The Death Knell of Manhattan Property Prices!

Spitzer & Blitzer? Didn't I say I own on Fire Island?

I got caught bs'ing? I don't think so. Read it again, JMan. You said something outrageous, & I gave you NUMBERS!

Give me numbers....

BTW quote me: on the NYSE we've hit a 52-week bottom.

wow you made 750k last year dam you must be so much superior to all the peeps on this board particularly to the peeps who made under 750k. Those peeps are just plain stupid.

Spunk, you extrapolate. I did make $750k last year, will make more this, but the year b4 made beaucoup less.

Read what I say. It should be gospel.

And you know I said you could raise your rent. W/ a papal dispensation from me, what r u waiting 4?

Spunk, since the sky's the limit, you should raise your rents 1000%. Right? They're your properties. So they're worth it. Right?

Tenfold. Just like NY County's 7fold increase in 10 years.

Cash in.

Wow I can't get over that you made 750K. I don't know what to say. I am so sorry I questioned your forecasts.

750k dam

steve-o, how many different languages have you translated douche bag into? FRAUD? It is clear to me who the fraud is on this thread. You my friend are a bonafide windbag. I guess social skills suffer a bit when you are locked up in your Chelsea apartment translating contracts 15 hours a day. Get some exercise will ya?

bjw2103, my "light at the end of the tunnel” question wasn't based on the market, it was based on an article regarding the cleansing of the sub prime mess. I asked a question and digs answered it.

Spunky and Juice, I have been hearing the same gloom and doom on Manhattan since 06. I have lived in Manhattan most of my life, and real estate has always "seemed" expensive. I have bought and sold several properties and I have always turned a nice profit. Right now I am attempting to sell a two bedroom two bath condo 1700+ square foot condo in Tribeca that I bought in a new building that I bought in 03 for 1.4. People told me that I paid too much at the time, we will se how it goes.If I don't get my price, I have a renter lined up for 12k a month which will give me a pretax profit, after mortgage and common charges, of around 6k a month. Not bad, but not terrible since I have only 400k tied up.
In my mind, the only thing that has changed, and it is a big thing, is that Wall Street is taking a hit. That is a problem, but I remember that Wall Street took a hit in 2002, and real estate did just fine. I am aware that there is a reluctance on the part of lenders to lend, but most people in Manhattan buying in the 2,000,000 plus range are just the type of qualified buyers that lenders will lend to. Interest only mortgages are low and are going to get much lower. My one month libor from Merrill that I locked in for my new house in the burbs that I bought two months ago is 4% this month, and getting lower. Mortgage rates will go down and lending for qualified buyers is not an issue. Rents in Manhattan are high, and one of the reasons why wealthy people own instead of rent is because they want to design their home the way they want (new marble, new kitchen, etc.) something you can't do in a rental.
As I said, Brooklyn, LIC, starter apartments in emerging neighborhoods may see some price reductions. However, there will be no price reductions for say, the Superior Ink Building in the West Village, not will there be fire sales at 15CPW. In fact, if they could build another 15CPW today in this market, all units would sell for higher prices than the first. Do you dispute that Steve? IF so, if you can get me 10% off any two bedroom in the Superior Ink Building, I will give 1% of the deal. Even a guy making 750k would not turn up his nose at around 30k for doing nothing but explaining to the developer why he should knock 10% off of the price.

Oh, JM - "Douche bag?" "FRAUD?"

You say something ridiculous - that "westernized countries love to own property" - I prove to you that it's ridiculous, and I'm the fraud? Please, guys, please! These personal attacks go nowhere.

FYI my income last year included a 60% gain in the stock market. We've discussed this elsewhere. My salary - wages and... - was not nearly that high.

So that you know what an endowment loan is, and why it greatly affects the property market in the UK: "The customer pays only the interest on the capital borrowed, thus saving money with respect to an ordinary repayment loan; the borrower instead makes payments to an endowment policy. The objective is that the investment made through the endowment policy will be sufficient to repay the mortgage at the end of the term and possibly create a cash surplus."

It's a type of annuity - in the end, you wind up not even paying the principal if the investment are solid.

mh23, I have never been to the Superior Ink building in the WV, except when it was an ink building, so I can't tell you anything about it. However, here's a listing down more than 10%:

http://www.streeteasy.com/nyc/sale/161370-coop-372-fifth-avenue-midtown-south-new-york

12/15/2007 Listed in StreetEasy with CBHK at $2,250,000
01/29/2008 Price decreased to $1,995,000
03/05/2008 Price decreased to $1,850,000

So it's happening. Whether that will happen in any individual building will depend on the particularities of that building, and the original asking price. What is true is that it's happening.

I am not discussing the $10 market - that is a different dynamic.

A must read for all of you who call me names:

http://www.nytimes.com/2008/03/19/business/19leonhardt.html?_r=1&hp&oref=slogin

It explains exactly what I've been explaining for weeks. So you can write to the reporter and call him a douche bag, too, JM. However, f you do, I'd be hesitant to state as you did that the All the Western World loves to own property, because the Swiss certainly don't. And I'd be very hesitant to say that if prices go up in San Jose California, that they're going to go up in Riverdale, Bronx, too. Or if rents are high in London they will be in New York, as well.

Wishful think however you want. Leverage yourselves all you want. Bear Stearns certainly did.

I love you all!

Steve. "Individual building...particulars" is a correct read on the Manhattan market, as it always has been. This unit is a coop with high maintanence is a bad location, for me. Were it a condo, and were the cc's around 1600, and if it had a 421a tax abatement, it would sell for 2.1 or so. My point is simply that, there will continue to be a demand for quality properties, and that the people who will buy them probably won't be viewing their apartment as a main piece of their investment portfolio. What we may see is a standoff between buyers and sellers, and then we will see who blinks first. If you remember, this happened in 07, and then beginning in Spring and summer and fall an enormous amount of inventory was moved. Will that happen now? Doubtful.
However, like in any market, if you catch a desperate seller who is infected by the fear in the market, or who simply needs to sell for financial reasons, a deal can be had. Are there a lot of people like that..time will tell.
I mention 15CPW and the Superior Ink building because I wanted to use as an example two well known properties by the same architect in different parts of Manhattan. Also, this is the segment of the market that interests me. What a studio will trade for in Kips Bay, I don't know.

mh23, I just look for market fundamentals. Even in the worst of times properties sell, life goes on. My point - which I've repeated a gazillion times - is that, overall, I don't see the fundamentals as supporting these general price levels in Manhattan. On a macro level, not a micro (building) level.

Not enough people in the world can afford a $3 million apartment in Manhattan. It's simply a fact.

The NY Times article explains nicely why prices shot up so much; it's also clear that while mechanisms are being put into place to stop the bottom from dropping out of the market, the very instruments and leverage and bad underwriting that existed and led to this boom, no longer exist. I said before: a 7fold increase in 10 years is not sustainable if incomes don't rise to match, and they didn't. If you think it's sustainable, then you should invest. There are always winners and losers. Not all of my investments make money. Overall they do, however. Maybe this time I'm wrong, but I'm happy in my 2-br 2-ba apartment paying $4,500 a month in rent. Because to buy it across the street would cost twice that.

Others should refrain from making ad hominem attacks. And stick to facts, don't make sweeping statements about the desires of the Western World to own real estate without looking at the real numbers. Don't compare London real estate to Manhattan's, when Brooklyn is so much closer.

From msnbc.com, Bulls:

Wall Street turmoil threatens NYC economy
City officials, high-end retailers brace for thousands of layoffs

NEW YORK - The near collapse of investment bank Bear Stearns, and the wave of layoffs it threatens, could mean hard times ahead for an already-worrisome New York City economy whose survival depends heavily on Wall Street.

For every $1 billion in Wall Street profits, New York City gets $70 million in direct taxes and enjoys even more revenues indirectly from all the money that is spent here.

Sen. Charles Schumer, D-N.Y., on Tuesday asked JPMorgan to try to soften the economic blow of Bear Stearns' problems by finding a new buyer for the parts of the company that the new owner doesn't want.

"The crisis in the financial and housing markets is hitting New York City's economy particularly hard as a result of the city's stature as a financial center," Schumer wrote to JPMorgan's CEO James Dimon. "The loss of thousands of additional jobs would create serious additional problems to the city's economy."

The turmoil in the markets, including layoffs at financial companies, is already being noticed by businesses that cater to the Wall Street crowd.

Take Gracious Home, for example. Even before the Bear Stearns crisis, the high-end home accessories store that sells door knobs for up to $1,000 each was experiencing a decline in business of 10 percent over the past six months, with sales deteriorating even more in the last few weeks.

"This has rocked the boat," said Carol Kappenhagen, a corporate services manager at Gracious Home.

At Delmonico's, the historic steakhouse a few blocks from the New York Stock Exchange, lunch business has declined anywhere from 15 percent to 20 percent over the last few months, according to Corrado Goglia, general manager.

You think it's going to get better?

What's this translating contracts bit? I jumped in late? Is that what stevejhx does for a living? stevejhx, can you explain what you do? seriously, I missed earlier discussions on this.

Also, stevejhx, your deadpan style (though a bit student-ish) was much better. You got a bit shrill last night and sounded a bit like a nasty queen. I could almost see the purse flying across the room...particularly when you blared what you made last year. Know what I mean? You make solid points and the conversation is entertaining and informative so let's not ruin it with lifestyle discussions - as you told me.

I'd like to settle this buy vs rent debate once and for all. Stevejhx and anyone else who has an opinon about this, please go to:

http://www.nytimes.com/2007/04/10/business/2007_BUYRENT_GRAPHIC.html

With this model, you can enter your own parameters and it will tell you whether you are better off renting or buying. It's highly customizable, so you can play with lots of different scenarios. Typically, its cheaper upfront to rent (no downpayment to make) but over time, buying tends to be cheaper. This may be different for you, depending on your unique situation.

I'm tired of people (actually just 1 person) making blanket statements like "it's cheaper to rent than buy - period" with the tone that anyone who disagrees is an idiot. For some people it might be. For others maybe not. Everyone has their own variables to take into account and using the link above, you can find out for sure. While I am still of the opinion that RE prices in Manhattan will soften, I don't necessarily believe that that means that you would necessarily be better off renting.

IMom - thanks for bringing this up, that's an awesome tool that I had in my bookmarks for quite some time - the main factor to consider is the HPA assumption, currently the markets are pricing in 4.5% drop annualized for the next 3 years...

eah I translate contracts, have worked on some CDO agreements through some major players in the international market, though I'm not at liberty to say who.

A "nasty queen"? Really? That's funny. Click on the link I put up a few days ago of me at the Comic Strip. Nothing queeny about me. Must be a projection.

And - you have no way of knowing whether that income figure I put up is remotely true. Maybe I just wrote it to get a rise out of my Spunkster and JuicyJuice. :)

iMom: I'm glad you brought that graphic up, even though though I saw it when it first came out months ago.

Plug in these figures, which are reasonable market figures for today:

Monthly rent $4,500
Home price $1.2 million
Down payment 20%
Mortgage rate 7%
Property taxes 1.5%
Annual home price increase 3%
Annual rent increase 3%

You will see that it is NEVER better to own than to buy within the next 30 years.

I've demonstrated elsewhere that the purchase price of an apartment renting for $4,500 is approximately $1.2 million in today's market. 7% is a reasonable interest rate for a jumbo loan. Property taxes on a new condominium of that price run about $1,500 a month (with no (now phased out) abatement and without even taking common charges into account). Home price increase is generous, since home prices fell 17% last year. Rent increase is about right - that's what my rent has gone up on average for the past 3 years.

The only way you can change the result materially is by changing the annual price increase. If you think it's going to go up a lot, god bless. I think prices are going to fall, and I've said why.

Oberon is right on Home Price depreciation.

I don't think people who disagree with me are "idiots," as you say. I didn't start the "idiot's thread" where they discuss what idiots people who don't believe property prices will go up forever are. I'm not the one calling people douche bags or frauds just because I expose flagrant misstatements that people make, such as "All The Western World Loves Property," when that's not true. I'm not the one comparing London and NYC real-estate prices when I don't even know the structure of the mortgage market in the UK.

Other people did that. All I did is give numbers.

You provided the tool on this thread. Give me the numbers you expect to see in the future, to support yourself.

Just so you know - and I'll repeat: historically, the out-of-pocket expenses for buying and renting are the same, based on a 30-year fixed interest mortgage with 20% down. Right now, if you do the figures, it's much more expensive in Manhattan, and I've proved it by comparing similar apartments for sale and for rent right across the street from each other in Chelsea.

If you don't think my numbers are right, tell me where I'm wrong.

I spoke with someone who happens to manage approximately 750 rental units. This year they have only increased rents by small amounts ("$50-$100/month" according to him) compared to last year when they've increased between 10% and 18% on most of their units.

A new development that they thought they'll rent for an average $5,500 (mostly nice 2 BRs) is finally fully occupied at an average of just under $4,000

stevehjx -- it's pointless, I've shown these guys the same math. I'd buy my current place for $650k (which would still be a 25% premium over the cost of renting) but if it went on market it would list at over $1mm.

It's also amusing to look at sale prices from 1997-1998 and to see that the claims about Manhattan real estate "always" being expensive don't hold water. Same studio sold for $120k in 1998 and for $370k in 2006. Adjust for inflation, quality of life, whatever, that's still uncalled for.

And one last thing before returning to my job for a while, as useful as that model is, it is very crude because it merely uses a net future value model for a constant flow of income. While that's good for income flows, it is, in fact, statistically irrelevant for asset prices since it is not a dynamic model.

For instance, if I invest $1000 today, it goes down 5% in the next year, and goes up 4% in the following year, I would wind up with $998.00 in two years.

Reverse that: it goes down 4% next year, and up 5% the following year, and I would have $1,008 in two years.

The NY Times model is not sophisticated enough to figure differences like that out, and - sorry - no projection beyond 5 years is worth its weight in ink. If it were, the Soviet Union's 5-year plans would be all the rage, and shelf vodka would be a lot cheaper in this country than it is.

stevejhx, i tried the tool with following numbers (for a 1 bed doorman coop on UES opposed to our 1 bed doorman rental on the UES)
Monthly rent $2,950
Home price $555,000
Down payment 25%
Mortgage rate 5.25% (a 7/23 adjustable rate)
Property taxes 2.25% (to incorporate maint. payment of about 1100 a month)
Annual home price increase 3%
Annual rent increase 8% (this is how much our rent went up on average since 2004: from 2400 to 2600 to 2730 to now 2950)

it breaks even at 4 years. the numbers work out differently for smaller properties, and for coops. and it seems to me you have a great deal for your place, given that your annual rent increase was only 3% in recent years.

Kiky, thanks for your input, but your figures are waaaaay wrong. To do the comparison first you use only 20% down, 30-year fixed mortgage, since that's the historical norm. So your interest rate is waaaay low. Moreover, you're calculating the payment by "guessing" that the rate won't set higher after the 7 years. You have no way of knowing that, so your comparison is inaccurate.

Fact: a $440,000 loan (jumbo) at Chase Manhattan Bank, 0 points, is 7.152% (from bankrate.com, today). That - the correct comparison - gives you a monthly mortgage payment of $2,972.38. Add maintenance - your figure - it comes to $4,072.38 per month to BUY the very apartment you are currently renting for $2,950. That's PRECISELY 38% more expensive to buy your apartment than to rent it, even with your phenomenal 8% annual rent increases.

Which, as you know, cannot continue through eternity else nobody will be able to afford the rent, since very few people's income goes up at 8% per year forever.

Thanks, zizizi. See my message to kiky.

Those "adjustable rate mortgages" are just what got people into trouble: all the interest-rate risk is transfered onto the borrower, which is precisely why lenders like them so much.

The fact is, soon it will be illegal for banks to issue loans like that 7/23 ARM kiky is talking about, UNLESS the lender can prove that the borrower will be able to afford THE MAXIMUM RESET, which can be as much as 7% above the initial rate. So, kiks, unless you can afford that 7/23 ARM resetting to 12.25%, it will be illegal for a bank to give it to you.

How do you like them apples?

Thanks Oberon. Yes, the "Home Price Appreciation" and "Rent Increase/Decrease" sliders have huge effects on the outcome. Plus or minus 1% in either category makes a big difference. I also found that you have to go into the Advanced Settings and set the "Rental Broker's Fee" to 15% (I understand that to be the standard in NYC) and be sure to enter the appropriate "Condo Fee/Common Charge." Even though I have no interest in renting, I find this to be a very useful tool for evaluating different properties for purchase.

stevejhx, I am completely on board with your income vs. prices argument - the math doesn't lie here - but let me play devil's advocate for a moment. The increase of the last few years is unsustainable, which I think everyone here agrees with, but what if prices stagnate while incomes start to catch up? You're saying yourself the recession is essentially over, and the greater economy is fine. Isn't it quite possible then that apartments will become more affordable NOT because prices drop, but because incomes rise? Some might say that amounts to the same thing, but I'm pretty sure it takes much longer for incomes to adjust that way. Thoughts?

i agree that rents should not go up 8% per year - my income doesn't - unfortunately this is what the landlords are asking. all my friends have had similar experiences with their annual rent increases. in recent years it was in the range of 8% to 12% per year. i see your point though - you are expecting that in future the rents will have a downward trend. i hope you are right.
are you renting from a person, or is it one of the big rental buildings owned by a company?

Is is better to lease a car than to own it? For some people. The same goes for RE.
But it seems that the only people rationalizing their decision are renters. Why is that, I wander...

bjw2103, both will happen: incomes will rise, prices will fall, until we reach an equilibrium. Usually in cases like this the equilibrium is overshot, as in 1997, when prices fell below their long-term norm. That's why I think prices will drop nominally to their 2004 rates, though it will take some time to get there.

kiky, go to nybits.com and check out all the rentals that are available. Plenty out there. My rent did go up more this year than in the past, but it won't next year as housing prices fall.

I rent from a large company in an exclusively rental building. They know not to go overboard with rent increases b/c with me they get a check every month, no questions asked. It's a huge risk to take on another renter when I pay.

inquirer: it is NEVER better to lease a car than to own one, at least not financially. Not ever. It is sometimes better to own real estate than to rent it.

And now that we've finally agreed that rents can't go up 8% forever because no one will be able to afford them, why can't we agree that prices won't go up another 7fold in the next 10 years, turning a $1.2 million apartment in to an $8.4 million apartment by 2018.

Where's my JuicyJuice and Spunkster to refute that argument? 8% per year means prices would double in 12.5 years. We've seen prices go up 700% in just 10 years. Why would anybody want to wet their toes in that?

I rent in a brand new condo building in midtown-east - my landlord DID NOT even hit at a rent increase for my second year lease. In fact, he is hoping I will stay. I also sold my condo in early 2007 and I am seeing prices either at or slightly below my sales price (I am waiting to purchase and see no reason to rush, especially in the Co-op market). Prices are dicated not just by supply and demand (like every broker will have you believe) BUT by what people can actually afford. There are plenty of really rich people in NYC that love paying 1500/+ sq ft but that is not the majority of the folks that live in the borough. Just like every other price peak in the stock market or in real estate, each cycle sees really high peaks and then a settleing in period. As long as unemployment stays good in NYC, the settling in period will only last a couple of years (2010-11). If we start losing jobs (Which is always the case when a democrat wins the white house - late 1970's and the entire 90's), the settling in period will last a lot longer.

inquirer - I second steve, a car is a naturally depreciating asset, lease is always a better solution with regards to cars, I think the stats I saw somewhere are that 95% of new car sales have been leased over the past couple of years

IanPerry, thanks for this: "Prices are dictated not just by supply and demand (like every broker will have you believe) BUT by what people can actually afford."

Bravo, bravo!

People have been able to afford too much with the low teaser rates that keeks quoted that adjust after x years, but new regulations being implemented will make it illegal to offer those loans to anyone who can't CURRENTLY afford the highest maximum reset rate. So if they offer you a loan at 5.25%, with a +7% cap, you'd need to be able to afford that loan at 12.25% NOW to be able to take out that loan.

Well guess what...?

And Oberon, I said the opposite: I would never lease a car because a car's useful life goes beyond the lease period. However, once you pay off the loan, it's yours for free.

stevejhx - I didnt say you were a quue..just kinda prissed out like one. But, I hear you...

But IanPerry, the country tends to gain jobs during Democratic administrations. Bill Clinton, Lyndon Johnson, John Kennedy. The 70's, if you recall, were Richard Nixon, Gerald Ford. Jimmy Carter inherited the Gerry Ford stagflation policies (remember WHIP INFLATION NOW!?) and reversed them once and for all with 21% interest rates under Paul Volcker. Reagan benefited from that.

But that's a different issue altogether. Back to housing....

Ah, but eah, I am a quue..., as you put it, just not swishy. ;)

Jesus, really..Chelsea and FI! Anyway...where is that pic...let me judge that the swish factor.

steve - then I guess we diverge on the lease argument, but nonetheless...

stevejhx,

its funny because politics is always a different story by a different person with a million points of view, so you're right, let's stick to housing by saying housing can sometimes be dicated by economics. If people are not confident and the job outlook is not great, they tend to not rush into buying. I for one, do not believe we are actually in a recession yet (all the signs are there that we will most likely be sooner than later) and there is always a chance that the rebound will be quick (like 2000-01). I believe the real esate market in NYC is cooling off because the run up has been way too high and not because of economics. That might be another phase altogether that is yet to be seen.

basic math - people making GREAT MONEY are complaining that Manhattan is too expensive to either rent or buy and that they are forced to settle for something other than what they want. That's just plain odd.

IanPerry, I agree on all points!

and eah, my grandmother grew up in Chelsea and my great-grandmother (on the other side) drank herself to death here. So I'm following in footsteps....

Well, just be sure it's good booze.

only top. :0

hahaha...maybe that's why we snipe...

With statements like "it's always better to lease a car," the dangers of ignoring particular circumstances emerges. If you drive back and forth to a weekend house every weekend and exceed 15,000 miles/yr on an auto, leasing makes virtually no sense since any lease will have a per/mi charge for milage in excess of 12K or 15K per year. It's an apt analogy for buy vs. rent--individual circumstances and particular economic situations/goals are variables along with intangibles. I think it is silly to pronounce rent or buy is universally the smarter choice.

Kylewest, I couldn't agree more on real estate. However, I can't think of one good reason to lease a car, since I believe they have the leases worked out that way.

On this I take Suze Orman's word: I own my car outright.

FWIW (and this is really off RE topics): if you take care of your auto's body, and only put on <12,000mi/yr and also like a new car every 2-3 years, and you dislike the hassle of selling your present car before getting the new one, leasing could make sense for you. Frankly, there is no reason that it is ever necessary to drive a luxury auto and by pure financial analyses there should not be any BMWs or Mercedes on the streets. A Hyundai gets you there just fine for a lot less money. It's probably better to layout the things to weigh, and let people make their own decisions based on their own priorities and goals and circumstances.

Wow. It is so exhausting being measured and reasonable.

Something happened to that last post. It should say:
FWIW: if you take care of your auto's body and only put on <12K mi/yr, and you prefer to drive a new car every 2-3 years without the hassle of selling the old one, then leasing may make sense for you. If a pure financial analysis were to be applied, a luxury auto would never make sense and we'd all drive Hyundai's and BMW and Mercedes would be extinct. The point is that people make decisions based on individual goals, circumstances, and preferences. The best that can be done is to lay out the factors to weigh in making an informed decision and then let people make their own decisions without judgments about what is the right or wrong choice. Buy vs. rent is not a debate which can be resolved. It is too dependant upon variable not accounted for in formulas (e.g., what if there are no suitable rentals in the area you want to live--only coop buildings? Doesn't that factor in? If you are set on leather seats and Hyundai's only come with cloth, do you still have to by a Hyundai? Or can you get what you really want if you can afford it?)

Something happened to that last post. It should say:
FWIW: if you take care of your auto's body and only put on <12K mi/yr, and you prefer to drive a new car every 2-3 years without the hassle of selling the old one, then leasing may make sense for you. If a pure financial analysis were to be applied, a luxury auto would never make sense and we'd all drive Hyundai's and BMW and Mercedes would be extinct. The point is that people make decisions based on individual goals, circumstances, and preferences. The best that can be done is to lay out the factors to weigh in making an informed decision and then let people make their own decisions without judgments about what is the right or wrong choice. Buy vs. rent is not a debate which can be resolved. It is too dependant upon variable not accounted for in formulas (e.g., what if there are no suitable rentals in the area you want to live--only coop buildings? Doesn't that factor in? If you are set on leather seats and Hyundai's only come with cloth, do you still have to by a Hyundai? Or can you get what you really want if you can afford it?)

OK. I'm done. Something wrong with the site. Posts getting mangled. Ignore the above, please. Sorry.

Kylewest, I have no idea what you mean, but I'm probably better off since it's Car Talk, which I hate. I have a Lexus SC430, just FYI, pushing 5 years old.

As I said, I'm relying on Suze Orman for car leases, since I never even looked into one.

Now, back to property!

OK. Well!!!! I'm all excited about a new coop I'm buying. I haven't yet sold my present coop, but I guess I'll just rent it out or let me son live there (he's 21). When the market heats up again after this current kind of doldrums, I'll put the coop back on the market and kick my son out if I sell it.
Juiceman, the Swiss probably don't give a shit about you, either, but many of us love you.
We're beginning to love stevejhx, too, because he has energy to burn!!!!
In the meantime, rah, rah, Obama!!!!!!!!
One love!!!!

Poorish lady, as long as you can afford both places at once, more power to you! Check your co-ops bylaws, however: some don't allow what you want to do.

Don't look for a warmer market for about a decade, if you ask me: that's how long the last downturn lasted.

I wouldn't mind JuicyJuice and the Spunkster if they weren't so abusive. I do agree the Swiss don't care about them, however.

Energy to burn? I'm translating something from Chile for the IRS - deadly! This is entertainment.

And PLEASE let's keep politics off the thread!

Steve. Do you believe that there are certain intangibles to owning that make it different than renting? If staying in a hotel is merely temporary shelter, why do some people stay at the Four Seasons when they could sat at the Days Inn. Both provide shelter. In your two bedroom rental, can you design and build the kitchen that you want...can you derive the benefit of determining what your living expense will be for 30 years. Can you get a tax credit on profits of up to 500,000(should you sell for a profit), do you get the tax advantage of a mortgage deduction, do you have the flexibility to rent your rental for a few years if the market is such that doing so would generate a considerable profit. Can you devise you rental to your children so that they can live for free, assuming you have no mortgage.
I understand you are talking macro, but we are not merely discussing "shelter". Part of what fueled the bubble that has occurred through much of the country is that people who never would have viewed their homes as something akin to a stock, began to do so, leading to speculation, inflated appraisals, flipping, and other dangerous and irresponsible practices. I just don't see those behaviors ocurring in Manhattan. The only thing that has ocurred in Manhaatan is that the local economy may be weakening. How much that impacts value remains to be seen.

The average cost per square sold for $1098.00 in Manhattan during the month of February 2007. The average cost per square sold for $1278.00 in February 2008. A 16% increase. I guess inflation is showing it's ugly head. Go figure

BTW the above cost per square ft prices were cold hard statistics for Condo's in Manhattan. Sorry to report the bad news.

mh23, I definitely think speculation, inflated appraisals, flipping, etc. were rampant in Manhattan and contributed to the run-up. In fact, I still see people trying to flip properties today - I just think they struggle a bit more to make a profit. For example, there's a 2-bed/2-bath condo in a renovated church on 135 W 4th St (#1E) that closed 6/27/07 for $2.2 million. The sellers relisted it on 1/25/08 for $2.995 million, and then had to cut it to $2.795 million on 2/16/08 - still trying to turn a modest 25% profit in 8 months. With regard to inflated appraisals, my real estate attorney just laughs at how appraisals essentially had no relation to comps during the run-up. Without the scammy fake appraisals, however, in which people simply told the appraiser the number they needed to see on their appraisal, I don't think many of the mortgages made in Manhattan from 2002-2007 would have been approved.

Oh, my Spunk. Wishful....

Spunky: The February year-earlier comparison is interesting. It also requires three huge caveats, if by "sold" you mean "closed":

1) About twenty monster closings at 15 CPW and 768 Fifth Ave skew the averages dramatically. I played around with the nyc.gov spreadsheet a little bit to see how big this effect really is. By including or excluding those buildings, I could pretty much make the numbers say whatever I wanted them to say. For example, filtering out those two addresses reduces the average closing price of a Manhattan condo in Feb '08 by at least 25%. That doesn't mean the market was down, just that averages may not mean much.

2) Because of the time lag between contract and closing, data on closed sales can look reasonably healthy long after the market turns downward. At best, the figures offer a trailing indicator of market strength.

3) Seller concessions of many sorts fly under the radar of sales price analyses. Anecdotally, a lot of us have observed that those concessions are rampant now, whereas they were unheard-of a year ago.

poorishlady, congrats on your new place. I'm very happy for you.

stevejhx, man you have some time on your hands don't you? Look, I may have mis-spoke when I said "westernized world" (I actually have no idea what the Swiss, Dutch, or Norwegians do) but what is your point? The thing is, whatever opinion that surfaces that is different than yours, your response is 55 posts that have 362 different topics, a bunch of half hearted numbers, and some really fuzzy logic. So back to peace steve-o, I don’t have the time or energy to argue with you.

Oh, and by the way, check out how many different mortgage products are available to Londoner’s besides endowments. I think you will find it interesting. And rentals in London, they are priced in weeks, but most contracts are for 6-12 months and rent is paid monthly. Hence, no different than Manhattan.

One other thing (I can’t help it), your advice to kiky is completely irresponsible.

“use only 20% down, 30-year fixed mortgage, since that's the historical norm.”

Why? So it helps your case better? What if kiky has 25% to put down and wants to do so? The model already figures in lost interest, what does the historical norm have to do with anything?

“So your interest rate is waaaay low. Moreover, you're calculating the payment by "guessing" that the rate won't set higher after the 7 years.”

Rate looks pretty good to me. It is pretty close to a conforming loan and kiky’s 7/1 ARM rate is in that strike zone right now. 7.15% based on an internet rate (jumbo no less) is a bit aggressive don’t you think? If that was the case, come up with the other 20k to get the extra two points on the rate right? Oh, and guessing the rate won’t set higher in 7 years? What if kiky plans to move within 7 years? That makes no sense.

“Those "adjustable rate mortgages" are just what got people into trouble: all the interest-rate risk is transfered onto the borrower, which is precisely why lenders like them so much.”

Are we being a little dramatic here steve-o? A 7/1 ARM is a very safe and sound product for responsible buyers. A 7/1 is not the same a teaser 3/1 is it? C’mon buddy, admit you are stretching this a bit can you please? A 7/1 is what got people into trouble?

“The fact is, soon it will be illegal for banks to issue loans like that 7/23 ARM kiky is talking about, UNLESS the lender can prove that the borrower will be able to afford THE MAXIMUM RESET”

Where is you data for this? Is this speculation or has this passed into law? I think this is a great thing, but would most likely be applicable for short term loans. Would like to see what you are basing this on.

Maybe instead of trying to prove your case all the time steve-o, you should ask kiky some questions first. Based on the scenario and some more information, there is a good chance that it would make sense for kiky to buy. iMom made a great point earlier, it is not black and white.

For people looking for real advice from this board, do your own research. steve-o is a good data point for the worse case scenario but there are many other potential outcomes (see mh23's points) to this downturn. steve-o is more interested in proving his "theory" than helping others make sound decisions. If you want good advice, ask malraux, tenemental, kylewest, urbandigs, or any of the other responsible posters on this board. steve-o is great for entertainment though!

West81 you can spin the numbers any which way you want but the fact remains that average per square ft
price for a condo sold for $1098.00 in Feb of 07. The average square ft per Condo apt sold for $1278.00 in Feb 2008.
If you don't want to believe these numbers please by all means do your own research. I am sorry to cloud all the chit chat, prognostications, and wishful thoughts with actual facts.

BTW West81 I didn't state average price per condo I stated average price per square ft.

slumpy, you mean people who closed in Feb 08 are going to lose $200 more per sqft than those who closed a year earlier? that must really suck for them.

yes zani that's exactly what I meant.

West81st, thanks for that. We saw a dramatic spread develop between ultra-lux and everything else in 2007 with the sales of 15 CPW, the Plaza and others, and it sure seems like that spread will be growing throughout the downturn. Not only are median prices essential to limit the skewing (though it doesn't eliminate the skewing, as the sheer number of ultra-lux closings is high), but a breakdown by price range is necessary, as the vast majority of NYC buyers did not see a price increase. Certainly, if you're outside of Manhattan, you saw the opposite (though the spread itself IS in Manhattan).

Average prices do a good job of amazing folks outside New York ("Did you hear...?"), but any semi-savvy NYC buyer knows there's a lot more to it.

Spunky: Sorry about switching the parameters. I couldn't do a meaningful adjusted calculation of price per square foot because nyc.gov didn't provide square footage for most of the super-luxury units. Let's face it, people paying those prices for prestige properties don't care all that much about price per square foot. Well, except maybe the Caynes, and they started caring about a week AFTER they closed.

For what it's worth, the units at 15 CPW and the Plaza are not, for the most part, exceptionally large. They are just exceptionally expensive. So they likely skew the price per square foot too - perhaps not as much as they skew the price per unit, but pretty close.

I just have a feeling that no matter how clear the numbers demonstrate that the price per square ft have increased from Feb 07 to Feb 08 those that don't want to believe the numbers will use the old "well it's 15 CPW that's throwing the numbers out of whack" How mathematically can 15 CPW skew the price per square ft numbers by 16%.Give me a break. 15 CPW sales volumes in Feb 08 represented a small % of all condo sales in Manhattan during the month of February.
Once again if someone can provide actual numbers to dispute the following that would be great.
price for a condo sold for $1098.00 in Feb of 07. The average square ft per Condo apt sold for $1278.00 in Feb 2008.

Spunky - I tried, but the data just isn't there to do it right. When I extrapolated from the superluxury sales that DID have square footage listed, and applied the same price per square foot to the other sales in those buildings, 15 CPW and the Plaza did - believe it or not - account for something like a 20% swing in price per square foot for elevator condos in Manhattan that closed in February. That's an interesting hint at what might be going on with the averages; but since I had to extrapolate from a statistically inadequate sample, I'm not going to claim that it means anything.

Also, to make the adjustment consistent, you would have to identify the twenty or so highest-end outliers from February 2007 and filter them out too. I don't have that much time on my hands. Back to work!

For what it's worth 15 CPW represented a a small % of the 816 mil worth of condo's sold in Feb. The only thing it would of skewed by a small percentage is the average cost per condo. Regarding the average cost per square ft maybe 2 to 3 bucks a square ft.

Spunky - We're looking at the same figures and drawing very different conclusions.

You are correct that 15 CPW represents a tiny percentage of the units AND square footage sold in February. But that building accounts for an incredible portion of the money that changed hands: $307MM, nearly 38% of your $816MM total, according to Streeteasy's recorded sales; somewhat less according to the City's spreadsheet, which looks incomplete.

The impact of 15 CPW on BOTH averages is huge. That's what happens when you reduce the numerator of a fraction by 38% without changing the denomiator nearly as much.

Not to mention the "denominator". Gotta watch those denomiators, though. They're tricky.

Spunky...For reasons I don't understand, there are certain people who are convinced that they can rent their way to wealth and financial freedom. They don't care about mortgage deductions, tax credits, tax deductions for home improvements. They don't care about capping their living expense for up to 30 years, or having an asset that can generate income if they want to rent. They only know that if they keep paying rent, they will take the rest of their money and buy stocks, gold, oil, cd's, or whatever else they can and of course, those items will go up in value right after they buy them.
They don't care that Manhattan is a world capitol, they don't care about the billions of dollars of investment that are going on, they don't care that people with money always own and almost never rent. That these people will own a house in the Hamptons for two months a year use, or own a house in Aspen for one month a year, or own a house in St. Tropez. They don't care that, unlike Stockton, the population of Manhattan is increasing at a dramatic rate, or that rental vacancies are at around 1%. Just keep renting, live in an apartment that you have no control over for a cost that you can't predict from year to year, that is their philosophy.

Amity, anyone in any market that buys an apartment only to sell it for a profit in less than a year is a putz who thinks they can outsmart the developer. While this may happen from time to time, it is not nearly as prevalent in Manhattan as it is throughout the rest of the country

or what it's worth, the units at 15 CPW and the Plaza are not, for the most part, exceptionally large. They are just exceptionally expensive. So they likely skew the price per square foot too - perhaps not as much as they skew the price per unit, but pretty close--West81st

West81 Mathematically that makes absolutely no sense. The the actual number was 826 mil total for condo in Manhattan. There were 508 condo units sold. The average size per square unit was 1148. That's over 500,000 square ft in total. How can you say that because of a few units sold in 15 CPW that skewed the price per square ft in all of Manhattan.

Spunkster, the sky's the limit, ain't it? Up up and away with prices, damn incomes or affordability!

JuicyJuice, apology accepted. Lots of mortgage products have always been available in the UK. The fact is, most people still take out endowment loans.

Show me your numbers, sources, for rentals in London. I went on to Foxtons - a major estate agent there, who used to manage the place I lived in - and saw plenty of rentals with asking prices not unlike those in Manhattan (and in nice neighborhoods). Exchange rates have to be taken into account, too: rent as a percentage of earnings in pounds sterling, not euros or dollars.

And JuiceMan, I am being as consistent as I've always been. I've ALWAYS said the historic norm between rents and owners' carrying costs is that they are the same out-of-pocket, and based on a 30-year fixed mortgage with 20% down. The fact is the new proposal from the Fed would make it illegal to give a loan to someone if they can't currently afford the higher reset possible. So kiky probably couldn't get her loan. And in any case that's "prudent lending": only lending to people who can pay the money back. Novel, isn't it?

We're not being dramatic at all, and it amazes me that you even say it. I happen to have a 5/1 interest-only ARM on my place in Long Island. But the mortgage is for $250k more or less, and I could write a check and pay it off if I wanted to. I can afford it, and I pay it as if it amortized, and, if it reset today, the rate would go down since it's based on the prime rate.

Yes it's true that you can make the argument that a 7/23 ARM is less risky than a 3/1 ARM, but you can't quantify the risk because no one knows with certainty what will happen in the future. Kiky's "example" was wrong precisely because her assumption was that there would be no reset after the 7 years - up or down - so it is not a valid comparison. And wrong because the historical equilibrium is with a much less risky 30-year fixed mortgage with 20% down. I believe that we are headed back to that equilibrium. Always have, always will.

Kiky can finance her apartment that way if she wants, and if she has cash she can buy it outright and make her very happy. I made no comment about any of that, and have said that for long-term investors who don't have to offload soon, buying right now is fine, albeit expensive. But in Kiky's case it is 38% more expensive than renting using the historical equilibrium, and I think we're headed back toward that equilibrium.

And Spunk: learn the difference between average and mean before you post your data and make an extrapolation for an entire market. West81st is right: one large apartment can significantly alter the average, but have virtually no effect on the mean.

If you want the details on what happened in the mortgage mess, go to

http://www.nytimes.com/2008/03/20/business/20mortgage.html?ref=business

Read this: "Richard Geller, founder of Mortgage Relief Formula, a for-profit venture based in Fairfax, Va., that counsels troubled ARM borrowers, said he received calls from affluent consumers in almost every major metropolitan area. At the moment, Manhattan appears to be the only exception in the weakening market, Mr. Geller said. “It’s really late in the schedule and will be the last place prices soften,” he added."

And remember this adage: "Past performance is no guarantee of future performance."

West81 are you stating that during the month of Feb 307 mil dollars worth of condo sold at 15 CPW? You just lost all credibility with that one. Try coming up with real numbers instead of fabricating them to prove your point.

mh23, why do you make ridiculous statements like you do? Who says nobody cares about "mortgage deductions, tax credits, tax deductions for home improvements. They don't care about capping their living expense for up to 30 years, or having an asset that can generate income if they want to rent."

The question being asked is, at what price?

Agter reading stevjhx and West81 I now truly understand what Juiceman was talking about. These jokers are pure BS artists and are for entertainment reading only.

The JuiceMan apologized for that rather nasty statement, Spunkster.

No one refutes your numbers, just the conclusion that you draw from them. Your love of overpriced Manhattan real estate sometimes makes you sound like an alcoholic who convinces himself he can have just one more drink before getting behind the wheel.

But I am glad you find me entertaining! I try my best.

Spunky:

Is the following formula correct?

Price per square foot = total dollars paid / total square footage sold

Assuming it is, let's use some rough plug numbers, just for illustrative purposes.

Assume the overall figures are: $816,000,000 / 583,000 sq.ft. = $1399 / sq.ft.

Now remove $307MM in sales for, say, 83,000 sq. ft.:

The calculation becomes: $509,000,000 / 500,000 sq.ft. = $1018/sq.ft.

Is 83K a reasonable estimate of the square footage sold at 15 CPW? I have no idea, but how far off can it be? If anything, it might be on the high side, which means I'm probably reducing the denominator by too much rather than too little.

Spunky:

Here's the source for the $307MM in February closings at 15 CPW. How reliable is Streeteasy?

http://www.streeteasy.com/nyc/building/15-central-park-west-new_york

Obviously, 15 CPW signed a lot of high-priced contracts last year. They are closing a lot of those deals in Q1 2008.

By the way, it's possible that some of the $307MM isn't really in the $816MM, because of issues of property classification and timing. All the numbers are hypothetical anyway. My point was to demonstrate how twenty or thirty sales at $4K per sq.ft. can swing the borough-wide averages. Even if $100-150MM of the 15 CPW sales are really out of scope, the impact is still quite dramtic.

W81, sometimes you just have to let people fantasize ... Spunkster is one of the best, along with JuicyJuice.

More bright news for Wall Street, from Bloomberg: "March 20 (Bloomberg) -- Citigroup Inc., the biggest U.S. bank by assets, plans to cut more than 5 percent of staff in the securities unit to rein back expenses after U.S. subprime- mortgage related losses."

spunky, are you that ridiculous that you're having West81st explain fractions to you? FRACTIONS?? Did you sleep through 3rd grade?

stevejhx, you say for long-term investors who don't have to offload soon, buying now is fine, albeit expensive. What kind of specifics are we talking about here? Timeline, cost, location, etc.?

Spunkster - what was the source of your numbers, I'm seeing something different, but want to confirm the data set

First of all, bjw2103, I AM PROUD TO ANNOUNCE THAT TONY STARTED A THREAD DEDICATED ENTIRELY TO ME! It even has my screen name in the title! Who else can boast something like that?!

Then, I don't think anybody should buy any asset that may be depreciating if they're going to hold it for less than 5 years. That's not a scientific number, just a personal feeling. RE is not liquid, not like stocks, prices don't crash, they deflate slowly.

I especially wouldn't buy anyplace that has seen an astronomical increase in value in a short period of time. CA and FL are moribund markets - prices down 20% and still falling. Manhattan started later in the cycle, but it's turn is next: a sevenfold increase in 10 years without incomes increasing the same amount is not sustainable.

My rule would be this: if I can afford it putting down a very conservative 20% with a 30-year fixed mortgage and plan to stay put for at least 10 years, then I'd buy it and damn the market. Unfortunately right now using that formula I can only afford to buy a studio, whereas I can rent a 2-br 2-ba place for the same monthly amount. Why die in a studio when I can thrive in 1000 ft2?

What I am saying has nothing to do with what people are accusing me of. It's just my criteria, which have been the historical criteria from the Depression until 2000. I won't take out fancy financing that I can't afford because it might reset, I won't take out a 40-year mortgage, nothing like that. I took out my ARM because I can pay the balance in full and did not intend to keep the property for more than 5 years and did not want to rent a room in a house on the beach because I don't like people. (I just said that for Spunkster: actually, I work on most weekends so I couldn't really have roommates: too noisy.)

If people think I'm a naysayer, gloom and doom, fine. I say I'm being prudent.

Thanks steve. I think the thread dedicated to you is hilarious, you've obviously hit a nerve with some people, but hey, with so much at stake for everyone, people are going to get snippy when they hear things they don't want to hear, especially if true.
I explained my situation earlier here, and I'm trying to time my purchase as best I can based on whatever advice I can get from those with more experience on here. My parents have been in RE for 40 years and are quite conservative, so I tend to listen to them, though I'm tempted to pull the trigger since I can legitimately afford the unit I'm after, with 50% down, 30-year fixed, reliable salary, and excellent credit. My major worry is the timing and uncertainty of finding something else I like as much. Thanks for the input!

If you really love the place and plan to stay there and have the dough & don't mind putting 50% down, I'd say go for it. I will probably do something similar in 18 months to 2 years. I've seen getting stuck with real estate before (it happened in the early 70's and early 80's) and it can be devastating. Your parents are right to be conservative.

Now, if my detractors have anything to say about my criteria for affordability - 20% down and a 30-year fixed mortgage - then speak up. That's how property has been classified as "affordable" since the Depression. Of course it's possible to take advantage of all this financial engineering - which will soon be illegal! - but why take such a risk with your primary residence, when there are other options? When you factor in taxes, maintenance, insurance, and other charges come right up to the 28% criterion for housing expenses, taking out a mortgage of twice your income, 2.5x at most, in a very low interest rate environment.

I see nothing wrong with that. Anything else is speculation, I think. That is the historical norm that we will return to, about to be codified into law. When it does, it will be the death knell for Manhattan real estate.

It still cracks me up that this website marks "affordability" as a misspelling.

West81 rather than working with hypothetical numbers and since you feel 15 CPW should not be in the equation because it is not representative of Manhattan RE and it does not prove your point that Manhattan prices are dropping let's cull out 15 CPW.
Let's start with all condo units south of 14th street.

Studio Feb O7 $992.00 compared with Feb 08 $1070.00
One Bedroom Feb 07 $902 compared with Feb 08 of $1124
Two Bedroom Feb 07 $1000 compared to Feb 08 $1237

Above for you information are average prices per square ft. Even a hypocrite like bjw2 can understand this one.
Next neighborhood excluding the one with 15 CPW coming soon. How silly of me to include 15 CPW since that place is in the Manhattan but we shouldn't count that one.

Two points, Spunkster:

1) You need to work with the mean, not the average. Just FYI, the mean is where half the properties are listed higher than, and half lower than. For instance, the mean of 1, 2, and 6 is 2. The average of 1, 2 and 6 is 3. The 6 skews the average, but doesn't affect the mean (or median): it's the halfway point.

It works the other way, as well: the mean of -1,000, 2 and 6 is still 2. The average is -330.67. That analysis takes out the outliers.

2) I caution you: just because things have gone up a lot in the past does not mean that they will go up in the future. In fact, statistically, the more things have gone up in the past beyond their historical values, the more likely they are to come back down to their historical values.

It is likewise true that just because something went up yesterday does not mean it will go up tomorrow. That is what I said to keeks yesterday: just because her rent has gone up 8% in each of the last 3 years does not mean that it will in the future, and, in fact, it makes it less likely it will, because no one will be able to afford it if it continues to escalate at that rate.

The same is true for property prices. Get rid of all the fancy financing we've seen in recent years - and it's going to go away soon by law - and prices will HAVE to drop to the point where they are affordable again based on available cash and financing, which are directly related to income.

There is no refuting the argument, Spunkster.

oh I see stevjhx I should only include certain properties in certain areas when coming up with the sum total. I should not include all properties in the sum total. Any property that sells for more than you would of liked it to sell for we should leave that one out. I get it. Thanks

Spunky: When did I claim that Manhattan prices are dropping? I made two assertions, neither related to tha actual direction of the market:

1) That we can take the available data and make a superficially persuasive case for almost anything; and

2) That a small number of super-luxury sales can dramatically elevate certain market averages.

Most of the numbers I used were either yours (for total February sales and average square footage per unit) or Streeteasy's (sales at 15 CPW). They are hypothetical in the sense that I can't vouch for them, but they aren't completely baseless. The February square footage sold at 15 CPW was a SWAG. It seemed reasonable, and its precision was not crucial to either of my points.

Should we ignore prices at 15 CPW? No. The fact that fabulously wealthy people want to live there, and are willing to pay outlandish sums for the privilege, is a positive sign for the market as a whole. But if somebody just wants a nice 2BR in an established pre-war co-op, that buyer should probably focus on comps, not Jimmy Cayne's pad at the Plaza.

Honestly, I have no idea which way the market will go, or even which way it's going today. I just think we shouldn't assert trends based on statistics that are wide open to interpretation.

stevejhx: Isn't that the median, not the mean?

West81 I agree but all I am presenting are numbers as well so if you want to cull out certain buildings to manipulate the numbers for entertainment purposes and make the majority here happy that's fine with me.

W81, the mean is the median.

Spunkster, if you want a valid picture of the real cost of property, you take the mean, or the halfway point. It will eliminate the effects of (1) gazillion-dollar properties; and (2) fire-sale properties, such as an apartment with a rent-stabilized tenant in it, which would improperly skew the average in the other direction.

The average and the median show different things. The average is just that, the average of everything. The median shows the DISTRIBUTION of prices along a curve. The average can be significantly skewed by outlying values; the median can't. More specifically, you would take the median and the standard deviation to ascertain what the central point of the curve is, and how far, on average, the individual data points differ from the median.

Go back to my last lesson: the average of 1, 2, and 6 is 3. The median is 2. The standard deviation is 2.65.

The average of -1000, 2 and 6 is -330.67. The mean is 2. The standard devision is -579.66.

That gives you an accurate picture of the distribution of those numbers. In both cases the median is 2, which means that half the numbers are above 2, and half below. The closer the standard deviation is to 0, the closer the data points are together. Which, since 2.65 is a lot closer to 0 than -579.66, it means that the first group of numbers are clustered closely together, and the outlier doesn't have a significant effect on the average. In the second group, with such a large standard deviation, the outlier - negative 1000 - has a very large impact on the sample.

That is how to do the analysis you are trying - incorrectly - to do. If you didn't and/or don't know that, or if you still don't believe it, I would humbly submit that you should not be investing in the real-estate market.

So, take all the data points that make up that average you tout, and instead take their median and standard deviation. Then and only then will you be able to draw a conclusion about the distribution of the numbers that make up that average.

And you are right, W81 - I'm tired. It is the median, not the mean.