Rate rise impact on manhattan property prices

Also, for the equity vs real estate crowd, what are your thoughts on S and P performance under the same scenarios.

BankRate.com qotes 30 year jumbos at 4.37% with a best rate of 4.30%, 15 year 3.50%. I think you've gotten spoiled after a few short years of subsidized mortgage rates.

Which is why I think the recent rate rise is a non event. I am spoilt I locked in substantial mortgage at low rates a few months back.

In NYC (if that's what you're specifically asking about), I think the relatively tight inventory has a lot more to do with prices than an interest rate bump to, say, 5.25%.

It will impact the lower end of the market more than the upper end of the market of course. But even in the lower end, buying is often a cost comparison vs renting, and it really doesn't change much. You will just buy 10 sf less, but it will still be cheaper than renting (if the cost analysis was already favorable to buying for you).
Also, if growth doesn't pick up, mortgage rates won't go up more, the fed will act again. Of course rate rises will have an impact, but I think it will be dwarfed by other factors.

In the short term, I believe that the rise in rates will cause a flurry of increased activity with somewhat higher prices. At some point 6-9 months down the road, activity will stagnate, and following that, prices will decline somewhat. What percentage - I don't know and I don't even know what the base date should be for comparison given my prediction of the forward trends and given the recent rise in prices.

Anyone seriously planning to buy and intending to use financing, who believes rates will rise will be inclined to speed up their purchase. These buyers don't focus so much on the purchase price so much as how that purchase price translates into a monthly payment amount on a mortgage.

http://research.stlouisfed.org/fred2/graph/?id=MORTGAGE30US

Rate rise since the bottom in 2003 did not have that much of any impact on property prices or equities as the rate rise was combined with growth.

Easy credit and massive leverage had nothing to do with the increase in propery values after 2003' I guess

There was no easy credit for coops in manhattan due to the board requirements. For condo, easy credit during 2003-7 is true and definitely contributed to the price increases.

bullshit.

as prices rose, appraisals went up.

if you could put down the minimum requirement for the co-op, you were in business.

of course the fact that interest rates went down only helped on the way in and fueled a lot of cash out refi.

The rate rise started two months ago around May 1st. S&P is flat, so to the first order you could say stocks didn't care much. Possible reasons: growth expectations have compensated, price levels were never dependent on Fed-subsidized interest rates (use of leverage financed with long-term debt), maybe the money leaving bonds found its way into stocks. The next percent rise may be greeted similarly, I dunno. It's not like much of the stock market prices was based on financing stocks with 1.5% financing, and now they're looking at 2.5% and maybe 3.5% in the future. Companies took advantage to issue historic amounts of bonds at low rates (e.g., AAPL's $17B issue), but for the most part stocks aren't priced on expectations of continued further financing at Fed-subsidized rates.

Coops have not participated in the upside of late. And you ignored the massive leverage in the financial system which also contributed to the bubblishness of 03-07'

For Manhattan RE, we'll know in a few months. The May index level reflects sales during March, April, and May. Probably contracts that were Jan, Feb, and March. Roll forward one month, and the June index level will reflect contracts that were entirely pre- May 1st.

Assuming rates stay flattish for the next 3 months, contracts signed July, Aug, & Sep (entirely post- July 1st) will show up in the November index.

So I think the June => Nov change will best isolate the reaction to interest rates. Possibly push it back a month as people signing a contract now may not fully have "digested" the interest rate change. I.e., they are committed to the process and are not going to pull out now.

Nada, partially true. Discount rate does matter for stock valuations if growth expectations remain the same (usually they do not). One may say that market participants never valued equities using such a low discount rate (indirectly using higher than historical risk premium) as they knew it would go up. In general, I do agree that equities are less rate sensitive than the dividend discount model will suggest if inflation and growth assumptions remain the same.

One data point I have on a current buyer. After a number of lost multiple-bid above-ask offers stretching back many months, they just this week had their offer accepted. They were a bit surprised by this and by the fact that theirs was the only offer, despite an asking price more attractive than recent direct comps.

Not Manhattan, but high-priced area elsewhere. Cash buyer.

Agree. Late this year or early next year will reveal the true impact of recent rate rise.

Some facts about a 1% rise in interest rates.

Mortgage payment increase for a 30-year fixed loan: 13%.

Mortgage payment increase for a 5-year ARM: 14%.

Interest payment increase for a 30-year fixed loan: 30%.

Interest payment increase for a 5-year ARM: 42%.

Yield increase on risk-free 10-year alternative for capital: 60%.

There are many ways to "run the numbers", but so long as some set of numbers matter to you, it's a material change.

Less tax benefit on the interest payment.

>> One may say that market participants never valued equities using such a low discount rate

Yep, that is my point. As earnings yield / 10-year spread widened, there was no massive rush into equities based on pushing this spread to historical levels.

It's often next to impossible to isolate a single factor when judging the market up or down. The economy, price expectations, housing formation, supply, seasonality, media and other things affect buy and sell decisions.

Did you read that in a fortune cookie?

300 thinks he's Aswath Damodaran now

>Did you read that in a fortune cookie?

Do they have Chinese restaurants in C0lumbia C0unty?

Brooks2 thinks he's either Fischer Black and Myron Scholes now

most manhattan trasactions are cash deals anyway

As of midday today (July 5), we saw an overnight jump of 2.5% => 2.7% in 10-yr yields accompanied by a small increase (0.3%) in stocks.

Headlines on this one seems to attribute both moves to improved economic outlook.

Headline was a good payroll(jobs added) number was strong, better than estimates. But dig deep into the data, not so good, jobs added were lower income nor professional, higher income jobs.

So fed may tapper sooner than expected because of better employment but overall growth of economy not do good. Thus without Gentle Ben throwing money around Risk assets including RE may not perform so well. Especially with higher rates as INO nada pointed out.

As reflected ... Stocks flat

Day ended with 10-yr rates up 2.51% => 2.74%, stocks up 1% nevertheless.

300_mercer, a question for you.

You yourself have said that the drop in interest rates made were a significant motivator for you to switch from renting several years ago to buying a couple of years ago. 30-yr rates are currently up 1.3% from the levels from 2 months ago, 0.2% up from a couple of years ago. 5-yr ARMs (which you often would quote in your rent vs buy) are up 1.2% from a couple of months ago, up 0.6% from 2 years ago.

You think if we move up 1% from here it'll affect prices. And you've previously said that the drop to current levels was a motivator for you.

What do you find special about the last percent's drop / rise that changes things? You think the next percent affects the calculus of buyers (in different ways for different people, granted). Why wouldn't the last percent have similar effect?

Friday after Day July 4th= light trading which is what we saw. It's also true that the stock market tends to miss signals the bond market gets.

I do think Bernanke managed to change the conversation in the bond market. Participants now are looking more for reasons why the Fed will begin tapering....
-------------------------------
Michael Becker at WCS Funding Group says today is one of the worst selloffs in mortgage backed securities (MBS) that he has ever seen.

For example a 30-year FHA loan that Becker placed on Tuesday at 4 1/8% would be 4 3/4% today.

The Fed is probably having a conniption-fit over these reactions. Expect the Fed to come out in full-force again, with repeated attempts to talk rates down.

http://globaleconomicanalysis.blogspot.com/2013/07/mbs-clobbered-and-treasury-yields-soar.html

Come on nada? The higher interest rates will come with a stronger economy that'll translate into higher wages. That's Mercy_6969 story and she's sticking to it.

The pool of NYCers wiling and able to afford the $2.5K month delta on 3.5% to 5.5% on$2MM 30yr fixed will explode when the bankers start making $3MM bonuses in 2013. Just you wait. Bonus season is coming... it's coming so you better buy now.

A perpetual money machine... JUST buy RE. It's not the best asset class, it's the only ASSET CLASS. Look at apple. it went from $700 to $390. Look at gold went from $1500 oz to $1000oz. Look as bonds getting hammered.

YOUR PREPAID RENT ETFs... just fine. Buy more.

>300_mercer, a question for you.

If anything is clear from this thread and many other comments from 300m, he lacks confidence in his purchase and general financial knowledge. Sad to see a grown man that way.

Feds not in control of rates anymore . Bond vigilantes took control today . I wonder what bill gross' next interview will be like .

Pimco's next interview will be about convincing his bond holders not to flee..

http://dealbook.nytimes.com/2013/07/02/investors-pull-9-6-billion-from-pimco-fund/

Nada,

You are correct that the rates before today's rise were where we bought a couple of year back. Fortunately, we refinanced a few months back 5/1 below 2.5%. In addition, have not had any bond exposure in my portfolio for a while. In five years, I expect the fed funds to be 2.5-3%. Our floating rate will be at 4-4.5% but at a significantly reduced mortgage amount due to pay down. In my opinion, if the rates were to stay at current levels including today's rise, Manhattan property prices will rise 5-7%/year for the next two years (ending 2015) after you see another 3-4% rise in the next 4 months on top of the last 1y ~9-10% rise. If the rates go up another 100-125bps (10y at 4% where I think the long term fair value is with ~2% inflation and ~2% real return), the SE condo index rise may taper to 2-4% per year. The impact will be muted:
1. Tax benefit. 100bps only means 75bps.
2. Mortgage spreads will potentially come in shaving off 25bps.
3. More people will do 5/1 vs the current 15y/30y fixed and take increased risk.
4. Another 100bps rise will be accompanied by stronger economy.

You may have noticed that I stayed away from buy vs rent or comparison to other asset classes to keep the thread sane.

You sound really stretched.

Mercer, if rates rise, you're probably correct that hybrid arms gain market share, at the expense of fixed 15/30 year, but your prediction of where fed funds will be followed by a resultant prognostication of future home price appreciation sound very stretched indeed.

What is your prediction?

Don't really have one, other than a stronger economy would be a plus for real estate, and the real estate market probably can handle modestly higher rates. I assume, as you do, that the Fed has to end QE at some point. Just not sure how much stronger the economy can grow considering China re balancing, and Europe still very much a mess.

>> Friday after Day July 4th= light trading which is what we saw. It's also true that the stock market tends to miss signals the bond market gets.

$140B of S&P futures traded today, $215B of 10-yr bond futures. You say that's not enough to get a true read of the market's opinion. Interesting.

that's what the press is reporting.. at least cnn, fox & reuters,
-----------------------------------------
Traders said volumes were light Friday since many money managers took the day off. U.S. markets were closed Thursday for the Fourth of July holiday.

http://money.cnn.com/2013/07/05/investing/stocks-markets/

Volatility and Volume

The VIX fell on Friday in response to the rally in equities. The widely watched barometer of volatility expectations was last down 5.43 percent to 15.32.

Volume was lighter than normal in the stock market despite significant price movements across asset classes on Friday. Only around 119.6 million SPDR S&P 500 ETF (SPY) shares traded hands compared to a 3-month daily average of 144.4 million.

Read more: http://www.foxbusiness.com/news/2013/07/05/market-wrap-for-july-5-stocks-oil-us-dollar-jump-in-wake-strong-payrolls-report/#ixzz2YE4CaPOt

After choppy trading through much of the session, which was marked by light volume, stocks extended gains in late afternoon, pushing the benchmark S&P 500 index to close above the its 50-day moving average for the first time since June 19.

http://www.reuters.com/article/2013/07/05/markets-usa-stocks-idUSL2N0FB1MY20130705

>> The pool of NYCers wiling and able to afford the $2.5K month delta on 3.5% to 5.5% on$2MM 30yr fixed will explode when the bankers start making $3MM bonuses in 2013.

Mid-level bankers making $600K, $350K after-tax? The extra $30K is nothing to them. They plan on blowing that much on coke with the $3M 2013 bonus.

I also said the stock market tends to miss signals the bond market gets.

Higher bonuses will help, but much of the pay-out is now deferred.

>> that's what the press is reporting.. at least cnn, fox & reuters,

Try cmegroup.com. That's where the real data & volume is.

>> I also said the stock market tends to miss signals the bond market gets.

Bond market gets things right, stock market gets things wrong. Seems like you should be able to mint money off that.

Bond markets in 1987 & 2008 saw things the stock market didn't.

Mercer, your model seems to be something like:

- 3.5% 30-yr fixed => 10% price increase annually
- 4.5% 30-yr fixed => 7% price increase annually
- 5.5% 30-yr fixed => 4% price increase annually

Interesting. Take interest paid on $2M mortgage from $70K to $110K, and aggregate market reaction after 3 years will be to bump price to make mortgage $2.25M for a $125K interest payment. Because economy is "strong", buyers down the line will sprout money/confidence to pay an extra 78% in interest relative to the meek buyers of today.

I'll call Bernanke up today and tell him to relax on this whole QE / interest rate spike thing.

If interest rates hit 10%, apple will add $15b in interest income on top of it's $40b in earnings. Given its 10x PE. It should trade at $550b. Or 41% increase in shares and to top it all off Americans will have more money to spend on apple products. Bc as we all know 10% interest must mean blazing economy. 0% unemployment, 10% increases in re per annus and 30% gain in yr/yr salaries.

But of course these are just averages. For us manhattanites, it means 100% increases in re, 300% increase in bonuses and four jobs for each of us!!!! Excelsior!

So in 2000 years, the bond market saw something the equity mkt did not in just two of those years! Hmmmmm. W67 would now turn the mike back to Riversider.

Mercer needs a better financial calculator. Here try this one. Calc10bII. Great app.

It show the change in PV given changes in interest rate when all the other variables are held constant. The coolest part of mercer's imaginary world is the supposition that regardless, RE PV holds constant no matter what the other variables do dos. To take it up a notch... The PV of real estate continues in an upward 10% march regardless of the business cycle, human productivity and/or substitution effect of rents, age of population or credit bubbles.

Schwingggggc! A financial boner that never goes down. Throbbing veins and all. Hilarious.

Nada, Only time will tell where the SE index ends up.

Separately,
w67 has been predicting declines for a long time. Do not think I need to dig out the thread where he agreed that he is an idiot if the prices are up at 2012 ye. Of course, from his posts, he is sitting pretty with gains from trading stocks.

''If the rates go up another 100-125bps (10y at 4% where I think the long term fair value is with ~2% inflation and ~2% real return), the SE condo index rise may taper to 2-4% per year. "

2-4% if the 30y rates stays below 5.5%.

Nada, What is your prediction for real estate prices in the table of interest rates you give?

>It show the change in PV given changes in interest rate when all the other variables are held constant.

Because that is the way the world works, right? Interest rates change without regard to other variables.

>> Nada, What is your prediction for real estate prices in the table of interest rates you give?

I haven't formed an opinion yet. You are were a buyer, I am not, so I'm trying to understand what goes through the mind of a buyer. So help me out.

Suppose I'm a Mercer-ist, a disciple of the guru 300_mercer. Six months ago, Master Mercer was telling me to pay up because my $2M mortgage is only $48K a year in interest with a 5/1 ARM at 2.4%. Now I'm staring at 3.6%. Master Mercer tells me higher price with mortgage at $2.07M is good. That's $75K in interest, $27K more than before. Not sure where it's supposed to come from. If rate goes to 4.5% in the next 6 months, Master Mercer says I'm fine paying mortgage up to $2.1M with $95K in 5/1 ARM interest.

Prices are set by the marginal buyer. For the marginal Mercer-ist buyer using Mercer-ist metrics, prices were bid up to a certain level before. What makes the marginal Mercer-ist of tomorrow, with 4.5% 5/1 ARMs and 10%-higher prices, a buyer? Aren't they looking at 2x the cost of capital under Mercer-ist metrics? Where does the extra $47K come from?

Thanks for flattery with a dose sarcasm.

The 2.4 was govt. throwing free money and property prices would have been 25 percent higher in two years in my opinion with the economy improving. For coops, buying was 25-40 percent cheaper using 5/1 than renting a comparable apt in a rental in my opinion with 6 percent cost of capital and 2 percent annual property price increase - no interest in debating that as we would never agree on rent per sq ft per month. At current 5/1 rates with the above assumptions, buying is still much cheaper for a coop - do not forget the tax break. 5/1 is not increasing much further than 4 percent in my opinion due fed holding it down for at least two more years. At 4 percent 5/1 buy vs rent is break even with 2 percent price increase. If you think the expected increase is higher, higher breakeven. In addition, people can put higher percentage down from their recent stock market gains.

Spx yields 2 percent before taxes. People are willing to accept that 1.3 percent post tax yield for expected price appreciation. Just try similar thinking for manhattan real estate. Stock model does not work for unlimited land supply area or for areas where building cost is a large percentage of total price due to depreciation. Property prices increase are mostly from land price increases.

He's not flattering you, he's mocking you. How many months did it take before you were nervous about your own purchase - don't tell us you just got fidgety in the past month because of rates.?

http://streeteasy.com/nyc/sale/883418-coop-40-east-9th-street-greenwich-village-new-york
Assume 35 percent down.

Try this one. Similar doorman 3b/r in this area $8500 for long term rentals if you can find one.

I see: you're basically saying that the market got it wrong. At 2.4% 5/1 rates, prices should have been much higher but the market hadn't figured it out. The move from 3.6% => 2.4% over the past couple of years only resulted in a 10%-ish price increase. It should have been much higher. Now that we are back at 3.6%, we'll see 6% annual appreciation for the next couple of years. Because your personal opinion of rent vs buy tells you so, until the gap closes.

I guess I'll disagree. I attribute more to the market than Mercer's delayed-reaction buy vs rent model. I'll guess a portion of the market financing with 5/1 ARMs at 2.4% is just not going to be so willing to bid up prices as much at 4.8%. I'll guess that the Fed's worries about a spike in interest rates affecting the nascent housing recovery are not hocus-pocus.

I see: you're basically saying that the market got it wrong. At 2.4% 5/1 rates, prices should have been much higher but the market hadn't figured it out. The move from 3.6% => 2.4% over the past couple of years only resulted in a 10%-ish price increase. It should have been much higher. Now that we are back at 3.6%, we'll see 6% annual appreciation for the next couple of years. Because your personal opinion of rent vs buy tells you so, until the gap closes.

I guess I'll disagree. I attribute more to the market than Mercer's delayed-reaction buy vs rent model. I'll guess a portion of the market financing with 5/1 ARMs at 2.4% is just not going to be so willing to bid up prices as much at 4.8%. I'll guess that the Fed's worries about a spike in interest rates affecting the nascent housing recovery are not hocus-pocus.

>> At 4 percent 5/1 buy vs rent is break even with 2 percent price increase.

I'll guess that a portion of buyers are not gamblers at heart. I'll guess that if 4% were the magic threshold for a portion of them, it was going to be based on a fixed loan. Maybe some of the demand shifts to 5/1, but some of the demand tapers off. Maybe some people say to themselves "If I can only afford this with 5/1 ARM rates priced off a sub-inflationary index, maybe I cannot afford it."

>Mercer's delayed-reaction buy vs rent model.

The mockery continues.

300 Mercer:

1. I think rising rates will cause RE prices here to accelerate more slowly or to stall
2. but not because of the incremental cost they impose to own, at least not at current rates
3. but because of the context in which they are rising, and the causes of rate rises
4. which portent a much rougher short-term haul for bonds, stocks, emerging markets and real economises
5. thus (a) reducing assets available to invest in RE, and (b) increasing fears of general economic collapse

6. contrary to what most of you believe, stocks sre poised for catastrophic equity losses
7. for a number of reasons, only several of which I am going to cite
8. first, yield chasing has caused stock prices to rise substantially above where they should be
9. second, the world free-trade model that our economy has been based upon for decades is imploding
10. third, stock markets are extremely nervous and inclined towards panic selling
11. the recent free fall caused by Bernanke's taper speech underscores the depth of investors' anxieties
12. it is also probably a precursor to much worse panic selling when US bonds are hit by an adverse event

13. fourth is China's economy and financial system distress
14. investors worldwide sold something like $70 billion in federal debt in April
15. the worst sell-off in history
16. which also might have contributed to the rapid spike in federal debt yields that followed

17. if China and its financial system continue to experience serious distress, it is likely that
the national and local governments, and wealthy nationals, will sell US debt to raise cash

18. doing so will put a lot of pressure on US debt yields and perpetuate or magnify the problems
caused within the last 2 months by rising interest rates

19. as if and when rates rise further, stock investors will (a) demand higher yields on their new
purchases, driving stock prices down, and (b) gradually switch into bonds as bond yields rise,
as long as they dont think that they are buying at the bottom of still sharply escalating rates

Mercer. W67 does admit to being an absolute re bear. But it was more a rejection of a bubble economy and borkers making more than doctors. It just didn't sit well with me. W67 never ever thought the FED would go 7 years with zero rates and never thought the Bank auditors, fed and state levels would ever let banks sit on REO assets for 7 years. It looks like we are headed to a decade of a false RE mkt.

So fk it. If that is the game. I'll play bubble assets. 200% on sprint on $1mm. $220k on apple. Shittttttzzz. W67 is 1/3 owner on a 200 condo unit development. Life goes on. But I need 200 mercerists to buy my condo and mint me $5mm bf 5/1 arms go to 5%. Cause unlike Mercer. My business partners and w67 assume a $4mm pay out if 30yrs hit 6% in the next year as we finish the development, given comp rentals and direction of incomes. But apparently I should be calm as there is a great great great pool of buyers who will always buy re no matter what. For that I thank you SE re bullz.

But of course we can get some Chinese, Egyptians and or Irish carpenters and blow it out the park.

Saying a rate rise reduces real estate demand is axiomatic, just as saying reducing interest rates stimulates the economy. But we're at zero bound. How many buyers cite low mortgage rates as the prime reason they recently bought. I bet there are some, but not as many as you might think, especially given banks new-found attention to DSCR front and back end ratios. Perhaps the magic number isn't 4% but 6%. And while I agree that some financing moves to 5/25 hybrids perhaps the decision amongst a portion that a part of the market takes is to purchase a smaller residence, or make a larger down-payment.

Of course higher rates are a negative for the market. The question is having just hit rock bottom is a back up of 50-100 bps all that meaningful. Lower rates did not entice all that many buyers. Ironically many buyers who did come to the table recently did so using 100% cash, especially when it comes to investor properties. At this juncture, the only part of the mortgage market seeing a drop-off as a result of the rate rise is refis.

And certainly the higher rates go the more they really will deter buyers, but by how much is purely guesswork.

Larry Yun, chief economist at National Association of Realtors ®, prognosticates on the effect of rising interest rates as of a month ago:

“I anticipate that the rate [for a 30-year fixed mortgage] will probably go up to 5% by the end of next year. So from now until next year, the general direction will be upward."

“In Middle America I don’t see much impact since homes are so affordable,” explains Yun. “The more expensive coastal regions… is where one will begin to feel the first decline or impact.” He suspects that California metro areas and east coast hubs like Boston, New York, and Washington D.C. could begin to experience slackening sales because low-interest monthly mortgage payments in these relatively pricier places have helped make homes seem more affordable to more buyers despite the fact that relative to income, principal amounts are still expensive.

http://www.forbes.com/sites/morganbrennan/2013/06/05/how-rising-mortgage-rates-could-affect-the-housing-recovery

Kinda makes you wonder, when you're more bullish than the chief economist of the National Association of Home Price Shilling.

Larry Yun: 5% 30-yr mortgages => decline/impact in high-priced areas

300_mercer: 5.5% 30-yr mortgages => price appreciation rates in Manhattan at 2x inflation

She got you Mercer. You're numbers were extremely aggressive. No charge for the mockery of course.

In all fairness, Yun is less bullish than his storied predecessor:

http://www.amazon.com/gp/aw/d/0385514352

A more reasonable guess would be the recent increase in prices moderates from here, based on nothing more than an observation that over the last few years people put off purchasing a home.

Nada, people buy assets all the time assuming price increase. 1.3 percent post tax spx bring prime example. They do the same with re. You can call both gambling.
Riversider, put your prediction on se index for dec 15 to mar 16 average. I call it 2400 plus unless 10y >3.75 or bloomberg successor kills with tax increases. More than 100 bps higher than now.

W67, good luck with your condo development. Assume you shorted some bond futures to protect your potential profits against rising rates.

If you're serious about 2% yield for stocks, oh boy.

AAPL has only paid out $10B in dividends ever, yet it sits debt-free on a $150B cash hoard that's increasing $40B a year. Used to have div yield of 0% until last year, now 2.5%. Where do you think the other 7.5% of earnings yield ends up?

Chew on that one for a while.

Unlike AAPL, $2M apts tend not come with $770K cash stuffed in the floorboards, and the renters tend not to stuff another $150K annually in there after sending you the monthly check modulo cc/taxes. And in the end, Chuck will only charge you $7.99 while Dollie & Bloomberg want $200K.

Well, 67 owns more condos that 300. In addition to his ownership of commercial condos.
Did this latest ownership come before or after Aboutready bought in Williamsburg?

You know, if you plot Ford vs Apple on the day that Apple first hit $390 and w67 told everyone he sold Ford to buy AAPL, you would have been better off with Ford.

Thnxs mercer. No worries. After having witnessed how the game is played, knowing how frail the re markets are and seeing japan at zirp for 15 years, don't need no IR hedge as w67 will be out in a few months. Why sit and sweat for $5mm, when you can sell to mercerbigdevelper for $3mm gain today.

W67 likes Ford, Apple and newSprint at current valuations.

Inonada called it correctly. Fed will support RE and let 'owners' bleed the bubble slowly with inflation eating away at the paper bubble profits. The masses have bought into the program. Long live Greenspan/Bernie/TBD! The ones with the $ makes the rules. Relatively speaking the ones with 90% of their net worth tied to their 'mortgage' ain't the ones with the $. Meh?, I'd like to see how it feels to have real wealth and not sweat the 300bps gyrations of 5/1 arms. Like the guy buying a $2mm Viking with 0 down. They last a season or two at the yacht club. I'll go for a ride but I ain't your friend.

Sorry greenie. Didn't sell all my ford. You gotta understand. W67 has lots of piles of cash. Some in my kid's trust fund. Some in my wife's 401k. Some in my 401k. Some in developments. Some in businesses. My wife makes a mint. W67 makes some decent coin on commercial tenants.

As an overall asset allocation though, w67 is very short residential real estate especially in manhattan.

Chew on that greenie. Keep taking notes and living your life on SE.

Nada. Please just a tongue lashing would have sufficed. Not need for belts mercer's nubile financial butt. It's gonna leave a mark.

>, w67 is very short residential real estate especially in manhattan.

And how do you manage that?

hi....greenburg.

drop dead.

be sure to finish your apple sauce first.

then....

drop dead.

Did you spike the apple sauce?

Hey columbia. Greenie is a true troll wo equal on SE. a thoughtless egger on that basically repeats the last 10 words of posters she deems not up to her standards on SE. Just forget her.

How does w67 short manhattan RE. One. By not being an 'owner' of what w67 can Easily afford. Two. By making a ton of money on other asset classes while Bernie eats away the nyc re bubble profit by negative inflation carry. Third. By selling 1/3 of 200 condos into said cheap money fueled bullshit re markets. Using same 0% to sell my commercial properties at a 4% cap rate. Four. By raising my children to never have anything to do a residential borkering.

Nyc Re. Keep it pumping. Erections lastly more than 12 hrs should seek medical advice.

$200k transaction cost versus $9.99. Ha! Yep.

Love the apple analogy. RE that's got $770k in cash with renters stuffing more $ more $ into the mattresses every year. Boooyah!

Too bad you sold Ford to buy Apple.

Apple since April 19: +4.6%
Ford since April 19: +23.6%

Amount of condos purchased by w67 since he told everyone else not to buy real estate: 67

"W67 never ever thought the FED would go 7 years with zero rates and never thought the Bank auditors, fed and state levels would ever let banks sit on REO assets for 7 years."

uh oh.

no erection.

not surprised.

Why are you so interested in other people's erections?

i'm not.

but tell us more about your problems.

You aren't interested, but you want to know more?

actually.

not really.

drop dead.

another fantasy of yours?

you got me.

can't wait for you to drop dead.

how soon?

Apple is not debt free .

Oops, I forgot the changes on the Q2 balance sheet. My bad, not $150B cash and no debt. $167B cash and $17B debt whose rates are lower than current treasury yields.

Buyers of RE have to finance the turkey with higher yields => bad for seller.

Buyers of AAPL keep cheap financing => good for seller.

how do you think the holders of aapl bonds are feeling ?

Here's the guy who seems to have the best bond market call right now..

http://www.moneynews.com/streettalk/pento-bonds-stocks-collapse/2013/06/23/id/511403