3 Titans of NYC data discuss the Future of NYC RE

Check out the rental charts!!

https://www.millersamuel.com/note/november-19-2021/?goal=0_69c077008e-0ab371d7b5-120795059

Interesting that when it comes to getting rid of Rent Stabilization landlords are claiming vacancy rate is well over 5 percent.

Zillow and Goldman Sachs very bullish, CoreLogic and the mortgage bankers association not so much.

Personally, I think it's very difficult to make 3 to 6 month predictions in New York City real estate. And probably a pretty pointless exercise. This fall we've seen strong demand for the best properties, and that has continued, however, overall certainly a muting of the markets. A relatively inexpensive three bedroom in bedstuy, relatively quiet. Our two bedroom listing at 1 Grand army plaza, five offers right out of the gate, and I continue to get four to five inquiries a week. We've done a decent amount of new development business over the last few months, including a competitive situation to get a deal done at 77 Charlton. The best brownstones in Brooklyn continue to draw a lot of competition. Most recently we lost a best and highest at 382 Sackett Street.

I think the next year will be a good one for New York City real estate, I would say a moderate market with additional strength for the best properties. That said, we're not in the forecasting game. Ideally I believe any home purchase should be long-term, 8+ years. And always make a purchase that makes sense within your entire investment universe.
Fortune: Zillow changes its 2022 real estate outlook—here’s what it says to expect from home prices next year.

Ultimately, we're not in the business of telling people to buy. We're in the business of assisting people who've already made that decision.

https://fortune.com/2021/11/18/zillow-changes-2022-real-estate-outlook-what-to-expect-from-home-prices-next-year/

Keith Burkhardt
TBG

Zillow forecasts a 13.6% increase in home prices yet shuts down its iBuying division. Fascinating…

I think I-buying works, but you've got to be short selling sellers. Finding those that don't want the hassle of dealing with a broker or else just need a very quick deal and are willing to potentially give up money to achieve that. Certainly not a very pretty business model, but one other companies have used for many years.

Or else you just have to activate the program when you're in a deep secular seller's market. I guess either way you're trying to time the market?

Their model seemed to benefit buyers.

Excuse me, I meant their I-buyer model seemed to benefit sellers with aggressive prices.

I keep hearing and reading about how strong bonuses are going to be this year. Another reason I feel 2022 will see strength in the New York City real estate market.

Two large sales we recently closed on were definitely predicated on bonus expectations. They went from relatively moderate homes to above 5 million. Both purchased before selling their current homes, which we also assisted them with the purchase of.

Keith Burkhardt
The Burkhardt Group

There is a lot of catch up to do for NYC real estate from the pandemic.

And BK continues to be on fire in $1000-1200 per sq ft range in good areas.

There are also people that when flush with cash, think New York City real estate is a good place to allocate some of it. Sure, equities have been on a tear the last 10 years, but those previous 10 years sucked, And it seems like forward looking models are predicting modest returns for equities. Equities are also not immune to a 30 or 40% pullback, which can be a real jolt to the system.

I know I sound like a broken record, but at least the people I work with including myself, owning real estate doesn't preclude us from making other investments as well. About 20% of my holdings are in cash right now ( which is high for me). 30% is equity in my home, and the rest mostly stocks.

Curious if anyone on here ever regrets not buying real estate and owning the home you live in when equities are not performing or go into a prolonged downturn? Assuming you've got a large chunk of your net worth in stocks.

I used to! Now I keep a rather heavy allocation in cash, and the money allocated to equities is fairly long-term. Meaning at this stage of my life, the money I have in stocks I'm not really worried about for at least another 10 years. And I feel pretty confident the valuations will be higher 10 years from now versus today.

Some interesting data that covers some of the Brooklyn neighborhoods we don't often talk about here;

https://www.nytimes.com/2021/11/25/realestate/brooklyn-is-the-capital-of-new-yorks-sellers-market.html#x3D%3BMoreInSection_AMP

Keith--thinking back, been in Manhattan for 15+ years, never rented (excepting for 6 months), the overall leveraged return for a middle of the road coop is comparable to the stock market in this period, especially if you consider a middle of the road income increase and tax advantage.

I bet a lot of people have similar experiences.

Not having to negotiate every year with a landlord and be able to customize your space, OTOH, is priceless.

sloux,
I am certainly in this camp - "Not having to negotiate every year with a landlord and be able to customize your space, OTOH, is priceless". For me it is probably worth at least 10% premium to eqt rental.

However, will appreciate a couple of example as **middle of the road coops** from what I have seen have not been able to keep up with SPX assuming 1. 25% down payment 2. buy vs rent (factoring in repairs, upkeep, transaction cost over 10y hold etc) without price increase is a wash.

Guess I'm just saying I like having a portion of net worth in my home, regardless of how it's doing versus SPX/equities. In my particular case, it's helped me build, stabilize my net worth. If I had a huge amount of savings, income, I might feel differently about owning real estate. But then again, I also prefer the long-term nature of owning your home, not having to fuss with moving and all that stuff. We do love to travel and rent other people's homes though : )

I wouldn't want to bet the farm on any one asset class. If you have a crystal ball into any given 10yr period, sure I'll bet the farm. Otherwise I like diversification, I include my home as part of that plan. However, I am a long holder of real estate.

This is a one-way story
BUY BUY BUY always in NYC

Pandemic - BUY
Taxes go up - BUY
Crime goes up - BUY
Homeless rises - BUY

Buy if you have a long-term view, and/or you prefer to own your home rather than rent it. Otherwise just rent. The choice is yours....