The RE Market is Hot Again

It's officially Spring, also the time period where real estate is seasonally at its best.

Kylewest, I guess you have not been reading the other posts. You are not delusional for sure. Wait till the time 66 east 11 goes on the market at $3000 per sq ft.

Even 20 east 9th street is selling at crazy 1500 plus per sq ft.

>66 east 11
>20 east 9th street

The joke is on them. As NYU continues to expand this area becomes less and less desirable.

Disagree greensdale. Nyu proposed expansion actually affects prime lower fifth ave region minimally. The greatest expansion being discussed is south of washington square park. And frankly nyu students are not all that bad as neighbors. Especially graduate students. Far preferable to e ex frat boys of the midtown and upper east sides. Having the mix of generations is a nice part of living here i think. While Sullivan street may be over the top, the area i oulined above in my other post benefits i think.

Meanwhile, apartments are selling like crazy at 11, 30, 40 Fifth; 28 east 10; 20, 30, 40, 60 East 9th; 67 east 11 st... I could go on. Pre and post wars are selling almost as soon as they hit the market.

Just you wait. The next bust could come any year or decade now, and then they'll be sorry they didn't divine 2013's miracle stock and plow the money into that. Remaining landlord-bait will then seem to be a small price to pay.

Don't make me snap in W-formation.

here are the facts you must know before discussing NYC RE market:

1. the fucking obama and fucking bernanke keep printing money and debt like there's no tomorrow
2. our corrupted government continue to ban foreclosures to keep the mortgage backed securities alive
3. more and more rich chinese want to move their illegal money to the usa
4. more and more rich europeans want to move their illegal money to the usa

went to some open houses in West Village today and they were much slower than last week. Any idea why? Could it be due to Jewish holiday?

Palm Sunday?

In 4 years, the UES is going to take off....especially east of Lex. It is relatively inexpensive at the moment, but once the 2nd Avenue Subway line is completed it is going to take off. GV was inexpensive at one time and attracted young, artsy types and I think that will eventually happen on the far east side. I am going to focus my search east of Lex...below 80th and above 60th.

Young, artsy types attracted to the far east side????? Randy, really?

more likely f-artsy types

There is something to what Randy is saying...I have known kids who moved from Bushwick to far east side, not because of the atmosphere, but because of the rent...but that is how it always starts...but it still needs hip, cheap eating places and vintage stores

rb345
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more likely f-artsy types

Hey Arby, how are you and the extra rolls of toilet paper getting along?

Investors Pile Into Housing, This Time as Landlords

http://online.wsj.com/article/SB10001424127887324034804578346800317118568.html

It's great to be hot if you are a seller today. Obviously not if you are a buyer.
If you are a long term owner this is bad for you because extra purchase price from buyers in the market gets used up today and is not available in the future. Similarly patient renters will be rewarded by a less frothy market in the future as their competition will have already spent their money and their excess money during the overheated days. Recent buyers from 2010 and 2011 who are patting themselves on the back will see no extraordinary gains unless they sell in the short term.

Interesting.

It's cute seeing this same excitement year after year over the 4 years I've been here. Lots of excitement, lots of prognostication, goes nowhere, followed by a collective sticking of head into the sands of "psychic benefits of home-ownership". Maybe it'll be different this time, maybe we are moving to a new era where yields will never matter again, maybe rents will finally double this decade.

Prices are flat to 4 years ago. Off even the best of time points, inflation-tracking. Meanwhile, opportunity to rent a spectacular apartment on the cheap while enjoying spectacular investment gains elsewhere has been squandered.

Not sure what you are all getting excited about, even if prices go up. Won't you still be living in the same second-tier place as before, that first-tier place being even farther out of reach? Isn't the point of increased wealth to improve living standards?

Maybe there'd be a story if rents on top-tier places were increasing. But they just haven't, and this doesn't seem to be changing. Apparently the market for people looking to sink millions of dollars into meager-yielding NYC RE far exceeds the market for people looking to flush six figures annually down the toilet to rent that same meager-yielding home.

Psychic benefits of owning ... FLMAOZ

are you a troll?

inonada: Did we ever get an answer from the moderators about whether the SE condo index is indexed for inflation? If the answer is "no", then you're right: prices haven't moved much in real terms from 2009 levels. If the answer is "yes, there has been movement - not exactly a rampaging bull market, but movement.

Prices flat to to how many years ago in the stock market ???????????

Take any building in Williamsburg , and prices are at record levels .......

Some chelsea buildings above peak and at record

>> inonada: Did we ever get an answer from the moderators about whether the SE condo index is indexed for inflation?

Not on the thread, although they said you can email Sofia Song if you have further questions. I never asked because I thought the information/data was quite explicit in the methodology paper. I've pointed out the reason before.

One other piece of information that I just looked up. Sofia had asked me a question a few years back when their methodology paper came out, in reference to a point I had made in a post. In her email, she included a spreadsheet that has index data under the heading "SECMI (Inflated)". This "SECMI (Inflated)" index was at 1000 in Jan 2000, peaked in the neighborhood of 21xx in late 2007 / early 2008, and bottomed at 17xx in late 2009. That matches the currently-published numbers; inflation-adjusted would put the latter numbers at levels 21.5% lower.

If that's not enough for you (or whoever), then I suggest sending a quick email to Sofia.

It's idiotic to cherry pick dates in the stock market while arguing real estate is flat in real terms. How many years is stock mkt flat in real terms?

The resident pseudo sophisticated commentator notwithstanding ....

Talking about recent history -- I was not here in 1999 saying RE sucked and stocks were great....

Inflation-adjusted, stocks are at or below levels set in 2007 but no other year. Any other point in any other year, it is up -- sometimes by eye-popping amounts.

In contrast, NYC RE is at or below inflation-adjusted levels from ALL points in time since mid-2004.

Yorkville will *never* be hip or trendy, even with its very own subway.
(Unless white-brick postwar construction somehow becomes popular with the hipster set.)

C'mon!

(it's still a good investment, however)

Please don't ever let yorkville become popular with hipsters . Please stay out . Yorkville is an excellent combination of old New York and modern construction . There seems to be an upsurge in east village type small Italian restaurants which is a great addition .

I have noticed a lot of young, hipster types in the east 70s east of Lex. They just can't afford downtown anymore. Though not Yorkiville, it is the cheaper area of Lenox Hill. Cheap housing will be a draw to young artists. They are priced out of downtown and parts of Brooklyn. This area is not just postwar white-brick buildings. There are some old and grand buildings....some of the pretties in the city. Restaurants on 2nd have suffered due to subway construction, but they will be back.

Ino>>Maybe there'd be a story if rents on top-tier places were increasing. But they just haven't, and this doesn't seem to be changing. Apparently the market for people looking to sink millions of dollars into meager-yielding NYC RE far exceeds the market for people looking to flush six figures annually down the toilet to rent that same meager-yielding home.

Ino: I think the only explanation for this is foreigners seeking financial haven in assets. But as many lose money, govts crack down on corruption and banks are wobbling, how long can this last. I remember arguing that Bear Stearns closing their mortgage hedge funds would lead to eventual popping of bubble and I was ridiculed by those who said it was an insignificant blip. Likewise, I think the derivative fallout from Cyprus could be significant even though everyone says it is a small insignificant banking situation. No one is addressing the derivative impact!!

http://www.reuters.com/article/2013/03/25/us-eurozone-cyprus-lending-idUSBRE92O0Q220130325

Foreign-owned is probably a significant part of it. Any ideas on a source of stats for fraction of Manhattan condos that are foreign-owned or investor property? I'd be curious.

To evaluate the Manhattan RE market using simple economic rules like what use of funds will yield the greatest monetary return is not going to lead to an accurate understanding of the market or produce especially compelling predictions. It may explain a large swath of the market, but a significant slice, at the very least, is profoundly affected by "externalities" that supply-and-demand forumlas and rent-versus-buy formulas do not capture. That is why you see prices ticking up again. That is also why doomsday never came after 2008. That is why the-sky-is-about-to-fall folks have been plain wrong and missed the buying opportunity of a life time in the last couple years if buying is what they are trying to market time.

The cache of owning in Manhattan is "worth" something to many people even though their money could make more money doing something else. Psychologically many people prefer to own to such a degree that pure numbers crunching doesn't explain purchasing versus renting choices. And the types and locations of units available for rent versus purchase plays a role is messing with traditional economic formulas. The doomsdayers tend to see all one-bedrooms, for example, as widgets that are completely fungible. But if what one wants is a pre-war one bedroom in a decent building around lower Fifth Avenue, for instance, good luck finding a whole lot of rentals.

If you have a solid retirement savings plan in place, and you have a budget that allows for owning and for your living expenses (both necessary and discretionary), then the fact that the money one would use to purchase a place could provide a greater return if invested otherwise is not a driving determining factor when it comes to buying. Why is this just ignored by so many posters on here?

I dunno, maybe some people want more in life than to get to middle age and be living as a couple in 700 sq ft despite all the "cache" such refined living may afford.

Maybe they want luxuries. You know, like maybe a 2nd bathroom so one can shower while the other poops. Maybe a washer/dryer so they can wash their own underwear. Maybe bedrooms for children/guests. Maybe even -- dare I say it -- an actual separate office. And maybe they even want all that with a view of something other than the building across the street.

Maybe some people want to live in the nicest place possible for the leastest amount of money, and even after that, maybe they want to pile up as much money as possible for no reason other than maybe to do something interesting with it some day. Give it to charity, build a company, start a religion, that kind of thing.

Ino: I don't think data is kept on foreign owned condos. Is it? Anecdotally I can tell you that when I was looking for high end rental 3 years ago, at least 90% of the apts I looked at were foreigners renting out investment properties. It must have grown exponentially in the last few years -- especially in the high end market.

>> Is it?

No idea. You see Miller Samuel reports referring to fraction bought in any given quarter by investors or foreigners, but that's about it.

On investor-owned, maybe someone can elucidate. I recently received a letter for the condo owner from the Dept of Finance stating that the 17.5% across-the-board tax abatement was being removed (50% this year, 100% next year) for non-primary residences. How do they know? Is it registered somewhere, or do they tell by income tax? I.e., you claim it is your primary resident but don't file income taxes as NYC resident => ruh-roh.

>> That is why the-sky-is-about-to-fall folks have been plain wrong and missed the buying opportunity of a life time in the last couple years if buying is what they are trying to market time.

Let me get this straight. A 5% change in price since 2011, or 10% since 2009 if that's what you meant by "couple", is the buying opportunity of a lifetime. Are you insane?

You do realize that prior to 2009, there was this bubble that saw prices go up 200% over 13 years. If a 5-10% inflation-tracking change over 2-4 years is considered the buying opportunity of a lifetime, what do you call that? And what do you call that thing where the stock market goes up 135% in just 4 years?

Welcome to the wacky world of KW...

Wacky, yes, but with pistachio walls. Have YOU self-actualized via pistachio walls, nadino? Didn't think so. Case closed. 5% > 135%.

It makes no sense to cherry pick a relatively brief period of time ( even if the cherry picker says its because of when they chose to invest) and make general proclamations. Stupid, actually. Is the pseudo analyst going to retract her analysis if , say, the stock market drops this coming quarter . What's the logic and what's the point of getting on a high horse of pseudo analysis based on a brief 4 year period of time -- is that not the very essence of cherry picking , and as such pointless .

It makes no sense to ignore obvious market factors -- eg foreign buyers - that have a huge impact on this market (and also in London, for example ). I suppose the analyst would say London prices are a crazy bubble also. Is it not possible that the global reallocation of wealth investment since the fall of ussr, rise of china , oil money, etc. has changed the parameters of invvestments in some world class cities .

It's ludicrous to pretend away the stunning performance of some sub markets in NYC since the crisis, and particularly in the last year. Ask anyone looking in. Villages or willaimsburg if you don't get that . Try a few open houses ......

I guess lets see where we are in 2 years...Im feelin pretty good about having bought back in 2010

What's the logic and what's the point of getting on a high horse of pseudo analysis based on a brief 4 year period of time -- is that not the very essence of cherry picking , and as such pointless . Seriously, under what analytical framework does that approach hold any water. It's silly. And yet the pseudo analyst trots it out over and over again. If one believes that NYC real estate is a poor investment choice, please argue something more substantive than that.

By the same logic used by the pseudo analyst, I could point to stock x that quadrupled in the last 18 months and say it was a bad investment not to invest in stock x, and all other investments were poor choices. But...wait.. Stock x might fall tommorow. If the pseudo analyst says she would sell stock x before it fell, well, lets see how seriously real investment analysts would take such an assumption . Is it just me or is beating the same cherry picked story over and over again to tell the whole NYC markets they are idiots tiresome and silly and superficial ???????

do you live in greasydale or greensburg?

So. .. In sum.. Can the pseudo analyst defend the concept of ridiculing ny real estate investments based on a chosen four year time frame ????? Is there any systematic investment analysis anywhere that would do such a (ridiculous) thing ?

greasydale for sure.

Hi C0C0

Its frustrating reading the same comments by inonada that ignore so many things when comparing the stock market to the real estate market. One being that in 2007 when the stock market was lowest it was 50% off its highs, while the manhattan real estate market wasn't even close to that. Also, the drift and volatility of both markets is also not discussed by inonada either. From the cheap seats he seems very similar to an anti-fanboy, almost rooting for everybody else to lose their money in real estate because he doesn't own any.

Deja vu

kylewest: nice discussion you attempted to start here.

reallynow, wtf are you trying to say?

really, now?

https://www.youtube.com/watch?v=yaCyjcB3H