Home prices fall 14.4% in past year, Case-Shiller says

But... but... the foreigners will come and save us!!!!!

Well - I am a 'foreigner' and just bought a unit on the upper west side. Does it help you?

93rd, thanks for saving us !!

Uh-huh...

http://www.nytimes.com/2008/05/25/realestate/25deal2.html?_r=1&ref=realestate&oref=slogin

"...brokers have exchanged stories about calls that have been made to some very affluent buyers at 15 Central Park West%u2019s most desirable condos, offering to buy them out...in one such account, Dr. Lindsay Rosenwald, a physician who became a venture capitalist and a founder and senior managing director of Paramount Capital Asset Management in New York, was said to have been offered $85 million for his 5,870-square-foot duplex penthouse (with a 1,128-square-foot terrace), or $14,480 per square foot (not counting the terrace). When asked to confirm this, Dr. Rosenwald said he had actually received five or six calls from brokers, offering as much as $100 million for his apartment. He said he had turned the offers down..."

Yeah - I can see how special MAnhattan ain't - I'm crying all the way to the bank. 15 CPW's been a lot better investment for me than your (supposedly and laughable) 60% ROR, weasel-boy, even after factoring in all the closing/sales costs and taxes. Oh, and did I mention, I only had to put 10% down, and now some other guy I'm renting to is buying the place for me by paying my mortgage and maintenance costs plus putting positive cash flow in my pocket every month?

Just sold my place to NOT a foreigner.

Prove it.

Why do I have to prove anything you? Why am I supposed to care?

Can't you discern humor when you read some? Going back to roast my lamb. Peace.

Bon appetit.

Ah, yes, Malraux - even if you did own there (doubt it), 15CPW is representative of ALL of Manhattan, isn't it?

LMAO.

be excited steve. seems your buying opportunity is right around the corner. don't miss it like you did around '03.

Ah, yes, weasel-boy - even if you do make 60% ROR in the stock market (doubt it), that's representative of ALL traders, isn't it?

LMAO.

Nice stevie boy,

Now maybe the $250k in rent you blew away in the past 4 years, will be offset by a similar price reduc that's right around the corner, in addition to Brazil's 1,000% returns which I'm confident you've netted from your "wasted" down payment, all at long term gains nonetheless. Get your lawyer greased and ready for those closing docs!

PS, you're not listed as a performer at the Gotham like you said, or are you just a hype man for one of the third tier comedy acts? We were looking forward to seeing you, handsome :(

"Now maybe the $250k in rent you blew away in the past 4 years, will be offset by a similar price reduce that's right around the corner...."

Blowing money in rent? Ha-ha-ha. The only time you "blow money on rent" is when rents are higher than the amortized cost of purchasing, which they haven't been since 2003. Otherwise - especially in a market with falling prices - you're pissing away your principal until eventually you lose even that.

malraux, what do I care about 'all traders'? I make more than most hedge funds on a more regular basis. I showed you the price quotes - go to morningstar, check out the biggest earning derivative funds; I own most of them.

RClavi, they have ensemble performances - check the marquee.

But you don't own your apartment, love. Good thing you are master of at least one market - and seemingly late in life.

"But you don't own your apartment, love."

First, neither do you: the bank does.

Then, why do I need to?

You have all swallowed the realtor Kool-Aid, that somehow "owning is better than buying" under all circumstances. It is not. It's better when it's cheaper; it's worse when it's more expensive. Now it's twice as expensive to own as to rent, ergo renting is better.

"Seemingly late in life"? Do you know something that I don't know?

weasel-boy, what do I care about 'all Manhattan?' I've made more in real estate (and art) than most condo/art owners on a more regular basis. I showed you the addresses and artists' names of some of my holdings - go to the resale numbers, check out the biggest earning real estate and art transactions; I own units in/art by most of them.

Case-Schiller also says that the ENTIRE NYC area declined only about half of that, or 7.4% YOY, weasel-boy. In addition, you can bet that prime Manhattan real estate held up FAR better than suburban stuff in Staten Island, meaning something like MAYBE a 5% decline (maybe less, who knows?). Realistically, the bottom line is that prime Manhattan has seen a drop of LESS than 5% YOY, and if you bought well, you're STILL seeing significant gains (hence my 15 CPW joint).

THAT'S the number that matters here.

If you check other websites like Brownstoner, you'll see that areas like Brooklyn "prime" (north williamsburg, most of the slope, carroll gardens, brooklyn heights, most of fort greene, some of clinton hill) have not seen drops, and indeed some buildings have seen as much as 30% gains since 2006.

Quote from 2000 Renter - " I am sitting on the sidelines because prices will go down."
Quote from 2001 Renter - " I am sitting on the sidelines because prices will go down."
Quote from 2002 Renter - " I am sitting on the sidelines because prices will go down."
Quote from 2003 Renter - " I am sitting on the sidelines because prices will go down."
Quote from 2004 Renter - " I am sitting on the sidelines because prices will go down."
Quote from 2005 Renter - " I am sitting on the sidelines because prices will go down."
Quote from 2006 Renter - " I am sitting on the sidelines because prices will go down."
Quote from 2007 Renter - " I am sitting on the sidelines because prices will go down."
Quote from 2008 Renter - " I am sitting on the sidelines because prices will go down."

I guess eventually you will be right.

malraux -- what art market specialty?

Steve probably has more experience fighting eviction than anything else. Fess up steveie.

inquirer:

Post War and Contemporary Art...

Any specific regional interest?

Regional? No, not per se. I mean, it's mostly European/American.

malraux, you haven't showed me any names or addresses of anything that I recall, but nor am I interested.

Quote from 1987 Buyer - “I am holding on to my property because prices will go up"
Quote from 1988 Buyer - “I am holding on to my property because prices will go up"
Quote from 1989 Buyer - “I am holding on to my property because prices will go up"
Quote from 1990 Buyer - “I am holding on to my property because prices will go up"
Quote from 1991 Buyer - “I am holding on to my property because prices will go up"
Quote from 1992 Buyer - “I am holding on to my property because prices will go up"
Quote from 1993 Buyer - “I am holding on to my property because prices will go up"
Quote from 1994 Buyer - “I am holding on to my property because prices will go up"
Quote from 1995 Buyer - “I am holding on to my property because prices will go up"
Quote from 1996 Buyer - “I am holding on to my property because prices will go up"
Quote from 1997 Buyer - “I am holding on to my property because prices will go up"
Quote from 1998 Buyer - “I am holding on to my property because prices will go up"

Quote from 1999 Buyer - "LOOK AT THAT! I JUST BROKE EVEN WITH 1987!"

Only a fool thinks that property prices can rise forever, or can rise beyond incomes and leverage, or can even hold constant in a time of falling incomes.

You do, however, seem to like illiquid assets.

Only if you have a mortgage Steve.

Quote from 2000 Renter - " I am sitting on the sidelines because prices will go down."
Quote from 2001 Renter - " I am sitting on the sidelines because prices will go down."
Quote from 2002 Renter - " I am sitting on the sidelines because prices will go down."
Quote from 2003 Renter - " I am sitting on the sidelines because prices will go down."
Quote from 2004 Renter - " I am sitting on the sidelines because prices will go down."
Quote from 2005 Renter - " I am sitting on the sidelines because prices will go down."
Quote from 2006 Renter - " I am sitting on the sidelines because prices will go down."
Quote from 2007 Renter - " I am sitting on the sidelines because prices will go down."
Quote from 2008 Renter - " I am sitting on the sidelines because prices will go down."

Quote from a 2008 renter - "LOOK AT THAT! I'LL NEVER BE ABLE TO AFFORD PROPERTY AT THE RATE I COULD HAVE, HAD I BEEN SMART ENOUGH TO BUY ON THE DIP!

Only a fool quotes articles that spin facts his/her way, rather than just coming out and being straight-forward. "Home prices fall 14.4% in past year, Case-Shiller says" - yeah, averaged across 20 metropolitan areas - oops, you neglected to mention thatone teensie-weensie fact. Why didn't you just say "Home prices fall 7.4% in past year across the greater NYC area, Case-Shiller says?" Or "Home prices fall less than 5% and are still up significantly in many areas in past year in prime Manhattan and Brooklyn locations, Case-Shiller says?" Oh, because you're full of shit, that's why.

I like art because it's the largest legal unregulated market in the world, allowing for massive opportunistic returns based on how connected you are and how you get/use information. I like real estate because it's the only investment I know where I can put 10% down, and get some other schmuck (like you) to pay for the rest of my property plus put positive cash flow in my pocket every month while my basket of carefully selected properties increases in value.

"Home prices fall less than 5% and are still up significantly in many areas in past year in prime Manhattan and Brooklyn locations, Case-Shiller says?"

Case-Shiller didn't say that, that's why I didn't say that.

FX is "the largest legal unregulated market in the world," not art.

"get some other schmuck (like you) to pay for the rest of my property plus put positive cash flow in my pocket every month while my basket of carefully selected properties increases in value."

Sometimes, you can get a schmuck to do that. What you can't do now is buy an apartment in Manhattan and rent it out at anywhere near what it costs you to hold it. Therefore, were you to buy today, I would not be the schmuck, you would.

get some other schmuck (like you) to pay for the rest of my property plus put positive cash flow in my pocket every month while my basket of carefully selected properties increases in value.

yes, steve, i am sure you have the best basket. no one else has a basket like you, we're all just slaving away under our mortgages and don't invest a dime. however, most people with a basket that looks like yours also own their nyc residents and several other properties. they just do. they dont miss out on buying a primary residence. you really do remind me of a teenager.

Steve just feels like lecturing everybody, 24/7. Some are like that. Why do you guys engage him? You know already everything, and more, that he has to type.

he is fun to engage. i have no issues with steve. he is such a type. i cant say the type lest he "report abuse"...but it is amusing.

Aah, I'm so happy being a star!

But - can I say "morons" without being reported? - I do, in fact, own property. Well-priced property.

Show me one apartment for sale in Manhattan today that you could rent out for as much as it costs you to carry it per month.

One.

Snore Steve, Snore. You're so right. We're ALL morons who just closed on an overpriced condo and never invest in exotic funds and are solely invested in high free mutual funds that void themselves out. You're the lone renter who makes millions in the stock market. Oh, sorry. There is the fag pad on FI. Tell me, do you rent it with like 30 little twinkies to help with the mortgage?

EAH, Your homophobic rants are totally beyond the pale.

cherrywood, fret not - I've seen this sort of attack from eah before, and it doesn't faze me.

"We're ALL morons who just closed on an overpriced condo."

No. You're just a moron if you don't realize that owner-occupied real estate gives you nothing in return except shelter, so it should be priced the same as all other comparable shelter. If you think that the "premium" for owning a property is 100% more than the price to rent it, that is moronic.

You buy property to live in when it's cheaper than it is to rent; you rent when it's cheaper to buy. To buy in all seasons is to drink the National Association of Realtors' Kool-Aid.

Re FI, no, I own a 2-bedroom 2-bath apartment facing the Great South Bay with no roommates to pay the mortgage. Though I wouldn't mind a few Twinkies.

oh jesus cherrywood, lighten up. steve and i have had this going on for months. its a freakin' joke. ever worked with a bunch of guys?

With all the back and forth on buying now vs. waiting 'til prices drop, I decided to post this article from today's NYT. Read on:

May 28, 2008
Economic Scene
As Home Prices Drop Low Enough, a Committed Renter Decides to Buy
By DAVID LEONHARDT
For the last few years, I have been an evangelist for renting.

I’ve told my sister-in-law and her husband that they would be crazy to abandon their reasonably priced one-bedroom rental in Brooklyn. When two of my colleagues were moving to Los Angeles, I e-mailed them a spreadsheet that helped persuade them not to buy a house there. That same spreadsheet was the basis for an article in 2005, when I argued that “renting has become a surprisingly smart option.” Last spring — like any good evangelist, comfortable with repetition — I wrote a similar article.

The case for renting has been simple enough. House prices rose so high in the first half of this decade that you could often get more for your money by renting. You could also avoid having a large part of your net worth tied up in a speculative bubble.

All this time, I have been a renter myself, first in the New York suburbs and then in Manhattan. But my wife and I will be moving to Washington this summer. And the housing market has, obviously, changed quite a bit since our last move, in 2005. Nationwide, prices fell 14.1 percent from early 2007 to early this year, as Standard & Poor’s reported Tuesday. Home prices almost certainly still have a way to fall, but they’re now well below their peak.

So my wife and I began our search with open minds, willing to consider renting or buying. We ended our search by signing a contract to buy a house.

This is the story of my conversion.

•

One of the big lies of the real estate business is the idea that renting a home is tantamount to throwing money away. It’s a useful fiction for real estate agents, because they make vastly bigger commissions on house sales than rentals. But the comparison isn’t nearly so straightforward for the rest of us.

Renting involves one obvious, recurring cost that can never be recouped: the monthly rent check. Buying, on the other hand, involves multiple expenses, some of which aren’t so obvious. On top of closing costs, there are repairs, property taxes, mortgage principal and mortgage interest. (The mortgage-interest tax deduction reduces this last cost but doesn’t eliminate it.) When you own, you also lose the ability to invest your down payment elsewhere, like the stock market.

Of course, owning also brings benefits that have nothing to do with money. You can settle into your home, confident that no landlord will kick you out. You can repaint the walls and redo the kitchen. All else being equal, owning seems far preferable to renting.

Knowing all this, my wife and I were willing to buy a house even if it was ultimately going to cost us a bit more than renting. We just weren’t willing to have it cost a lot more than renting.

Over the last several years, I’ve come to like a simple, back-of-the-envelope way to compare the costs of renting and owning. You find two similar houses, one for sale and the other for rent, and divide the sale price by the annual rent. You can call the result the rent ratio.

The concept will probably sound familiar to stock market investors. It’s the real estate market’s version of a price-earnings ratio — a measure of how expensive an asset is, relative to the underlying economic fundamentals. Like a P/E ratio, the rent ratio provides something of a reality check.

Throughout the 1970s, ’80s and ’90s, the average rent ratio nationwide hovered between 10 and 14. In the last few years, though, it broke through that historical range and hit almost 19 by the time the housing market peaked, in 2006.

And while home prices — and rent ratios — have always been higher on the coasts, they reached whole new levels recently. In the Washington area, the ratio went above 20. In Boston, New York, Los Angeles and south Florida, it topped 25. In Northern California, it approached 35, higher than it had been in any city, at any point on record.

In concrete terms, a rent ratio above 20 means that the monthly costs of ownership well exceed the cost of renting. At current mortgage rates, for example, a $500,000 house would typically bring monthly expenses of about $3,000 (taking into account taxes, repairs, a typical down payment and, yes, the mortgage deduction). When the rent ratio is 20, that same house could be rented for only about $2,000 a month.

There are two problems with buying a house in this situation. The first, plainly, is the extra $1,000 you’re paying each month for the privilege of owning, on top of the thousands of dollars you spent on closing costs. The second problem is that a rent ratio above 20 is a good indication of a bubble. When the prices of houses get out of line with the competition’s prices — that is, those in the rental market — a correction is coming.

The question facing my wife and me was whether we were entering the market before the correction had gone far enough. I really didn’t know what the answer would be. So as we looked at houses, I started calculating rent ratios.

In the neighborhoods where we were looking, two-bedroom condominiums were selling for $400,000 and being rented for about $2,100 a month, which makes for a rent ratio of 16. Four-bedroom houses were selling for $700,000 and being rented for almost $4,000, which makes for a rent ratio of 15. No matter the price range, pretty much every apples-to-apples comparison produced a similar ratio.

Historically, this is still a bit high. But it’s very different from where the market was just a couple of years ago. With house prices having fallen over the last two years and rents continuing to rise, the decision became a much closer call. We would now have to spend only a little more each month for the privilege of owning.

This month, we found a house that we really liked, and we made an offer. It was accepted.

I’m still not sure how good our timing was. Based on the backlog of houses on the market, I fully expect that our new house will be worth less in six months than it is today. I’m also not sure that we would have been willing to buy in Boston, New York or much of California, where the rent ratios remain above 20, according to data from Moody’s Economy.com.

In fact, if you’re now renting — almost anywhere — and do not need to move, I’d probably recommend that you wait to buy. The market is still coming your way.

But it’s O.K. with me if our timing wasn’t perfect. After several years of reporting on the housing market, I’m convinced that the most common real estate mistake is viewing a house first as a financial investment and only second as a home. That’s one big reason we ended up in this bubble-induced mess.

Most of the time, the decision whether to rent or buy should be based above all on life circumstances. Do you expect to move again in a couple years? Or is there a good chance that you’re ready to settle in — and stop worrying about real estate for a while?

The housing bubble, unfortunately, forced a reconsideration of this standard, because houses became so overvalued. But they’re slowly coming back to reality, which means that buying has again started to make sense for more people. Apparently, I’m one of them.

Re: What Case-Shiller index shows re: NYC prices, here's what the NYT reported May 28th:

"The market in Manhattan remained strong longer than the New York suburbs. But even in Mahattan, prices are now falling, thanks in part to Wall Street's problems" ( reference to layoffs, etc)

You can find this at http://www.nytimes.com/interactive/2008/05/28/business/20071031_HOUSING_GRAPHIC.html#

Case-Schiller, who cares

I quote the guy who always quotes Case-Schiller, none other than Steve himself

the man who has made 60% equity returns annually
the man who thinks investing in 3rd world markets is an advisable alternative for the average homeowner

the man who stated unequivocally
http://www.streeteasy.com/nyc/talk/discussion/3410-real-estate-is-a-bad-investment