120205/REAL_ESTATE/302059976/1033

It used to be that the Wall Street people lived in certain areas, but in the past two decades they live all over in Manhattan and no place is safe for a normal family or retirees.

bgrfrank - couldn't agree more. My husband is in finance and we live on 157th St. People expect us to live downtown but the reality is, his job can evaporate at any moment. With the amount of space we need with 3 kids uptown was the only choice that allowed us to sleep at night. I cannot believe over the last 5 years how much this area has changed in terms of demographic. Will be interesting to see how the outer boroughs develop/change. I really cannot think of any part of Manhattan that isn't picked over.

yeah, screw those bankers and all that tax revenue.

I'd have to disagree falco. Not all tax revenue is the same. Like alcohol/cigarette tax..... Tax of professional stadiums and bankers sorta filter to a highly paid pool of tax cheats that pay 15% and not the 40% that 'wage earners' pay.

Trust me, I spent more time doing cross border 'loan' deals which in essence shifted income tax to Ireland than the US. The loans were nothing more than repatriation of shifted income to offshore to avoid the 'onerous' tax rate of the us.

One time we had a PowerPoint of 45 little boxes. 43 of which were created so that each tax jurisdiction would 'ok' that portion of the deal. What a mind bender.

See you are not 'guilty' of cheating if you compartamentalize specific portions of the transaction. Like the nazis getting one guy to push ppl into the chamber and another to drop the gas tanks into the.... See no one is at fault.

I should say 'tax for stadiums'. It's like building a federal highway to a whorehouse in private lands owned by a las Vegas politician.

What sideline buyers should always remain conscious off is the longest the Fed wait until it rise interest rates, the worth your position down the line. When (not if) mortgage rates double, the value of your property will drop a whopping 33%. People are making a purchase decision based on the monthly payment they can afford. Buy today a $1M apt at 4% over 30y fix with 20% downpayment. That's $3800/month. When rates will reach 8%, to pay the same monthly the value of the apt will drop to $650K.
When that shit happens to you 2years after you bought, simple, you walk away, but when that happens to you 10, 15 years down the road...What do you do? You suck it up!
So imagine the picture for a second! You bought an apt 15Y/20Y before w/ a 21 Years tax abatement, and suddenly realize that market price is over 30% less than you paid for ( because Mortgage rates doubled) PLUS, your monthly maintenance charged is gradually going from $500 to $2500 /month! Do you really want to be that sucker?
NO THANKS!

Oh! And i forgot to mention that that $1M apt cost you $1.6M after 30Y once you add up interest rates. So you end up having paid $1.6M over 30Years for an apt that will only be worth $650K! Not what i call good management of your own finances!

"Oh! And i forgot to mention that that $1M apt cost you $1.6M after 30Y once you add up interest rates. So you end up having paid $1.6M over 30Years for an apt that will only be worth $650K! Not what i call good management of your own finances!"

Unless your only other option is to live on the street, you have to take into consideration how much you would have spent on rent over the same 30 years.

Because corporations are doing what Washington won't do - effectively create a corporate tax rate that isn't the highest on the world - to w67, corporations are the equivalent of the Nazis.

"Without Wall Street, New York becomes Philadelphia” - best quote.

This is a great article.

Very interesting article. I hope NYC manages the transition well away from dependence on Wall Street to more tech, science, leveraging the advertising, media and law cluster we have. Philadelphia! Never.

Agree with Maly!

tech, mini cluster here (silicon valley/SF WAY more relevant). Science, interesting but not likely - universities and top labs are NOT going to regenerate to NYC any time soon. advertising - prolly the only relevant example but a fraction of the overall "gdp" of nyc. law, probably more than half their revenue is generated from the financial industry - its a trailing indicator, not a leading one.

So, kill the financial industry and watch the contraction continue. obama is trying his dardenst to do so and he may get his wish if he gets another four years. as i have said before, w67th 500psf will be the ask instead of the bid. great points, maly. i think i see pink mushrooms growing in central park and lollypops rain down on the city on saturday afternoons....

tumbleweeds.........

The banks know it the bankers know it, everyone knows it. The model is broken. The big banks do not have clarity with regards to future cash flow, and earnings. It will take time to figure out.

I'd love to see NYC become more of a hub for science. Cornell just won the bid to build a new engineering/applied sciences campus on Roosevelt Island. The thing is though, none of these industries (tech, science, etc.) can come anywhere close to generating the kind of incomes that Wall Street has produced. As far as I'm concerned, this is a good thing. The way people think about money here in Manhattan is so out of touch with the reality of the rest of the country (and the world), and this can be laid squarely at the feet of the finance industry.

I'm old enough to remember when biz was crappy in this town. When big mac wasn't a burger that would kill you but a desparate bond play to keep this city above water. I remember the outflow of peeps to the burbs. I remember the danger that lurked around every corner as we kept our wallets in our front pockets. Everywhere defaced unrepaired facades, dirty unrepaired parks and monuments and cheap living. Those who think this town will be the same only with cheap residential re are mistaken. When 500 per sqft is the mean ask the streets are going to feel a lot different.

not better...

Agree, falco. Very hard to keep the balance between having a city cheap enough to keep a "middle class" and mean streets.

yes agree..FG..... pfffff.. the bubble continues to deflate.

yeah, so i wouldn't "bet the farm" (you'll get that joke in a second) on science or biotech saving manhattan. here is the totally awesome new york outpost for alexandria real estate equities, i think the largest us landlord of science-focused facilities.

http://alexandrianyc.com/ersp.html

here is info on their nifty loan program

http://www.nycbiotech.org/pdfs/ERSP_fund.pdf

here's the one when the first of planned 3 towers got their first tenant with much fanfare

http://cityroom.blogs.nytimes.com/2009/07/21/east-river-science-park-has-its-first-tenant/

and here's the one when they turn the site of the second tower into a farm (funny ha ha)

http://www.nytimes.com/2011/12/25/realestate/temporary-tenants-bring-life-to-stalled-construction-sites.html

i thought this was an interesting snip about having capital but not spending it from the developer......

"Joel Marcus, chairman of Alexandria Real Estate Equities, says that although his company has the wherewithal to self-finance its next building, “there are a lot of economic storm clouds around right now, and we’re not going to be foolish about how we deploy capital.”

maybe new York comes full circle and gets split into patroonships?

and omg renter hataz did you know there was an anti renter party and an anti renter war?

http://en.wikipedia.org/wiki/Anti-Rent_War

interesting everyone thinks that wall street guys make so much money. ok so a few do. for every one of them, though, there are several in the city that are entrepreneurs. are any of you aware of how much you can make owning a pinkberry, a mcdonalds, a flower store, a bodega, supermarket, etc, etc, etc. not to mention opportunities to sell things on the internet? open excel and crunch some numbers next time you pay someone your hard earned cash and figure out how much these businesses make. most lose money so i'm not suggesting this is an easy route but i think u r barking down the wrong tree if u think wall street and law are the main contributors to wealth in the city. that is a gross misconception. i know guys who net $200-500k per month and are in their young 40s. no one knows it because they don't show off. that's the difference between creating wealth (u appreciate it) vs getting handouts from the government (wall street).

wall street and law partners stick out because those idiots (ironically) spend beyond their risk-adjusted means. a 28 yr old trader in a ferrari is not too different from the $20/hr idiot driving a bmw. those of us in business don't spend too show off, but spend on investments. so although i feel that the wall street demise will contribute to a decrease in prices, you would be mistaken to think that there will not be a price floor set by the business owners (who own the vast majority of manhattan already)! i have no crystal ball but at about $700 per sq ft you would start to get a lot of takers....

and btw ultimately the price will be set on the commercial side. if u r comparing renting to buying then u r only looking at passive cash flow investment but the same space can be used to generate active cash as well with much higher yields. finally if the income tax rates rise this will set a floor under commercial space because as a business owner u end up spending more in ur business when tax rates are high and "cashing out" and buying stocks and bonds when tax rates are lower.

"Without Wall Street, New York becomes Philadelphia” This is the most stupid quote ever!
Do you think the 47 millions tourists coming to NY each year come to see Wall street? Get real!

Well stated, nyc1234.

Some of the biggest money people I know don't work in either law or Wall Street.

nyc1234, well stated...

covert entrepreneurial wealth in this town is verrry underrated, just as they want it.. who can blame them, since they actually earned it for the most part?

once the wall street (or friends/family) find of their money these guys will have to listen to a sales pitch every other corner about why they should give up 2%/20% on their portfolio..

Not that covert. All public records these days.

As an entrepreneur, I want to believe NYC1234's post. As a downtown resident, my experience is directly contrary. Nearly every person I have met in my time down here is connected to the finance industry, either banks, private equity or hedge funds. In many cases it is both spouses.

Now think about volume. 7000 employees at GS alone saw their pay dip over 20% this year. In real numbers that is more than $100k less for the average worker, assuming you were not one of the 7% or so that have been laid off in the last year. Now consider the widely held belief (as per the article) that this is not a blip but the new reality. Then think about how this is being replicated at much larger(albeit less well paying) banks across the city.

@nada/wbttom. Thanks. I'm guilty of running ppl off the board, but there goes bj41. Fking hilarious. Living above the armpit of midtown tunnel with attitude. You go sister.

@nyc1234. How did I forget, the pinkberry owner will save us! Doh. Yes the small cash business owners that report all their cash receipts to be able to pass 5th avenues coop boards. Yes the immigrant Chinese restaurant owner who would rather spend $700psf with $400k down and an out of whack rent/buy ratio...... Yep he'll put a floor in all the $1mm studios. Forget the fact he's earning 50% returns on new restaurant openings.

Buy now or be pinkberry money priced out forever! Flmaozzzz.

For the price of a first class tkt, Mr. Chang doesn't want to bring his entire village over one at a time to make a better life for his kin. Yep, he can't wait to get a Perna plaster dildo on 300 Mercer with real walls. 20yrs of manual labor to get that 50 inch led tv with Xbox, play station and 24 hr porn. Fking hilarious. $700psf! Just cause nyc1234 paid $700psf, we should all put a floor on it for her.

pinkberrys, baloons, frosted cakes, lollypops and pink mushrooms. nirvana it will be.

tumbleweeds.......

Where is it written $500psf (1998) nyc prices comes with armageddon?

Like holders of pearl in the last bubble, most just stared at their little nuggets....... And in the end they were just beautiful pearls, bought and sold for their beauty and not what someone else would pay for it in 12 months.

$500 would put us back to 1999. Mean Streets was 1973. What do you think the ppsf was then? $200?

If we hit $200, or even $500, I'll almost certainly buy (again). When's that happening (roughly), guys?

Ask Bernanke! He's the one keeping rates artificially low...

just like when you bot stocks in march 09

That's called damage control! They can't stop the bubble from deflating (prices are still dropping even with rates @ historic low), the best they can do is trying to slow it down. If prices were flat out crash, everybody would walk away from their mortgage and the financial system would collapse!

were = would

Malthus more like $100psf. Sometimes you just signed and took over the maintenance.

See that's what irks me. A good portion of the nycers were the beneficiaries of their grandparents of parents of the 70's bc of their lack of income 'could' not move to the burbs. Ppl with money left in droves. Now these same families like Ali 55+ older nyc borkers think their shit don't smell.

Hey Ali good on Harvard for that chinese Knicks player. Never mind that he had to score 300 pts higher on his SAT and be given the privilege of competing against the other 'minorities with 300pts hugher'. Let's just overlook that cause Ali, you were on a nationally ranked hockey team when you got into Harvard, right?

Bernie.
How would you like your eggs?
- over 0%
How would you like to pay for that?
- my 0% capitalone card
How would you like it tonite (tranny)?
- zero guilt, with a strap on.

The $500/sq ft discussion is getting old.....We have been talking about this for the past 5 years....

Really, Brooks2? You are the one who said "Sell!" 3 months ago.

Brooks2
about 3 months ago
ignore this person
report abuse

i think in a few months you'll see that if you sold yestersday... it would have been a good sale.

"Ask Bernanke! He's the one keeping rates artificially low..."

sledge, so I guess the logical question is, can he keep this game going long enough? I'm going to take a wild guess and say you think it's just a matter of time before rates shoot up exponentially. What then?

Expend your cash reserves and wait until it happens! If you already have $200K set aside today for a 20% downpayment. That same $200K will represent a 30% downpayment once the rates will have doubled and property prices adjusted accordingly. You'll be in a better position to pay off your loan quicker and refinance at a lower rate down the road!

tent city in lakewood, nj has a few openings........

I must admit I was pretty surprised to read this, I hadn't realized just how much of our workforce is in finance;

"The 344,700 workers in the finance industry collect more than half of all the wages paid in Manhattan, although they hold fewer than one of every six jobs in the borough. The pay gap between them and the 1.5 million other workers in Manhattan"
http://en.wikipedia.org/wiki/Economy_of_New_York_City

That's @ 20% of the workforce.

"Financial services account for more than 35 percent of the city's employment income"

But bottom line is, if rents maintain, the market won't crash ($500 psqft). There will always be investors to dive in.

Sorry w67, I love you brother but $500 per sq ft average condos/coops manhattan means apartments will be selling between $300 and $700 per sq ft. It will be armageddon and everyone's home worries will be way behind the sealed shut banks.

Incidentally, amongst some national wealthy friends, there is a mad dash to Vegas inventory right now.
Talking about 1500 sq ft single family homes for 50K. Getting a measly 1K a month rent sounds like a no brainer.

1)Of course, find the actual tenants that are renting.
2)Convince me every continental state will stop building casinos so people have a reason to fly X hours to the middle of the desert besides needing to see Wayne Newton.
3)1 year, 1k a month tenants don't destroy 3K refirigerators,etc when they leave.

Ive warned them.

"1 in 8 jobs in NYC and 1 in 13 jobs in NYS are linked to the securities industry."

Is this seperate from the category "finance" or part of?
http://www.osc.state.ny.us/osdc/rpt12-2012.pdf

I believe Securities is a subset of Finance (Finance includes insurance and commercial banking I believe).

rangersfan, I've been to that tent city in Lakewood. ( incidentily, that's my plan B )
Problem is that I'm Eddie Albert and my wife Ava Gabor, who adores Park Avenue, won't move.
Even my Licenced Real Estate broker, Mr. Heynee can't seem to convince her.

of jobs in NYC, whatever percentage is finance related, what percentage of earned income is finance-related??