Brooklyn Apartment Sales Drop 44% as Banks Tighten Loan Terms By Laura Marcinek July 10 (Bloomberg) -- Brooklyn apartment and townhouse sales fell 44 percent in the second quarter from a year earlier and prices dropped 1.9 percent as buyers struggled to obtain mortgages from banks battered by the credit crisis. The median sales price declined to $525,000 from $535,000 in New York City's most... [more]
Brooklyn Apartment Sales Drop 44% as Banks Tighten Loan Terms
By Laura Marcinek
July 10 (Bloomberg) -- Brooklyn apartment and townhouse sales fell 44 percent in the second quarter from a year earlier and prices dropped 1.9 percent as buyers struggled to obtain mortgages from banks battered by the credit crisis.
The median sales price declined to $525,000 from $535,000 in New York City's most populous borough. The number of sales fell to 2,031 from 3,601, Prudential Douglas Elliman Real Estate and property appraiser Miller Samuel Inc. said in a report today.
``The pattern that we're seeing is a lower level of activity, with prices overall moving sideways,'' Miller Samuel Inc. President Jonathan Miller said in a telephone interview.
Six out of every 10 banks raised standards for home loans to their most creditworthy borrowers in the first quarter, according to a Federal Reserve survey of senior loan officers. The property market in New York City is also slowing as financial firms cut almost 90,000 jobs after taking more than $400 billion in mortgage-related losses and writedowns.
New York City's market is starting to show signs of the national slump started in 2005. Manhattan apartment sales dropped the most for a second quarter since 1998 and unsold inventory approached an eight-year record, Prudential and Miller Samuel said in a report released on July 2.
Nationally, home values fell in 23 of 25 U.S. metropolitan areas in April, according to Radar Logic Inc., as sales of a record number of foreclosed homes pushed prices down. Prices in the New York area fell 3 percent in April from the same month a year earlier, Radar Logic said in a July 7 report.
`Drop in Activity'
``In most metro areas across the country we're seeing a drop in activity more so than a drop in prices,'' Miller said.
In Brooklyn, the median price of condominium units rose 8.1 percent to $514,725, while the number of sales fell 11 percent, Prudential and Miller Samuel said.
New developments comprised more than half of all condominium sales in the borough, which has more than 2.5 million residents and sits across the East River from Manhattan.
Brooklyn is experiencing a wave of new condo development as Manhattan prices have more than tripled over the last 10 years. The median price in Brooklyn is about half the $1.03 million median in Manhattan and that has sent prospective buyers across the river to neighborhoods including Williamsburg, Brooklyn Heights, Park Slope and Carroll Gardens.
`Fading' Market?
City zoning changes allowing taller buildings in some neighborhoods have also encouraged development and turned former industrial neighborhoods into residential areas.
Toll Brothers Inc., the largest U.S. luxury homebuilder, has moved into the borough to take advantage of the increase in demand. Toll, based in Horsham, Pennsylvania, is building a 29- story skyscraper on the waterfront in the Williamsburg neighborhood with luxury condos priced as much as $2.3 million.
In May, Toll Chief Executive Officer Robert Toll said sales in Brooklyn had ``faded'' and said most U.S. housing markets remained depressed.
In Park Slope, the Novo, a newly constructed condominium on Fourth Avenue, has 12 units for sale, seven of which have had price reductions in the past three months, according to StreetEasy.com, an online real estate listing service.
The price of a three-bedroom unit in Novo was reduced by 9 percent to $990,000, according to StreetEasy. The price of a two- bedroom unit decreased almost 6 percent to $705,000, according to the Web site.
Revitalized Areas
In the co-op market, Prudential and Miller Samuel said sales fell 53 percent in the second quarter from a year ago. The median price rose 1.3 percent to $255,000.
Sales of one-to-three family houses, which account for about 50 percent of the Brooklyn market, fell 52 percent. The median price declined 1 percent to $594,000, the report said.
The median price of a luxury apartment declined 5.5 percent to $1.2 million. Sales fell 27 percent.
Overall median prices in Williamsburg and Greenpoint rose 9 percent in the second quarter to $580,400. In Brownstone Brooklyn, an area comprising Brooklyn Heights, Carroll Gardens and Gowanus, the median price rose 1 percent to $1.2 million.
``A lot of the parts of Brooklyn that have gone up have been extensions of Manhattan,'' Dottie Herman, chief executive officer of Prudential Douglas Elliman said. ``I think they've done a wonderful job in certain areas of revitalizing.''
Let the games begin.........
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Response by Junkman
almost 18 years ago
Posts: 288
Member since: Jun 2008
This article can provide solace for both bulls and bears. lol
In Brooklyn, the median price of condominium units rose 8.1 percent to $514,725, while the number of sales fell 11 percent, Prudential and Miller Samuel said.
New developments comprised more than half of all condominium sales in the borough, which has more than 2.5 million residents and sits across the East River from Manhattan.
Brooklyn is experiencing a wave of new condo development as Manhattan prices have more than tripled over the last 10 years. The median price in Brooklyn is about half the $1.03 million median in Manhattan and that has sent prospective buyers across the river to neighborhoods including Williamsburg, Brooklyn Heights, Park Slope and Carroll Gardens.
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Response by stevejhx
almost 18 years ago
Posts: 12656
Member since: Feb 2008
"sits across the East River from Manhattan."
Is that where Brooklyn is?
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Response by Junkman
almost 18 years ago
Posts: 288
Member since: Jun 2008
Yea steve,
Where Lebron will be in 2010 and Chinese national hero Yi will be. Brooklyn will become the next Taiwan. We'll be on the map. Marty for Mayor.
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Response by petrfitz
almost 18 years ago
Posts: 2533
Member since: Mar 2008
This is great news! I am in the market for two brownstones and should be able to get a very nice price and in two years when the market rebounds I will see a very nice profit. I will then take my $500K tax emption and roll the rest into more properties.
This market has so much potential.
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Response by stevejhx
almost 18 years ago
Posts: 12656
Member since: Feb 2008
Yawn.
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Response by MMAfia
almost 18 years ago
Posts: 1071
Member since: Feb 2007
"I am in the market for two brownstones and should be able to get a very nice price and in two years when the market rebounds I will see a very nice profit. I will then take my $500K tax emption and roll the rest into more properties.
This market has so much potential."
Petrfitz, I have already discussed in great detail about market inflection points, especially in illiquid asset classes such as real estate.
Let's assume that somehow, you are absolutely right on the money and the market does bottom in two years from now (you already know my opinion on people who try to pick bottoms).
If that is in fact the bottom, your assumption that the market rebounding will be "soon" is highly unlikely. Without getting to the details of the economics behind the unlikeliness (please refer to the other thread for that), the bottom line is shifts in market direction for highly illiquid assets will take years- in the case of real estate, history has confirmed this.
Now, do I agree with you in calling the market bottom? I can't say as I am horrible at predicting bottoms.
What I can tell you is that I do think that there is a probably chance that what occurred in Japan during it's housing bubble could occur here:
One should accept this as a potential outcome in this country, perhaps not probable, but definitely possible. Look at that chart- that's an entire decade.
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Response by julia
almost 18 years ago
Posts: 2841
Member since: Feb 2007
And so it begins...
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Response by petrfitz
almost 18 years ago
Posts: 2533
Member since: Mar 2008
MMAfia - i dont really care if the market bottoms. I am selling a Manhattan property that I purchased in 2003. I will walk away with about $4.5 million net (sales price minus purchase price including taxes and fees)
I will dump this money into 2 new brooklyn properties taking advantage of a Manhattan Stronger dollar to a Brooklyn weaker doolar. If the market doesnt rebound, I am still $4 million up. ButI am willing to beat that it will rebound in the next 12-24 months (barring a completely stupid bombing of Iran)
I know there is money to be made in any market. This RE market in turmoil puts the small guys like you on the sidelines and therefore I dont have to deal with pesky competition. My cash purchases are stronger now because less people can borrow.
There is plenty of money to made in this market.
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Response by petrfitz
almost 18 years ago
Posts: 2533
Member since: Mar 2008
oh yeah - people like you will rent those brownstones from me. I should net about $10K per month from each of those brownstones.
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Response by Junkman
almost 18 years ago
Posts: 288
Member since: Jun 2008
MMAfia,
Just saw a report today about population changes here in NY State. New York City had an influx of new residents from the state whereas most of the other cities and towns in NY had population decreases, Ithaca an exception probably because of Cornell and the area's intellectual environment.
This report was only concerned with population changes within New York State. Obviously, NYC is a destination for many out of state US residents and foreigners. Perhaps NYC brand will help it tread water until this economic debacle is over. As you are well aware. statistics about US, in general, are not really applicable to NYC and Manhattan in particular.
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Response by stevejhx
almost 18 years ago
Posts: 12656
Member since: Feb 2008
This market has just begun its correction. I've been saying for months that it's 2 years behind Miami, San Diego, Las Vegas, everywhere else where prices shot up and are now correcting.
I have a friend who has a contract out on Trump Something in north Miami. He can't get financing, not even from the developer, and so will lose his significant deposit. The correction in South Beach - where there's limited land! - has been 30% over the past 2.5 years, and still nothing is selling.
With the recent price drops, the per-floor premium at Chelsea Stratus now exceeds $250,000, and that's just the asking price. Probably more like $350,000. Count the units that developers are holding off the market, all the new inventory currently being built, and the near zero demand, and I think we'll catch up to the rest of the country mighty fast.
So for those who accuse renters of pissing their rent money away, imagine if you will that you bought a unit in Chelsea Stratus, and now the one below you is selling for $300,000 less. If, say, those units would rent for about $7,000 a month, that price drop amounts to 3.5 years' rent. And if they fall more - which they will - that's more years' rent.
Let's say you buy a $2 million apartment and the 50% correction occurs as Shiller predicts for the rest of the country. The price falls to $1 million. Let's say that place rents for $7,000 and rents don't change. That's 12 years' rent that you could have paid just with the price drop, not including taxes and common charges. If the market does fall 50%, all told you're looking at a loss of probably 15-20 years' rent.
So why not just rent for 15 or 20 years, avoid the loss, and invest your money elsewhere? In fact, it seems like under this scenario, under the mattress even makes sense.
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Response by stevejhx
almost 18 years ago
Posts: 12656
Member since: Feb 2008
Junkman, NYC gained 250,000 residents since 2000.
Every last one of them bought a million-dollar apartment. That's what drove up demand.
Sneaky: "This RE market in turmoil puts the small guys like you on the sidelines and therefore I dont have to deal with pesky competition."
Yawn.
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Response by petrfitz
almost 18 years ago
Posts: 2533
Member since: Mar 2008
Steve in the two years you have been telling people to rent prices have went up 30-40%. Those who listened to you missed a huge opportunity, including yourself.
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Response by reaper
almost 18 years ago
Posts: 118
Member since: Oct 2007
Good luck Perfitz.... Keep us (those of us who really care) updated...
I'd love to see the Brownstones you find and any info on them...
Don't think we're all Bearish Haters!!!!
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Response by petrfitz
almost 18 years ago
Posts: 2533
Member since: Mar 2008
reaper - check out brownstoner.com House of the Day (HOTD) threads.
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Response by LICComment
almost 18 years ago
Posts: 3610
Member since: Dec 2007
I love steve's assumptions - assume all of Manhattan is like Chelsea Stratus, assume a 50% crash in Manhattan real estate, assume rents don't change for 15-20 years, assume NYC real estate will react the same as Miami, San Diego and Las Vegas (disregard the substantial and fundamental differences in the real estate market between NY and those cities), etc.
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Response by stevejhx
almost 18 years ago
Posts: 12656
Member since: Feb 2008
Those are all valid assumptions. Whether they occur or not isn't the point. The point is know your downside risk.
"the substantial and fundamental differences in the real estate market between NY and those cities."
In terms of price increases, what might those be?
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Response by anonymous
almost 18 years ago
Yawn = the new LMAO
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Response by MMAfia
almost 18 years ago
Posts: 1071
Member since: Feb 2007
Junkman, that is one of the stats I am watching- thanks for the update. I'll continue to watch this.
petrfitz, without taking your bait of "i am big fish/you are pesky small guy" dribble, I totally agree with you that one can STILL make money in this RE market.
perhaps you are one of them. however, the number of people who will be able to make money will be smaller and smaller as we now have confirmation of a market inflection point what with sales transactions in manhattan dropping to the lowest level in a decade for Q2 YoY.
basically, you are swimming against the current, and many others who choose to do so will fail. perhaps you might make it, but that's not my point.
my point is that the tide has shifted HERE in Manhattan, and we have data confirming this.
By the way, I am still waiting to here your reply from the other thread as to why now is the best time EVER in Manhttan's history to make money in RE. Even better now than in 2003 (your analysis including that there is less competition from other buyers now which is why it's a better market now than back in 2003 was not very convincing).
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Response by TheFed
almost 18 years ago
Posts: 176
Member since: Mar 2008
Don't work LICBroker, this is just a Brooklyn report. I am sure if one comes out for queens it will show great increases in LIC (not!).
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Response by petrfitz
almost 18 years ago
Posts: 2533
Member since: Mar 2008
MMAfia
I answered you:
1 - less competition
2 - price softness
3 - a ton of sideline sitters who will have to buy at sometime over the next few years
4 - a few motivated sellers
etc etc etc
Do you want me to tell you how to make money? Figure it out yourself. Steve cant tell you.
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Response by MMAfia
almost 18 years ago
Posts: 1071
Member since: Feb 2007
So because:
1 - less competition
2 - price softness
3 - a ton of sideline sitters who will have to buy at sometime over the next few years
4 - a few motivated sellers
etc etc etc
You think that this is the best time EVER in Manhattan's real estate history to make money. Even better than when the current boom we are seeing started back in early 2000.
Hmmm.. ok. Personally, I still don't believe that now is the best time EVER, but hey, that's just my opinion. Others here can come to their own personal conclusions.
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Response by petrfitz
almost 18 years ago
Posts: 2533
Member since: Mar 2008
MMAfia - you think that the best time to buy is when:
1 - everyone else is buying
2 - there is more competition
3 - itis obviously a good market
4 - there are no motivated sellers
that was 2003
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Response by MMAfia
almost 18 years ago
Posts: 1071
Member since: Feb 2007
No petrfitz, you thought wrong.
I never said anything about when I thought the best time to buy is.
I just wanted you to explain why you think now is the best time EVER in Manhatan's real estate history to make money in it.
And you explained it the best you could, so thanks.
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Response by 80sMan
almost 18 years ago
Posts: 633
Member since: Jun 2008
petrfitz, when I step into your shoes I see it's always a good time to buy. The big question for you is when do you sell? Don't take this the wrong way, I'm not judging your approach, I'm just trying to understand it.
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Response by petrfitz
almost 18 years ago
Posts: 2533
Member since: Mar 2008
You sell when you:
1 - get your desired price
or
2 - have enough equity to sell pull in tax free exemptions and reinvest
or
3 - you want to
or
4 - you find a more lucrative opportunity that your sale will fund
You dont sell:
1 - when you dont want to - meaning you have to (lots of ways to avoid this)
2 - when you dont get your desired price
3 - when you dont make money.
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Response by Junkman
almost 18 years ago
Posts: 288
Member since: Jun 2008
Here is the article pasted from NY Times 7/10/2008 about population growth in New York city.
Junkman- Population growth would certainly be a contributing factor. It translates in to higher demand. The next question is where are they settling? What are their financial capabilities? Will they be able to afford NYC RE? That's just as important then the numbers who are moving here.
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Response by 80sMan
almost 18 years ago
Posts: 633
Member since: Jun 2008
petrfitz, you're a trader. You just happen to trade real estate. I once knew a trader who told me "I'll trade a hot stove". It makes sense that you go long real estate since you can't short it, you can't trade options or futures. You have to hold the physical commodity. I know how the rest of the story goes.
Good luck to you.
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Response by MMAfia
almost 18 years ago
Posts: 1071
Member since: Feb 2007
80sMan, there are Futures markets on the CME based on the CaseShiller metropolitan indices. Traders require liquidity, and thrive on volatility.
petrfitz is not a trader. he's an investor given the time frame required to make real estate transactions.
i just don't agree with his investment strategy that now is the BEST time ever to make money in Manhattan RE. but then again, there are many other investors with whom i don't agree with as well.
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Response by lowery
almost 18 years ago
Posts: 1415
Member since: Mar 2008
wow, petrfitz, hats off to you!
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Response by eric_cartman
almost 18 years ago
Posts: 300
Member since: Jun 2007
me thinks perfitz has three condos sitting in the market, and is getting increasingly nervous by the day.
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Response by petrfitz
almost 18 years ago
Posts: 2533
Member since: Mar 2008
i dont own any condos. I have 4 buildings in manhattan. I am in the process of selling 1 of them in lower manhattan that i bought in 2003 and am making a net of $4.5 million on that transaction.
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Response by dco
almost 18 years ago
Posts: 1319
Member since: Mar 2008
petrfitz- I call BS.
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Response by 80sMan
almost 18 years ago
Posts: 633
Member since: Jun 2008
MMAfia, the total open interest on CME housing futures is 435. Volume today is 0.
The physical housing market is incredibly volatile. While it's not liquid, it does have a high dollar volume. Petrfitz appears to be trading physical property. Let me restate, housing is not liquid, nor exchangeable. The transaction costs are staggering. I actually know a few people who quit their day jobs to trade real estate. I believe petrfitz is in that camp.
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Response by MMAfia
almost 18 years ago
Posts: 1071
Member since: Feb 2007
80sMan, good point with regards to the CME's lethargic volume. I did want to point out though that there is a way to gain exposure to real estate through Futures.
I agree- petrfitz is most likely in that camp. Thanks for the info.
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Response by eric_cartman
almost 18 years ago
Posts: 300
Member since: Jun 2007
perfitz, i call double BS
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Response by petrfitz
almost 18 years ago
Posts: 2533
Member since: Mar 2008
no i didnt quit my day job. I work in Television and New Media and am one of the owners of my company.
and it is not BS
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Response by MMAfia
almost 18 years ago
Posts: 1071
Member since: Feb 2007
I don't think 80sMan meant that you quit your day job petrfitz. you are merely in the camp of real estate traders.
why are you so insecure that you always have to reaffirm your success? whether it be through your millions, your ex-model wife, or your newfound status as one of the owners of your company.
nobody really cares. 80sMan didn't mean that you quit your day job. get over it already.
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Response by EddieWilson
almost 18 years ago
Posts: 1112
Member since: Feb 2008
> This article can provide solace for both bulls and bears. lol
Wow, the broker shills won't even stop the laughable rationalizations with a FORTY FOUR PERCENT DECLINE.
Helpful to not understand math if you're going to shill...
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Response by EddieWilson
almost 18 years ago
Posts: 1112
Member since: Feb 2008
> New York City had an influx of new residents from the state whereas most of the other cities and
> towns in NY had population decreases
Whoops... broker shill "forgot" to mention that the actual number was just 24,000 (thats less than a third of a percent), which even if each one took a new condo, would not fill all the new apartments that came to market in Manhattan. Oh yeah, and that number is for all of NYC....
But, keep on trying... I'm sure you'll be able to convince everyone that its a hot market and we should buy your Toren apartment because you can't handle the mortgage...
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Response by EddieWilson
almost 18 years ago
Posts: 1112
Member since: Feb 2008
One more time, in case anyone missed it.
FORTY FOUR PERCENT DECLINE.
Say that out loud.
Sales cut in HALF.
Ruh Row.
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Response by EddieWilson
almost 18 years ago
Posts: 1112
Member since: Feb 2008
Jees, I have to say it again.
Forty Four F*ing Percent.
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Response by 80sMan
almost 18 years ago
Posts: 633
Member since: Jun 2008
EddieWilson, maybe someone should explain that a 100% increase and a 50% decline are the same thing.
This can be proven using topographical isomorphisms over deleted Klein spaces. Ergo
100 * 2 = 200
100 * .5 = 50
q.e.d.
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Response by EddieWilson
almost 18 years ago
Posts: 1112
Member since: Feb 2008
yes, absolutely... when you double and half, in whatever order, you end up in the same place.
X * 2 * .5 = X
X * .5 * 2 = X
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Response by Jerkstore
almost 18 years ago
Posts: 474
Member since: Feb 2007
Petrfitz reminds me of those guys at Au Bar in the 90's: desperately, sweatily trying to convince everyone who was w/in earshot how successful they are. Probably has the stainless Daytona and a leased Gallardo.
Thank God I grew up - and still get to be amused by those who never did.
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Response by EddieWilson
almost 18 years ago
Posts: 1112
Member since: Feb 2008
Forget Au Bar, that guy clearly lives in his mom's basement.
This article can provide solace for both bulls and bears. lol
In Brooklyn, the median price of condominium units rose 8.1 percent to $514,725, while the number of sales fell 11 percent, Prudential and Miller Samuel said.
New developments comprised more than half of all condominium sales in the borough, which has more than 2.5 million residents and sits across the East River from Manhattan.
Brooklyn is experiencing a wave of new condo development as Manhattan prices have more than tripled over the last 10 years. The median price in Brooklyn is about half the $1.03 million median in Manhattan and that has sent prospective buyers across the river to neighborhoods including Williamsburg, Brooklyn Heights, Park Slope and Carroll Gardens.
"sits across the East River from Manhattan."
Is that where Brooklyn is?
Yea steve,
Where Lebron will be in 2010 and Chinese national hero Yi will be. Brooklyn will become the next Taiwan. We'll be on the map. Marty for Mayor.
This is great news! I am in the market for two brownstones and should be able to get a very nice price and in two years when the market rebounds I will see a very nice profit. I will then take my $500K tax emption and roll the rest into more properties.
This market has so much potential.
Yawn.
"I am in the market for two brownstones and should be able to get a very nice price and in two years when the market rebounds I will see a very nice profit. I will then take my $500K tax emption and roll the rest into more properties.
This market has so much potential."
Petrfitz, I have already discussed in great detail about market inflection points, especially in illiquid asset classes such as real estate.
Let's assume that somehow, you are absolutely right on the money and the market does bottom in two years from now (you already know my opinion on people who try to pick bottoms).
If that is in fact the bottom, your assumption that the market rebounding will be "soon" is highly unlikely. Without getting to the details of the economics behind the unlikeliness (please refer to the other thread for that), the bottom line is shifts in market direction for highly illiquid assets will take years- in the case of real estate, history has confirmed this.
Now, do I agree with you in calling the market bottom? I can't say as I am horrible at predicting bottoms.
What I can tell you is that I do think that there is a probably chance that what occurred in Japan during it's housing bubble could occur here:
http://www.realestatedecline.com/images/housing_bubble_us_vs_japan.gif
One should accept this as a potential outcome in this country, perhaps not probable, but definitely possible. Look at that chart- that's an entire decade.
And so it begins...
MMAfia - i dont really care if the market bottoms. I am selling a Manhattan property that I purchased in 2003. I will walk away with about $4.5 million net (sales price minus purchase price including taxes and fees)
I will dump this money into 2 new brooklyn properties taking advantage of a Manhattan Stronger dollar to a Brooklyn weaker doolar. If the market doesnt rebound, I am still $4 million up. ButI am willing to beat that it will rebound in the next 12-24 months (barring a completely stupid bombing of Iran)
I know there is money to be made in any market. This RE market in turmoil puts the small guys like you on the sidelines and therefore I dont have to deal with pesky competition. My cash purchases are stronger now because less people can borrow.
There is plenty of money to made in this market.
oh yeah - people like you will rent those brownstones from me. I should net about $10K per month from each of those brownstones.
MMAfia,
Just saw a report today about population changes here in NY State. New York City had an influx of new residents from the state whereas most of the other cities and towns in NY had population decreases, Ithaca an exception probably because of Cornell and the area's intellectual environment.
This report was only concerned with population changes within New York State. Obviously, NYC is a destination for many out of state US residents and foreigners. Perhaps NYC brand will help it tread water until this economic debacle is over. As you are well aware. statistics about US, in general, are not really applicable to NYC and Manhattan in particular.
This market has just begun its correction. I've been saying for months that it's 2 years behind Miami, San Diego, Las Vegas, everywhere else where prices shot up and are now correcting.
I have a friend who has a contract out on Trump Something in north Miami. He can't get financing, not even from the developer, and so will lose his significant deposit. The correction in South Beach - where there's limited land! - has been 30% over the past 2.5 years, and still nothing is selling.
With the recent price drops, the per-floor premium at Chelsea Stratus now exceeds $250,000, and that's just the asking price. Probably more like $350,000. Count the units that developers are holding off the market, all the new inventory currently being built, and the near zero demand, and I think we'll catch up to the rest of the country mighty fast.
So for those who accuse renters of pissing their rent money away, imagine if you will that you bought a unit in Chelsea Stratus, and now the one below you is selling for $300,000 less. If, say, those units would rent for about $7,000 a month, that price drop amounts to 3.5 years' rent. And if they fall more - which they will - that's more years' rent.
Let's say you buy a $2 million apartment and the 50% correction occurs as Shiller predicts for the rest of the country. The price falls to $1 million. Let's say that place rents for $7,000 and rents don't change. That's 12 years' rent that you could have paid just with the price drop, not including taxes and common charges. If the market does fall 50%, all told you're looking at a loss of probably 15-20 years' rent.
So why not just rent for 15 or 20 years, avoid the loss, and invest your money elsewhere? In fact, it seems like under this scenario, under the mattress even makes sense.
Junkman, NYC gained 250,000 residents since 2000.
Every last one of them bought a million-dollar apartment. That's what drove up demand.
Sneaky: "This RE market in turmoil puts the small guys like you on the sidelines and therefore I dont have to deal with pesky competition."
Yawn.
Steve in the two years you have been telling people to rent prices have went up 30-40%. Those who listened to you missed a huge opportunity, including yourself.
Good luck Perfitz.... Keep us (those of us who really care) updated...
I'd love to see the Brownstones you find and any info on them...
Don't think we're all Bearish Haters!!!!
reaper - check out brownstoner.com House of the Day (HOTD) threads.
I love steve's assumptions - assume all of Manhattan is like Chelsea Stratus, assume a 50% crash in Manhattan real estate, assume rents don't change for 15-20 years, assume NYC real estate will react the same as Miami, San Diego and Las Vegas (disregard the substantial and fundamental differences in the real estate market between NY and those cities), etc.
Those are all valid assumptions. Whether they occur or not isn't the point. The point is know your downside risk.
"the substantial and fundamental differences in the real estate market between NY and those cities."
In terms of price increases, what might those be?
Yawn = the new LMAO
Junkman, that is one of the stats I am watching- thanks for the update. I'll continue to watch this.
petrfitz, without taking your bait of "i am big fish/you are pesky small guy" dribble, I totally agree with you that one can STILL make money in this RE market.
perhaps you are one of them. however, the number of people who will be able to make money will be smaller and smaller as we now have confirmation of a market inflection point what with sales transactions in manhattan dropping to the lowest level in a decade for Q2 YoY.
basically, you are swimming against the current, and many others who choose to do so will fail. perhaps you might make it, but that's not my point.
my point is that the tide has shifted HERE in Manhattan, and we have data confirming this.
By the way, I am still waiting to here your reply from the other thread as to why now is the best time EVER in Manhttan's history to make money in RE. Even better now than in 2003 (your analysis including that there is less competition from other buyers now which is why it's a better market now than back in 2003 was not very convincing).
Don't work LICBroker, this is just a Brooklyn report. I am sure if one comes out for queens it will show great increases in LIC (not!).
MMAfia
I answered you:
1 - less competition
2 - price softness
3 - a ton of sideline sitters who will have to buy at sometime over the next few years
4 - a few motivated sellers
etc etc etc
Do you want me to tell you how to make money? Figure it out yourself. Steve cant tell you.
So because:
1 - less competition
2 - price softness
3 - a ton of sideline sitters who will have to buy at sometime over the next few years
4 - a few motivated sellers
etc etc etc
You think that this is the best time EVER in Manhattan's real estate history to make money. Even better than when the current boom we are seeing started back in early 2000.
Hmmm.. ok. Personally, I still don't believe that now is the best time EVER, but hey, that's just my opinion. Others here can come to their own personal conclusions.
MMAfia - you think that the best time to buy is when:
1 - everyone else is buying
2 - there is more competition
3 - itis obviously a good market
4 - there are no motivated sellers
that was 2003
No petrfitz, you thought wrong.
I never said anything about when I thought the best time to buy is.
I just wanted you to explain why you think now is the best time EVER in Manhatan's real estate history to make money in it.
And you explained it the best you could, so thanks.
petrfitz, when I step into your shoes I see it's always a good time to buy. The big question for you is when do you sell? Don't take this the wrong way, I'm not judging your approach, I'm just trying to understand it.
You sell when you:
1 - get your desired price
or
2 - have enough equity to sell pull in tax free exemptions and reinvest
or
3 - you want to
or
4 - you find a more lucrative opportunity that your sale will fund
You dont sell:
1 - when you dont want to - meaning you have to (lots of ways to avoid this)
2 - when you dont get your desired price
3 - when you dont make money.
Here is the article pasted from NY Times 7/10/2008 about population growth in New York city.
http://www.newsday.com/services/newspaper/printedition/thursday/news/ny-stpopu105758528jul10,0,3395084.story
Junkman- Population growth would certainly be a contributing factor. It translates in to higher demand. The next question is where are they settling? What are their financial capabilities? Will they be able to afford NYC RE? That's just as important then the numbers who are moving here.
petrfitz, you're a trader. You just happen to trade real estate. I once knew a trader who told me "I'll trade a hot stove". It makes sense that you go long real estate since you can't short it, you can't trade options or futures. You have to hold the physical commodity. I know how the rest of the story goes.
Good luck to you.
80sMan, there are Futures markets on the CME based on the CaseShiller metropolitan indices. Traders require liquidity, and thrive on volatility.
petrfitz is not a trader. he's an investor given the time frame required to make real estate transactions.
i just don't agree with his investment strategy that now is the BEST time ever to make money in Manhattan RE. but then again, there are many other investors with whom i don't agree with as well.
wow, petrfitz, hats off to you!
me thinks perfitz has three condos sitting in the market, and is getting increasingly nervous by the day.
i dont own any condos. I have 4 buildings in manhattan. I am in the process of selling 1 of them in lower manhattan that i bought in 2003 and am making a net of $4.5 million on that transaction.
petrfitz- I call BS.
MMAfia, the total open interest on CME housing futures is 435. Volume today is 0.
The physical housing market is incredibly volatile. While it's not liquid, it does have a high dollar volume. Petrfitz appears to be trading physical property. Let me restate, housing is not liquid, nor exchangeable. The transaction costs are staggering. I actually know a few people who quit their day jobs to trade real estate. I believe petrfitz is in that camp.
80sMan, good point with regards to the CME's lethargic volume. I did want to point out though that there is a way to gain exposure to real estate through Futures.
I agree- petrfitz is most likely in that camp. Thanks for the info.
perfitz, i call double BS
no i didnt quit my day job. I work in Television and New Media and am one of the owners of my company.
and it is not BS
I don't think 80sMan meant that you quit your day job petrfitz. you are merely in the camp of real estate traders.
why are you so insecure that you always have to reaffirm your success? whether it be through your millions, your ex-model wife, or your newfound status as one of the owners of your company.
nobody really cares. 80sMan didn't mean that you quit your day job. get over it already.
> This article can provide solace for both bulls and bears. lol
Wow, the broker shills won't even stop the laughable rationalizations with a FORTY FOUR PERCENT DECLINE.
Helpful to not understand math if you're going to shill...
> New York City had an influx of new residents from the state whereas most of the other cities and
> towns in NY had population decreases
Whoops... broker shill "forgot" to mention that the actual number was just 24,000 (thats less than a third of a percent), which even if each one took a new condo, would not fill all the new apartments that came to market in Manhattan. Oh yeah, and that number is for all of NYC....
But, keep on trying... I'm sure you'll be able to convince everyone that its a hot market and we should buy your Toren apartment because you can't handle the mortgage...
One more time, in case anyone missed it.
FORTY FOUR PERCENT DECLINE.
Say that out loud.
Sales cut in HALF.
Ruh Row.
Jees, I have to say it again.
Forty Four F*ing Percent.
EddieWilson, maybe someone should explain that a 100% increase and a 50% decline are the same thing.
This can be proven using topographical isomorphisms over deleted Klein spaces. Ergo
100 * 2 = 200
100 * .5 = 50
q.e.d.
yes, absolutely... when you double and half, in whatever order, you end up in the same place.
X * 2 * .5 = X
X * .5 * 2 = X
Petrfitz reminds me of those guys at Au Bar in the 90's: desperately, sweatily trying to convince everyone who was w/in earshot how successful they are. Probably has the stainless Daytona and a leased Gallardo.
Thank God I grew up - and still get to be amused by those who never did.
Forget Au Bar, that guy clearly lives in his mom's basement.