S & P 10 year return 2.88%, Manhattan Real Estate over 150%

Zorter, thanks for clearly illustrating the unsustainable rate of appreciation in Manhattan real estate.

Also, to be fair, I must repost the widely viewed chart for those who may have not seen it yet:

http://www.forbes.com/lifestyle/2005/05/26/cx_sc_0527homeslide.html?thisSpeed=65000&boxes=custom

Note that it does not account for the past 3 years, as it ends in 2005.

Also, it is not just "Manhattan" home prices, but still, worth a look.

Wow - that is a great chart! Thanks for sharing.

This one's good too:
http://en.wikipedia.org/wiki/Image:EconomistHomePrices20050615.jpg

I would love to see that chart up to today, and in 1980 I was not doing to much investing although in 1882 I bought my primary residence in New Jersey which is worth 6 times what I paid for it.

That should be 1982 sorry

2005 seems to be the cut off for all charts

give it up...Manhattan RE is going DOWN

Thats right Maz, thats why I buy selected jewels that are being sold by people like you who are running for the hills.

I hope lots more people run...........

There is a very high probability that you will have your wish lowery. Same for zorter.

So why the angst? If you guys will obviously benefit from this, then you should spend more of time trying to scare people so that you can get the "selected jewels" from them. AKA shake the "weak hands" to accumulate more shares as the Hedge Funds and trading desks of large I-Banks do with the equity markets.

Mafia I am only saying that I am glad I had money in real estate and I am not scared to buy in this market if the right opportunity presents itself. Had I put as much money into the market as I have put into real estate I would be suffering crippling loses.I am not from the ultra rich, I grew up in the Bronx and was handed nothing in my life. I worked for every dime and really have no knowledge of how large I- Banks operate.I have achieved a good life in large part due to real estate and remain cautious but unafraid.

zorter, more power to you. I truly admire those who create their own wealth while retaining humility.

you are correct in that you would have suffered losses in the equity markets. as I have said before, there is no blanket statement- everything is a probability. currently there is a larger probability for asset deflation in Manhattan RE. that does not mean that opportunities don't exist for those who are experts and professionals in the asset class.

personally, i am not one of those. i am not a seasoned Manhattan RE veteran and expert with insider knowledge. i am just someone looking to buy a place to live in, and for me, given my situation and knowledge, the risk premium is too great for me to buy an apartment in Manhattan right now.

Zorter,

No offense, but realize that you and other fortunate souls have experienced one of the greatest real estate booms in NYC history over the past 8 years. (And it is funny how so many ONLY have this positive experience as perspective.) Yet, that does not mean that it is sustainable nor does it imply that a correction (as mild as it might be) isn’t in store.

As for comparing NYC real estate performance with the S&P, it is sort of comparing apples and oranges. One includes 500 companies nationwide and the other focuses just on the 5 boroughs and conveniently excludes the rest of the nation. Does that mean if I happened to only own the top performing stocks in the S&P I could use their performance relative to real estate? How about if one traded in and out of their positions (which is far from unreasonable with stocks), could we use that return in comparison to real estate? I mean, if you are going to play the “NYC return” game, those that actively trade stocks should be able to place their own limitations and exceptions on their returns, right?

I just find it hard to believe that amateur real estate buyers in NYC were so much savvier than those in Miami, Las Vegas or L.A. that are presently getting their asses handed to them. Meanwhile, you act as if real estate countrywide has been the best investment while it is clear that in much of the country it hasn’t’ been in the long-term when compared to returns from the stock market.

But, congrats on doing well with your investment / purchase here in NYC, just please don’t think that the last 8 years of bubble real estate we have experienced is the norm. Just ask those people who owned from 1990-2000 about real estate appreciation in NYC.

(The following ISN’T direct at you zorter…)

Finally, I do agree with MMAfia’s statement regarding the lack of sincerity coming from all of these real estate bulls. Honestly, if I thought that real estate was TRULY a bargain, I wouldn’t be telling complete strangers to buy, but instead I would be trying to convince them to sell to ME! What is the point of trying to drive up the price of an asset is potentially such a great investment? Why not try to spend time buying as much as possible (by talking down prices) and then letting the bullish market forces naturally push prices up?

Are we really to believe that there are so many kind-hearted souls out there that are simply trying to help others get their first home? If anything, if, as some love to mention on this board, you want to receive the next rent check from us renters, why spend SO much time trying to get us to buy our own place? Are you really trying to kick out your own renters? Why not lie to us and tell us to ignore buying and just keep on renting?

Or do all of these real estate promoters have other intensions in mind instead?

The aggressive altruistic tone coming from some simply makes little sense and frankly comes off as deceptive and self-serving.

chansford- Very well said.

Well said Zorter, If I kept banging my head trying to make money on Cisco Systems and the like for the past 10 years instead of putting it all in Real Estate I'd probably hang myself by now.

... or post on real estate boards all day about the impending CRASH.

That doesn't mean RE is a Bargain right now IMO... It means, yeah, I probably lucked out - lost ion some markets like Daytona but, I'm on the sidelins looking at RE AND stocks for bargains right now....

Chans - That's what Steve and so many here do in reverse - I've been saying this fro months and here we are spun all the way around again, they post articles all day about the "Real Estate market" in General being bad or in "NYC" being bad.... Without regard to each and every real estate investment being an individual investement for analysis....

"The Re market is CRASHING"... "NYC RE is CRASHING"....

We can say that about a few stocks as well or the "Stock Market" while there are GOOD investments in each.

Too many people around here talk in such general terms...

I like it better when people post specific poperties to analyze but, then again, anyone who thinks they really have a great RE investment isn't going to post it here - Unlike stocks.

I'm NOT a Bull....

I just think every market - The Stock market, the RE market Whatever has opportunities no matter what and I'll at least look at it without throwing around generalizations about an entire marker...

People think others are Bulls just because they look for opportunity...

While there is no absolute generalization, the truth is, it's getting harder and harder to make money in Manhattan RE.

It still can be done, but the harder it gets, the more risky, and the more of a "pro" you need to be.

Some people did make money during the DotBust. But they were few and far between. The majority lost money. Those who did make money were either "lucky" or extremely well informed, experienced and astute traders.

I think zorter's strategy is smart. Over the long term monthly rentals have gone up. Whether property values will go up over the next several months is anyones guess. In the meantime what zorter is doing is building equity in his apartments by using the monthly rents to pay down the mortgage. Over the long term 7 plus years not only will zorter have positive monthly cash flow but a very nice amount of equity in each of his apartments. Not rocket science so I do like the simplicity of this strategy.
Maybe this in combination of MMafia's precious Metal accumulation strategy is a good way to diversify.

Long term average real return on RE... 0%.

Reverting to the mean is gonna HURT.

At least this was an insightful helpful conversation, and I appreciate all your comments. I just came from brooklyn and what deals on cabinets and granite, amazing, if anyone is doing work let me know I have some great places.I am not trying to get anyone to buy a place a place in Manhattan, I am reacting to all the doom and gloom that gets posted daily to these boards, and am just offering another perspective.I think the real answers to some of these theories will come in 5-7 years, when hopefully I won't be begging in the streets of Manhattan.

chansford, you may be surprised by the number of altruistic people on this board that really do want to help. It is the primary purpose for this board. That’s why it is so critical to have all views represented and as much accurate information shared as possible. Ideally, NYC real estate newbies (or not so newbies) can read this forum, get a good dose of competing market views, tips, and sound advice which hopefully leads to better decision making. Sometimes this purpose gets lost in the verbal sparring, but my bet is the majority of regular posters on this site really do want to help people. Look, we are not saving starving children here, but I’ve seen bunch of unselfish strangers give lots of great advice and dedicate a good deal of time to helping people with very stressful and complex problems. When you think about it, it is a very cool thing.

Ditto Juice. I've been much better now haven't I? =D

Better? MMAfia, your posts have been so good I think you may have convinced me! Well, maybe not, but I appreciate that you look at the issue from both sides. I actually don't disagree with your POV but the potential outcomes, not so sure.

The inventory situation right now is very interesting and the most important number to watch in the coming weeks and months. I think you mentioned in another thread the importance of population shifts out of Manhattan. I agree, however I think the trend is going to be opposite of your predictions, in the coming years populations are going to concentrate around major metropolitan areas more than they ever have.

zorter- please give info on your cabinet and countertop deals. thanks!

JM, I out of curiosity, what's behind that theory? Are people going to sell their homes which have depreciated so much to buy in a city like NY where home prices are through the roof? I can see paying a premium especially in light of how much it is going to cost to keep these homes warm this winter and fill up the tank, but I still don't see it outweighing the price differential, in ny at least.

Thanks for pointing me and others in the right direction Juice.

Wyndcliff 2 places both do granite, tile, and cabinets
1. E Stone,Inc. 718-388-8855- 508 Morgan Ave. Brooklyn, info@eStoneUSA.com Chris or Steve- Granite Tops 50-60.00 per square foot installed.
2. New York Tile Trading Inc. 718-680-2268 George newyorktile@hotmail.com 4920 3rd Ave. Brooklyn
I am on budget to take off popcorn ceiling, paint,new granite tops with full backspash, new appliances, scrape floors,and new mirror and cabinet in bathroom 18,000-20,000.This is a rental unit so no high end names and no architect, and no general contractor, the old fashioned way, we earn it.

dmag, I wasn't referring to the 7500 sqft McMansionites living (if they haven't foreclosed) on former farmland 2hrs from any place that matters. My point was that people are less in a hurry to leave the city for suburbia and for people that an afford it, a city lifestyle is becoming more and more attractive. Additionally, the Brooklyn and Queens new developments, while arguably expensive, will attract more and more people to city life.

The WSJ had an interesting article today that discussed smart growth in the new $5 a gallon world. Feel free to dismiss as hogwash, but I think the ideas behind it make sense even if the execution may fall short of reality.

http://www.collegejournal.com/article/SB121538754733231043.html?mod=RealEstateMain_1

> a city lifestyle is becoming more and more attractive.

Not quite supported by the stats, as apartment sales in Manhattan are down 40%

> Additionally, the Brooklyn and Queens new developments, while arguably expensive,
> will attract more and more people to city life.

More likely just drive down prices, as most of the inventory is still unsold (and things aren't getting any better).

I agree with JM, who would rather live in his own ass than in California: the suburbs are an experiment gone awry.

Over the long-term people will move closer and closer to the city, and avail themselves of public transportation, which can't reach everywhere. Not only will that be good for the environment, it'll be good for people's health b/c you walk a lot more in the city than you do in the burbs, where the furthest most people have to walk is from their cars into the Cheesecake Factory.

Ever see the size of people's asses in Pittsburgh?

However, that doesn't mean that prices in the short-term will increase in Manhattan. It's a long-term demographic trend.

EddieWilson- Take a look (or perhaps you have already) at LIC. The inventory is building daily. The true inventory is about 4X the amount listed. Most of those developments are less then 50% sold with the exception of 5sl, which sold most units over the last 2 years. In fact they still have units they can't unload.

Most developments are artificially withholding inventory, to make it appear lower. These developers are going, to take a beating, by keeping prices at these levels. What's unique is that LIC is mostly new developments. This causes a problem. As prices fall in Manhattan (mostly existing units) it decreases the spread between Manhattan and LIC. The main reason for moving to a transitional area is that you get more for the money, however as prices drop in Manhattan it looks like less of a good deal. So LIC's new developments will need to adjust and adjust fast or they will appear to look desperate in the coming months (waiting will cause larger price drop). The problem is that they just can't reduce the prices 10,15 or 20% to reflect the market, mainly because contracts pending would run the risk of collapse. Either buyer will pullout or the bank appraisals wouldn't support the mortgage request. It's a tough spot. It's clear that I would wait for dramatic reductions in LIC. Also this applies to all of NYC when it comes to new developments. They all suffer from the same problem when it comes to lowering prices.

Oh yeah, totally agreed. As bad as the glut in downtown/prime brooklyn is, LIC is triple fucked.... its got twice the inventory and even less going for it in the surrounding areas... no Smith Street, no promenade, no BAM district, no downtown. Hell, its basically Jersey City.