Markets set for biggest losses

JM- Sure I'll take a stab. Yes I have said the decline in the NYC area will be 20-30% and still believe that. So your information about myself is correct. With that said the truth is why it's not on this list I don't know. I 'll take a guess.

1. Perhaps the author of the article lives in the area and doesn't want to talk about NYC. For fear his property or investment may further decline.
2. Perhaps they are looking at delinquency numbers and are forecasting a disaster.
3. Perhaps those are area where there are a large amount of secondary homes. (NON-primary residence)
4. Perhaps they saw the largest amount of flippers get caught with out a chair when the music stopped.
5. Perhaps those are areas where the elderly call their last stop and will see inventory numbers grow daily
6. Perhaps those are are going to Delcine more than the 20-30% prediction I have made..

7. Perhaps they are wrong.

JM- I have said dozens of times I hope I'm wrong, however most realty people predicted a 4% decline across the country to 2008. Well if they predicted that well I'll stick with my analysis. OK. Someone else perhaps I'm wrong or missed few "Perhaps"

JM- It actually doesnt matter really now does it. The truth of this article being gospel in your eyes does prove one thing however, the problem is getting worse not better.

Not gospel, but shouldn't be dismissed either.

If dco actually offered reasonable opinions based on rational complete market analysis, I could take him seriously, but all he does is give nonsensical comments based on innuendo and misinformation. Take it from someone in investment banking, the market indicators show that we are in the final stages of the subprime downturn. Most banks in the US have written their subprime assets down. They are still in the delevering process, which could play out for up to a year (if not sooner) before the banks get comfortable increasing risk levels. There is a tremendous level of assets on the sidelines now waiting for credit markets to stabilize. Once this happens, we will see a growth trend in real estate markets again, albeit at a much more moderate pace than the last growth spurt. We will also see the financial services companies and banks increase staff again. In NYC, supply and demand trends and the weak US dollar have kept prices from dropping sharply and should continue to keep the real estate market stable in the short-term. Of course, you can not consider any of the above and just listen to dco pull numbers out of thin air for his "opinions" and "predictions."

LICComment I agree. dco responses and opinions are consistently shallow, unintelligent, witless and weak-minded. He's an embarrassment to himself but I do enjoy his uncomplicated writings.Who the heck wants to get so sophisticated in such complicated times like this. That's why I enjoy coming home and watching the brainless and boring show Deal or no Deal. Let's me unwind after a rough day.

The other reason I like reading dco's comments is that you really don't have to think that after after you read it. It's simple stupid and yet refreshingly pointless.

Sorry actually I meant to say The other reason I like reading dco's comments is that you really don't have to think that hard after you read it. It's simple stupid and yet refreshingly pointless.

LICComment: What you described sounds like late-2009 to 2010. Until then, most banks still have to execute (pardon the pun) their announced layoffs, which will result in additional charges to net-income and thousands of people out of work, and bonuses overall for 2008 are going to be a fraction of what they were 2 years ago. In addition, you have sustained retrenchment in the hedge fund industry, inflationary pressures from energy that only look to be getting worse (Goldman recently forecasted $200/barrel oil) and NYC's budget under significant pressure due to a drop in tax-revenue. Furthermore, the recent run-up in stocks is mainly due to all the added liquidity the Fed has provided to the street. Rather than lending the capital out, which is what the Fed intended, the street is keeping the money in-house and flooding the equity market with cash.

Meanwhile, many of the properties on the market are still priced like it's 2007 (particularly new-development) when you had to make an offer on the spot or lose to another bidder. Seller-denial is causing units to sit on the market for longer and longer and inventory to accumulate to a point where we now have one full year's worth of inventory on the market. I'm not saying NYC RE prices are going to collapse but it's hard for me to understand how you can look at all these factors and be so dismissive. The risk of the entire financial system collapsing may be behind us but we are hardly at the point where we can disregard the significant risks to the market.

This article http://money.cnn.com/2008/05/06/real_estate/100_forecast.moneymag/index.htm looks at 100 places and shows a predicted 13.2% drop by May 09 for NYC

"Meanwhile, many of the properties on the market are still priced like it's 2007 (particularly new-development) when you had to make an offer on the spot or lose to another bidder"

Now doesn't that pissed you off.

shamrock that's 13.2% price drop is for New York City. You know like places that South Bronx, Staten Island and stuff like that.

imom - if something is priced x amount of dollars and eventually sells for x amount of dollars, that can only mean that it does cost x amount of dollars. 2007 or not.

stakan and houser: Look at the following listing:

http://www.streeteasy.com/nyc/sale/26563-condo-245-west-99th-street-upper-west-side-new-york

Been on the market since 4/4/2006...767 days...no price adjustments...and guess what...IT'S NOT SELLING!!! Doesn't take a rocket scientist to realize that $3,500,000 is NOT the correct price for this property.

So, stakan...to use your phrasing:
if something is priced $3,500,000 dollars and sits on the market for over 760 days with no buyers, that can only mean that it does NOT cost $3,500,000. 2007 or not.

AND....there are hundreds if not thousands of units on the market just like this one - that have been sitting on the market for hundreds and hundreds of days, with no buyers and with the sellers not adjusting their prices to today's reality. If the property were really worth that amount, someone would have stepped up and picked it up already. It's been over 2-years for crying out loud.

Hello my intellectual friends. Thanks for the compliments houser and LICComment. These were great and well thoughtout responses. Again I'm impressed by your wisdom. If you guys find my theories to be simple and require little thought then perhaps that's because they are. You see this stuff is not as complicated as people would like to make it sound. It's like going to the doctor.

You tell him "hey Doc my arm hurts when I do this" he replies "then don't do that". Simple right. For some people it is. For people like you guys this is a hard concept.

houser I know the 13.2% was not for Manhattan on its own and was for all of NYC (the good, bad and very ugly parts all combined) but that was all that was in the article. Thanks for clarifying for others

shamrock - Your find is relative to NYC. It's just some people refuse to listen. Even articles that say sales are slowing and inventories are climbing are not recognized by a select few. You see shamrock there is this magical island known as Manhattan where prices only climb and never fall.

iMom - let's take your points one-by-one. I believe the delevering by the banks and their resistance to increasing their risk profile of their assets will last into 2009, not 2010. The banks may even increase their risk tolerances this year depending on what happens in the market. Most of the bad debt assets have been written down by the banks at this point, and their balance sheets have nowhere to go but up. Layoffs are happening now, but if you look closely, the percentage of staff being laid off is relatively small compared to prior Wall Street downturns. It is too early to predict 2008 year-end bonuses, but if the worst of the subprime crisis is truly here and things improve at all for the second half, which is likely, bonuses would likely be in the same range of what they were this past year, which wasn't too bad from a historical perspective.
The hedge fund industry had ballooned and needed some fallout. The good players in the industry are fine and most are doing fairly well this year. We are seeing some reversion to the mean in the hedge fund world, but by no means is their a collapse.
Much of the inflationary pressures in the market are due to increased global demand for commodities and the weak dollar. The Fed is most likely to keep rates low for the time being, but they have indicated that their last rate cut will be the last for now, and it is likely to raise rates by the end of 2008 or early 2009, once the liquidity issues work their way through the housing market. Higher rates, along with a likely slowdown and potential lower rate environment in Europe, would strengthen the dollar tremendously and quickly. This would lower oil and commodities prices substantially. Not back to $20 a barrel, but don't be surprised if it is down to the $80 level a year from now.
As for NYC real estate prices, there have been some price declines and slowdowns in the market from a year or two ago. I think that over the next year the market will likely be stable to down slightly. I'm not being pollyana here. But I believe that those who expect doomsday are mistaken and not looking at the entire market objectively, or they just don't understand. The Manhattan market was overheated and crazy a couple of years ago. It has slowed down and is a bit more normal now, but prices are still high and aren't going to collapse. There is still more demand than supply. New inventories have just brought in more buyers. And the current weak dollar is helping real estate demand from foreign buyers. You can't look at one isolated apartment and judge the whole market on it. Anyone here can pull up on streeteasy a new development and see all the apartments that have sold quickly recently at prices up to $2000psf.

dco - what makes you an expert? If you can manage discussing something without calling someone names, of course. What makes you an expert in Manhattan real estate, dco?

LICComment, re your comment on wall st cuts and bonuses this year, what we have seen so far is only the start, not the end. The WSJ today reported the following:

Wall Street Cuts Pick Up

Nearly 50,000 Jobs
Slashed This Year;
More Lehman Pain?

By IANTHE JEANNE DUGAN
May 10, 2008; Page B3

Wall Street's downsizing is picking up steam, and for employees at banks and securities firms it feels like death by a thousand cuts.

The global financial crisis is increasingly claiming jobs as the stock market struggles, financial firms retreat from risky businesses and deal-making remains slow. More than 23,000 financial-related U.S. job cuts were announced last month, according to outplacement firm Challenger, Gray & Christmas Inc. That increased the total to 49,825 in the first four months of this year -- nearly as many job cuts as were announced for all of 2007.

In the U.S., Wall Street's employment losses are concentrated in New York, where one in every five securities-industry jobs is based. Layoffs also are deepening in London, Hong Kong and other financial hubs. Lehman Brothers Holdings Inc., based in New York, is expected to announce next week that it is eliminating about 5% of its employees, or about 1,425 positions, on top of a previously announced 5% cutback in Lehman's work force. A Lehman spokeswoman declined to comment.

By the end of June, Morgan Stanley plans 1,500 more job cuts, falling largely in the U.S. and hitting all businesses except global wealth management. No brokers will lose their jobs, but the latest downsizing puts total layoffs at Morgan Stanley at about 4,500 people, or 10%.

The firm is "constantly evaluating business conditions to ensure we are right-sized for the environment," a Morgan Stanley spokeswoman said.

The misery began last fall, as write-offs related to subprime mortgages spread and lenders tightened up on all kinds of credit, ultimately reducing merger and stock-trading activity and, in turn, meaning fewer workers on Wall Street.

UBS AG announced on Monday that it plans to shed 5,500 employees, including 2,600 investment bankers, with New York and London bearing the brunt.

In Asia, many major banks began shrinking the size of their staffs in April.

Employees who survive expect smaller bonuses. Meanwhile, skirmishes between firms and ex-employees are spreading.

Jeffrey Liddle, an attorney in New York, says he filed an arbitration claim this week on behalf of a former mortgage-backed securities salesman at Merrill Lynch & Co. Despite having his best year ever, the salesman's pay plummeted to about $190,000 from $1.2 million.

"He couldn't make enough money to feed his family," Mr. Liddle says. The employee asked to be laid off, so he could receive a severance package. Merrill Lynch declined, so the salesman quit and took a job as a stockbroker at another firm. A Merrill spokesman declined to comment.

Re: LICC. My understanding from IBD friends is that there aren't many deals in the pipeline. That's why bonuses for 09 aren't promising. e.g. in end of 07 you need deals to be in the works for 08 for bonuses in 09. Are you finding it different in your sector?

Look I realize 190,000 salary is not what it used to be but it's not enough to feed the family. What's that all about? Gee no one believes in cutting back a little.

JuiceMan, you take your cues from magazines?

Then you are sure to lose what tattered shirt you may have left.

Like houser's "FINANCIAL ANALYST FINANCIAL ANALYST FINANCIAL ANALYST FINANCIAL ANALYST."

I don't invest based on what a magazine says. In fact, I do the opposite.

Unless I can think of one good reason to agree with that magazine.

LICComment, i wish i could go through you comments one by one. you seem to stamp on what dco is saying but then you back it up with something which reminds of something i would read in a smith barney branch.

which hedge funds do you think are fairly doing well this year? i know what we are doing and i know what my friends are doing. so who do you speak of?

$80 a barrel? wow. in a year. dollar gaining dramatically. i need to rebalance on monday.

most of assets have been written down already ? do you really think so? i think citi may disagree with you. can you give me some examples of banks which are sitting on hoards of cash waiting to invest.

dude, your entire response sounds more like wondering hope rather than reality.

steve, I just asked a simple question. Lots of markets highlighted but not NY. Don't you think that is strange?

lupus1- Everyone with an open mind and intellect can see that this is going to get really bad. It's just not going to effect the real estate of NYC but whole NYC economy. I can't believe that there are people who don't see the trouble ahead. Perhaps I'm wrong and they do see it but have to much at stake to admit. I'm also starting to feel bad for those who are currently under contract for these new developments. It's a lot of money and I never want to see anybody lose sleep over such an investment. It going to be a very rough 12 months.

JuiceMan: "steve, I just asked a simple question. Lots of markets highlighted but not NY. Don't you think that is strange?"

No. I don't necessarily think we'll be the worst market, nor do I place any credence in what a magazine thinks. I've given you my scenario, based on Fed formulae, so if you think I'm wrong, put up or shut up.

I know people who work at "magazines." Respect = -10%.

dco, I just had dinner with some senior HR folks from a couple major ibanks. I asked them what the general feeling was on the street, 1) panic 2) caution 3) business as usual. When I said the word panic, they dismissed it immediately saying there is no panic at all, hiring has slowed in some cases, some groups have not done well and are seeing cuts, but the mood is generally neutral. They did not have negative sentiments at all. Now, this is purely anecdotal, but I find it a bit odd that I read Wall Street is in a downward spiral on this board and then I talk with some fairly credible folks in the business and they shrug it off as a non issue. Don't you find that strange?

Well steve, if you bothered to read the article, all the analysis is based upon the S&P Case/Shiller Home Price Index. Does that have your respect?

LICComment: I guess we'll just have to agree to disagree. Keep in mind however, that I'm not expecting a "collapse" in RE prices. I just think that MANY properties will have to be repriced from their original levels (which were set in 2006-2007) to reflect what the current market will bear. You can call it a "write-down" of asset prices similar to what the banks did to all the illiquid paper they kept on their books at inflated, unrealistic valuations. In this case, the assets are NYC properties (instead of illiquid paper) that have been sitting on the market for hundreds of days at inflated, unrealistic valuations and the "write-down" will occur as market valuations correct downward just as they did in the financial markets.

My original beef with you was your earlier implication that "rational complete market analysis" (like yours, I assume) would conclude that RE prices would "see a growth trend" and the implication that dissenters to your view are "based on innuendo and misinformation." This implication, I felt, completely ignored all the major risks (economic and psychological) in the market that could hurt NYC RE Prices. There ARE many legitimate reasons to believe that NYC RE prices will decline over the next year and those who subscribe to this view should not be labeled as any less informed, less credible, less insightful or less intelligent than you, even if you are "someone in investment banking."

In addition, your first post mentioned that:
"the weak US dollar have kept prices from dropping sharply and should continue to keep the real estate market stable in the short-term."
But your second post argued that the Fed is:
"likely to raise rates by the end of 2008 or early 2009" which "would strengthen the dollar tremendously and quickly."
Well, LICComment, if the weak dollar helped RE prices over the last few months, how would a strengthening dollar help RE prices in the future? You can't have it both ways and both can't be beneficial to RE. A strengthening dollar might relieve commodity inflation but it would also have the effect of stifling foreign demand for NYC RE, which directly contradicts your thesis.

Furthermore, you wrote:
"don't be surprised if it (oil) is down to the $80 level a year from now."
With oil on Friday reaching $125/barrel, you seem pretty confident calling for a 36% decline in one year. If you really have that strong of a view, Mr "someone in investment banking", why not put your money where your mouth is and short oil-futures-ETF's? Unless your answer is "I already have" or "I will first-thing Monday morning" then the truth is you really don't know where oil will be in one year. But that's okay - no one does. Just don't go around acting like you do.

Also, you claim that:
"There is still more demand than supply."
If that were true, why has overall inventory increased to now over 7,600 properties? That goes against the basic law of supply and demand. If demand > supply, inventories would be going down, not up. The truth is that at current price levels, demand < supply, so inventories will accumulate until prices decline enough to create equilibrium between demand and supply. That means that prices are currently too high and will need to come down. Therefore your statement cannot be correct.

Finally, I posted an obvious and undeniable example to support my claim that there are properties that have been languishing on the market for hundreds of days (over 2-years in my example) because the sellers are out-of-touch with reality and how do you respond? You dismiss it by saying "You can't look at one isolated apartment and judge the whole market on it." How many examples would you like me to present to you? 10? 20? 100? 500? Exactly how many examples would you need to see before you accept this as legitimate evidence? I'm sorry I don't have time to list every single case. If there were some way for Streeteasy to sort listings by "number-of-days-on-market", I'm sure that you would see 1) a significant increase in time needed to sell an apartment and 2) a significant increase in the number of apartments that have been for sale for over a year.

And just for kicks, here's another example for you to dismiss - 320 days on the market and not a single price adjustment:
http://www.streeteasy.com/nyc/sale/92799-condo-212-east-47th-street-turtle-bay-new-york

But according to you, LICComment, none of this is anything to worry about. According to your "reasonable opinions based on rational complete market analysis," properties languishing on the market for hundreds of days is a sign of a perfectly normal housing market that needs no adjustment.

iMom, I could be wrong but the building at 212 E47ths that you refer to is a building being converted from a rental and I thought elsewhere there were discussions in relation to ongoing issues with this process. The apartments I think were all listed with identical photos a long time ago before the conversion process was even started and as mentioned elsewhere there were/are problems which have delayed things (open to correction on this) and why it is still on the market

Looking at building in the same area and only a few doors away you have http://www.streeteasy.com/nyc/building/236-east-47-street-manhattan

Recent sales in this building were about 3% below the asking price

And this 1 bed apt has just sold for 699k http://www.streeteasy.com/nyc/sale/179502-condo-236-east-47th-street-turtle-bay-manhattan after only 38 days on Streeteasy.

So does it not also depend on the building as good buildings will hold better than other buildings and yes things may slow for them as well but not as much and in this case 38 days seems good and the price seems good based on all the negativity out there

lupus - I don't know what you do in the industry but you don't seem on top of current market events and forecasts. You seem to mock the outlook of a stronger dollar and falling oil prices over a year's time. Just this Friday, the WSJ printed the results of its recent economic survey of 55 economists. "The survey, conducted May 2-6, showed that the 53 respondents, on average, expect the price of crude to fall to about $105 by the end of next month and to about $93 by the end of the year. (Crude settled at $123.69 Thursday on the New York Mercantile Exchange.)" Also from the WSJ last week: "The dollar has steadily weakened since around March of 2002, and has of late been most notable for its pathetic performance against the euro and its decline to parity with the Canadian dollar.
But the expectation that the Federal Reserve will no longer be lowering rates has removed one of the supports for buying other currencies against the dollar, and analysts now forecast that the dollar may strengthen while the euro weakens in response to looser monetary policy in the euro zone." These forecasts aren't isolated and are consistent with the market data and forecasts that I have been seeing. I don't think the dollar will rise and oil will fall overnight, and oil surely could continue rising short-term, but a year is a long time for commodities markets and currencies.
As for hedge funds, one of the business lines at my firm is funds of hedge funds. I really can't discuss specific names, but there are lots of good shops that are in positive territory this year. Also from the WSJ last week: "While it is still too early for hedge-fund honchos to celebrate, the biggest winners so far this year are some of the funds that had the biggest losses over the brutal summer of 2007.
Highbridge Capital Management's $1 billion statistical-arbitrage fund, for instance, is up about 10% this year after losses of 14% in 2007, according to investors. Highbridge is the hedge-fund affiliate of J.P. Morgan Chase & Co. Goldman Sachs Group Inc.'s high-profile Global Alpha hedge fund, which took a 37% drubbing last year, is up more than 7%."

iMom- With respect to the weak dollar's effect on NYC real, I actually can have it both ways. There are many factors that effect real estate prices, and demand from foreign buyers is just one. Sure, if the dollar strengthens that demand may subside, but a strong dollar would also indicate better domestic economic conditions which would benefit demand. The weak dollar is helping to mitigate the current weaker economic conditions in the U.S. for the NYC real estate market. This mitigation benefits NYC much more than other locations because foreign buyers focus on NYC.
Thanks Shamrock for pointing out how mistaken someone can be looking at some isolated listings and making broad conclusions. iMom - the point is that I am not going to take seriously people with chicken little attitudes that only look at some isolated bad news and try to tell everyone that their apartment values will collapse. You have to look objectively at the whole picture.

As for supply and demand, see the following: ". . . economists Joseph Gyourko, Christopher Mayer, and Todd Sinai coined the phrase “superstar cities” and posited that some lucky areas—this metropolis very much included—are simply different, possessing the right combination of “inelastic supply” and near-bottomless demand to untether them from national trends. On the supply side, New York is geographically small and decidedly finite, and the red tape required to build here is staggering. (Gyourko has calculated that the inflated values created by artificial stifling of construction cost the average New York homeowner more than $7,500 a year—a de facto “preservation tax.” Others say that number may be closer to $10,000.) Even Michael Bloomberg and Dan Doctoroff’s pro-building agenda, which includes tax breaks for developers, aggressive rezoning, and a taste for neighborhood-altering megaprojects, hasn’t really done much to pump up inventory. Despite what our own eyes tell us (“I live in Tribeca and can count 40 separate construction projects in my neighborhood right now,” says Roubini), new construction is not adding nearly enough units to glut the market. Low crime, plentiful jobs, and the resurgence of big-city sex appeal, meanwhile, have led throngs of people to want to live here and, in a huge paradigm shift, stay even after they breed. To well-heeled newcomers, our enormous rents make our enormous mortgages a relatively sane proposition, and our international character, combined with the soft dollar, also make us one of the few American cities with a global buyer pool."

I am not sure what "inventories" numbers iMom is looking at. I agree that the NYC RE market of two years ago was wildly overheated. A return to more normal inventory numbers was bound to occur. That does not mean that supply is now overwhelming demand to drive prices down significantly.
As I said before, the market now is soft and we are in a down cycle. Things aren't great. But they aren't collapsing either and those of you who make blanket uninformed statements of how recent buyers are going to lose hundreds of thousands in a big market downturn, without complete and rational analysis, are narrow-minded or shameless.

One more point on the inventories: "You may have noticed that inventory for Manhattan jumped today by just under 700 new listings, bringing total active inventory (co-ops, condos, townhouses in Manhattan excluding duplicates, FSBO's and open listings) to about 7,659. The reason for the jump is that Streeteasy has expanded their listings database to include "a bunch of new sources in Manhattan". According to one of the tech guys over at Streeteasy, "...this should be the last big change, at this point we have pretty good coverage".

iMom - this shows the danger of spouting off conclusions without a complete picture of all the facts.

LICComment, excellent post. I agree with you 100%.

Plus, all these iMoms and such contradict themselves: even according to them, the owners are not in a panic rash to sell. She (they) is/are scouring the sales ads hoping (!) to find the proof of a disaster. Stupid and shameful approach.
Try this on them: iMom, next year, for various reasons, your rent will be increased 65%.

"Well steve, if you bothered to read the article, all the analysis is based upon the S&P Case/Shiller Home Price Index. Does that have your respect?"

No. Case/Shiller only includes single-family homes, and accounts for sales on a metropolitan regional area, and the NYC area goes as far north as New Haven.

"The reason for the jump is that Streeteasy has expanded their listings database to include "a bunch of new sources in Manhattan". According to one of the tech guys over at Streeteasy, "...this should be the last big change, at this point we have pretty good coverage"."

Fine by me - still shows the inventory at 8,000 , which is a 1-year supply no matter how you count it.

steve, B&L Properties are taking a very close look at...

iMom, what's your point about these units staying on the market for over 300 days? Have a look at these, took me 2 minutes to find them:

http://www.streeteasy.com/nyc/sale/211231-coop-201-west-70th-street-lincoln-square-manhattan

http://www.streeteasy.com/nyc/sale/212263-coop-80-central-park-west-lincoln-square-manhattan

http://www.streeteasy.com/nyc/sale/212205-condo-120-west-72nd-street-lincoln-square-manhattan

Less than 40 days on the market. If I use your logic, the market must be humming. Making market conclusions based on a few overpriced units that aren't selling seems a bit silly to me.

B&L properties - if they're looking at anything - are looking at the price of 2-bedroom units in the building across the street from me, with far lower asking prices.

Just like Central Parking LOWERED my monthly parking expense when the building across the street did.

JuiceMan:

In the last 30 days, prices were cut on about 17 percent of the co-ops and condos in Manhattan, according to an analysis of listings on Streeteasy.com, a Web site that compiles information from most brokerage firms. Prices rose on around 2 percent of all Streeteasy listings. Among the most expensive properties — those listed for $10 million or more — there were fewer price changes, but price cuts outnumbered price increases by a ratio of 10 to 1.

http://www.nytimes.com/2008/05/11/realestate/11deal1.html?ref=realestate

Still waiting for you to do the Fed's imputed rent = market rent analysis.

Steve, you've got to be kidding with this. According to the article, nearly all of the units cut were in the $10 million and up price range, and average and median prices rose last month. So a $15.4 million unit decreased its price and sold for $14.9 million, while the $1 million units are going up in price. This is your evidence of a big market downturn? You can't be serious.

Did you read the article?

"Among the most expensive properties — those listed for $10 million or more — there were fewer price changes, but price cuts outnumbered price increases by a ratio of 10 to 1."

Don't know where you got that figure, 'cause it ain't even in the article.

What is in the article is that median property prices rose again - meaning, ominously, that only the top-end is moving. Not good news for those of us who work for a living.

You forgot to include the rest of the article steve. 17% on the median means? oh yeah...lagging indicator.....

“Buyers are out there expecting to get good deals,” said Gregory J. Heym, the chief economist at Brown Harris Stevens and Halstead Property. “Some people who want to sell are more open to it.”

That isn’t evident from actual sales data from deeds and tax records filed with the city’s Finance Department. Preliminary data showed that prices rose last month, with the average sale price on a co-op or condo reaching $1.45 million, up 17 percent from a year earlier. The median price was $927,500, also up 17 percent.

LILComment - stevie and imom are the examples of the persons who manipulate the obvious to fit their shameful agenda. They should not be engaged in anything meaningful and transparent.

"You forgot to include the rest of the article steve. 17% on the median means? oh yeah...lagging indicator....."

No I didn't: "What is in the article is that median property prices rose again - meaning, ominously, that only the top-end is moving. Not good news for those of us who work for a living."

If that weren't true, then inventories wouldn't have risen so precipitously over the past 4 months.

Steve - you need some help with reading comprehension. If the top end price changes were 10 to 1 down, and the average AND median prices were up, that implies that the overall market outside of the top end was up.
What is this with you and inventories? First, we established above that some of the inventory number is inflated due to technology changes at streeteasy. Second, inventory levels are still not as high as they were in 2006 and are not at a level that is causing any big price decreases. Could that change? Maybe, but you haven't shown me anything substantial to base a prediction on yet.

LICC, steve only cares about median when it fits his "story".

"What is in the article is that median property prices rose again - meaning, ominously, that only the top-end is moving. Not good news for those of us who work for a living."

Weren't you the one who berated people for not knowing the difference between mean and median?

LICCommen, does everything you think come from the wsj? great backup to your arguments above, highbridge(their stat arb fund specifally - good pick ) and gs, let me pick two quant funds. yes i stay on top of current market activities but fortunately dont let others formulate my views.

Steve - you need some help with reading comprehension. If the top end price changes were 10 to 1 down, and the average AND median prices were up, that implies that the overall market outside of the top end was up.

What? I need help? You're comparing sales data to listing data. Completely unrelated.

Anybody saw westelle today? SHe's hot!
Steve, you've missed the boat AGAIN. Face it like a man and imom should, too.

LICComment: Even before the recent one-time UPWARD adjustment to inventory, there was a clear and measurable upward trend in NYC inventory:

From urbandigs.com on May 3rd, even before the UPWARD revision on May 8th:
“As most of you probably know by monitoring the Streeteasy.com powered Manhattan inventory widget on UrbanDigs.com, total inventory in Manhattan seemed to rise above 7,000. The trend is clearly rising, and the reason is clearly sluggish demand. As buyer confidence started to decline late in 2007 as a result of the credit crisis and lagging effect on the equity markets, we started to see a consistent rise in inventory trends.”

Furthermore, the recent spike upwards only strengthened my point. The adjustment was UPWARD, meaning that even MORE apartments are on sale than originally thought.

Regarding oil, you cite a poll of a forecast for oil prices in the future. Since when does a poll guarantee that that outcome will be for certain? Much less a forecast of something as volatile as oil and as far out as one year? Again, I ask you: If you’re so sure the price of oil will be $80 (like you said in an earlier post), why don’t you have a short-position on in oil-futures so you can make a fortune on your view? The truth of the matter is that oil might be higher or lower in one year’s time, but no one knows for sure, not even the great and mighty investment bankers who walk among us. You may have a view of where oil-prices might go in one year, but that view is by no means a certainty so don’t treat it as gospel.

Stakan: You’re calling me someone who “manipulate(s) the obvious to fit their shameful agenda”? Look at LICComment, who says:
Weak-Dollar -> Good for Real Estate
Strong-Dollar -> Good for Real Estate
Low Interest Rates -> Good for Real Estate
Rising Interest Rates -> Good for Real Estate
Rising Inventory by all accounts -> What rising inventory?
Thousands of laid-off Wall Streeters and $billions in write-offs -> Bonuses will still be fine
Stakan, I suggest you rethink who is really being manipulative.

JuiceMan: The listings you provided only show that APPROPRIATELY priced properties are selling at a reasonable pace. My point is different: If a property sits on the market for hundreds of days, months or even years without selling, it’s only fair to assume that that property is not properly priced and needs to be adjusted. The listings you provided are examples of properties that were properly priced, probably because they came onto the market relatively recently (less than 40-days, by your own admission). The examples I showed were of listings that came on the market in 2006 and 2007 that still have not sold - over 700 and 300 days on the market without any price adjustments.

iMom - can we try to keep this discussion at a high level, because your last comment really devolved.
Yes, forecasts do not guarantee an outcome. However, I was responding to posters like yourself that seemed to mock the outrageous idea that oil prices could fall significantly. By showing that 53 leading economists currently have this view, I was showing that this forecast is not so preposterous.
Yes, if you read my comment, I fully explain my views on how a weak dollar is a mitigating factor in NY real estate. I never said that a strong dollar would be good for NY real estate, so please stop misconstruing my statements. I said that many factors affect real estate, and if the dollar is strengthtning, it would be likely that other factors that would benefit real estate would come into play.
I did not say anywhere that rising interest rates would directly benefit real estate prices. This is more misinformation on your part. I said that the Fed would likely raise short-term rates as the economy improves and works its way through subprime issues, which would help to strengthen the dollar. Again, please stop misconstruing my statements.
I never said inventory wasn't rising. If you read my comment, you would see that I acknowledge that inventories have risen. I said that inventories had been uncommonly exceedingly low and I am not surprised if inventories rise to more common historical levels. I also pointed out one of your many mistakes concerning your focusing on the rise in inventories without pointing out that much of the recent rise had to do with streeteasy's technology.
Yes, I stated that I believe current layoffs may not be as detrimental or as deep as in the past. Compare the number of Wall Street job losses this time around to the late 1980s or the internet bubble. Many of the current job losses are in the mortgage and real estate credit areas, which are not as New York centric as other areas. The internet bubble resulted in approximately 90,000 job losses. As I said before, times aren't good, but if market conditions do stabilize and improve, it will not hit the real estate market terribly. Sorry I don't believe that Wall Street will collapse and take real estate down with it like you do.
Happy Mother's Day!

re: inventory:

The upward trend and level were firmly in place before last week's bump on StreetEasy. Take a look at the following Miller Samuel chart. At the pre-bump 7k level, current inventory was higher than any time this decade except for the middle half of 06. Also, look at how inventory went up and down throughout the course of most years.

http://www.millersamuel.com/charts/gallery-view.php?ViewNode=1204831603HmXFR&Record=3

The following is UrbanDigs's/Miller Samuel's recent (but pre-bump) chart of inventory, showing that it's been straight up since Aug 07, with the exception of December, when many listings get pulled in anticipation of a January re-release.

http://www.urbandigs.com/2008/05/inventory_rises_above_7000_new.html#comments

Now, I'm not sure how the recent bump relates to Miller Samuel's system in previous years, but we are currently just about equal to the highest inventory level this decade (June 06), and we're in what's supposed to be the busiest selling season with transactions way down. We also have massive new development inventory throughout the outer boroughs, offering potential Manhattan buyers that are willing to consider a more affordable alternative myriad options.

as long as scarey trends are being discussed, I wonder if people weigh in on commuting costs -- bike sales and spiking mass transit usage are in the news -- can't do the 'burbs without two cars, so the "Manhattan Is Special" argument would seem to have a merit that isn't even being discussed -- likewise all boros accessible to subways

Oh please. Commuting costs are nothing compared to the cost of private school. Most people considering burbs vs the city are looking at school options, such as higher prop taxes/strong public schools vs lower prop taxes/NYC income tax/private school. Anyone making cost considerations on just commuting costs doesn't have school age kids.

I guess I was looking at it as a single person, kiss, you're right. I wouldn't ignore it out of hand, though. We don't know where commuting costs are heading. I should think those arguing the center of the city is invincible might through the low commuting cost into the equation.

This seems to fly in the face of the doomsayers: http://afinecompany.blogspot.com/2008/05/upper-east-side-condos-may-2008.html

Lots of sales at rising prices in the UES.

He has positive sales figures on three buildings out of how many? I've been hearing about two of them for ages and I don't even follow the UES. Look, I don't want to get into a bears vs. bulls battle, maybe things are OK up there, but Andrew Fine is the kind of hard-shilling hack broker that inspires people to start bearish threads. Other than a few decent "roving reporter" entries, his posts on Curbed are totally groan-inducing.

Shit, "hard shilling hack broker"? You must not know me.

Only your posts. I did think the one about the auto-clean toilet was funny.

Shit, Fine, that was a classy response. I'll re-submit as "hard-selling excessively optimistic broker."

Thanks Tenemental, I'll settle with the revised version.
Yes, I am an optimist, I'll confess, but I believe I have plenty of reason. NYC is and has always been a great long term investment. It's hard for anyone to claim to have a crystal ball or time the market. The long term trend is your friend. I'll readily admit that there are many challenges lately. We were coasting along, oblivious of the national market, aided by foreign investment (cheap dollar) and relatively low rates. There is no doubt that our market made a decisive shift in March when the fed had to bail out Bear Stearns. This event was a serious confidence shaker. Despite Wall Street's quick resilience and ability to shake it off, the real estate market hasn't- at least yet. The foreign money that has floated our market for the past couple of years is scared and there is a crisis of confidence. The real question is, how long will it last? If the credit markets continue to settle and the spread on mortgage rates come into line with historical norms (about a point lower than current), and the foreign money gets flowing again, we have a fighting chance to come out of this dip without much damage. Plenty of "ifs", but many of them are likely at this point.
In regards to my blog, I am glad you find at least some part of it amusing- which is better than no part! Excuse the positive spin. I feel there is plenty, too much, negativity in the media. Generally speaking, if there is a building I don't like, I won't write about it.
As for the UES article, I have to say that I was impressed by how well these large projects have sold, and when reviewing the numbers, I was suprised at both the percentage sold and increase in average $/psf. Of all the buildings I surveyed up there, only one (on 79th-you know the one) had lower $/psf numbers.
Peace!

Juice, come on, using CNN as a reliable source for information on the direction of a market?

Fineman,

Just saw a blog from a fellow realtor of yours at truegotham and the current post on how to market your property in a softening market. The first recommendation is to not hire an optimistic agent:

1. Hire a "genuine" real estate professional with experience and knowledge: By genuine I don't mean properly licensed (that's obvious). I am talking about someone whom a buyer will trust and believe. Don't hire a "buy now, real estate prices always go up" kind of agent. Remember that the prospective purchaser is forming an opinion of your property through the representation by your agent. Don't let an agent make a bad first impression. It's an uphill battle if a buyer doesn't believe what your agent is "selling."

Would be interested in your views as you are a self admitted optimist and a real estata professional yourself.

Fair point verain, but it was good enough to stir the pot.

KISS- I think you are misunderstanding my optimism. What I am saying is that I am long term bullish on the market. NYC is resilient and improving. We are safer, cleaner, and more international than ever. Demographically, more and more families are staying in the city (a baby boom of sorts), and considering transportation, culture, and medical facilities, if you can afford it, NYC is a great place to retire. There were clearly periods over my lifetime (40+ years) when you would have had to wait years to be "up" on your property investment in the city. However, the long term returns have been quite impressive. Today's climate is no doubt challenging. If you are in the market today you have to look for value and hire a broker who knows the market, knows the developers, knows the community, and has long term solid relationships. You have to have someone who is knowledgable on your side, who knows how to negotiate. You have to have someone who knows the ins and outs. The person who can get someone in the door at phase 1, before the development is marketed and amended. Someone who knows exactly what the breaking point is for the party you are negotiating with, without alienating the other party. I can go on and on, but it comes down to hiring someone with true savy who you trust.
The key to marketing your property in a softening market is to set a realistic price that is in tune with the market. I've turned down many owners of late who clearly thought that their property was worth 10%-15% higher than true market value and insisted that they are right. I will not take that client. So many agents/brokers will tell the potential client what they want to hear, jerk them around for a few months, waste both persons time, then break the news that they have to lower the price. That irks me and it is completely counter to my ethics. I'd rather lose the listing than sacrifice my integrity.
----Sorry for all the run on sentences---Had a full day. Until tomorrow.

I saw that 5SL, Powerhouse and Foundry in LIC all just posted a bunch of very recent sales at pretty good prices - $700-$850psf range. Maybe the sky isn't falling dco . . .