Bidding wars in the suburbs

@ph41: I lived in Austin 30+ years ago, and it was wonderful. I've been back since, and now, I'm not sure I'd want to live there again.

@George: "many of the jobs going to places like Charlotte, Raleigh, Denver, SLC, Austin, Nashville, Miami, etc are senior software engineering jobs that pay well into the 6 figures ": Yes, except companies are announcing that they will be paying wages based on the cost of living in those other cities, rather than SF. So a coder in Nashville may be making 75% of what they would be elsewhere.

In my experience, there are material regional variations in the pay of lower level staff. A developer in Bulgaria costs 1/4th the price of the same person in London. At the executive level (think top tier Masters degree with 10+ years experience), there is a global market for talent and hence rather consistent prices globally.

Aaron2, why you might not want to live in austin again?

@Anton: It has nearly doubled in size since I was there, and the infrastructure hasn't really kept up. The traffic situation is a problem (think of MoPac as the West side Highway, and I-35 as FDR Drive, and just move the NYC experience of those roads to Austin). The water supply is challenged (there have been significant boil-water advisories during storms as the sewage and treatment systems can't keep up). Public transportation is minimal, so a car is a must have. That said, it's got a lot going for it (center of banking, education, and gov't in the state, reasonable cultural activities (Austin Symphony, Austin Lyric Opera, lots of outdoorsy things), and good sports (Go Longhorns!). Meanwhile even the more distant cities are becoming suburbs (Elgin, Bastrop, Georgetown), and sprawl is a concern -- I mourn the covering of large parts of the western hill country with anonymous subdivisions for the professional middle class. Real estate taxes are significantly rising (average county tax rate is ~1.8%, vs NYC of %1.925 (per smartasset.com)), and will have to go higher to maintain basic services.

If I were starting over, I'd seriously consider living there. If I were banished from NYC / NY State, the Austin area would be on my short list (I might aim for Fredericksburg, San Marcos, or one of the smaller towns between Austin and Houston ).

I fascinated by Austin. I have never been, but my mother and her husband have a number of properties there that they rent out and one in Wimberly that they keep for themselves. They also really like San Antonio. Again, I have never been, but generally love the places my mother likes. Asheville, North Carolina is another one of her favorites.

Keith B,
Saw that you went into contract on East 41st Street. Congrats!

Thanks Lz3!

That sounds like a story that needs telling.

More about the Manhattan exodus.

https://nypost.com/2020/06/04/frantic-new-yorkers-snatch-up-unwanted-homes-in-the-suburbs/

No big story to tell, first time buyers in NYC, tired of staying in hotels when working here. But like all of the deals taking place these days, a lot of ups and downs with a bit of drama.

Reading the deal volume is down 84% in Manhattan, I'm happy to be doing the reduced business that we are. I think it's a testament to the business that we've built up over the last 12 years.

Keith
TBG

George,
I wonder if most of those sales represent a sale which isn't going happen in NYC and thus diminishing the "huge wave of pent up demand" which some brokers are claiming is going to sweep over NYC and cause prices to rise as soon as live, in person showings begin.

The price discrepancy bt city and suburb has grown materially over the last 20 years. It's natural that it would even back out, at least a bit. The wave of demand is coming, just not in Manhattan.

19 Years in Manhattan, now 5 years in "flyover country" in NC... It turned out to be a smart move, even before the COVID-19 crisis and the recent protest activity. There's only one NYC, and there are things I miss, but the simplicity, the convenience and more recently, the relative comfort of being locked down in a house with a patio, yard and garage has been a blessing. I am truly pulling for a booming recovery for NYC , but the headwind I see is the large number of good living / remote work options that exist now that didn't - even just a few years ago.

The pent-up demand is going towards holiday houses.

https://www.bloomberg.com/news/articles/2020-06-07/airbnb-joins-vacation-rental-sites-seeing-surge-in-summer-demand?srnd=premium

We've had a number of requests for referrals. One client has already closed on a beautiful house in the Woodstock area. One of the guys working with me has been looking for a vacation home up in Hudson valley, if you need a referral for an excellent broker up there contact me off-board. The client who just purchased and closed raved about her.

Keith

This is going to be painful for NYC/NYS, who both rely on the income tax paid by workers in NY who commute from other states. NY's loss will be NJ and CT's gain. Taxes will have to rise on those who don't vote with their feet.

***

https://www.bloomberg.com/news/articles/2020-06-11/socially-distanced-office-of-the-future-being-designed-by-cushman

White says he’s talked with the CEO of a big, New York-based bank who’d been planning to lease new office space in the city but decided to hold off because of the pandemic and is looking at short-term space in surrounding suburbs instead. “Suburban satellites make a ton of sense,” he says.

David Simson, a New Jersey broker at real estate services firm Newmark Knight Frank, says he’s received an influx of inquiries over the past few weeks from New York corporations seeking short-term office space. “The rental rate in New Jersey is about a third of what it is in Manhattan,” Simson says, “so the tenants are getting the benefit of the market from a cost-per-square-foot basis when reallocating some of those people to the suburbs.”

Industrious, a flexible-workspace company backed by developer Brookfield Properties, says it’s seen a recent jump in the number of corporate renters asking about suburban locations with private offices rather than open-plan setups

All this talk of the suburbs made me curious and take a look at what was available in NJ. I have to say that I was pretty blown away by what was available in some very nice neighborhoods in Bergen County. Some pretty great homes you could get for <$1MM, which probably gets you a decent 1BR at most in most of NYC.

SE comment software strikes again. My last sentence was "Some pretty great homes you could get for <$1MM".

Ok, I have no idea why, but using the less than symbol seems to cuts off all text that follows afterwards. I hope 3rd times the charm here: "Some pretty great homes you could get for less than $1MM".

I haven't checked lately but NJ towns values used to have a correlation to having "direct" train service.

From the WSJ: "The Housing Market Around NYC is Booming"

https://www.wsj.com/articles/the-housing-market-around-new-york-city-is-booming-11592227115?mod=hp_lead_pos12

I agree with the earlier poster that the suburban boom will probably be temporary. BUT I think the effect of self-driving cars needs to be considered for the medium term. If you can just have your car drive you into the city and park itself or just drive itself home...that is going to have a huge effect on the desirability of the suburbs in my opinion.

Yet another...

https://www.wsj.com/articles/the-coming-urban-exodus-11592435672

***

The message being sent is that progressive governance is, at best, ambivalent about maintaining civil order. The net result the past three months has been a sense in many cities of irresolvable chaos, stress and threat.

I think many younger, often liberal families would stick it out if they thought there was anything resembling a coherent strategy to address this mess—the new health threat, the homeless, the rising crime, the filth, the increasingly weird school curriculums. But there is no strategy.

The quality of the response by both political and institutional urban leadership to the pressure of these two events has been so uniformly unproductive that it sends a message: The cost-benefit just isn’t working anymore, with incentives mounting to move out.

The unhappy result as young families and well-off retirees leave is that these cities will increasingly become more divided between upscale progressive singles able to afford the political incompetence and the residents of inner-city neighborhoods that will fall further behind

For those who’ve always wondered what the 1960s were like, you’re living it, but this time without much love.

The politics of the city can certainly change we've seen it in the past, from Beame to Koch to Giuliani and Bloomberg... And without a doubt there will be a segment that's going to pack their bags and leave, the fair-weather New Yorkers who were looking for a suburban experience in an urban setting. But one way or another the city will adapt and so will its residents.

I know I've beaten this drum before, as a child and teenager I spent quite a bit of time in the city in the 70s, moved to the lower East side in 1982. Then moved to Chelsea, West 22nd Street in 1984. The city was significantly different then, a place many current New Yorkers would not choose to live in or move to. But none the less, it was a wonderful place to live! And I raised two children in the city during that time, and they're well-rounded very smart kids.

And I'll disagree with you George on your point that there is no love. My daughter and her husband have been very active in the protests, and they're very excited and full of Hope! I can assure you they're definitely feeling the love.. like most of life, what we see on the 5:00 news is much different from the reality that we live. Even in the 60s there were different factions of protesters, from the peace and love hippies to the more militant.

@George - Do you think New York will end up like Detroit? Do you see similar trends in other global cities or do you believe what you foresee as being unique to US cities? Note: I have no preconceived opinion on either question and don’t necessarily disagree with your observations. I can totally understand why families will continue to leave the city on cost alone (both housing and education) and genuinely wonder what it looks like down the road

@Keith - I much prefer your outlook. Thank you for providing it!

I have no data on this, just anecdotes, but it feels like an easy 10-20% of my kids' friends aren't going back to school in NYC in the fall. Suburbs (easiest), TX (jobs, no state income tax), and CA (weather) are the three main destinations.

We really want to stay. Biggest frustration point for us right now is that DOE seems absolutely clueless about fall -- meanwhile, our daughter's nursery school has four scenarios gamed out and offers complete transparency. I can deal with the boarded up windows and the growing number of people strung out on the sidewalk, but if DOE can't figure this out, that could be the last straw.

@flarf, I feel your pain. I have clients in the private school world and I'm very jealous of the fact that privates have delivered decent remote learning and stand ready to deliver in-person learning in the fall.

However, I'm a city person; the density is what attracts me. I do not look forward to another long stretch of this mess (not being able to work full-time will be a real hit for me and my family) but as Keith points out, there are positives to raising kids in the city.

If you run to the suburbs to avoid a year of disrupted school, then do you move back once the dust has settled? Two moves in the space of five years seems really disruptive to everyone.

If you don't move back, then you lose the benefits of raising kids in the city in the first place. I was raised in a nice suburb, and in my mind, the independence advantage that city kids gain when they are tweens is not small. And the diversity of socialization that they get in a city ... where's the suburb that replicates that?

"Two moves in the space of five years seems really disruptive to everyone"

Just have to point out here that many military families do this their entire lives. Until I went to college, we lived nowhere more than 4 years in a row. Both my parents came from military families, and their experience was similar. It is also expected for those working their way up the professional middle class corporate ladder in a large company that they will be moved around to whatever office / factory / site / city was in need of their skills for 2-5 year stints. There's a view that if you're staying in one place, you've maxed out, unless you're at the top.

I think there's a big advantage to putting kids into a variety of schools around the country/world and giving them the real experience of diversity. (NYC is still pretty parochial, for all it's vaunted 'diversity').

Just slightly different take. Some families will permanently move to burbs. But the families who are in the city will look for more space if they can afford it. Essentially an extra bedroom. And I see City getting back towards normal pretty despite a set back due to looting. Real estate showings opening up possibly Monday. And there will be a lot of pressure on DOE to open as per schedule.

NYC is facing a huge revenue drop. I think the big wish is a gov bailout either by the current admin or perhaps Biden next year. So services will decrease for now.No doubt higher taxes will follow. Will progressive's over rotate as they did with bail reform ? Statistics re crime on the original bill that passed do not look good. Increasing crime is going to be number one for quality of life. Expense/cost/taxes will be a secondary driver. Hope, and all that other stuff will depend on the first two.

Interesting, Aaron. In the military family/corporate family model with frequent relocations, who takes care of the grandparents? One thing keeping us here is my in-laws (who are delightful, but also older).

Is there anyone moving due to the looting that would otherwise not have to due to covid?

looting has been such a small decision factor as compared to covid, I thought.

If schools don't fully reopen in the fall, we've decided to stay in our remote location permanently. I'll have the necessary conversations with my business partners, as we're nowhere near NY/NJ/CT.

Mrs George has been pleasantly surprised at how much she likes it outside the city, despite being NY born and bred and thinking she would never like it anywhere else. Her family has been in NYC since the war, so she would cut you one if you called her "fair weather".

If schools do fully reopen, then we'll probably be back, though we may reduce our rent in NYC and buy something out here so that we have a bug-out place, instead of putting all our spare funds into buying NY real estate. Until prices fall further, something in line with 30's famous predictions, it's just not worth the risk of being trapped in NY watching Blas and Cuomo bicker while "protesters" smash the front windows of our building.

It would be our third move in 4 years, but things have changed rapidly. NYC isn't the NYC I moved to in the early days of Bloomberg's administration, when Joel Kline ran the schools. A Biden presidency would entail a bailout and a restoration of the SALT deduction (a giveaway to the wealthy if there ever was one), which may help stabilize the situation and improve my own income materially, but Blas or his likely successor will waste whatever is given. The pre-covid situation wasn't sustainable even if the Fed drops a hundred billion bailout on the city.

https://streeteasy.com/blog/may-2020-market-reports/
Coronavirus Market Disruption Fuels Largest Brooklyn Price Drop Since 2011

Thanks, 30Y. Decreases in sales prices and flat rents - quite the one-two punch for NY RE.

I believe 30 is predicting a 50% price decline? Prices for resale two bedroom condos(all downtown) are down a little over 13% year over year, so potentially another 37% down from here? Average price per square foot for resale condo(all downtown) is 1400 currently, so you're a buyer at around $882 /square foot?

I certainly see more price weakness, but not to this extent.

https://www.urbandigs.com/resale-charts/price-/-square-foot/all-downtown/condo/all-prices/2-beds/?agentid=9325

Keith
TBG

@f_p: "who takes care of the grandparents?"

It could be a challenge. When my dad retired we moved in with my mom's mother, who was in her late 70s and living alone in a large house in the west. Dad's parents on the east coast had his 2 sisters nearby to look after them, and dad wasn't interested in putting 3 kids into DC schools in the mid-70s. Some late-career senior military can choose their assignments, and if they have parents living near a base, that can be one option.

@Keith: What was the baseline for 30's prediction? Was it the peak? If so, we're probably closer to halfway there by this point.

I was initially skeptical about his call, but it feels like we are likely going to land much closer to it than I thought was going to be possible.

And another, this one focused on young people fleeing.

https://www.nytimes.com/2020/06/19/nyregion/nyc-coronavirus-young-people.html

It's amazing how little people know about the long arm of NY taxes. One woman is quoted as having left temporarily with the intention to return, and she's not paying NY tax in the meantime. If she gets caught, she risks a big tax penalty. Unless and until one permanently abandons his/her NY domicile, they owe NY tax, regardless of where in the world they are (or are not).

https://www.foxnews.com/media/ben-carson-us-process-losing-its-cities

I'm sorry, but Ben Carson?

I don't put much faith in Ben Carson. Guys like Ed Rendell had it right. The book linked below is a good read about how he turned around Filthadelphia in the bad old days of the early '90s, when West Philadelphia was known world-wide for crime thanks to the Fresh Prince. Rendell was, in many ways, the opposite of Blas. One of this first actions in office was to stare down city unions and make them capitulate, else there was no way to control the chaos and get the city budget under control. He was tough and charismatic, and ultimately loved his city in a way that Blas doesn't (exhibit A: Blas leaving to run for Prez).

I got to know Ed after he left office and before he became governor, and although I frequently disagreed with him, he impressed upon me (without saying it) that the quality of executive governance in a city is critical to its survival. it starts with the mayor but has to involve the governor and local Congressmen too. Ultimately it's simple: people flock to well-managed cities, raising real estate prices, and flee those that aren't, lowering real estate prices.

https://www.amazon.com/Prayer-City-Buzz-Bissinger/dp/0679744940/ref=sr_1_1?dchild=1&keywords=prayer+for+the+city&qid=1592589981&sr=8-1

In times of turmoil in NYC I always enjoy coming to the StreetEasy forums to see consensus and then betting on the opposite. I remember it being the end of the real estate world in NYC in both in 1999, 2001 and 2008. I know this time is different, right? I guess we will wait to see how this one shakes out as well.

I like to deal in facts and not emotion but housing is inherently an emotional decision which will cause people to make bad financial decisions. This is one fact I know, New Jersey and Connecticut are one of 5 states that have the worst underfunding of state pensions ( both significantly less than 50%) How do you think they will be making up the shortfall? They will each be raising their property taxes, sales tax, state tax by huge amounts within the next few years. Any suckers who purchase homes in these states in a bidding war are going to be yelping in pain by a large margin in 2 years is my guess.
NYS pension funding is in great shape but spending has to be cut. it was cut in 2001 and in 2008 ...and it is really nonsense to say it can't be cut without losing services. THe level of corruption in this city is really breathtaking. Didn't Thrive waste 1.5 billion dollars of city taxes and counting. Wasn't the original L train shutdown going to cost 2+billion ?

I am actually hoping for significantly lower prices in the NYC area so I can upgrade at a lower price ...hopefully someone is foolishly fleeing cause they got in a bidding was for some ranch in Conn with $30,000 prop tax soon to be $45,000+...keeping my fingers crossed for the real estate market open in a few days

@selbourne - the ben carson on laura ingraham on fox news clip was tongue in cheek.

@george - I don't know anything about Philadelphia but am interested in the subject matter in general. Thx for the book rec.

@flmd - "I am actually hoping for significantly lower prices in the NYC area so I can upgrade at a lower price." Me too; who can resist such a good sale if it comes to fruition and you are committed to NY regardless of what it becomes.

@flmd - I'm puzzled why you call out NJ's and CT's finances, but aren't concerned by NYS or NYC. Both the state and the city have their own pension and retiree benefits problems that watchdogs have been calling out for years. Why wouldn't the same concern for property taxes exist here? It might not be as bad as NJ and CT, but it's not that far off.

thoth,
It was 35% to 50% off peak prices. I wonder if that occurs will people who had some fairly nasty comments even admit it happened.

Peak being 2015?

Anyway, heres some actual data for everyone to digest and interpret (from Urbandigs)

https://youtu.be/JVrsxFiLbds

@thoth : sorry but its a fact that NYS pensions are funded at 85% while NJ and Conn are less than 50% funded. They along with Illinois, Kentucky and I think Nevada(?) are in bad shape...ratings agencies have been calling them out for years and everybody with a small understanding of economics already knows that...why do you think houses in Conn and New Jersey were not moving the last three plus years.

California was in the same pickle 7 years ago but they dramatically raised income and property taxes and are now 75% funded. The same will happen in NJ & Conn period. its inevitable.. For whatever reason no one is talking about the property tax issue in hopes of getting dopey people to purchase theses homes in bidding wars no less.

I'm not so sure about this pension argument. In general, pensions in areas with aging populations are under severe strain, and it gets worse as taxes push away young people. The exact amount of underfunding is a guess since no two actuaries ever agree on anything. But NYC's pensions (there are at least 5) are not exactly in great shape.

https://fee.org/articles/new-york-city-s-pension-debt-is-driving-it-to-bankruptcy/

https://therealdeal.com/2020/06/19/hotel-distress-could-strip-nyc-of-1-8b-in-tax-revenue/
Hotel distress could strip NYC of $1.8B in tax revenue
The projected loss does not include property taxes, which are due July 1.

"Projected tax losses" are happening everywhere in the world. Every municipality and every state. That doesn't change the FACT that NYS pensions are 85% funded. And that NJ and Conn pensions are under 50% funded. Which means that the underfunded states according to your article are in an even worse position.

@George after your google/bing search all you could find was some obscure lobbying organization that only says that pension liabilities are taking up most of the debt...Duh! The United States tax receipts go overwhelmingly to medicare and the payment of debt...New York State pensions are 85% funded and that is a fact. why didn't you attach all the articles discussing unfunded pensions in Conn & NJ?

People, buyers just need to be aware of everything when making decisions. The fact of the matter is that taxes will go up everywhere to some extent to cover federal debt issue but you have to be aware that it will rise to a larger degree in states with dramatically underfunded pension liabilities and don't let anyone manipulate or gaslight you into thinking otherwise.

Who knows what the future will hold even concerning Covid 19. Florida confirmed daily cases are 4,000+ per day and rising. Hopefully they can keep hospitalizations down but who knows ? Baseball teams are now moving their base of operations for spring training back to the Queens and Bronx? Who would have thought that even two weeks ago?

https://www.nydailynews.com/new-york/nyc-crime/ny-man-fatally-shot-brooklyn-gun-violence-soars-20200620-pp3uqtsenbf63n4aei3tw265ou-story.html

Since Monday, there have been 33 reported shootings across the city — more than double the number of shootings reported during this week in 2019, when only 12 shootings occurred.
As of June 14, the city was reeling from a 24% jump in shootings across the city, from 317 this time last year to 394, officials said. Murders were also up by 25% from 127 to 159.

Police sources claim the violence since Friday was much bloodier with at least 21 people shot in a 24-hour span between Friday and Saturday. The NYPD could not immediately confirm those numbers.

@flmd, if you think it's a "fact" that pensions are x% funded, then we'll just have to agree to disagree and stop this nonsense right now. All I'll say is to do some googling of your own on the term "assumed rate of return."

@George as I said above these are the facts directly from the federal reserve and the tax foundation no less.

https://taxfoundation.org/state-public-pension-plan-funding-coronavirus/

its all there to see for every state. NJ is actually the 2nd to last state at 36% funding (my bad)and Conn is at 46%...you can view where NY (95%) is at as well as all the other states in the union

Once again buyers wherever you are planning to buy make it your business to know everything before you make a purchase. Don't allow yourself to be gaslit or manipulated by people that are trying to use this board as yahoo stock message board

You can disagree all you want ...facts are facts my friend. I would argue you need your own bit of education on rate of return. Anyone who is buying a house in Conn and NJ in a bidding war is going to get their face ripped off if they think they are going to profit on a sale down the road.

But there are many people who know that they cant rely on making a profit on their home

The opinions of actuaries should never be mistaken for facts. Trust me, I know. Good day, Sir.

@flmd - NYS, NYC, and CA are all much worse off than they seem just going off the pension funded number. In addition to what George pointed out, you are ignoring Other Post Employment Benefits (OPEB) which are conveniently ignored in those numbers, but represent long term liabilities for these states. Those wonderful pension funded numbers look horrendous once you take all long term liabilities into account.

Thank you @George that was funny.

As I said, I posted the information so buyers can make an informed decision. that does not have to be you @George

If your position is that The federal reserve are just actuaries with an opinion, fine have at it.

Maybe during the next election cycle candidates should state the amount of the federal deficit is subject to actuaries opinions as well. Hell why not have Jersey go to the muni bond market and tell them that they are wrong about their unfunded pension , its actually 80% funded. which should allow the state to borrow at a lower interest rate

By the way , why are you assuming I am a sir? Do you think a woman couldn't marshall easily obtainable information from the federal reserve

flmd, thanks for the info. I am not interested in moving to NJ / CT but I didn’t know about the issue. I guess credit agencies seem to think CT & NJ are amongst the least creditworthy too. For example:

https://www.spglobal.com/ratings/en/research/articles/190319-u-s-state-ratings-and-outlooks-current-list-1738758

So NY is one notch below AAA while CT is 5 notches & NJ is 6 notches. So Fed, Tax Foundation, & credit agencies all seem to be supporting what you are saying.

George, do you have anything to back you up other than general disdain for NY policies?

Thanks Inonada

prior to Covid 19 anyone selling a million dollar plus home in NJ/Conn/Ill was being told they would need to take a 20% - 50% haircut due to their impending state tax increases to cover their pension shortfalls. Now newspapers are essentially just printing advertisements and hiding it as newspaper articles. The throw in anecdotal stories from 2 or three people and NO One talks about this anymore.

its actually pretty shameful and reminds me of the tactics used in the runup to the housing bubble of 2007 - 2008

flmd,
Take a look at the history of house flipping in relationship to bubbles popping and where we are in that cycle.

We may very well be in a bubble. If we are, its everywhere in this country. housing costs will come down as income, property and sales tax go up all over the country to cover pension costs, medicare increases and a higher federal debt.

I'm just arguing that no one should be overpaying or getting into bidding wars anywhere in the metro nyc region; I'm aghast at the suggestion I've read that people should overbid and offer no contingencies. whoever wins has got a big fat booby prize waiting for them

Pensions are just one element of a bond rating. Other factors are more important, notably economic diversification and strength, or the ability of an economy to outgrow debt obligations.

In any event, buying up NYC real estate before the Big MAC was not a terrible idea. Indeed, any idiot who bought around that time and held on did just fine, like our President. So why is it such a terrible idea to buy suburban land after a 40 year cycle where suburbs have become out of favor?

You should buy what you can afford and live where your quality of life match your desires and lifestyle. Who cares where anybody lives? And for that matter who cares whether somebody wants to rent or buy...

What is the Big MAC?

https://en.m.wikipedia.org/wiki/Municipal_Assistance_Corporation

Here's a better summary of what the control board and MAC actually did.

https://www.nytimes.com/1986/06/30/nyregion/financial-control-board-loses-most-of-it-s-control.html

Default appeared imminent on Sept. 9, 1975, when Gov. Hugh L. Carey signed into law a state plan to restructure the city's fiscal management and to infuse $2.3 billion in cash. The plan called for a seven-member board to enforce austerity and control the city's revenue flow.

The board did that, and more. In its first years, many participants and observers now agree, the panel made numerous painful, controversial decisions that the administration of Mayor Abraham D. Beame was unwilling or unable to make.

It ordered hundreds of millions of dollars in budget cuts above those proposed by the administration and demanded the layoffs of thousands of additional city workers. It rejected a contract negotiated by the city's Board of Education and the United Federation of Teachers. It also rejected a transit workers' contract.

The board, in effect, imposed a wage freeze for municipal workers, modifying it later to permit only cost-of-living increases tied to productivity gains.

On its initiative, the state took over the City University, relieving the city of its subsidies to the university. And it forced major management changes at the city's Health and Hospitals Corporation, including the resignation of the corporation's president.

So I’ve started reading about Ed Rendell and me-likey. As I’ve noted before, I don’t follow NYC politics. However, I am becoming increasingly interested. Who does anybody on this board support for next Mayor?

P.S. @Inonada - thank you for asking about the Big MAC. I had googled it to no avail and then just assumed George was using the year MacDonald’s introduced the Big Mac (1967) as a reference point.

@flmd - I'm completely with you about your assessment of NJ and CT. I just don't exempt NYC and NYS. We are probably better off, but not by much.

Here are a few sources to help you learn more about NYC and NYS fiscal situation and why it's much worse than it seems at first glance:

https://www.mercatus.org/publications/urban-economics/state-fiscal-rankings
NJ is 48 and CT is 49, so yes, they are doing worse. But NY is 41.

Here's their specific profile for NY:

https://www.mercatus.org/system/files/norcross-fiscal-rankings-mercatus_ny-v1.pdf

See the row for unfunded OPEB for NY? It's $88.5B and 0% funded.

Total unfunded pension liabilities are indeed only $14.7B, which reflects the 95% funded number you mentioned above. But that's based on the state's own discount rate assumptions, which is the point that I think George is making. These rates vary within the state by pension plan, depending on how they are governed, and NY's are not particular conservative:

https://www.empirecenter.org/publications/nystrs-barely-nudges-its-rate/#:~:text=The%20board%20of%20the%20New,(b)%20still%20unrealistically%20high.

I think it could also be argued that the short term bailout orchestrated by Rohatyn et al set the stage for the shift in wealth and long term financial time bomb NYC has become, especially the concept of mortgaging any potential cash flow into massive long term debt.

I think we will see next year when the taxpayers in NYC will have to start making good on bond guarantees like the one's on Hudson Yards (which has already stopped paying EB-5 investors, which it got through gerrymandering a district all the way up to East Harlem to syphon funds intended to spur development in "high unemployment areas")

@toth the studies you bring up are brand new and are measuring a states "financial ability" as they deem it to meet all their costs currently. It includes medicare costs and assumes increases to services that no state can sustain. All states will have to cut costs. Municipalities cannot raise debts. They will cut just as they did in 2008, also raise taxes as well. The federal government will do that as well.

There is a reason the federal reserve and the enitirety of the institutional bond market reviews unfunded pensions that is what has to be paid ; can't cut it.

Once again I never said that NY is not having financial difficulties. The whole country is having financial difficulties.

But people need to be ahttps://taxfoundation.org/state-public-pension-plan-funding-coronavirus/
ware that NJ & Conn costs will dramatically rise. The property tax bill, income tax bill and sales tax WILL go up dramatically to cover an unfunded liability they can't cut. That is a certainty.

Now NYC in particular can continue to increase taxes ( Deblasio has increased spending approx. 30%+ during his time in office) waiting for a bailout that will not come from the government. There will be some money but that will go to pay for direct coronavirus costs and other states have costs as well and they will get federal money as well(that's why Cuomo has been bellyaching about how NY is the hardest hit so they should get a boatload of money from the fed government).

If NY doesn't stop increasing taxes you will see a continued move by smart money to establish residency in Florida or Hamptons -Long Island, to avoid NYC taxes; not so much NYS taxes; maybe Pennsylvania as long as their state doesn't get cute. I am establishing residency elsewhere if the city/state does not elect an official who is more prudent

Dumb money will move to Conn, NJ and pay for the unfunded pensions . simple as that. Remember people it was only four years ago that, David Tepper, the owner of the Carolina Panthers decamped NJ for florida. Just like that they lost I believe 15% of their tax revenue

Hopefully NYC residents will elect someone like the vice chair at Citibank , Raymond Aguire (sp). African- American, fiscally prudent business man with a long history of public service . The other political hacks cant even pass an algebra test

@flmd - Many thanks for the info. Discussions like this are what keep me tuning into SE Forum.

I get the argument that moving from NYC to Westchester or CT or NJ is perhaps jumping from the frying pan to the fire. Ultimately the entire northeast except perhaps Rhode Island(*) faces a similar problem of declining population, rising taxes, poorly-functioning infastructure, excessive public unionization, corrupt one-party government, burdensome regulation, and declining clout in Washington. These factors are all linked and feed off each other.

I disagree that none of this will change. A Biden presidency looks more likely, and possibly controlling the House and Senate too, with a wishy-washy Supreme Court Chief Justice in their corner too. Thus the rest of the US will get the diseases of the northeast and giveaways to the rich will reach trillions: restoring SALT deductions, raising the tax subsidy for homeownership, and massive Federal bailouts with few strings attached. It would be a great thing for NY property values.

*Regarding Rhode Island: https://www.washingtonpost.com/opinions/this-is-the-vice-president-who-would-restore-adult-supervision-in-washington/2020/05/21/ae64cd00-9b8d-11ea-ac72-3841fcc9b35f_story.html

Raimondo would certainly appeal to me as a Biden VP choice. I also believe elimination of the SALT deduction was the responsible thing to do and should not be reversed. Moreover, I support reining in the administrative state (regulations) in a balanced way. There are plenty of centrists in both parties who are looking for candidates to support in races at every level. Although I cannot vote in NY, I do hope that Ray McGuire decides to run for NYC mayor. If things don’t start looking up, Mr. and Mrs. MCR might end up relocating primary residence to Columbus, OH, which actually has great energy and diversity these days. I would be happy living anywhere with Mr. MCR by my side, but I am still rooting for NY.

@flmd - I don't think that we are that far apart on NYS. It's more a question of degree than kind. NYC is worse off than NYS, though, so if one is concerned by pension obligations, I believe that has to be factored into NYC property as well.

NJ and CT will absolutely have a reckoning. I think the (long, painful) end game will have to be an eventual cut in pensions, though, simply because the states are going to run out of money. The problem is that they can't tax their way out of the problem, or they'll kick off a death spiral, which is what happened to other governments that got into this mess.

@toth...they are not going to cut the pensions. Illinois tried that 2-3 years ago and the courts struck it down as unconstitutional for the state to go back on their "obligation". The judges in Conn and NJ , hell everywhere are beholden to the unions.

Christie tried to get momentum around cutting pensions and the teacher unions yelled to the constituents about how education would be eroded, blah, blah, blah. long story short the pension obligations are staying

Two markets I follow a little bit New Jersey, Montclair and Maplewood. Things seem to be cooling off a little bit now, as I would have suspected once people move out of panic mode. However if you are looking there's decent inventory in Montclair currently, one house I was eyeballing with an ask of 2.5 in upper Montclair, has taxes of about 60k a year. Not sure if that would be accurate for a new buyer though.

Montclair is a great town, at least parts of it with some nice character and some beautiful Victorian homes. Upper Montclair is the upper East side so to speak of the town. Direct train service into NYC. When we lived in Rutherford New Jersey for a year, Montclair would be the place to go for a decent dinner and night out.

@flmd - I should clarify, I don't mean the states unilaterally cutting pensions. Unless the federal govt bails them out, all of these pensions will have to be cut because the money won't be there. Yes, I know there are constitutional protections for pensions in many of these states, but that won't matter once there's no money to pay them. The solution will likely be an unhappy mix of higher taxes (likely property) and pension boards voluntarily sacrificing some benefits. IL will be a good test case to see whether this solution is possible.

I haven't seen any cooling. Where I am, the froth is building every day. Just on Friday a house went into contract after sitting on the market for 2 years. A guy I know down the street was shocked since it's a 2600 sq ft residence on a non-descript plot in tear-down condition, with an ask of over $4 million. But then he mentioned that his two condos just sold: one with 5 offers, the other with full ask on the first offer, even though they have tenants in place. What's available for sale and not ridiculously priced is the tear-downs, unrenovated condos 20+ years old, stuff far from desirable areas, etc. The rental market has become very tight too.

The reason the froth continues is New Yorkers seeing headlines like this:

https://nypost.com/2020/06/22/principal-warns-nyc-parents-about-potential-chaos-next-school-year/

“If people can leave, they are,” said a parent. “It’s that simple. But for many people, including me, that isn’t an option. We understand that this is difficult, this is unprecedented. But the lack of answers right now and the proposals they’re giving us are pretty traumatic.”

Guess I'm just looking at the inventory in the towns that I keep an eye on. I think a lot of people are going to wake up with a headache when they realize what they bought, down the line when they try to sell it themselves.

But good for the sellers.....

What has been a common thread in Real Estate is when any area becomes hot is new people come in from outside who know nothing about the area and what factors influence pricing and then pay top dollar for pieces which they think are "A" properties, but in fact either don't have things necessary to make them "A" or do have defects which make them "B" (or even "C") because they just are unfamiliar with the market there.

There used to be a word for such buyers: "speculators"

Meanwhile, 30's worries about crime are looking more prescient:

https://nypost.com/2020/06/21/nyc-shootings-skyrocket-as-court-closures-let-gun-possession-perps-walk-free/

I think one reason for the increase in gun violence is drug turf beefs. You have a bad combination of overall demand being lower and various "home bases" (specifically bars) being closed yielding almost all turf being street turf, which has always been the most prone to beefs resulting in violence.

Meanwhile this may be of interest:

https://markets.businessinsider.com/news/stocks/fed-bond-stimulus-risks-historic-stock-market-bubble-yardeni-outlook-2020-6-1029334701

With all the problems and chaos in the city, today Blas decides that the streets are too... clean.

https://nypost.com/2020/06/23/bill-de-blasio-announces-new-nyc-alternate-side-parking-rules/

The city should be eliminating street parking to widen sidewalks, not making it easier to own a car in the city.

What do you think that would do to small retail business?

By way of example, widening the sidewalks was the first step in killing retail on 8th St.

I would think widening sidewalks is a positive for retail as it encourages pedestrian traffic, plus creates more space for outdoor dining (good for the restaurants and draws customers that may then shop in stores).

Why oh why can't StreetEasy bring back page tabs for threads so one doesn't need to endlessly scroll through a zillion old posts to get to new the updates? C'mon SE--this isn't rocket science.

I'll tell you what's not a positive for retail: cars parked permanently in front of their stores by non-patrons. TBH I find it ridiculous that people can consume the most valuable real estate in Manhattan simply by putting a vehicle there and sitting in it for 2 hours once a week to avoid a ticket. The best thing for retail would be to make more 15 to 30 minute zones on one side of the street, eliminate parking on the other side, and recenter the street with wider sidewalks and bike lanes consuming the space that's freed-up.

In a better world, subways and busses would be free and parking/tolls expensive. Instead it's the other way around.

And another article about fleeing NYC, this time for the Catskills.

https://www.wsj.com/articles/new-yorks-hudson-valley-is-drawing-big-city-dwellers-looking-for-open-spaces-11593026006

Where is all this retail with alternate side of the street parking out front?

And subways/buses are already heavily subsidized by tolls. Fares account for about 40% of MTA revenues. Tolls account for about 12.5% and most of that goes towards subsidy.

And the joke of the planned "Congestion Pricing" is that even if it actually works, for every dollar collected one will lost from tolls. So in reality the MTA has to hope the plan doesn't actually reduce vehicular traffic at all. It's a terrible "Plan B" to the inability to get tolls on the free East River bridges which has failed multiple times.

"In a better world, subways and busses would be free and parking/tolls expensive. Instead it's the other way around."

Parking here in my UWS neighborhood (where it's hard to find spaces even though 10% or more, depending on who's counting, of my neighbors are gone) is $25 a day. How is that not expensive compared to a $29 metrocard, which gets you subways and buses for a week?

@ali - street parking is free in my neighborhood while garage parking is $45 day. I think the objection is to free street parking.

New York City has historically been reasonbly close to being one of the great pedestrian cities in the world -- density, paved sidewalks everywhere, a high level of public transportation to get around, as well as good public transportation to the immediate suburbs, and inter-city rail connections. Where they have fallen down is in failing to limit traffic by charging people something close to the true social cost of bringing a vehicle into the city and parking it on the street (to echo George, some of the most valuable land around). And I would add, failing to charge new transportation services for the cost of driving around while waiting for a fare (looking at you, Uber and Lyft).

You want to own a car in the city? OK., but you'll need to pay for it: $1000/yr license fee. You want to park on the street? $5/hr. from 6am to midnight. $2/hr from midnight to 6am. No more than 12 consecutive hours in the same parking place permitted. Bringing a car into the city: $15 in / $15 out. Please tell me why these are not appropriate fees. (While I could allow some carve outs for disabled/etc, the income generated might well pay for significant improvements in access services).

The fashionable idea that people will drive less because they've removed parking spots and turned traffic lanes into bike lanes only worsens the driving and pedestrian experience, but doesn't really address the problem (Looking at you, Mayor Mike).

but @mcr, the free street parking (of which there is not nearly enough) is one thing that makes living in these shoeboxes possible. And now that everyone is nervous about transit, you have a swing group of people (which includes me, guilty) who didn't used to have cars that have them. Are we taking space away from bicycles and restaurants? yes. But on the other hand, we're staying part of the tax base, in a time when many are not.

Aaron, your proposal makes sense to me (especially the part of having Uber and Lyft bear their share of costs) but I can shoulder that $1,000 a year license fee. Can our building's doorman who drives in to work? I'm not so sure.

Bicycle licenses, insurance, etc.