Open House Report: 151 West 86th Street #8C

It looks like an attractive apartment--I like that for the most part the finishes have a relatively classic feel. Where do you think it will trade? $2.2 or so perhaps?

I also thought $2.2 and surprised myself by liking the three sets of doors going from DR to kitchen. This should do ok although the maintenence is close to 3K which might or might not even hamper the deal depending on what a buyer really needs. Like it.

bramstar: I don't have a clear idea about pricing for this one. Dated touches like the textured wallpaper in the LR would put me off paying full value for the reno. That stuff won't bother everyone. Maybe $2.3 - 2.35MM?

320 West 86th #6B is a decent on-market comp. Unfortunately, the ask on that one hasn't budged and the maintenance is higher, so it doesn't tell you much.

i really like the size/layout of the kitchen as well as the DR doors (though they may not be very practical). kitchen floors and counters need to go, but i could probably live with the rest. wallpaper and carpeting throughout would also need to go. 320 has an odd layout.

sounds like a bargain.. you 4 should pool together to buy it.

Go on hurry before it gets out of reach for you... WHAT AM I TALKING ABOUT.. .WE ARE ALL RICH.

The old style 7 is interesting. It is nice that you get the space of the extra maid's room, which here it looks like they put to good use by expanding the kitchen. Regardless, at the end of the day, the layout seems like it is for the classic 6 buyers out there given that there is no third (family) bedroom.

jojo10: Agreed. With this format, there's no way to create a third BR that looks like anything but an afterthought. Some old-style sevens are more flexible; it depends on the positioning and size of the DR and servants' quarters.

w67: You don't like our numbers? That's fine - everyone's entitled to an opinion. What's your forecast for this one? Or would you rather just rail against extraordinary popular delusions and the madness of crowds?

Great review, W81.

W81: lol

These reviews are good writing and good reading, dwell.

As usual W81...great review and helpful!

Yes, good writing n' reading. We want more, W81. Good forth & review.

W81 From the pictures, the sale of 6C last year seems like it was in good shape (if you like those floors) but obviously didn't have the upgraded kitchen and master bath. But it sold for $1,875.000. And the higher C line that sold at arguably the top of the market in 2007 sold for $1.7. Another recent C sold for $1.8mm. Do you think that the upgrades in 8C were worth the extra $620 - 800K difference in these last 3 apts and the ask for 8C? Those lamps in the gallery don't look that expensive and as you say, the appliances are not top of the line. From my experience I would ball park (without having seen the actual apt) the renovations at around $200K. So the question is, if that is a fair assessment of the cost of renovations, has the market gone up in the last few years enough to justify the $2.5mm ask.

Apt23.... In a word.

Noooooooooooooooooooooopooooopoooooppooopopopooooooooooooopooooeeeeeeeeeeeese

Who the fk in a downward spiraling market overpays $800k for a $300k Reno and 4 floors of elevation? Oh I know ppl that would love their mama to give them $4mm in bubble profits. Flmaozzzzz.

Or they can play the Crying Game of 24 months of slow bleed.....

apt23: I spent a fair amount of time in #6C. IIRC, the only part of the apartment that didn't need gutting was the second bathroom. There were also questions about the availability of adequate power to upgrade the kitchen and climate control.

I think this market sector has been pretty flat for the past year. So, is #8C worth $500K more than #6C was? It's hard to say. #8C will draw a very different buyer pool, so the comparison may be irrelevant. It wouldn't be irrelevant to me, and it might not be irrelevant to an appraiser; but the people who showed up on Sunday didn't seem concerned about the 2011 clearing price for a wreck in the same line.

w67: Would you like to predict the closing price for #8C?

2.1mm tops

Price and month of closing please.....

Actually, I shouldn't say #6C needed gutting. We overuse that term. What #6C needed was a total makeover - probably a time-consuming and expensive one. For example, the master bath had been redone circa 1980 in various shades of brown. It was perfectly functional, but I doubt the new owners kept a single tile of it.

W81: That is exactly the point of my question. If you put 200K to re do the bathroom and kitchen expansion in 6C or -- more to the point-- 11C which sold at the top of bubble in 2007 for $1.7mm, would it sell for 2.5mm right now? If so, I would like to partner with 11C, renovate the apt, put it on the market and split the profits.

I understand that 8C might well sell near ask but I think it points to w67's lemming viewpoint. Say we put 200K into 11C for a base cost of $1.9mm -- and an equal aesthetic comparison to 8C but arguably more valuable as it is on a higher floor. There is not one chart, one article, one economist, even one sane realtor who would tell you that the market has gone up enough to support a 31% rise in prices since 2007. Yet, buyers will jump in to buy 8C because it is all shiny and spit polished.

apt23: I wish there were a simple answer. FWIW, I think it would be difficult to renovate a "C" unit to #8C's level for $200K; just the cost of carrying the apartment while it's uninhabitable could easily be $50K or more. Also, #11C went to contract in November 2006, before the peak. That might seem like hair-splitting, but the final run-up in 2007 was pretty dramatic. Ten months later, the number could easily have been in the 1.8s. Note the sale of #5C, also in original condition, for 1.8MM about six months AFTER the peak. The nearest thing to a peak sale in the "C" line was #4C for 2.1MM. That one had a nicely renovated - though unexpanded - kitchen; the rest of the apartment was just OK; see http://www.corcoran.com/property/listing.aspx?Region=NYC&ListingID=982860.

I agree with your fundamental point: that anything over $2.3MM for #8C seems awfully close to bubble-peak pricing, at a time when the overall market is still well below peak levels, even in nominal terms. W67 may be right that it makes no sense to pay a 2007 price in 2012. All I'm saying is that it won't surprise me if somebody does.

It doesn't make sense to me but I believe you are right w 81. It will probably sell for somewhere around 5% below ask. And though I did not factor in the cost of carrying the apt, I just completed a huge renovation on 2000 sq ft and 200K can cover some major work and top of the line additions. Even the recessed lights in 8C are cheap cans. But good for them. They will probably reap a very nice profit on their apt. The same is not necessarily assured for the next buyer however.

>The same is not necessarily assured for the next buyer however.

You don't know the future?

>apt23 - but the renovation is in Florida, right? Very different cost vs. NY

Let me get this straight.. w81, in 2007/8 I asked all the bulls/borkers three things:
1) Did we have a RE Bubble?
2) if so, how big of a bubble was it;
3) Are we done deflating?

Nobody answered.

I've called for $500 psf ever since. Now that we are for the most part clearly headed in the $500psf direction if not outright there for huge swaths of manhattan, you'd like me to opine on the sale price of 8C. Is that like if I called for spot price of $1700/ounce of gold 6 years ago and it came to be... you came up to me with a gold inlaid penis bauble and asked me to predict the clearing price of it?

M'okay. I'll play. No matter what price it clears at, I bet that the same amount of cash invested in Sprint stock today at $2.72 share (on a risk adjusted basis) and after transaction cost will beat whoever/ninny that buys this place... Your bet w81 is $2.3MM that would buy 845,588 shares... LET THE GAMES begin.

w67: $500/sf for #8C comes to around $900K. Ballsy call. I think that's a 1997/1998-ish price in nominal terms, earlier in constant dollars.

You're probably right that Sprint will outperform #8C going forward; but consider the performance of those two assets over the past five years. At the top of the Manhattan RE bubble, in Summer 2007, Sprint traded around $22. It fell more than 90% over the next eighteen months, climbed back above $5, and now sits below $3. By comparison, #8C would probably have fetched close to $2.5MM at the 2007 peak. If the owners had needed to sell in early 2009, they might only have gotten 1.7. In 2012, they will get something north of $2MM. That's pretty good, compared to where they would be if they had sold the apartment in 2007 and invested the proceeds in Sprint.

West81st
36 minutes ago
ignore this person
report abuse w67: $500/sf for #8C comes to around $900K. Ballsy call. I think that's a 1997/1998-ish price in nominal terms, earlier in constant dollars.

You're probably right that Sprint will outperform #8C going forward; but consider the performance of those two assets over the past five years. At the top of the Manhattan RE bubble, in Summer 2007, Sprint traded around $22. It fell more than 90% over the next eighteen months, climbed back above $5, and now sits below $3. By comparison, #8C would probably have fetched close to $2.5MM at the 2007 peak. If the owners had needed to sell in early 2009, they might only have gotten 1.7. In 2012, they will get something north of $2MM. That's pretty good, compared to where they would be if they had sold the apartment in 2007 and invested the proceeds in Sprint.

west6fuckface has been bellowing about 500 p/ft pricing for years. specifically for the this type of apartment. it is laughable.

now he is so desperate he is trying to find other investments to outperform real estate, as if they're in a drag race of some kind.

Apt23: To illustrate the carrying cost of a wreck, consider the owners of #8C. They closed six months ago on their new home, which needed extensive renovation. Even if #8C sells quickly, they will have carried both apartments for around nine months by the time the sale closes. It could easily wind up closer to a year. If you see the asking price on #8C come down, it might be an indication that their new apartment is nearing completion.

If you see the asking price on #8C come down, it might be an indication that their new apartment is nearing completion.
............or that it is an indication that it is overpriced and no one can get a mortgage because of comps in the same building.

Btw, w81, nice comeback to W67. Ha. Although I don't think w67 would have chosen Sprint in 2007. Real bets would have to be given in real time. not hindsight. For example, if w67 had chosen Apple which was a hot stock in 2007 he would have won as Apple was trading at about $120 in the summer of 2007 and is $550 now. So bets are only relevant without the advantage of hindsight.

I think I would take w67s side of the sprint vs #8C bet for the next few years. Though I would prefer to choose a well run MLP yielding around 7%. Or even a high flyer MLP like RNF yielding around 10% in the ag space. You will double your money a lot faster than you will with 8C. So make my bet an equal weight of RNF stock.

ph41: labor costs might be lower in Miami but high end products like granite or kreon lighting are the same. Also carpentry and millwork is high everywhere including Miami. And believe me, I did 4X the work that 8C did on that apt. I am not faulting them, they are marketing the apt well. I just believe that a buyer who bids close to ask will be paying an extra half million for the apt that in reality is only worth an extra 100 - 200K in upgrades over comps in the building.

w81 --point taken on the living costs during renovations. However, an appraiser does not factor in those costs in the value of the apt. So in essence, if you contend that the buyer must factor in those costs when making a bid, the buyer will be paying for the living costs of the seller who might choose to spend 50K on high end rent rather than going to live with grandma. Or in this instance, paying for the seller's bridge loan to carry two properties while they renovate a new home.

Apt23: I wasn't proposing that we bet on past performance. My point was just that there were far dumber places to put money in 2007 than a coop on the Upper West Side. One of them happens to have been W67's current favorite stock. Sprint might be a great investment today; I'm not making any bets on it.

Aren't comparisons between a stock and a primary residence somewhat AAPLs-and-oranges? I don't really get involved in those debates, and I don't have a strong feeling either way.

there is a more fundamental question. how long do we want to go forward under the mistaken belief that the market is always right, i.e. that the price paid for any given property at a point in time reflects anything other than one (or perhaps two or three) individual view points at that very moment.

there is no doubt (that our overall economy is in trouble. there is no doubt that the federal government has engaged in massive fiscal and monetary stimulus in an effort to mitigate the problem. there is much doubt as to whether that has worked or will work in any long term systemic way.

this absurd assumption on the part of many posters that manhattan real estate at $500 per square foot would represent existential disaster for the greater world is shall we say a little self centered. if wall street cannot contribute to the nyc economy at some close approximation of where it was circa 2004-2008, how can the assets that benefited continue to maintain their magical levels?

West81st, really??? The reason w67th likes Sprint today is precisely because it has fallen so much. Maybe he's wrong about it currently being undervalued, but the drop in price is precisely what attracts him to the stock.

Apt23: The appraisal question is tricky. If Manhattan coop buyers tend to pay a premium for renovated apartments, relative to the value of a comparable wreck plus the cost of the improvements (less wear and tear), what should an appraiser do? Value the improvements rationally? Or assume that buyers will continue to pay the premium to avoid the hassle and risk of renovating?

wow. take a look at what you just said. isn't the answer pretty clear? shouldn't an appraiser act rationally? isn't that precisely how we got into this mess in the first place? oh well, if the majority of people think prices are reasonable, they are?

columbiacounty, congratulations, you are like an 8 year old.
What is "right"?
What does that mean the market being "right"?
If I have something for sale, and someone will buy it at a price today, am I "wrong" because in 6 months it won't be, or might not be, sold at the same price? Should I sell it at the theoretical price 6 months from now so that people think I'm nice and righteous and I'll go to Heaven?

Seriously, congratulations, you've created in your head this ridiculous theory that for "any given property at a point in time" that more than one, "(or perhaps two or three)" people could buy that property. In the history of the world, in THIS universe, excepting ponzi schemes and fraud, when was a single piece of property bought by multiple people at the same time?

Complete idiot.

And here's more: "there is much doubt as to whether that has worked or will work in any long term systemic way." Well, when was the last time we had certainty? There's a point in a child's education when that child has to understand that there aren't definitive answers to all problems, and life is about discovery, testing, refinement and reaction. Apparently columbiacounty and apt23 don't understand this and haven't gotten to that grade level. "Oh no, I thought Ben Bernanke would push his button, and President Obama would push his button, and then the economy would be good and everyone would be happy, unicorns and fairies, pot-o-gold".

how is this any different from spending too much money renovating a B minus property so you end up with the most expensive unit in the building? because some one else did it too?

>West81st, really??? The reason w67th likes Sprint today is precisely because it has fallen so much. Maybe he's wrong about it currently being undervalued, but the drop in price is precisely what attracts him to the stock.

Oh look, the Porsche was $175K just last year. Now it's $125K. All I need to do is get that deer smell out.

>oh well, if the majority of people think prices are reasonable, they are?

Yes

"My point was just that there were far dumber places to put money in 2007 than a coop on the Upper West Side."

Hmm, yes the Hasselbecks are going to have spent $1.0M for 4 years of living in 2300 sq ft with mediocre view on West 99th St. If they get their same-as-peak asking price of $3.3M. If they get only the $2.9M fair price you declared, it's going to be $1.4M. The rent on the place is worth $500K to $700K over 4 years. So they are down $700K to $900K on the $700K downpayment they made.

http://streeteasy.com/nyc/talk/discussion/30208-open-house-report-245-west-99th-street-16a

Stocks are up small since then, bonds are way up. Even if you cherry-pick stocks as you have done with Sprint, you get a worse outcome with the Hasselbecks.

Columbiacounty says you can't take into account the actual price that the Hasselbeck's sold for. You have to take into account the theoretical price approved by the County Executive in Columbia County, or whomever else or whatever decision-making body columbiacounty thinks should be anointed. Then the Hasselbecks will have to give back the difference between what SOMEONE ACTUALLY PAID IN THE FREE MARKET and "what is right" to the magical wizard of all things more "right" than the market.

The Unicorn said I sold my apartment for too high a price, because only 1 person paid the price and 2 others bid 3% below. The Unicorn said that my apartment "should" have sold for $500 psf. Now therefore I must pay the Unicorn the difference between the actual price and the "right" price.
Must pay the Unicorn. Must pay the Unicorn.

I have an apartment for sale. Let me hire a "Unicorn Approved" broker who will sell it at the "right price" of $500psf.
Finally, a broker everyone loves. Unicorn Approved. UL Listed. Good Housekeeping Seal. JD Power Winner.

the argument is that reidential re as a primary residence is not the investment it once was. In fact it would appear that as of now and going forward you would at best break even. With that mind set, how does this effect current values? I can do better in stocks than re so, rent, don't own and invest house money in the market...prosper, retire early with $$$, build a kick ass mausoleum.

Fact is, people want to own. They want to customize their crib for their own fat little ass. This will never go away and must be factored into the equation. By the way all of you who are chat'in up the lack of bonus money??? My friends who are finacial investors have made a boat load of $$$ over the last 3 years. The are in good shape to buy prizes.

inonada: The combination of a short hold period, high transaction costs and maximum leverage would be a recipe for a big percentage loss even if the value of the asset didn't move at all.

Levering up is a choice. I think it can and should be discussed separately from the investment itself.

The high transaction costs are a fundamental problem. Keith B. and others are chipping away at those costs with commission rebates, but that only goes so far.

Although the short hold period is a risk for all buyers, I don't think it's the SAME for all buyers. Considering what they do for a living, and where they come from, the likelihood of relocation and/or wild swings in income was relatively high for the family you mentioned at Ariel.

As a long-term bear, I would never argue for Manhattan apartments as a good investment. In most ways, I think they are probably a crappy investment. Yet people continue to buy them, at prices that defy micro- and macroeconomic sense. I

Maybe the lemmings' march to the sea is finally ending, and #8C will provide more evidence of the weakness Urbandigs recently documented in the $2-5MM price range. We'll see.

For now, I'm reasonably certain that #8C is valued somewhere between $1.9MM (the floor established by the sixth-floor wreck) and $2.7MM (the level set by the adjacent, larger "B" line over the past two years). I split the difference around $2.3MM. From the perspective of rent/buy math and affordability at prevailing income levels, that price might not make sense. But it will be a notable breakout if the closing price is more than 10% away from $2.3MM in either direction.

W67...
"I've called for $500 psf ever since. Now that we are for the most part clearly headed in the $500psf direction if not outright there for huge swaths of manhattan, "

You certainly have stayed with your call. But the second part of the statement is so full of hedges and non-statements as to be diluted into oblivion. "headed in a direction" is just that, up or down. We are no where near the $500psf price level. Not that I'm happy about that.

If someone else put that out there you'd slay them. Just keepin it real. I'm a bear, but gotta call 'em like I see 'em.

Understood walterh7... but WHO in their right mind would have predicted a 36 month moratorium on foreclosures by all the lien holders?

Who would have predicted 5 years of 0% rate fed funds? (in 20 years an MBA will be studying the charts and say WTF was that flatlined area?)

w81...I'm up $59,191.17 in a day... ooops. forgot to add in the $20 in round trip trade.. .lest you accuse me of playing unfair.....

I do agree with you, it is unfair of me to be touting a stock I am in 160K shares in at $2.40/share. I also have banking experience in syndicated loans, work outs and bankruptcies of major companies and how most players will act... which in this case will be to roll over the entire debt at the first inkling of cash stabilization... as mgmt => when there is breathing room wouldn't you want another 2 years to carry out a turnaround strategy?

The upside to me:
1)The huge short position will be squeezed turning every shorter to join the good side and root for a turnaround whether they like it or not;
2) reversion to mean, i.e. a $500 McD stock versus $10 Burger King stock... I'm gonna short McD and long BK;
3) Short of bankruptcy.. .Sprint ain't going nowhere and every day they stay out of bk, one more day to double my money;

I'm swinging for the fences on this one position... but most ninnies that continue to be long NYC RE with 10x leverage have no fking clue how concentrated their risk and how little they have to gain even if they themselves hit 4 HRs in a row... they are on the losing team.

BUT if ANYONE RE BULLS wanna kick me in the shorts... take the SHORT position on S... I've got another $400K that I'd like to sink in there and I'm a buyer at $1.2/share....

I'd rather see columbiacounty put their money behind your Sprint bet. Columbiacounty genuflects to your posts, so let's see him support you. Come on columbiacounty, your master has laid out his logic and his numbers, get behind it.

w67: Congratulations on your astute investment in Sprint. Now, would you like to predict the closing price for #8C?

going to have to agree with w67 on this one. Without the hand of government, we'd be at $500psf already..

U wanna use my enormous financial brain to determine of there are stoopid people with too much money?

The answer is yes. And their small financial brains function on the level of:
Same line X wreck sold 6months ago for $1.7mm. Fabulous renoed 10% bigger Y sold for $2.7mm 2yrs ago. This in between size higher floor better renoed unit will sell for between $1.7 and $2.7mm and if it's doesn't! Then it'll tell us where the mkt is going.....

Flmoaozzzz.

Sometimes my neck hurts to carrying around all this brain mass.

From. Gawd damn.

It takes big ballz and bigger brains to see where manhattan re was headed in 2004-2007 when every ninny was a re bull. And I've said it before, but I'll repeat it again. The enormity of this bubble was way way way underestimated even by me....

What's hilarious is that you call yourself a re bear .... But have yet to tell me how much of a bubble we had. Will the market correct when Interest rate rises? Will will overshoot on the downside?

Me, it was 200% above normal. Market will get hammered at 6% mortgages. And like all bubbles we will overshoot. Some would argue tulips are still too cheap......

If Wes Welker hadn't inexplicably dropped a ball that hit him squarely in both hands, the Patriots would have won the Super Bowl. Does that mean the people who bet on New England were right? No, it just means their logic was sound. I doubt that carried much weight when they tried to collect on their bets.

Besides, I'm not even sure your premise is correct. #8C will trade somewhere north of $1000/SF. Do you really think tighter money would knock more than half the value out of that apartment, in a 35% down building that attracts buyers who can afford to borrow even less?

Sorry - the Wes Welker analogy was directed to Brooks2.

W67 - I think the most likely scenario is that we'll make our way back to the historic trend line for values. The size of the bubble was, essentially, the divergence between that trend line and market prices at the peak, in H2 2007. I don't know what the percentage was, though I think it was closer to 100% than 200% (i.e. 2x historically "right" values rather than your estimate of 3x). Either way, it was huge. Will prices overshoot significantly to the downside? You're right that it tends to happen at the end of every bubble; that doesn't mean it will necessarily happen this time.

I know I have posted this chart many times before. But to w67's point, this chart does not reflect govt intervention. When that intervention is over, the reversion to the mean may very well continue. Which would be a bitch for buyers in the last few years - and perhaps current buyers. Who knows? But this chart is rather fierce and supports a further downturn if the economy only "muddles" along as predicted by many pundits for the next few years.

http://www.theatlantic.com/business/archive/2010/08/home-prices-may-drop-another-25/62049/?source=patrick.net#toolsTop

"inonada: The combination of a short hold period, high transaction costs and maximum leverage would be a recipe for a big percentage loss even if the value of the asset didn't move at all."

Put some numbers behind your hand-waving. There was a $700K to $900K hole to fill.

1) The average hold period in the US is 7 years. Another 3 years would have added 3 years of negative carry at $100K relative to renting. No dice.

2) The tiny fraction of the population that would use you guys would have saved $50K. Big woop.

3) Put the $2.6M loan at 4.5% blended for tax benefit. SPY returned 4% annually, so if paid-cash was put there you get back $50K. Big woop. If put into a bond fund like TLT which returned 8% annually, it be a $800K in the wrong direction for the $2.6M loan, another $100K for the downpayment.

You like to say "held up well over the past few years", but you repeatedly fail to recognize that bubble prices require high capital appreciation just to tread water.

If things didn't happen as they happened, then my predictions would have been correct.

If I wasn't wrong, then I would have been right.

Despite my failure to predict the outcome in the past, I will be right in the future.

government can only slow it down, i can't prevent it. A football game has a time limit ,so bad analogy. We continue to see re prices go down, and yes, we have seen some apartments in decent hoods(in non land lease doorman co-ops buildings.. ie ME) trade below $500psf, we are headed there. W67 may have been aggressive with the time frame. and there is only so much government can do to prevent it. soon it will be raising taxes.. cost are going up.. interest rates my even go up... prices are going down.. there is no doubt in my mind.

I just lost 6 times in a row betting on black, therefore I have a 100% chance of winning black on the next spin.

it being the deflating real estate bubble

Santorum should not have won in Alabama because Romney should have won.

yea, but the facts are prices are going down. You can't dispute that.

I did not miss the train, it just left a minute before I got there.

And the train was there as was I, so technically I was correct.

I used Quick Pick and the winner also used Quick Pick, so technically I won the lottery too.

inonada: Right - if TCO consistently exceeds the cost of renting, the only way out of that hole is through appreciation. I didn't even consider that part of the bleeding at Ariel. I was focused on the capital loss. Thanks for correcting me.

I mentioned maximum leverage because it makes the percentage loss so hideous. I didn't mean that they lost more dollars because they borrowed, just that the same loss devoured a much larger portion of their equity stake.

Apt23: Thanks. That's the chart I was thinking of. It's national, so it peaks a year or so earlier than Manhattan and other details may differ. For the most part, though, the same principles seem to apply.

FKing hilarious... our entire financial system almost ground to a halt bc we were 100% overpriced......

bc 99% of ppl pay cash for homes in nyc

If we just use Montgomery, Mobile and Birmingham, the only 3 places I've heard of in Alabama, then Romney would have won.

If New York were North Dakota, then we'd be less than $500psf.

Al Gore would have won if we didn't have an Electoral College.

The war in Iraq was ok because of the Weapons of Mass Destruction.

It would have been the front door if the layout of apt23 was the other way
http://streeteasy.com/nyc/talk/discussion/25684-w-67s-prediction-come-to-pass-thru-the-backdoor

It was a bubble.

>But I thought bubbles pop.

This bubble was more like a balloon, it deflates.

>So you can put more air in and expand it.

Well that would create a new bubble

>We don't need that!

W81st, got it.

Brooks2: Different market segments are going in different directions. Over the long term, I agree that the direction that makes the most sense is down. But to where? $500/SF for prime Manhattan? Sure, in constant 1998-ish dollars. Wouldn't that get us back to near the trend line? As a target in nominal dollars, $500/SF seems like a major overshoot to the down side, unless I'm missing something.

Me thinks you cannot run scenarios with the following variables.
1) income
2) interest rate
3) present value
4) greatest re bubble know to man
5) leverage

Now just play with the variables with a $2.3mm coop, $3k maintenance, bonuses down some percentage. Change the interest rates to Ho hum 6%. Now take bonuses down a few more percent every year for 5 yrs....

And there you have it. PV at 50% of $1k sq ft.

It's pretty easy to play with numbers, the key is assigning a probability of it occurring. That's the KEY. Will we reflate to bubble bf interest rate rises? Will bonuses blow up again? Will credit get easier? Will systemic leverage increase?

Really quite simple to run a slew of scenarios where we get to $500psf and where sprint hits $5.

Btw a major overshoot would be $100 psf. Will we see it. Probably. When your mom bought her c9 for $28k, she probably could have gotten a c9 on 5th ave for $1.yes the carry was higher but so was the return.

Your mom scored big on this massive bubble but plenty more scored bigger. Not earned. Scored... And therein lies the problem with bubbles.

Putting food on the table is no game but it sure feels that way when you are scoring a living versus earning it.

Brooks2: Agreed - the football game is not a perfect analogy. On the other hand, a prediction that has no time boundary doesn't translate very well into real-world advice. And while real estate has no literal clock, a lot of buyers seem to hear ticking - biological or otherwise.

At least the flipper mentality seems to have faded. What's left is a lot of wealth chasing limited supply and a strong preference, among many people, for ownership - even after you hit them over the head with the unfavorable math.

#8C will go to a buyer who would almost certainly do better financially by renting, and who probably knows it. The option is certainly there, with rentals like this one up the same block: http://streeteasy.com/nyc/rental/805871-condo-115-west-86-upper-west-side-new-york . So, why does a mediocre apartment like #8C draw a crowd, asking close to $2.5MM? Stupidity and avarice are factors, but I think there's more to it than that.

The more is the fact people like your mother sells her 'home' for $4mm. Gives son $1mm and the new couple takes a $1.3mm mortgage. $8k in carry and 'ignore' the $1mm in bubble gift.

Or the 5th ave lady that bought a c12 for $1 sells her home for $15mm and downsizes to $2.5mm and leaves the rest in a irrevocable trust for her 3 cats.

Who buys the $15mm 5th ave? Well a retiring Cmbs Goldman banker.

That's how the 'winners' make poor suffering re borkers take on a $1.3mm yoke of a mortgage that's gonna take 30yrs to clear.

In my opinion this apartment overprice. It is not a three bedroom but rather a very nice two bedroom with a maid's room. There are nicer apartments on the upper west side much nice and true three bedroom. If I was buying now more than 2.1M is max I would pay for this space.

But no worrie. Now that the U rate is headed down and the foreclosure moratorium is suspended. I give NYC 3 years to really flush out the bubble prices.

Btw I'm only up $25k today on sprint. Shame really. I'm waiting for a big pullback. I should have gone all in in $2.4. Damn. Should have sold my coop. Fk fk fk.... Oh wait a minute. I took a $400k mortgage.... Prefunded my kids education (more) and I've got another $400k that I'd like to go into it with.

I get to write off a mortgage. I get to 'earn' LT capital gains in a tax advantaged way. Omfg. I'm gonna go out and buy an Audi R8 today to celebrate.

W67: I'm waiting for a pullback on Sprint to pull the trigger.

It seems that the apartment has generated interest indeed with bids at $2.1m to $2.2m - see here:
http://homepriceit.com/index_view_single_property.php?refid=1331744822&state=NEW YORK

oops - sorry - I meant here: http://homepriceit.com/city/NEW%20YORK

John75: That looks like an opinion poll, not a list of bids or even expressions of actual interest.

0023. U know it's a swing for the fences trade and my position is less than 1/5 of my liquid and 1/20 of my net and 1/100 of potential life time earnings net.

Just so you know... But would I take a $2.3mm leveraged bet on sprint versus this pos coop. Absofuckinglutely.

"absolutely" is such an ambiguous word ... must modify it for fellow apes so they understand.

Yes, you are correct West81 - sorry....What I meant to say is that people's pricing ideas are close to what you suggested....It seems though that the listing was submitted by someone who is interested in the apartment to get people's opinion on it....oh well...it will sell, but let's see how much....

Looks like 151 West 86th, Apt. 8C is now in contract.