Caveat Emptor: Manhattan Still Way Overpriced!

stevejhx,

Yes, there are a lot of rich people, foreign investors, etc. in Manhattan that do make it different from other U.S. cities. But the example you gave (and I have seen many such others myself of a similar nature) exemplify that Manhattan has been subject to the same credit bubble that was going on every where else with people throwing stupid dollars at apartments because they were allowed to finance in a way that banks simply would not have permitted 10 years ago.

All that being said, with inventory still pretty low the r.e. bulls and bears can debate whether these prices will stick. (Personally, I think that prices are likely to fall on a nominal bais and extremely likely to fall on a real basis over the next several years). But what seems not debatable by even the bulls is that the rate of appreciation we have seen (e.g., 20% per yesr compounded over the past 4 years) is not sustainable. Certainly income won't support such appreciation. I am a Wall Street lawyer and nobody I know in the law field or investment banking (among those of us still fortunate enough to have jobs at the end of the year) expects to have 2008 comp be greater than 2007.

Colgin

This smells just like the dot.com bust, people. At the end of 1997 the Nasdaq was at about 1550. It peaked 4 years later at 5000, or a whopping 220% increase in 4 years. Which increase was not supported by underlying earnings, the theory being, according to Wikipedia, that "an Internet company's survival depended on expanding its customer base as rapidly as possible, even if it produced large annual losses."

"The New Economy!" Ha!

Just as the increase in the Nasdaq was not supported by an increase in corporate earnings, the increase in Manhattan prices is not supported by an increase in personal earnings.

One way to go: DOWN!

Did I mention the Nasdaq last closed at 2,258.11. Less than half its peak 8 years ago.

Caveat emptor.

Colgin, I don't think inventories are low. I think we have an opaque market, and lots of new developments where the developer holds back inventories. Do a quickie search on this website to see how many listings are increasing their prices rather than decreasing them. 10:1 downward.

Foreign buyers are a myth - that's what they said in Miami. Wall Street is reeling. In fact, I work for all the big law firms and accounting firms and lots of banks.

It was all predicated on Wall Street bonuses that were predicated on earnings that didn't exist and are now being written off. Credit's nearly impossible to get. I see a return to the 2004 prices, especially because I used to live in that building whose listing I posted, and that apartment - which I've been in - while worth $1.2 million, is no way worth the listing price. Cobbled together from several apartments, a long dark walk to the living areas, wooden joists, fire escapes, no view. Other than that, it's perfect.

It's unsustainable - even to keep today's prices will require that people continue to earn what they did yesterday - and they're not - and for credit to be as easy as it once was - and it's not. I just don't see the fundamentals.

Rest assure 90% of posts on this thread will come from Stevejhx. He will respond to himself, ask questions of himself then respond again and again. If someone makes a comment Stevejhx will respond at least 2-5 times to that one comment.

Now what I would like to know is if one is better off renting than buying in Manhattan. What do you think Stevejhx?

hurry it's been over 30 seconds and you haven't replied yet.

If 90% of the comments come from me, Spunkster, 90% of the insults come from you, and 90% of the non-analysis of the market.

Which brings me great joy since otherwise I would be translating a document about electricity rates in Spain, which is very boring.

What's the song, Spunkster? "You light up my life!"

Now, tell me why these prices are sustainable. Haven't heard yet, but if you're holding on to a bunch I'll be glad to take them off your hands in 18 months!

I love you Steve and Spunk. LOL

Thanks, Sharise, I'm fond of you, too.

But Spunky isn't. She hates everything.

Are you sure it's a she? LOL

Steve,

Your sensible posts are very much a appreciated. You are the caveat mentor for those who use logic to realize that the prices for NY apartments are not sustainable in nominal terms as incomes have not remotely kept up with the price increases.

Well if she's not, he's awfully bitchy. ;)

You might be right: maybe "she's" an "it."

All I'm looking for is a decent argument that supports sustaining real-estate prices at this level. Why I make 3 times as much as I did 10 years ago, have 10 times as much cash, and still can't afford the apartment I bought 10 years ago because it's gone up 700% since then.

I'm not uber-rich, but I do all right: top 20% in Manhattan, top 2% in the US. I just don't know of that many people who make that much money that they can afford all these apartments at these prices. Discounting foreigners - which I don't believe for one moment - and the real uber-rich - who don't care about prices - I'm looking for somebody to explain things to me. Because here's the problem as I see it:

2006 New York County (Manhattan) Income Thresholds

Median income $60,017
Top 20% $351,333
Bottom 20% $8,855
Top 5% $710,116

These are the real census figures. We all know that 2006 was the best year for Wall Street ever. But still, to be in the top 20% of Manhattan wage earners, you'd have to make at least $350,000 a year. I beat that. To be in the top 5% you have to make $710,116.

This is just Manhattan. The figures for the other boroughs are far lower than that.

So I don't see how, with or without Wall Street cutting back, someone who makes $350,000 a year - based mostly on unreliable (and falling) bonuses - can afford a $2 million apartment. Using the 28% threshold, that's a maximum monthly housing budget - mortgage, taxes, common charges, maintenance, whatever - of about $8,000 a month. An 80% mortgage alone for a $2,000,000 apartment costs nearly $12,000 a month. Just the mortgage.

Even the top 5% - with a whopping income of over $750,000 a year - could only afford about $16,500 a month using standard ratios. A $2 million mortgage has monthly payments of just under $15,000.

I did a search of Manhattan listings on this website and found:

2,943 listings OVER $2,000,000 (20.0% of all listings)
7,318 listings from $1,000,000 to $1,999,999 (49.9% of all listings)
4,397 listings under $1,000,000 (29% of all listings)

Granted, some of these are duplicates, and there are others not listed. But given that distribution, and given actual incomes in Manhattan and knowing that BSC employees were wiped out, and all the other major Wall Street firms are cutting way back, who's going to buy all these apartments.

20% of all listings are affordable only to the top 5% of income earners.

69.9% of all listings are affordable only to the top 15% of all income earners.

0% of all listings are affordable to the median income earner.

Who's going to sop up all of these properties?

More data: According to the American Factfinder of the US Census Bureau, only 14.2% of all Manhattan households - or just under 105,000 households in all - made over $200,000 in 2006. Let's say you take out a mortgage for 3x your earnings, of $600,000. That means that putting down 20% - $150,000 - only 14.2% of all Manhattan households can afford an apartment over $750,000. Streetsearch comes up with 2,893 listings for $750,000 in Manhattan (some of which are actually in the Bronx, BTW.)

That means that 80% of current listings are affordable to only 14.2% of the population. And because of the Wall Street mess, their incomes are going to be far lower in 2008 than in 2006, and in the case of Bear Stearns, negative.

CAN SOMEBODY PLEASE TELL ME HOW THIS IS SUSTAINABLE, WITHOUT RESORTING TO INSULTS?

To me it's just one more measure which indicates things are about to crash, and crash badly.

Thanks, Pez. I just want to see a reasoned analysis of the fundamentals - without nasty sniping - that refutes these arguments.

I've made many:

1) Income growth not nearly matching skyrocketing nominal prices
2) Carrying costs for buying being up to 100% more expensive than carrying costs for renting

and now:

3) A chasm in the distribution between incomes and property prices, even when based on the acme of Wall Street earnings, in 2006.

Right now 80% of listings are affordable to only 14% of households based on 2006 levels, whose income will drop precipitously in 2008 and beyond: those who still have incomes. No one earning the median income in Manhattan can afford to live here.

As I see it, there is a disconnect, a huge lag between what is being offered and what can be afforded. Unless there isn't and there's an analysis that I'm missing. But if it's not income-growth, or rent-to-buy, or income-distribution vs. property-price distribution, THEN WHAT IS IT THAT I'M MISSING?

Oh BTW I got something wrong, which makes things even worse. Two posts ago I wrote:

2006 New York County (Manhattan) Income Thresholds

Those figures aren't the thresholds; those are the MEDIANS for each percentile.

stevejhx this thread is great place for yourself and those who are renting to mentally masturbate on why Manhattan RE prices are too high. Like I said before it appears to me your life and your existence is centered on responding to yourself and stroking the renters on these threads. They of course agree with your relentless arguments (that you mostly have with yourself) on why it's best to rent than to buy. It's a shame you don't have a wife, girlfriend, partner or any friends. Then again why am I not surprised. Besides, what else would you do with your time other than post messages on this thread.

Oh BTW do you think it's best to rent than to buy.? I'm just asking this question because I plan on living in the city for another 7 years? I think I should wait before I buy because I think these prices are just not sustainable. What do you think stevejhx?

Hurry up it's been 45 seconds since I posted and you haven't responded yet. This is very out of character for you.

Steve,

Your postings are extraordinary--and therapeutic. Thank you.

The Manhattan version of condovulture.com is circling Central Park as we speak...

Well Spunkster, I do it because it's a matter of a) taunting you; or b) translating electricity prices in Spain, which while it does pay 12 cents per translated word, is endlessly boring.

I'm asking questions that you have no answers to, so you get mad at me. Boo-hoo-hoo. Find an answer, rather than voyeuristically stalking every post I make.

If I'm not looking at the right gauges, TELL ME WHAT I SHOULD BE LOOKING AT, and if you're right, I'll concede and not post again.

What am I supposed to be looking at? What makes it a good idea to invest in property right now? Give me hard fact, beyond what's happened in the past. We're forward-looking here, Spunkster. Forward looking!

Stevejhx, if you want to come walk my dog every day for thirty minutes, I'd gladly give you a key to my place! She's a gorgeous dog and everyone in the neighborhood loves her!!!
I love your posts, but your energy might enjoy the park air --- and my dog would love it, too!

Steve,

your posts have been informative, that is up until the 10th time you repeated yourself.

Now, I think I speak for a lot of readers when I ask you to please SHUT THE F* UP.

Hey duecescracked, it's a free country. You don't want to read my thread, then SHUT THE F* UP.

Show me once where I did an analysis of Manhattan income distribution vs. listed price distribution. NEVER BEFORE.

It's a new thread with a new topic. My last topic was Bear Stearns, and I ended it when it outlived this usefulness. This is a NEW one. Get that? A NEW one.

So, if you can tell me why I'm wrong, or under what scenario properties are properly priced in Manhattan - because I can't find one - then SHUT THE F* UP and start your own thread. Maybe about a good market indicator, like open house anecdotes. Because all I can find are market indicators pointed the other direction - a crash - so I'm open to a good, reasoned analysis

People said on this thread, "there are a lot of rich people." Well not according to the census department there aren't. People said, "with inventory still pretty low," I said it's not low at price points that are affordable to the people who live here. People said, "It's not a bubble," and I said it looks just like the dot.com bust: prices rising without being related to income.

I said, "CAN SOMEBODY PLEASE TELL ME HOW THIS IS SUSTAINABLE, WITHOUT RESORTING TO INSULTS?" and so far no one has.

Here's a new subtext, duecescracked: BSC failed because it was using 100x its equity in leverage. As soon as their credit was cut, they failed. I say these prices are only affordable with extreme leverage, or by taking on unnecessary risk through ARM's where you assume the interest-rate risk rather than the bank.

If you think I'm wrong, then state your reasons. Otherwise, keep on buying properties, and SHUT THE F* UP on my thread.

Peace.

Steve:

One major assumption in your aforementioned analysis about the affordability of Manhattan apts. is that only the current population of Manhattan are the prospective buyers. To explain further, you make no mention on the demographics of the population within the tri-state area which might have an affect (e.g. rich parents in Westchester/NJ/CT buying for their kids), you further ignore empty nesters living - in and around the tri-state - who might decide to spend their retirement in an upscale condo as opposed to FL or a huge suburban home and finally how about the influx of foreigners (as wealth increases in BRIC and they venture to invest outside of their countries). I have no problems with your analysis per se, but you need to bring in all the parameters into the equation, which becomes very subjective and difficult to do accurately. Hence the analysis remains inaccurate (not wrong, just not as accurate).
BTW, I do enjoy your posts.

cheers!

Steve, let me tell you for the last time, wealthy people own, they don't rent. Your argument is very simplistic, and wrong. Your dependence on the comps between renting and owning does not work for Manhattan. It may for say Phoenix or Syracuse, but not here.
1) There are no townhouses, or quality three or four bedroom rentals in Manhattan. Now, if you believe that thos ewho spent millions of dollars on these properties over the past several years only did so because of subprime mortgages or other exotic lending instruments, I disagree. They did so because they wanted a townhouse in the west village or a four bedroom in Tribeca, and the supply and demand determined the price. If demand for these properties abate, and people need to sell, the price will come down. I don't see that happening, but we shall see.
2) As for two bedrooms, for a quality two bedroom that someone with money will live in, it costs about 6500 per month, minimum. Now owning a quality two bedroom in the west village, tribeca, upper west, etc, costs arounf 2.5 or more. Again, for someone that wants to own, for the obvious and oft mentioned reasons, they are willing to pay more tow own, and again, for people with money, they do not view their home as a primary part of their financial portfolio, the way someone in Clifton NJ might. Again, it comes down to supply and demand. Most of the people I know with money do not get mortgagess that are 30 or 15 year conforming. They get interest only products or 1 month libor. Don't bother explaining to me why these mortgages are desirable for the banks, I understand that. Most people use them because they want to maximize their mortgage deduction, and they are not concerned about putting 30% down if that is required. Now, You may be right that demand for these units will abate, or that some people may need to sell, and that therefore prices will come down. I doubt it, but if they do, it will be because of fundamental economic shifts, not because of credit or own/rent ratios.
3) For Studios, 1 bedroom, and other starter properties, those are most vulnerable because there is little difference between a studio in hell's kitchen that is a rental or that is owned. It all depends on how the owner wants to invest their money. For quality properties like 101 Warren, or 15 CPW, there are no comparable rentals, so they will always command a premium because they cater to the wealthy, not the 300k a year trader.
If your overly simplified salary argument was dispositive, how do you explain the increase from 02-03, or 03-04, or 04-05, or 05-06, or 06-07. Were salaries jumping those years, but just not now.
Owning in Manhattan is expensive, it has been for a while. Your comments give comfort to those who can't own, and probably will never own, that prices will come down to their affordability. That is a pipe dream. You seem like a smart guy, why you devote so much of your life to this, I dn't know. Maybe you have your eye ona one bedroom in Trutle Bay that is a little out of your reach and you hope the owner reads this and you scare him. Other than that, you need to chill. Your theory may work for scranton, but not Manhattan.

And just so the Spunkster and everyone else knows, the gross number of available apartments is statistically worthless as a market indicator. What matters is the price distribution of those available apartments correlated to the distribution of incomes that can afford them along a curve.

I think I pretty clearly demonstrated that there is no such correlation - that almost all the listings available are at levels unaffordable by current and expected future incomes. That is why, as the mayor said, property conveyance tax revenue has ground to a halt.

If I'm wrong, stop hurling insults and show me where I'm wrong. In three separate threads over three or so months nobody who disagreed with me ever gave any statistic to support their case. I'm waiting...Spunkster.

Steve,

your analyses are marginally insightful although I imagine that any qualified buyer of upper tier manhattan property would and should have done the same trivial calculations themselves before dropping 2M+ on an apartment. It's simple arithmetic after all.

What is most annoying about your 'threads' is that you continue to scream the exact same message justified by a hundred different ANECDOTES. It would be comforting to see you create one thread and stick to it rather than littering the board with a new one every 2 days. You have started or hijacked a half dozen different threads on the subject in the past 2 weeks.

Having said that, your stand-up videos rule.

By the way Steve - the amount of time you appear to spend hitting the refresh button on Streeteasy and furiously responding to posts is concerning and obsessive. What makes you so invested in the subject? The imbalance of number of posts you have made compared to those of owners and prospective buyers seems to indicate that you are much more worried about being right than owners and buyers are about it.

Steve...Here is where you are wrong. 15 cpw sold for more money than any condo development in the history of Manhattan . That happened in 2007. The Superior Ink Building is selling now for close to 3000 per square foot, today, in this economy. Townhouses continue to rise in price, today, in this economy. I know...you do macro, not micro. Howver, there is now macro for real estate, every neighborhood, unit, building has their own intrinsic value. I have no doubt that there are price reductions in this market, there have been over priced apartments in every market. I, like you, am aware that Wall Street is laying off workers. That will not help the market for real estate. How much it hurts it, if at all, remains to be seen. Your income argument is flawed (see previous post) and the credit argument is not relevant . People in Manhattan (coops and condos) were not availing themselves of the subprime mortgages that fueled the bubble in say, Lafayette Georgia. Therefore, you can't argue that the price increases that ocured were driven by the same factors that drove the increase in say, suburban Cleveland. If the income argument is true today, why was in not rue in say 04-05 when prices went up 20%?

As an interesting aside. I inherited my father's coop at 350 Bleecker. It was a combined one bedroom and studio I sold it in 2000 for 400k, which at the time was a high price for that building. I was young and I didn't want to move into the place, so I sold. It was, by far the worst real estate deal I ever made, even though, at the time, many wise people told me to sell and put the money into the stock market (I ignored them, thank G-d, and bought a house in Welfleet instead).

And I too agree, your stand-up videos are very funny.

i think the flaw in your logic is that you are looking at the incomes of all individuals and comparing it to housing prices. you posted about 15k listings. there are about 1.5mm people in manhattan which means only the top 1% would need to be in the market to buy the entire inventory. the average top 1% income earners make a whole lot more money than the average listing. i know i'm exagerating the logic, but just making the point that you cant use the entire population of manhattan as a proxy for purchasers.

mh23, what you say about the uber-rich is true: they don't care about price. What you say about how many uber-rich there are is not true.

The median income for the top 5% of wage earners in NYC in 2006 was $710,116. That means half of the top 5% earned more than $710,116, and half earned less. According to the census, that means that in 2006, the top 36,971 households in Manhattan had a median income of $710,116.

Which, based on the typical 28% housing expense, means that only about 18,500 households can afford a $2 million unit in Manhattan, of which there are currently 2,943 listed.

I hope a lot of these multimillionaires are into trading up

What you say about large apartments for rent is also not true. On this database alone a simple search will show:

We found 2,464 [rental] listings with at least 3 bedrooms
Median price: $5,500 Median size: 1,860 ft² Median price per ft²: $60

Then, do the same search for sales of units with 3+ bedrooms, and the result is:

We found 1,956 [sale] listings with at least 3 bedrooms
Median price: $3,345,000 Median size: 2,210 ft² Median price per ft²: $1,493

So, according to this website, there are 21% more 3+ bedroom units for rent than for sale.

Stop talking out your arse, crunch the numbers.

And you'll also see that while 3+ bedrooms for sale are somewhat smaller (1,860 ft2 vs. 2,210 ft2), they are also incredibly more expensive based on your typical 30-year fixed mortgage, 20% down scenario. Because at the median price of $3,345,000, the median mortgage alone would be nearly $20,000 a month, versus $5,500 a month. Add:

http://www.streeteasy.com/nyc/sale/100917-condo-923-fifth-avenue-upper-east-side-new-york

which by the way was "reduced $475,000 about 5 weeks ago" shows you

Common Charges: $1,199
Taxes: $906

Bringing the grand total for your median 3+ unit sale in Manhattan to a whopping $22,000 a month. To afford that you would need to make about $800,000 a year.

To prove the availability of high-end rentals, go to:

http://www.carnegiepark.com/site/availabilities/availability.htm

which is a Related Rentals property, where they have a

"Gorgeous 3BR/3BA with north, east and south exposures, large living room and formal dining room great for entertaining, bright light, phenomenal closet space, complete laundry and storage room. Home sweet home!"

For a mere $9,895.00 per month. And another one for $10,600. That is, HALF THE PRICE of your MEDIAN 3+ bedroom unit for sale.

For clarity, of that 3+ unit figure, townhouses represent:

We found 80 Townhouses with at least 3 bedrooms
Median price: $4,200,000 Median size: 4,500 ft² Median price per ft²: $735

That represents exactly 4% of the available total of 3+ bedroom units. Not statistically significant to skew the sample, nor significant in terms of price, either.

Your conclusion isn't true. If I were rich and wanted to get richer, I'd rent. Warren Buffett still lives in the same house he bought in the 1950's.

You want to know what happened in all those years? I can tell you from 2004 through 2006, because the data are readily available at:

http://factfinder.census.gov/servlet/ACSSAFFPeople?_event=ChangeGeoContext&geo_id=05000US36061&_geoContext=01000US&_street=&_county=new+york&_cityTown=new+york&_state=04000US36&_zip=&_lang=en&_sse=on&ActiveGeoDiv=geoSelect&_useEV=&pctxt=fph&pgsl=010&_submenuId=people_7&ds_name=null&_ci_nbr=null&qr_name=null&reg=null%3Anull&_keyword=&_industry=

What happened from 2004 through 2006 is that a lot of people at the very top started to make a lot of money. Between 2004 and 2005:

Median income rose 10.3% in Manhattan, whereas mean income only rose 8.9%.

Between 2005 and 2006:

Median income rose 7.2% in Manhattan, whereas mean income only rose 5.9%

The percentage of households earning over $200,000 in:

2004 = 11%
2005 = 13.2%
2006 = 14.2%

If you crunch the numbers what you will see is that while everyone in Manhattan got richer, the rich got richer faster. That is proved not only by the fact that the median grew much faster than the mean, but it is proved by the raw percentages of people making over $200,000.

I also think Manhattan's population grew during that time, creating further demand.

But - I think that "those who spent millions of dollars on these properties over the past several years only did so" because they were making a lot of money on investments that the banks are now writing off. I think it won't last.

I think that you say that my "dependence on the comps between renting and owning does not work for Manhattan. It may for say Phoenix or Syracuse, but not here" is a bunch of cr*p. New York City has one of the highest levels of renters in the country: about 64%. There are 23,847 rental listings on this website for Manhattan. There are 10,212 sale listings on this website for Manhattan. TWICE AS MANY RENTALS AS SALES, which dovetails nicely with the 64% - 26% rent / own ratio: twice as many people rent as own.

That ratio ALWAYS holds everywhere, except for the uber-rich - $100 million plus wealth - whom I'm not discussing in this thread.

mh23, my only conclusion is that you're a real-estate agent who hates to be confronted by stark raving facts. My numbers can be checked where I said they could. Your conjecture can't be checked anywhere. Your sales must be in the dumps right now, because the very people whose incomes were rising so fast over the past year, were either wiped out, are going to be cut back, or just plain fired.

baabamaal, I can't comment on "prospective buyers" because I don't know a way to.

deuce: I agree: "I imagine that any qualified buyer of upper tier manhattan property would and should have done the same trivial calculations themselves before dropping 2M+ on an apartment."

The problem now is the oversupply.

Regarding why I do it, it's in fits and starts depending on my work and how boring it is. Electricity rates in Spain are very boring, but I was translating an economic analysis of how electricity companies maximize income in a rate-regulated environment. It was very interesting to me, with my degree in economics.

As I do these analyses I learn more about the market, so I know when I'll be ready to take the plunge again. I'd love to own again, just not at these prices.

mh23, I agree again: the tippy-top end is not affected. The problem is the supply now seems to be much greater than the demand, at precisely the time when their incomes are going down.

Thanks for the kudos on my comedy. I'll be at Comic Strip next week, Gotham the week after, Philly the week after that.

mschlee, my point isn't only the percentage of people who can afford these price levels, but also the raw numbers. As a rule, however, over time the median income earner can afford the median income property in any market. That won't ever be directly true in Manhattan with all its public housing, but it will still be close.

Steve. First off, I am not a broker, I am an owner. If the market does not give me the price I want, I will rent. The rent will pay for my mortgage/cc's/taxes on my unit, as well as about half of the mortgage of my new house in Bergen County that I am moving to this Summer, and that I bought about six months ago.
Your argument is that Wall Street is the only stream of demand that has served to drive up prices in Manhattan. While it is a big part of that stream, it is not the only part. No individual that is willing to pay 6 million plus for a three bedroom condo would ever consider looking at an 180 square foot rental. Not only is the unit to small, but the finishes are crap, and, as I have said before, people who spend that kind of money like to customize. Your argument is that the only people who bought or who made money made money in "investments that the banks are writing off." I am not sure that that is so.
Your stats totally ignore any buyers that are not from New York City. While you discount foreign buyers as a factor, and you may be right, you can not discount the impact entirely. An, of course, there are those from Greenwich, Westchester, Bergen County, that purchased pied a tiere's or apartments for their children. Again, you will discount that, but it is not a zero factor.
You mention 04-06, but what about 01-02, 02-03, 0-3-04, prices went up then as well...Let me guess, incomes did as well, but this year, because of Wall Street, incomes will go down. They will on Wall Street for some, but what about actors, business owners, advertising, legal, Plastic Surgeons, athletes, models, etc...are they so insignificant as to not count at all?
Warren Buffet is a unique man, and a genius...What his eccentricities have to do with this discussion, I don't know.
Since you did not counter my argument regarding the fundamentals that drove appreciation not being contingent on exotic lending instruments, I assume you cede my point.
If you are arguing that the fundamentals relevant to the Manhattan market are deteriorating, and that that will lead to flat or slightly lowered pricing for starter apartments, and apartments in emerging neighborhoods, then you may be right. If you are arguing that there will be a 30% drop in resales from 15 cpw, west village, Tribeca, Upper West, etc. Then I disagree. Those people who bought could afford their units. They won't be getting foreclosed on, and they won't be having any fire sales. That is the part of the market that interests me.

Please send a link to your stand up bits

Steve is the greatest thing to happen to Streeteasy since that BidLow guy a few months ago. Anyone who has been around awhile knows these prices are crazy.

Sharise first:

http://www.youtube.com/watch?v=gqXh_EH9-fk

That's a later one. Enjoy!

mh23, peace. You brought up a good point. If your "rent will pay for my mortgage/cc's/taxes on my unit, as well as about half of the mortgage of my new house in Bergen County," then you probably bought a while ago, and you're cool. Same w/ me on Long Island: I bought 4 years ago, I'm not worried.

You say I say, "Wall Street is the only stream of demand...." That's not me; that's what realtors have been saying for 3 years. The fact is, however, that while WS only makes up 11% of NYC employment, it has in recent represented 35% of its income. So that's a huge bias; when profits fall and bonuses fall and jobs are cut - all of which are happening right now - it can't but affect NYC.

You say, "actors, business owners, advertising, legal, Plastic Surgeons, athletes, models."

Actors? Really? How many professional athletes are there? I'm a business owner who works as a legal translator and make beaucoup bucks at it, & I've not seen a downturn. If you're a lawyer working on M&A, however....

And plastic surgery is - pardon the pun - a highly elastic field. It costs a lot of money to have it done, and it is almost entirely unnecessary. (I know - I'm a self-inflicted victim.) Don' count on that.

You can't simultaneously argue that co-ops prevented a bubble through admission standards while simultaneously arguing "pied a tiere's or apartments for their children," because 90% of all co-ops don't allow that.

I'll say again, I'm not talking about the $6 million + housing level. I'm talking about the mere mortals among us, who can afford up to $1.5 - $2 million. That's still the top 20% of all Manhattan earners, but it makes up a grossly disproportionate number of apartments currently available. And higher is even worse. That's what I'm saying.

I could not readily find the figures for 01-02, 02-03, 0-3-04, but my argument is that we will return to 2004 price levels, so it's not really relevant. From personal experience I think what you'll find is that rents and housing carrying costs increased in tandem from 1998 - 2001, and then started to get out of whack. But it's not material to what I've been saying.

Part of the problem with the NYC property market is the dearth of real data - which I've also complained about - but I did find at:

http://query.nytimes.com/gst/fullpage.html?res=990cefda1538f932a25757c0a9629c8b63&sec=&spon=&pagewanted=all

that "New York Mortgage Company said that 65 percent of its jumbos are ARM's."

That's huge, and if resets are tied to LIBOR and go up - which they probably won't for a while since Manhattan is behind the curve on the property boom - it could be devastating. Especially with all the Walls Street cutbacks - representing 35% of the city's salaries and bonuses - coming upon us.

ARM's are one part of the puzzle; Wall Street bonuses were the other. I think it could be a perfect storm.

Subprime was not an issue in Manhattan, you are right. But I believe that since 2000, 80% of mortgages outside of Manhattan were subprime, which does affect Manhattan's property prices, since bubbles are not only from the top down, but also from the bottom up.

I'm glad you conceded all my other points on rentals, however, though I would say that Warren Buffett is not eccentric. Bloomberg lives in a nice townhouse but he could afford the whole block. Eventually, you just stop wanting more.

I don't disagree that in the super-expensive markets there will be little retrenchment: 15 CPW, for instance. The Village, Tribeca, UWS, UES (especially vulnerable) I disagree, however, with all the new building going up there, and all the available units. And if 65% of mortgages are ARMs, and BSC employees have been wiped out, and other major cuts are on the way, I think you're wrong when you say: "Those people who bought could afford their units."

Uh, uh: no they couldn't!

And thanks, Semi-Retired: I'm talking about property for mortals, not for Rupert Murdoch.

But we went through the difference between mean, median, and modal prices with the Spunkster a few days ago. I contend - and from what I see mh23 mostly agrees - that there is lack of correlation between incomes and property prices along the distribution curve.

mh3 something very unusual just happened. Mh23 posted a message here about an hour ago and stevejhx hasn't replied yet. What the heck is going on here. He usually responds instantaneously.

spunky...face it stevejhx has been terrific...

Steve. I agree with you to the extent that Wall Street should have an adverse impact on Manhattan real estate. I further agree with you that, the lower in price you go, the more that impact will be felt. Furthermore, were mortgage rates on Interest only/Libor products to go appreciably higher (As of now the 1 month libor is sinking like a stone. I am paying less than 4% on a 1 month jumbo from MLCC, private client.) that would also have a dampening effect.
Here is my prediction. Prices will stay flat, of perhaps up or down 5% for the 2.5 and up range. For those below, I agree that there will have to be some adjustments for those units that are priced as if the market today will tolerate overpriced units. 2004 is a little steep. In my building, which is one of the two or three best in Tribeca, you could have bought a 2,600 square foot three bedroom 3.5 bath in 2003 for 1.875. This month alone, a three bedroom and a four bedroom sold for over 2,000 a foot.
Anecdotally, on my floor there is myself, a business owner, an artist whose wife comes from a wealthy family, a real estate developer, and a guy from Blackstone. The three penthouses in my building are owned by, the ceo of american standard, a retired couple from Greenwich, and a woman who is in her mid forties who does not work. No wall street cdo exposure here, except maybe the blackstone guy, but he doesn't seem too worried. I also know a doctor, the guy that owns Fuze, a guy that owns a furniture line, a lawyer, a guy in the film business, all of whom own in the building. Unless they owned a shitload of BSC, I don't see them having any fire sales.

It's true that the uber-rich in the tri-state area operate under a different set of economic rules than the majority of the population. Downpayment requirements don't matter, they like interest-only loans, they don't rent, etc. I would even argue that the 28%-rule doesn't apply to the uber-rich (meaning that they can spend much more that 28% of their monthly income on housing) because they have so much money that they couldn't possibly spend the other 72% on the rest of their living expenses. I'm talking about the people who are so rich that they have more money than they know what to do with. I know a few of them and believe me, they're not worried the least bit about the credit-crunch, layoffs, stock market volatility or whatever. They have boat-loads of cash or liquid assets and never need to work another minute of their lives. If anything, they take on "projects" to keep themselves busy like financing independent films, opening up business ventures without any concern about making a profits (e.g. Ralph Lauren's daughter Dylan Lauren opened up Dylan's Candy Bar across the street from Bloomingdale's - I know their expanding, but not sure they've yet to turn a profit. Same situation with Robin Brown, the wife of a former Goldman Sachs partner who opened up Clay, a gym/spa on West 14th St - don't think they've turned a profit yet) or just spend their time decorating and then re-decorating their various properties. The normal rules of housing economics don't apply to these people and the apartments they inhabit will most likely not suffer. However....

....these people can't support the entire luxury-condo market that has over-expanded over the last 3-5 years. These apartments were built and priced for the working-wealthy, people who's incomes put them in the top 2% of the population, but who need to keep working in order to maintain that lifestyle: Wall Street traders/investment bankers, lawyers, corporate VP's, plastic surgeons, etc. They have a lot of money compared to the average-Joe, but they can't quit their day job and just sleep all day. It is this demographic that all these "luxury" condos were built for. It is the decline in this demographic that will lead to the inevitable contraction of the RE market in NYC.

So if you're one of those people who are set for life no matter what happens, everything is peachy and life is great. If not, it's probably a good idea to play it defensively for a while.

Well said, imom.

Anyway, G-d Bless. I do think that Steve is doing a good thing, because if he gets a few people who might be getting ready to overextend themselves to rethink their situation, he may be helping them out. And ultimately, the value of these boards, and everything else for that matter, should be for people to help one another. Good night.

mh23: the hubert? sweet property, wish we had been the ones buying in in 2003!

Gloom and doomers beware: Don't wish too hard; you might get what you ask for. Soaring office vacancies. A fall in housing prices that leaves some buildings worthless, surge in crime, and a plunge in tourism. People like Steve who post gloom and doom for the Manhattan RE market have every right to do so, but they also have the responsibility, and should hopefully have the common sense, to think about how their perpetual talking down of the market may potentially contribute to the downward spiral of a golden asset that they may someday want to be a part of.

I believe that if Steve JHX ever gets his wish, he may wind up living in a city he doesn't really like very much.

http://www.nytimes.com/2008/03/23/fashion/23envy.html?_r=1&ref=style&oref=slogin

Will,

You brought a smile to my face with that last comment. Your comment is another variant on the same old tired line that people with a vested interest in an investment have said for centuries. Investors who lost their shirts in the dotcom bubble would go on message boards and call bears unpatriotic, communists, evil people who delighted in others misfortune etc. etc.

It is all part of the cycle folks it doesn't matter whether its tulips (1800s), gold mines (1900s), real estate or oil limited partnerships (1970s), junk bonds (1980s), internet stocks (1990s), or homes (2000s). when its going up people say the same thing (there are always reasons why an investment will defy the usual investment cycle) and when it goes down people say the same thing.

"The only new thing in the world is the history you haven't read"

Do me a favor , just don't blame the media or assorted posters or bloggers if real estate goes down in Manhattan. It is a natural part of the investment cycle my friend. Don't worry as long as you haven't done anything stupid the real estate cycle will come back to life

Will. That was a moronic article written by someone who hopes their fantasies will somehow come true. Steve is correct to point out certain issues in the market, and to argue that there may be certain buying opportunities in certain segments of the market but this article goes way too far. I lived in Manhattan during the late 80's and early 90's. Crime was one reason why there was flight to the suburbs, it had nothing to do with Wall Street. The city was filthy and dangerous, so there was no stimulation from tourists or foreigners. The mayors were Koch and then Dinkins, two absolute losers. Today we have Bloomberg, who was preceded by Rudy who, if nothing else, cleaned up the city. Unemployment was around 10%, and the city did not receive the infusion of tax dollars and investment that it has in 9/11. The late 80's and 90's followed the late 70's and early 80's, when the city was also filthy, crime infested, and managed by morons. I remember that when I moved back to Manhattan in '93 I moved into a rental on horatio street in the meatpacking district. I was living with my girlfriend at the time and I had to give serious thought as to wether the neighborhood was too dangerous. I don't see that type of consideration being at play again
Everyone should just calm down. There is something a bit silly about some out of work actors rejoicing over the collapse of Bear Stearns, as if that will somehow make Park Avenue affordable for them. I predict that, if anything, should the city be perceived as being more "artist friendly and bohemian" again, it will attract even more tourists and people who want to own.

flmd, I didn't call anyone unpatriotic or a communist, but I agree with Barack Obama that words matter. They have power. I have power, you have power, Steve has power and Urbandigs has power... we all do. The world has changed and it's much easier than ever before to get a megaphone or place in the Village Square. It's right here on StreetEasy. That's what's different now than in the past, except perhaps the recent Internet bubble. I'm not telling people that they should shut up. They have every right to say what they want. But I am asking them to think twice and try to be responsible, or at least be on the look out for different motivations in postings or in why people take different positions.

Now I know most people are probably smart enough to read through the motivations of someone who seems on a crusade to push the market one way or the other, but not everyone reads this board every day.

Finally, I am not blaming the media or assorted posters if the real estate market goes down. In fact, in spite of all of the crazy stuff that has been on these boards the past couple of years it has gone up or at least stayed stable over time. But I am saying it does make a differnce and that pyschology matters in economics, and that we should read these posts (including mine!) with a healthy dose of skepticism.

I

Hey guys, good morning. Julia, just FYI, the Spunkster is my cyberstalker: says only nasty things about what I write, but apparently not only reads every word of it, but even notes the times I post. I think she has a secret crush on me.

Will: tee-hee-hee. In addition to what everyone else says about your post – the real-estate market is not liquid enough for rumors to cause prices to drop quickly. Not even if Obama speaks the words and the skies open up and angels shine down upon us. Learn about economics before you say more stupid things. Rumor can affect markets short-term, but real-estate is not a short-term investment.

FYI I know about NYC in the 70's and 80's because I lived upstate and visited all the time, and I never said we were returning to those days in terms of crime or anything else. What I did say is we will see a decline in the property market like the one from 1987-1998.

I am not a communist. I voted for Michael Bloomberg. BTW mh23 Koch may be an a**hole, but he did begin the process. Remember pooper-scoopers? The clean-up of Times Square. Getting rid of the bathhouses? He did a lot, but there was a lag.

And Will, regarding your link to the NY Times, I know 2 people who work at BSC. I'm only glad that one of them was wiped out. BSC’s failure alone is not enough to tank the real-estate market. There will be opportunities, of course, but the market is much bigger than that. I still think it will tank, but not solely because of BSC.

flmd: good post on boom and bust cycles. Everybody here thinks Manhattan is “special.” And therein lies the danger: in the dot.com boom they thought the economy was "New." And in the early 90's it was the Tequila Effect, where the Mexican peso was overvalued with respect to its purchasing power parity, and caused a worldwide crisis that we only started to recover from last year.

Nothing is “special”; nothing is exempt from the correlation between income and prices. If a Whopper costs you $1 in Buenos Aires and $5 here, there’s a reason: because nobody can afford $5 in Buenos Aires, and if they cost $1 here, that’s all anybody would ever eat.

Every single time there's one of these boom-bust cycles, something breaks out of a long-term equilibrium. In stocks, it's the ratio between prices and earnings, which in the dot.com boom could only be represented by a Greek letter, omega, because there were no earnings and you can’t divide by zero.

We can go on and on - prices are tied to income by definition. Demand is always elastic to some degree. It cannot be avoided. "Talking" about it won't stop it from happening.

mh23, I'm glad we've made this clear: I'm not talking about Ralph Lauren's daughter. I'm not talking about Harry Potter. I am, however, tangentially talking about how many Harry Potters there are, and how many daughters Ralph Lauren has. Not that many, and there are not that many people out there who can fill all the apartments that are currently available. I would also wager that prices have gone up so much that a lot of those people living in your building couldn't afford it today: you're talking about going from $721 psf in 2004 to $2000 psf in 2008. That is a 177% increase in 4 years. That is approximately a 35% compound annual return on investment in 4 years.

NOTHING goes up that much and stays there unless there is income to back it up. Look at flmd’s booms: nothing ever has, nothing ever will. Again, we're not talking about Harry Potter or Ralph Lauren's daughter, who have the cash to buy things outright. We're talking about the doctor who is comfortable but still needs to work to support his family. (My brother-in-law is a heart surgeon with 4 kids, I know something about the finances.) We're talking about the Wall Street broker or trader who may have made a nice bonus in the past three years, who now a) isn't going to because of all the write-offs; b) is worried about his job; c) has been or will be downsized; and/or d) has been wiped out.

Recall my earlier post:

2,943 listings OVER $2,000,000 (20.0% of all listings)
7,318 listings from $1,000,000 to $1,999,999 (49.9% of all listings)
4,397 listings under $1,000,000 (29% of all listings)

iMom has it right: sure some of all these units will be bought by the uber-rich, but census figures show that even in 2006, the best year for Wall Street ever, there weren't that many people making enough money to buy that many apartments, here or anyplace else. Not to live in, not to rent out, not as pieds-au-terre.

To refer to your Tribeca case - and again, I repeat: you can make money renting it because you bought it for far less than it's currently selling for, and many people who bought back then couldn't afford it at these prices. Go to nybits.com, which is the best website I can find for rental buildings. Rose has a 3-bedroom at 88 Leonard for $7,995 a month. A 3-bedroom in your building would cost twice as much to carry as one in 88 Leonard, though it didn’t at $721 psf. A wo/man who has to work for a living - who can't afford to buy something outright, or who wants to send their kids to an uber-kindergarten, or wants to save for their college - is going to look at that 100% price differential between buying and renting and say, "Wow!" Plus if you ever can't pay the rent the worst thing they can do is kick you out, and evictions take a year in NYC. A year of free living and you can lose - what? - a $25,000 deposit, versus a $500,000 or more down payment?

When you go to nybits, search for 3-bedroom apartments. They're ones that you won't find on this website because it’s mostly rental buildings. You can rent a boffo 4-br 3-ba apartment at River Tower for $16,600 a month.

http://www.nybits.com/apartmentlistings/8015414332d7e159d03e9d61a04b006a.html

You can get a 3-br at 52 Barrow for $6,795: with marble baths!

You can get a 3-br at Trump Place for $12,000.

You can even get a 4-bedroom at 1160 Fifth Avenue (at 97th Street) for $16,990 a month.

In EVERY case and in every price range you can rent something for half the price you can buy it in Manhattan. EVERY case, and it doesn't matter the size of the apartment.

mh23, don't look at who owns in your building who bought years ago at $721 psf. They're not who matters, they’re not who we’re talking about. Who matters is who is going to buy in the future at $2,000 psf. Yes there is the Jet Set, and yes there are people who have season tickets to the Jets on the 50-yard line, but they are few and far between, here or anywhere. I'm talking about the people iMom is talking about: today's people at today's prices, people who have to work for a living even if they have a $1-$2 million in liquid assets and incomes in the $500,000-$700,000 range.

What we're seeing listed today, those people can't afford, unless Ralph Lauren starts having a lot more babies, or I finally get my 1-hour Comedy Central special.

Steve, you have every right to your opinion and to post what ever you want. I just find your crusade a little tiresome and a little sickening.

Will, honestly, if you find me tiresome and sickening, I have a quick and easy solution....

Will - are you for real? Are you whining that we should stop posting our opinions on an anonymous messageboard because you are afraid of the impact it will have on your real estate investments? I don't know where to start on that one, it's so laughable.

Will, just because you've run out of arguments and don't like the facts, don't blame the messenger.

Not you, Steve. You seem like a very interesting guy. Just your crusade: I find that tiresome and sickening, but at the same time, like a car wreck, I am still pathologically drawn to it. Maybe that's my sado-masochistic side!

Probably why I still watch the O'Reilly Factor. Maybe I should stick with Charlie Gibson and call it a night!

Guys, since I used to be a bank auditor with BofA and Price Waterhouse, and I now make my living translating the documents that underlie all these instruments - working, for instance, on Parmalat's bankruptcy, lawsuits involving all the big investment and commercial banks, the International Monetary Fund, International Court of Arbitration, I know something about what's going on with Wall Street right now.

Instead of will's article about bottom-fishers, I highly recommend this article:

http://www.nytimes.com/2008/03/23/business/23how.html

What caused the boom in property throughout the country was subprime mortgages and ARM's. Jumbo ARM's have had an effect in NYC, as well. But mostly it was the bonus money from Wall Street, which represents 35% of all income earned in NYC.

It's unwinding. Quickly. Housing prices can't but fall along with them. It's not me who's saying this is the worst financial crisis since the Great Depression. It's the Federal Reserve acting like it is. Now we have a better understanding of how things work than we did in the 30's - please don't renegotiate NAFTA, Obama Smoot-Hawley - so we can stop a complete crash, but we can't stop a complete unwinding of things back to equilibrium.

will,

Steve's crusade is no different than the other posters who are real estate bulls. You say people have a right to say whatever they want and yet you want them to think about what they are saying before they post and then you tell Steve that you find his posts sickening. You are trying to censor him or any other post who is not a perma bull.

I understand you are scared. I own real estate in NY as well and don't want to see it decline. But you must realize that you cannot control what will happen. If you disagree then say you disagree. What will happen will happen irrespective of what anyone on this board writes or feels.

flmd, another good post. I own property on Long Island. It will go down, but I bought it 4 years ago so I don't really care. All I did was postpone upgrading for a while.

I also own gobs of stock. I've taken a big hit recently. But it will go up again.

Real estate deflates slowly. This time it will be somewhat faster because of what has happened to Wall Street. It still remains a good long-term investment. The only people who will be burned right now are flippers. If you plan to stay where you are, what does it matter?

stevie:

Seperate issue - Parmalat. Don't you think that at some some point they'll be ripe for a takeover after all the litigation? It's still appears to be a great brand. Seems like a buy down in the $3's to me....

flmd, I am not trying to censor anyone. I was simply pointing out that psychology does matter just about any economic projection. Perhaps I was pleading for self-restraint, thoughtfulness, and responsibility, but I don't think that's a terribly irresponsible thing to ask for. More importantly, I was asking folks to read these posts with some level of questioning, because who knows who we really are? (except Urbandigs)

I think Steve is amazing!!!
And he's right ---- Koch started the clean up process --- and Rudy rode the national wave of crime going down EVERYWHERE.
Steve, keep it coming! However, make sure you take your vitamins and eat enough greens . . .

Malraux, I have no opinion on Parmalat, except to say that I like milk. Glad you're still reading, though!

Will, where do I not show "self-restraint, thoughtfulness, and responsibility"? I show you real rental listings and compare them to real sale listings. I give you census data. I give you historic facts about the correlations between income and prices. I show you clearly how prices have exploded in a very short time in a manner not commensurate with gains in income. I draw logical conclusions based on sound, time-tested economic principles. I refrain from calling people and their posts tiresome and sickening. I do not make market extrapolations based on how many people do or don't show up at open houses.

What is wrong with that? If self-restraint means not saying what you don't want to hear, I can't do that. If I though prices were going to skyrocket, first I'd buy, then I'd spread the word. If it's not "thoughtful" to look up the data and present them, then what is? Making statements such as, "All Westernized Countries Love To Buy Property," which is a) unsupported, and b) untrue. What would you consider "responsibility"? Not publishing what is common knowledge throughout the world?

Steve. I made my point. You have the right to post to your heart's content.

But Will, you haven't answered my question about what you mean:

To you, what would be:

a) Self-restraint
b) Thoughtfulness
c) Responsibility

within this context?

Every time I ask any of my detractors specific questions requiring specific answers - such as these - I get no answer back.

Will,

The very fact that you want people to examine what they are saying is attempting to censor them. Will you have to realize that no matter how pro - Obama you are or how much of a liberal you think you are...you words are those of a censor...Yes you have not called Steve a communist and unpatriotic yet... I'm really trying to help you...stop you from becomming a caricature if the real estate market does in fact tank.

This may hurt to hear but your statements are emblamatic of someone who is very dependent on an asset class that is extremely worried of what will happen to their financial future. Steve's statement are emblamatic of someone who has missed out on a run up and wants a decrease in the worst way so he can either buy or at least enjoy a bit of schadenfreud (i don't think I spelled that correctly).

This is a cycle as such it may be time for the Bears to have their time in the sun...Will you have to let them have it. No one censored the bulls or told them to think about what they were saying.

Actually, fmld, I didn't miss out on the property boom at all. In fact, I made a couple of million on:

a) a 2-br 1-ba co-op in Greenwich Village
b) a studio in South Beach
c) a 2-br 2-ba condo in South Beach.

I made a deliberate choice to get out and rent.

What I'm trying to tell people is a warning based on what I've seen: I got out of property c) the day before Hurricane Wilma struck. Everybody was saying that Miami was crash-proof. Prices have fallen 30%.

I'm not comparing the dynamics between Miami (overbuild and flippers) and Manhattan (Wall Street collapse and price overshoot); we've been through that. What I'm saying is the fundamentals here are wrong. As this thread begins: caveat emptor.

steve,

ok you did not miss out on the real estate run up...but you are hoping to buy a property on the cheap ...you have to give me that don't ya

Last post for a while, some Swiss stuff to deal with. But, from here:

http://www.bloomberg.com/apps/news?pid=20601087&sid=avvPo059cPsQ&refer=home

read:

"Housing Eases: Housing is becoming affordable, Bove wrote, based on the research of Stuart Feldstein at SMR Research. Feldstein said the housing slump is bringing prices back in line with incomes, according to Bove's note."

That's all I'm saying: prices are coming back in line with incomes.

Means $721 psf.

Okay, one more.

flmd, not on the cheap: in line with incomes. Not 1997 prices. 2004 prices.

And I'm not "hoping": I'm betting on it.

i know you are trying to argue your case, but you are skewing the logic.

if your argument is ability to purchase, you point out yourself that "69.9% of all listings are affordable only to the top 15% of all income earners" that means that 10k units (.69*15k units you identify) are affordable to 75k (.15*750k wage earners). i'd say not a shortage of demand.

if your argument is appreciation, the appreciation rates you use are skewed because you are using a very low base year. look at the appreciation in 2 bdr (the market you talk about in the 1-2mm range) from 1989 to 2006, 316k to 1,075k about a 7.5% compounded annual growth rate. a bit higher than the historic national average of around 6.5%, but not by much

if your argument is sales price to rentals, you should do comprables for 2 bedrooms. look at units in the same or comparable building. i looked at a place last weekend that was going for $1.3mm and there was a rental available in the same building with the exact same layout for $5k/mo. $1.3 mortgage is about $6k/mo so a ratio of about 1.2 which is exactly where is should be. the economist used to track this and i believe 1.2 was the historic average but i could be a bit off.

i agree the market is slightly overpriced, but not by much. my guess is rental prices will come up and make the purchase to rental ratio even better.

if you have a time horizion longer than 5 or so years, you will probably be better off buying. even if you bought at the peak in 1989, you would have been better off buying than renting by about 1998.

flmd... actually, I don't support Obama and I'm not that liberal, but I am a card carrying member of the ACLU. And I agree with Steve on NAFTA, and also would like to see Frank-Dodd passed. Well, maybe I'm moderately liberal.

I'm expressing my opinion on personal responsibilty on the Internet, not trying to censor anyone. If someone is engaging in the blogosphere equivalent of having a screaming fit on the Village Square, I am going to be somewhat critical.

So don't try to censor me!

Anyway, I'll try to stick to Daily Kos. Sorry if I've gotten off point here.

Will...card carying member of the ACLU...please...you are a liberal...stop lying to yourself and your friends by saying you are a libertarian.

I don't know any moderates or Republicans who quote Obama...you may need to do a litle soul searching my friend. : )

By the way I'm just teasing you

Thanks Flmd. I quoted Ronald Reagan a couple of weeks ago and no one noticed, but I think poorishlady thought it was PT Barnum. But I supported Carter-Mondale all the way so I guess I am a liberal. But a Robert Rubin liberal more than a Robert Reich liberal. Oops. Better get back to Daily Kos. Sorry. Getting off point again. :-)

Anyway, Steve seems like a neat guy and I'll defend to my death his right to post here. I'm an economist though, and I was just reacting to what I see as major efforts to "talk the economy" one way or the other. I was equally upset when Bush and Cheney said we were in a recession in mid-2000. Alright, back to Daily Kos.

mschlee, spunkster's right, I'm an addict.

First, a 30-year fixed-rate mortgage with 20% down on a $1.3 million property at 7.12% (being offered by Chase) gives you monthly mortgage payments alone of $7,003. Add $1,000 in property tax (unabated – that program’s gone) and $1,000 in common charges, and you have monthly carrying costs of $9,000.

To rent the same property would, as you say, cost you $6,000, or 50% more to buy than to rent. Without considering attorneys' fees, real-estate brokerage fees, conveyance tax, mansions tax, mortgage tax, and so on.

As I have always said, forget about the mortgage interest deduction - it's a wash with the opportunity cost of investing the down payment elsewhere - because the equivalence is between that type of fixed-rate mortgage and rental costs. Yes you can get a lower up-front cost if you take out an ARM, but you then assume the risk of not being able to afford your mortgage with the reset. And the new regulations floated by the Fed will make it illegal to offer an ARM to anyone who cannot currently afford the highest possible reset. So those products won't be around anymore.

Then look at your "sample property," which is just not true and never existed. YOU MADE IT UP.

To prove it, go to http://350bleecker.com/policy/sales.html for actual sales data from an actual building. The first apartment sale recorded in 1989 was a 1-bedroom for $85,000. The last one-bedroom sold in that building - an identical apartment on the same floor: 5J vs. 5K: right next door - sold for $775,000 in 2007. At your 7.5% compound annual rate of increase - MUCH higher than the historic norm, by the way (see below) - that apartment would be worth $335,887 today, NOT $775,000. $775,000 is an annual compounded increase of 12.5%, which is INSANE. And that's also the 2007 price; in 2008 it's been upped to 20% (see above).

Don't believe me? Go to:

http://www.smartmoney.com/home/living/?story=rent

Where you will read this:

“The average real return for houses over long time periods might surprise you. It's zero. Shares return 7% a year after inflation because that's how fast companies tend to increase their profits. Houses have their own version of profits: rents. Tenant-occupied houses generate actual rents while owner-occupied houses generate ones that are implied but no less real: the rents their owners don't have to pay each year. House prices and rents have been closely linked throughout history, with both increasing at the rate of inflation, or about 3% a year since 1900. A house, after all, is an ordinary good. It can't think up ways to drive profits like a company's managers can. Absent artificial boosts to demand, house prices will increase at the rate of inflation over long time periods for a real return of zero."

You want to know what inflation has been since 1989? Go to:

http://www.westegg.com/inflation/

Type in $1, and 1989 as the starting year. You will get this answer:

What cost $1 in 1989 would cost $1.73 in 2007.

So that 1989 sale for $85,000, if historic norms are kept, should cost $147,050.

Just about anybody will tell you that's true that’s that what happens to property prices over time. Some figures say home prices increase at the real rate of income growth (income growth - inflation) which is about 1.5% per year + inflation.

Read this:

http://en.wikipedia.org/wiki/Housing_bubble#Housing_ownership_and_rent_measures

The historic price-to-rent ratio is 11 to 12. That means multiply your annual rent by 12, and you will get what property prices should be. A $5,000 rental should cost you $720,000 to buy. But take a current listing. Go to:

http://www.streeteasy.com/nyc/sale/167077-condo-99-jane-street-west-village-manhattan

which is for sale at $1,995,000. Compare it to:

http://www.streeteasy.com/nyc/rental/289191-condo-99-jane-street-west-village-manhattan

which is virtually identical, but is up for rent at $7,500.

That means that historically, that apartment at 12x rent, would cost $1,080,000, HALF what it is currently being asked, and approximately what it went for in 2004. And if you go to rockrosenyc.com, you can find a 2-br 2-ba apartment for rent at 100 Jane Street – right across the street – for $5,500, or 36% less than the 99 Jane Street apartment.

There is no market indicator that I can find that supports these prices, and making up fake apartment data won’t help anybody. Get real data, get back to me. Then read this and get back to me:

http://money.cnn.com/2007/11/06/real_estate/home_prices.fortune/index.htm

(I had to break this up because of all the links. Sorry!)

mschlee: I forgot this part of your silly argument:

"if your argument is ability to purchase, you point out yourself that "69.9% of all listings are affordable only to the top 15% of all income earners" that means that 10k units (.69*15k units you identify) are affordable to 75k (.15*750k wage earners). i'd say not a shortage of demand."

So you are truly saying that of the 1 out of every 7 people who in 2006 made over $750,000 is currently looking for an apartment? Because that's the ratio that you give: 10k units / 75k listings. That comes out to 13% of the extremely wealthy are looking to buy right now.

And if they did, who would buy their apartments? You forgot that part. Because if every wealthy person were to buy one of the current listings - and they have on average 7.5 to choose from - they would by definition leave 10,000 empty apartments behind, which somebody would have to buy.

Who is going to buy them?

Very interesting article in the front page of one of the sections of todays NY Times (I believe Sunday Styles). title was something like Recessions or Reservations. In the article it states how happy and overjoyed many New Yorkers who were shut out of the Manhattan RE market for the past several years are about what's going on with i bankers and the recent demise of Bear Stearns. They feel for the most part that prices will come down to 1990 prices and will be able to finally buy the two or three bedroom apt at affordable prices that they always wanted to buy. I thought of Stevejhx while reading this.

Hi Spunky. I copied this on an earlier post. Also, see post from a little less than a year ago that discusses how New York is relatively reasonably priced overall, compared to other international cities, another strong reason why we should not see any major price declines.

http://money.cnn.com/2007/06/15/pf/most_expensive_cities/index.htm

http://www.nytimes.com/2008/03/23/fashion/23envy.html?_r=1&ref=style&oref=slogin

Spunky, just to clarify, the point of the article was "don't wish too hard," you might get a lot more than you are wishing for. A severe drop in housing prices here would be indicative of much, much bigger problems. This is not to say that we might see some modest price drops here and there the year or so, but those wishing for a severe decline might want to think twice about it.

that was "the next year or so"

Thanks will. It was rather interesting reading because it gave me a better understanding for the psychological reasons why Stevejhx and others are devotedly voicing their reasoning as to why and how Manhattan RE prices must fall. Like I said before this is a great place for Stevjhx and his followers to mentality masturbate on the coming demise of Manhattan RE prices to 1970 pricing.

You all write about Manhattan as if it were a highly desirable “Paris/Munich/London” kind of destination. In addition to the obvious price bubble (remember tulips; people paid millions….), we also have the bums, the trash, the smells, the subway…etc. Factor that in, and real prices should be those of Bolivia.

Steve. I understand your argument. However, I have a question. There is a new development going up at 414 Washington Street. The units are 2998 square feet and they are asking 1600 a foot for the cheapest one. If I understand your argument, you would put the proper price at around 2.34 as opposed to 4.8? The more expensive units go up to 6 mil. I recognize that these are at the higher end of the market and that they are not indicative of the units that make up the thrust of your argument. I am just curious as to what you think they will actually sell for, if they manage to sell.

This may have already been posted, so forgive me.

NYC RE can and does go down! I lived through this more than 20 years ago when I first bought an apt in a 32-unit bldg. I was on the board for 8 years (the last 2 as president), and I can tell from my own experience that this was a long, slow, prolonged process.

Basically, prices started softening in 1988 (shortly after the stock market crash in Oct 1987), bottomed out in the early 90s, and then gradually firmed through the mid/late 90s.

Initially, there was a mexican standoff mentality between skittish buyers (some bottom feeders) and disbelieving sellers who refused to accept the new market reality. Those who had to sell (job loss; relocation; families who outgrew their 1 or 2 BR apt) had to sell at a significant loss if the'd bought in the mid 80s. Others, like me, held on until they got an offer that was acceptable to them (I sold in 1996 for a $10k loss on a $200k apt). Those who say NYC is immune to market forces, or that fundamentals are different now, I wonder whether they lived in NYC in the late 80s/early 90s.

If there is a market correction to come in NYC (which I believe there is, if not already underway), it will be interesting to see if it is a matter of sellers waiting it out for buyers' incomes to rise to the level of affording 2007 prices, or, as Steve believes, the credit crisis (tighter lending stds; re-setting ARMs; wall st layoffs) will lead to more rapid declines.

Steve, I have to say that while I am still not convinced that it will be as bearish as you say, I do think that you have written some very insightful posts. Keep writing, pls! Your posts are the only reason I have been visiting this site the last week.

Kiss. In 1988 there was still meatpackers in the meatpacking district, there was still the butter and egg market in what is now tribeca, soho was a true artists neighborhood, unemployment was around 10%, the murder rate was four times what it is today, bums slept in Washington square park, there was no bike path along the hudon river, just trannies (if that is a word) there were no Richard Meir projects, or Jack Parker projects, or the Standard Hptel, etc...Things change over time.
I think Steve said it best when he said that those who bought to flip will get burned. If you bought to live in the place, relax. If you wait five or six, or seven years until the market bottoms, at least be mindful of what amount of the down payment could have been paid by all of that rent money.

By the way, I don't think it will take five or more years for the market to bottom. My prediction is that prices will stay flat, or go up over the next several years.

mh23,

Yes, all of the above is true as to NYC during the 80s/90s (but it wasn't all Deathwish-NYC either).

On the other hand, you could argue that that time was more a crisis of confidence (whether lost wealth effect from the stock mkt crash, or fear of street criminals, etc), rather than mkt fundamentals, which is what Steve is arguing re current mkt.

Nevertheless, I am inclined to agree with you (based on my personal experience then) that it will be more of a flatlining mkt (not the 10, 20% returns the past few years) until incomes can catch up to current prices.

Will, you still owe me an answer: to you, what would be:

a) Self-restraint
b) Thoughtfulness
c) Responsibility

within this context?

Waiting....

Then, this nonsense: "New York is relatively reasonably priced overall, compared to other international cities...."

Did you know prices are dropping like a stone in London? Or that they haven't changed at all in Tokyo in 10 years? Or that almost everyone in Geneva rents?

It's another stupid comparison: the only comparison is income vs. price. Where it's in balance in other cities, prices will remain stable. Where it's not, they'll change.

Spunkster, you post a silly article that Will had already posted and was shot down. Read the articles about how prices work that's also in the Times.

And who said 1970's prices? 2004.

mh23, I've said it before and I'll say it again: I'm not talking about the uber-rich. I'm talking about regular people. However, I do think that there is a glut of apartments at uber-rich prices and a dearth of urber-rich. Exactly what that ratio is I don't know, beyond what the census says it is.

Kiss, you're right: starting in 1987, 87,000 Wall Street employees lost their jobs. That was one cause of the market decline. The other was a glut of inventory caused by co-op conversions from 1984 on. Many, many co-ops went bankrupt.

It had nothing to do with what the Meat-Packing district looked like at that time. That may have affected overall prices, but not their direction, because regardless of how bad it was in 1988, it was far worse in 1978. Though it did lead to an increase in population, which helped push prices upward because of increased demand. Not this much upward, but upward nonetheless.

FYI, bums still do sleep in Washington Square Park.

The equilibriums are all there, posted. Somebody tell me how somebody earning $500,000 - a good salary even in NYC - can afford a $6 million apartment, because I'm waiting. Somebody tell me why rents - extremely closely tied to incomes - have not gone up nearly as much as purchasing prices, which are also affected by leverage?

I'm waiting.....

mh23 - i think i visited that building on washington in tribeca a few weeks ago. its a nice building with great light and finishes, but seems absurdly over priced. Seemed a little odd there were no fireplaces - and for that price to have zero storage, no doorman, no gym, no roofdeck, no playroom and to be on a fairly low floor seemed a little crazy. i think the developer may be in trouble, they seem to have paid too much for the land and they seem to have switched brokers recently. they are also developing a few dozen similar units hitting the market a few months later across the street. it is clearly not as nice an apartment - but there is a 5th floor unit directly across laight in the full service sugarwarehouse building that has been on the market for several months for 3.25 - it's over 2600 feet and has a working fireplace. i think the missing amenities are important for families in tribeca - all the new comps have them. what did you think?

I think you are right. I personally don't like Laight Street due to all of the Holland Tunnel traffic and I think people want a full service building for that kind of money. I have not seen the finishes, but Tribeca, at least for the three bedroom and up units, caters to families; you need a playroom, storage, and a gym. This building seems more like an old styled artist's loft, yet there are no more artists. Spiderman, what do you think about the new Deniro Hotel opening? First Mr. Chow, now this.

my god you are all over the place. it looks like you have too much time on your hands. but to respond to you,

1. i'm assuming 20% down with a 6% ARM on the $1.3mm. puts the payment at 6k/mo. tax deduction savings approx equates to maintenance and property tax so total stays about 6k. and dont tell me i'm making it up, i got this directly from a mortgage broker last week. and to make things comparable to rent, we should be talking about an interest only which would reduce it even more.

2. the opportunity cost of the down payment is really not an issue right now. real returns are slightly negetive - just check the tips spread. even at nominal rates your talking 2.5% on a 5 year treasury. so on 20% of 1.3mm we are talking about $500/month

3. it's not a good idea to use price to rent ratio as a measure of value - it ignores factors that are very important, primarily interest rates and tax impacts.

4. the cagr i calculated was from data available on millersamuel site which is the best data i know of on historical median prices in downtown manhattan. please dont site a single example and expect it to support your argument. i agree that 7.5 is pretty high, but my point is more focused on the fact that you can alter results by changing the base year so you should be very careful looking at growth trends. it's like charting stocks - bad idea

to answer your question about why have rents not gone up as much as purchasing price, the answer is that interest rates have been and continue to be low (buying is cheaper), and expected appreciation has been high. so prices increased accordingly. now that expected appreciation is low, prices should adjust downward a bit. we'll see how much but i dont think as bearish as you.

please don't reply with a lot of useless links - i don't put much faith in the theories of newspaper journalists and one off examples.

i think it's fine to have some basic amenities - mr chows is a little silly (high price, not super food)but fun once in a while - especially when the weather is better and the glass slides open. the deniro hotel from what i understand may have a pretty good italian restaurant and is a less comercial place to put visiting friends and fgamily. i think one of the nice things about northern tribeca is that it is quieter but does have acess to good amenities - but if you dont have a gym in your building you do have to walk a bit further than many other areas to find one. northern tribeca could use a few more services but its a fine balance - wont take much to lose its charm.
riverlofts rigth next door to this building on washington (the non river side) just had a 4th or 5th floor unit sell in the high 3s - was i think about 2600 feet, fireplace, and of course all the services that come in the higher end buildings...

Oh, mschlee. Just look at history. Ignore it at your risk.

ARM = Death. That's why they're going to make them practically illegal.

Ha, ha: "don't reply with a lot of useless links - i don't put much faith in the theories of newspaper journalists and one off examples."

"it's not a good idea to use price to rent ratio as a measure of value - it ignores factors that are very important, primarily interest rates and tax impacts."

"Interest rates have been and continue to be low." Today. If you take out a 30-year mortgage, you're locked in. If you take out an ARM - which you cite - how do you know?

Actually, that ratio takes everything into account. As an investor, if you don't know that, I'd say you're Minor League.

Opportunity cost: stocks long-term = 7%. Real estate long-term = 0%. For a very good reason. Ignore it at your peril.

So, in all, as an investor, I'd say you're less than Minor League. Just look at what has happened in the past: it will happen again.

Which is what I would have said to the wench who bought my South Beach apt. for $1 million, thinking she was going to flip it in a few year for a profit, when now she couldn't get $700k for it: best of luck, & I'll see you in the pawn shop!
If you don't ready history, & you don' know what the future holds, you're in for a bad time.

The more I blog here, the happier I become. It is readily apparent to me that Property Bulls know not of what they speak.

And they will be burned!

A**holes:

With Economy Tied to Wall St., New York Braces for Job Cuts

http://www.nytimes.com/2008/03/24/business/24jobs.html?ref=business

"New York is accustomed to job losses on Wall Street. They come with just about every economic slump, and their impact is felt throughout the city. But now, as the city braces for a big contraction in the financial sector as a result of the credit crisis and the collapse of Bear Stearns, the fallout could be worse than in the past. The New York economy is more dependent than ever on high Wall Street incomes, which have jumped by more than half since 2001, to an average of $387,000, according to the city comptroller’s office.Last year, the finance industry was responsible for nearly a third of all wages earned in the city, the highest in modern times. And each Wall Street job supports three workers in other sectors. A great many of the 14,000 employees of Bear Stearns are expected to lose their jobs because of the firm’s cash shortage and its pending acquisition by JPMorgan Chase. As the credit crisis unfolds and other firms discover the depths of their losses related to bad loans, few expect the layoffs to stop there."

You have NO IDEA what's about to happen here.

NO CLUE.

Read the article. Take it from a 25-year veteran of the financial sector.

You have NO CLUE.

Steve: You've read my previous posts and you know I share your view that NYC RE prices are too high. Perhaps you feel prices have more downside than I do, but we both subscribe to same thesis on the market. Furthermore, I am wholeheartedly impressed with the fervency of your view and feel that you've more than supported your outlook with quantifiable data. However...

...I believe I also share the opinion of many posters on this board that the tone of your writing is abrasive, antagonistic and in the case of your last post, unnecessarily mean-spirited and unprofessional. I personally take no offense, but I thought you might like some objective feedback on how your writing comes across and how the perception of your tone might affect a reader's evaluation of your argument. While I share your view, I sometimes cringe at the tone in which you use to express that view. At the end of your posts, you often challenge others to respond with math/numbers to counter your arguments, as if you were picking a fight, and it sometimes seems as though you take opposing views as a personal attack. I know you feel that it was others that started with you and that you are simply fighting back, but the adversarial tone of these back-and-forth posts is becoming detrimental to the value of this board. Such harsh writing won't make others more amenable to your view and could even cast a questionable light on your perspective. It's alright for others to disagree with you. That doesn't mean that they are challenging your intelligence, experience or insight. Nor does it make them delusional, less educated or foolish - it just means they have a different point of view. If fact, I suspect some of the participants on this forum find your rationale less convincing because of the manner in which you present it.

Remember that I am not saying I disagree with your assessment of the market. I simply wish we could all bring a little civility back to this board, stick to the topics of each thread and not have this very valuable tool spiral into a school-yard name-calling free-for-all. I think most participants can do with less of the "in-your-face" attitude and more focused, professional discussion of the market.

Thank you for reading.

Stevejhx what I don't understand is the numerous links you post for different listings. Poking fun at the asking price and what not. If you are truly not interested in buying a property why are do you spend so much time going through for sale listings. If you truly are interested in an apt but feel the price is too high why don't you just walk away or make an offer.
In reference to call everyone on this board A**HOLES that was very characteristic of you so no surprises there.You must have the case of the Mondays.

Everyone relax. Steve clearly derives pleasure from other people suffering, that makes him a questionable source for information. By his own admission, he bought in Long Island at the peak of their housing bubble, so he may not be as sage as he thinks.
In any event, he does make one good point which is the following: If you live in your home and have no intention of leaving, ignore everything. You need shelter and if you are happy where you are and in no need of selling, then just enjoy your home and all the intangibles of home ownership. If you need to sell, you need to sell. Sometimes life throws us a curveball. Don't panic and don't lose faith. I believe that things are not nearly as bleak as the Times likes to portray them. I remember that post 9/11 was very bleak. Yes Steve, I am aware of all of the dynamics that makes this crisis different, but nonetheless, people were scared back then, and things turned around quickly. If you are a prospective buyer, you may have more opportunities, particularly if you find a desperate seller. In all likelihood, rents will stay the same, or go higher, if the sales market slows. If you think you find a deal, and you plan on making it your home, then don't be afraid to pull the trigger. Remember, if you wait three years, and then buy, you will have spent a lot of money that could have gone toward a down payment, or paying down principle. I started looking in New Jersey a year ago. The market was soft and getting softer. I kept looking until I found just what I wanted, and then I negotiated hard, and got a deal that I am comfortable with for a home I plan on living in for a long time, G-d willing. Manhattan will not be nearly as soft as Jersey or Long Island, but you may still get a deal.
I have been in business a while and the best lesson I have learned is the following: It is during those times when emotions begin to dominate (Fear, excitement, etc) that fundamentals are ignored, creating opportunities. If you can tune out the emotions and see things as they truly are, you may be surprised at how obvious certain choices become. Don't panic, this situation may play out quite differently than Steve and the Times believe

Why is Steve so mean? Simple reason and totally unrelated to the real estate market. Ever heard the expression 'there is nothing sadder than an old queen'...steve hasn't been priced out of the real estate market. He's been aged out of the backroom and bath houses. So, he need a new place to put all that pent up energy/libido. So, I guess taking down the NYC real estate market is his new way to get off. I bet he has a smoke after each post.

Good morning all!

Hey, iMom, I know you agree with me (for the most part). Why the tone of the last post? It was meant to be spunky, or should I say perky! People say all sorts of ridiculous things on this thread that go unanswered. There was mschlee's claim that property prices increased in value at a historic rate of 6.5% per year, when in fact the real rate is 0%. Then she makes up a property, makes up a price, claims it has increased to another price at a rate of 7.5% per year, when real data show that properties within that time frame have increased 12.5% per year, which is unheard of in history.

Then she says she doesn't "put much faith in the theories of newspaper journalists and one off examples," yet doesn't say what she does put faith in, or what happens when you check out the references the journalists use (like economic studies).

Speaking of which, then she says "it's not a good idea to use price to rent ratio as a measure of value" when every economist in the world tells you that those two figures, over time, are closely correlated. It's just plain BS.

Then deuce tells me to "SHUT THE F* UP," and you get upset when I call somebody an a**hole? Will calls "[my] crusade a little tiresome and a little sickening," and you get upset when use a derogatory term?

Will claims to be "an economist" yet ignores price/income data? He wants me to show "self-restraint, thoughtfulness, and responsibility," and won't say what that is.

Spunky contributes absolutely nothing of use except ridicule, and you get upset when I say something? Nearly every one of her posts consist of, "Now what I would like to know is if one is better off renting than buying in Manhattan. What do you think Stevejhx?" and the like.

The tone of mh23's posts are summarized nicely with "Steve clearly derives pleasure from other people suffering," which is entirely untrue. S/he also claims that "By his own admission, he bought in Long Island at the peak of their housing bubble, so he may not be as sage as he thinks," which is also not true: where I bought had not seen a price increase in 6 years, which is why I bought there instead of Manhattan. I had been watching the market.

Then s/he makes this vast claim about the type of people living in his/her building, who bought at $721 psf, and extrapolates that they could still afford the same property at $2,000 psf, that the world is full of "Ralph Lauren's daughters" who are going to buy all these properties up.

Tony started a thread with my name in a vain attempt to ridicule what I was saying.

On another thread I was called a BS artist and a number of other nasty things - far worse than what I said - because I printed data that showed - despite the claimant's claim - that property ownership is in fact not prevalent in the "Westernized World."

And the tone of eah's comments all along has been, "there is nothing sadder than an old queen" about me, claims I've been going to backrooms and bathhouses. (Didn't I say that Koch closed the bathhouses, which was a good thing?)

Everyone in the past has claimed that the financial industry is what was supporting property prices in Manhattan, and now it seems clear that it's in a shambles, but - with no proof - they now choose to ignore what they've been saying in the past was the platform on which property prices were built, without coming up with one iota of reasoned analysis - beyond "I think" and "I believe" - to support what they're saying!

So yeah, you're right. I enjoyed myself a little, gave a little back! LOL! People got mad when the experts predicted the demise of the dot.com bubble. People who are emotionally invested in any bubble, and have all their eggs in one basket, are going to get mad at someone who tells them they're dumb. I told friends in Miami and San Diego to sell, too, a few years ago, and now they're teetering on bankruptcy because they can't rent their properties out for as much as it costs them to hold them.

I agree with this about what mh23 said: "If you live in your home and have no intention of leaving, ignore everything. You need shelter and if you are happy where you are and in no need of selling, then just enjoy your home and all the intangibles of home ownership. If you need to sell, you need to sell. Sometimes life throws us a curveball."

So it is a challenge, iMom: instead of speculation, gut feelings, ideas, thoughts - all the insults constantly tossed at me - somebody please, please, please show me one datum that would indicate that this housing market is anywhere near its historical equilibrium, that it has not risen to bubble levels here in Manhattan just like it has in the rest of the country, that the financial industry and Wall Street - the backbone of NYC's economy - are not in for a bad run in the future. One datum, that's all I ask.

If you want to continue to disregard what all the experts are saying, what the data are saying, what's happening all around us, then you are, well, an....

Peace and happiness to all!