Does Manhattan real estate not appreciate anymore?

I don't think so unless you go to a serviced hotel cum apartment.

BTW, If have 15 or fewer units with a full time doorman, $1.5 CC per month per sq ft is common. Full time doorman means 5 full time employees at $60k-100k all in cost per employee.

If "you" have.

I will add that other than a laundry room in the basement, we are a zero amenities building: no gym, no playroom, no golf simulator, no pool, no sauna, etc.

@'nada: Probably higher than yours: 820 5th Ave - also a 'no amenities' building. Last shown maintenance (several years old now) for #3 was $26,160/mo, and that unit is about 6000 sf, but I don't know the breakdown of what's what in that bill.

Also: "..desire to use a common element decreases as your personal space becomes nicer" -- don't know what that says about all the new construction with long lists of amenities... :)

Aaron,
Younger generation is used to and expects amenities which starts with serious upgrade of college dorms over what these dorms used to be 30 years back. In addition, foreign buyers want amenities as that is what they are used to in their country. However, for ultra-luxury buildings amenities, pool and gym clearly add to conveniece and privacy and for larger buildings say >50 units, the incrementa cost is not that high. In addition, some of the amenities may be in spaces which will command low price per square foot relative to the rest of the building.

Aaron I’d argue in some cases the amenities are to paper over having small units OR as 300 says - it’s just more over the top amenities to placate a cohort who was raised with much higher creature comfort expectations.

A good point re: raised on higher creature comforts starting during dorm life by 300..

My college dorms were basically hastily constructed after WW2 with typical communal hallway bathrooms and old school steam heat. Brick bunkers.

Post 2000 they built a bunch of new dorms that were holiday inns for college kids. Central air, private baths, study rooms, windowed atriums, elevators, etc.

https://www.thestandardannarbor.com/amenities/

Even has in-unit washer dryer.

steve123,
Your college dorm sounds like the 9 months I spent in the U-Halls on West Campus.

Not the high end, but in run of the mill "luxury" Condominiums you get get absolutely anything you could possibly imagine:
From a "Sumac Meander" (WTF that is) to a skate park....
EXCEPT an extra square foot actually inside your unit.

300_mercer,
Why are taxpayers guaranteeing student loans so kids can live in that while broadly studying Cancel Culture?

30, A lots of issues in colleges right now with woke and cancel culture (I hope the students find a way to focus on learning and allowing free thinking) but this luxury dorm is very likely paid by rich parents without the kids taking any loan. These parents will likely pay for even first year of rent post college if the kid can't afford it - nothing wrong with that from my point of view as it puts the money back into the economy.

Seems like Aaron2 and I live in very similar buildings.

My current building is fully staffed and is amenity-light. No gyms, saunas, pools, piano rooms, playrooms etc. But we have 24/7 doorman. About 200 units in the building, some of which have been combined over the years. A lot of smaller units in the building.

There are 12 people on staff, all wear a uniform:
5 front door staff (1 concierge and 4 doormen)
4 porters
2 handymen
1 super

Pizza on the floor? Unacceptable!
In my building doormen accept deliveries and you have to come down to the lobby to get them, which doesn't inconvenience us too much - at least you are never exposed to the elements, although it means you probably want to change out of your PJs and look at least minimally presentable. One time I was expecting a delivery of perishables while on vacation. Asked a doorman to bring it up to the unit and stick it into the fridge. Of course, the doorman forgot to do that, and we had to toss out the box upon return. Was not a big deal, nothing important in there.

Doormen will not help with unloading cars, but they will load items on a cart and might help bring the cart to the elevator. They do not open doors, as building is equipped with automatic doors at all entrances.

I have not calculated how much we spend on staff per square foot or per apartment, but I feel for me the building spends money prudently.

I used to live in a Rose Associates rental building which had even more units (all studios and one bedrooms) no amenities aside from a roof deck, and a similar level of staffing, which we were also quite happy with.

@300

> this luxury dorm is very likely paid by rich parents without the kids taking any loan.
I think there is a problem that many colleges often do not allow you to select a lower amenity dorm (or charge you materially less for a lower amenity dorm) if you have less $$$ to spend. Colleges basically force majority of students into the same level of consumption as the rich kids.

>In addition, foreign buyers want amenities as that is what they are used to in their country.
Which countries have high levels of amenities similar to NYC luxury condos? I have never seen it outside the US.

"Which countries have high levels of amenities similar to NYC luxury condos"

China and HK. It is all about "face" there. Bedrooms are tiny. Staffing is cheap relative to real estate prices.

I haven't been to any ultra-luxury in China and HK. So can't say compare ultra-luxury. But I expect very high level of staffing.

Krolik,

There are university owners dorms and then there are privately owned "Student long-stay Hotels" like the ones I posted. Blackstone has a huge business in that.

Univesities should indeed try to have lower end dorms rather than inflating tuition and room costs. But if some parents want to pay for a fancy private dorm for their offspring, who am I to protest. It is their money hopefully after payment of all taxes due. In Ivies, poor/true middle class students are getting a free ride but if your parents make more than say $150k per year, you are screwed.

>> @'nada: Probably higher than yours: 820 5th Ave - also a 'no amenities' building. Last shown maintenance (several years old now) for #3 was $26,160/mo, and that unit is about 6000 sf, but I don't know the breakdown of what's what in that bill.

Seems closer to 8000 sq ft, no? The listing claims 100 ft of Central Park frontage, and the room dimensions are consistent with that. I’m eyeballing the other side at 80 ft (averaging out missing pieces).

At $26K/mo and $3.25/mo/sqft, it’s rather quotidian as far as these things go. Probably no more than $1.5/mo/sqft after you take out taxes. My place is at $4/mo/sq ft in CC’s alone. Next… ;)

>> My college dorms were basically hastily constructed after WW2 with typical communal hallway bathrooms and old school steam heat. Brick bunkers.

Ahh, you bring back fond memories. Mine still had the original furniture from the 1950’s. The problem with that sturdy gray-painted steel furniture is that not even 40 years of freshmen could wear them down one iota.

I didn’t give a rat’s ass, of course. I was simply excited to have my “own” space (shared with a roommate, of course) and living with a bunch of peers. I do recall a general displeasure at the quarters, the food, etc. from some of the more privileged students. Others knew it was all going to be crap relative to what they grew up with anyways, so they embraced it wholeheartedly.

I spent a year in a university-owned men-only, communal bath dorm (a 2 story walk-up building , circa 1955), and a year in a bath-shared-with-your-neighboring-room concrete & cinderblock dorm (c.1969). The Standard @ Ann Arbor they certainly were not (though the first dorm had a adjacent sand volleyball court). This was, admittedly, over 40 years ago. (The first dorm still exists, is still men-only, and now has a TV room, Recreational Room, Computer Lab, and laundry, which judging from the online photos are pretty minimal looking by modern standards.) Like 'nada, I didn't care - I was thrilled to be there. (current rate: $13,111 for 1 academic year).

Did someone mention Ann Arbor? How about those Wolverines?! and the Lions to boot. Very exciting year for Michigan football fans.

Oh, those Michugenas.

It’s kind of funny how my question six months ago about Manhattan co-op appreciation (or the lack thereof) eventually devolved into the merits (or lack thereof) of putting pizza boxes on the floor of the elevator.

I’m still curious if one bedroom UES co-ops don’t appreciate anymore. Do they?

I don’t have much thought about UES 1BR coops specifically, but I think the 16-year run of sideways may still have some ways to go.

One anecdote… a colleague who had bought a coop ~16 years ago upgraded to a new place recently. He bought the new place in 2022, spent something like a year renovating, and then put the old place on the market in late 2023 after moving into the new one. The listing price on the old apt was realistic, but it still took a small chop to find a buyer. I am guessing the sale will end up ~20% lower than what he paid, assuming the board doesn’t throw a fit.

One aspect of this apt’s trajectory is that, unlike the vast majority of coops bought & sold across a holding period that long, they did absolutely no work. As my colleague noted, it was already long in the tooth when they had bought it. So now ~16 years later, it makes for a great apt for someone looking to gut renovate. No concerns about throwing away a kitchen that’s only 15 years old and whatnot. And of course, the price reflects the apt being in such a condition.

Now I don’t think this ~20% decrease represents an under-market situation. Other apts in that same building show no such trajectory. Rather, it reflects what happens when you DON’T additionally spend to renovate across ~16 years. The ~16 years of market flatness has been on the back of constant market-wide renovation.

(FTR, while a 20% “loss” may seem like the end of the world to some, I doubt he cares. He has made lots of money elsewhere, it was an additional 1.25%/yr cost, he raised his family there, and it was time to move on.)

Another anecdote to share…

The apt where I had the pizza box incidents was sold about a year ago. The buyer had gone through a bunch of hoops and shenanigans to buy the place. Despite the ultra-luxury apt being only 6 years old, he had renovations in mind, with architects and designers ready to spruce it up “right”. Rich people are weird, but whatever…

Fast forward a year, and a friend who lives in the building sent a link showing that it’s on the market for sale. No renovstion, never moved in (virtually staged). To me, this is just bizarre. How do you go from hoops & shenanigans & architects & designers to “never mind” in a year? Can you not see that far ahead in life?

It then dawned on me that this apt has had 3 owners thus far in 7 years, now looking for a fourth. I know for a fact that at least two of them intended to occupy the apt themselves. However, between all 3 of them, they only occupied the apt for 6 months out of those 7 years. The longest residency was mine, at 2 years. The owner I rented from had also intended to occupy the apt, going through the hoop of selling/buying a similarly-priced apt in the neighborhoood, only to decide he wanted to move to FL a year later.

Rich people are weird….

The fate of the pizza box apt has made me think about what’s been happening to NYC. A decade ago, two decades ago, it felt like the place everyone wanted to be. If not be, at least have a foot in. Or invest in.

Now, the tourists seem to be moving on. Those that don’t truly like dense, urban living seem to have figured out they need not live such a life. Investors, after nearly two decades of having their asses handed to them, seem to no longer pop up like weeds. NYC just doesn’t seem to be in demand like it used to be.

Some difference between housing for residential use, and housing to park money for a period & nice to have 2nd or 3rd homes.

At least one owner had intended for it to be a primary residence.

I think the brokers, lawyers, and NY tax coffers made out well. That’ll be close to 40% of the value of the apt paid as transaction costs in less than 8 years, assuming it sells sometime this year. A weird way to park money if you ask me, and not really the intention of the buyers. Obviously, the place never actually became a residence or 2nd or 3rd home for any of them. More like a bunch of time, money, effort, and headache for little to no enjoyment.

Interesting note about the tourists moving in. On our ventures back to the city lately we certainly see that in midtown but isn’t the UES still residential and untouched by tourism?

When I talk to anyone under the age of 40 they wouldn’t be caught dead in the UES and are all looking at Brooklyn. Too bad I couldn’t afford to buy when I lived in Cobble Hill back in the 80s.

By “tourists”, I mean people who like to have a place in NYC in theory (as a primary residence or 2nd home) because they think it’s the place to be, but in practice they don’t like being here. It’s as if a light bulb went off in their heads — “Hey, you don’t need to live in NYC to be cool even if you dislike it. Now, even living is nowhere can be considered cool.”

Well, I wish they would start selling then.

@GeorgeP: "I’m still curious if one bedroom UES co-ops don’t appreciate anymore. Do they?"

Here's my anecdata: I've been in my UES 1BR for almost 13 years. I bought it, & did a modest renovation (new bath, kitchen, plaster/paint touchups, new interior doors, refinish floors). 1 year ago the mirror image unit 10 floors above me, in very good, move-in ready, but slightly dated condition sold for about 17k more than my purchase price + renovation costs. 8 months ago, a unit in same line as mine, but 11 floors above, in the same condition as the prior unit sold for $40k more. 5 months ago, a unit in the same line as mine, but 6 floors below me, and in need of some fluffing up, sold for the same amount as my all-in cost.

Generally, I don't see material appreciation / depreciation over the period.

Re the tourists: If they're going anywhere, it's the museums and shopping somewhere trendy on Madison. There are no 'hot' UES restaurants or clubs that they're standing in line for that I'm aware of. (and that's why I'm on the UES)

Nada You've identified two of the primary types of buyers that we deal with. One that wants the stability of ownership, and not overly impacted by whether or not it turns out to be financially better or worse versus renting.

And one that has enough money to play Monopoly in real life. I'm on my fourth transaction with one gentleman, so to your point it's been good for us, the attorneys..... Not so good for him from a transactional point of view. But he doesn't seem bothered by this, and on more than one occasion he has directly told me," I appreciate your advice, but I'll worry about that when I sell".

"At least one owner had intended for it to be a primary residence."

Intended, but it didn't have to be, and then it wasn't, and when it wasn't, for that owner it was no sweat.

>> Intended, but it didn't have to be, and then it wasn't, and when it wasn't, for that owner it was no sweat.

There sure seemed to be a lot of sweating. But what do I know about it, I’m sure you know the situation better.

>> I'm on my fourth transaction with one gentleman, so to your point it's been good for us, the attorneys..... Not so good for him from a transactional point of view. But he doesn't seem bothered by this, and on more than one occasion he has directly told me," I appreciate your advice, but I'll worry about that when I sell".

How many years has that been over? The money angle is one aspect of it, and I get that some people don’t care about burning money. But how fun is the actual process of selling / moving / buying for him — does anyone actively enjoy that? I guess it could be fun if one is not otherwise occupied with life?

" Not so good for him from a transactional point of view. But he doesn't seem bothered by this, and on more than one occasion he has directly told me," I appreciate your advice, but I'll worry about that when I sell"."

So, an educated, rational person entering thoughtfully into a transaction he deems reasonable based on his financial situation, and factoring in additional preferences important to him. Doesn't seem like much if any sweat.

Nada first transaction was 2013.

Re: "But how fun is the actual process of selling / moving / buying for him — does anyone actively enjoy that? I guess it could be fun if one is not otherwise occupied with life?"

I think that some quite enjoy the process, and that with many options available as to ways to spend their time, that is one they choose. Some people buy a new car every other year; that sounds awful to me, but whatever. All these transactions provide income to those in the industry, as well as revenue to the city, so think of it is a productive form of redistribution of wealth if you want to put a positive spin on it. It's all good from where I sit.

>> I think that some quite enjoy the process

Yeah, believe me I get that, given how often I switch. But buying/selling a home seems like a lot bigger PITA than leasing or buying/selling a car. You wanna change cars, it’s a small matter of money and a visit to the dealership. You wanna sell a home, it’s a (less) small matter of money and a lotta attention. I can’t tell you how many places I’ve seen come on and off the market over a course of *years*, trying to find a buyer, by people to whom the money should ostensibly not matter. Do some people find that enjoyable, to the tune of repeating it every 2.5 years? To each their own, I suppose.

> Do some people find that enjoyable, to the tune of repeating it every 2.5 years?

What % of people in Manhattan in your opinion are repeating it every 2.5 years?

All of the people I know (in Queens) have lived in their purchased apartments for at least five years, some of them stayed in their home until their death.

The reason for repeating the process (selling/buying) for the people I know is mostly due to job relocation and family size change.

I think significant driver to the frenzy of NYC Real Estate from 2008 thru 2016 was people who bought every couple of years

A large percentage of my business is people buying and now selling apartments with me and buying again. In the case that I reference above, this family continues to own all the apartments. That will be changing soon though.

@aaron I like your line about "anecdata.” It sounds like you hit the nail on the head. Not much appreciation, not much depreciation. I guess if you know that going in it’s alright. My concern would be when it’s time to sell and the board won’t let it go for market rate because they’re not happy with it. Then I’m stuck.

I mean makes sense, doesn't SE Manhattan price index say we are at 2014 levels right now?

Given we've had a bit of inflation since then, being flat on the index means you've lost ~29% in real terms.

>> What % of people in Manhattan in your opinion are repeating it every 2.5 years?

I’m guessing it’s a pretty low percentage of the people but a higher percentage of the sales. A 2.5-year holder will show up on the market 6x as often as a 15-year holder.

And I think the situation gets even more skewed the higher you go. Right now, there are ~500 listings at $10M+. And I’d guess once you include the shadow inventory (listed but pulled, new dev being held back, etc.) it’s closer to 1000. But there are only 4400 residents who earn $5M+. So one home of inventory for each 4.4 residents. I’m sure non-residents make up a good portion of the buying pool, but those are the very same ones who tend to hold shorter / have changes of plans / etc.

Re: "I can’t tell you how many places I’ve seen come on and off the market over a course of *years*, trying to find a buyer, by people to whom the money should ostensibly not matter. "

We have at least four apartments in our building that fit that bill. Sellers whose apartment is a seldom pied-a-terre, who put their apartments on the market every few years. I don't get it. Why would you want to keep an apartment you never use?

I counted the number of transactions the gaggle of the highest-end units in my old building have had in the 7 years since it opened, and it’s 2. An outlier, perhaps, but this is across more than a half dozen units.

>> Why would you want to keep an apartment you never use?

Maybe because it’s no sweat?

>> I mean makes sense, doesn't SE Manhattan price index say we are at 2014 levels right now?

There’s a funny intersection of that reality and people whom should not be sweating. I recently looked up one listing to see what finally happened on it. It had been bought in 2013 and was first listed for sale in 2019, at a 60% increase in a market that had been flat. Owner moved to FL. It finally sold in 2023, 4 years later, at…. the 2013 price.

@inonada I’m surprised the board approved it.

People keep cars in Manhattan. Is it entirely rational?

Its just not a big deal.

>> I’m surprised the board approved it.

It was a condo. If the board doesn’t approve, the board has to buy it.

>> I’m surprised the board approved it.

The biggest unit in that condo sold in 2014 and went back on the market 3 years later, in 2017, asking 35% more than the purchase price. It’s done the rounds with listing agents, with a price drop in 2019 to 25% above the 2013 purchase price. As we enter 2024, it’s still listed. It has now been looking for a buyer running on 6.5 years. I’m fairly confident the seller would take an offer at the 2013 price by this point.

Whatever it sells for won’t matter to the owner big picture financially — so yeah no financial sweat. But what a hassle for just 3 years of enjoyment.

>> And I think the situation gets even more skewed the higher you go. Right now, there are ~500 listings at $10M+. And I’d guess once you include the shadow inventory (listed but pulled, new dev being held back, etc.) it’s closer to 1000. But there are only 4400 residents who earn $5M+. So one home of inventory for each 4.4 residents. I’m sure non-residents make up a good portion of the buying pool, but those are the very same ones who tend to hold shorter / have changes of plans / etc.

A lot of information.

"So one home of inventory for each 4.4 residents.", is this making you conclude 2.5 years of residency?

No, just at the extremes like Keith’s one client. But I think it happens more at the highest end. Lots of money => capacity to follow any whim, no matter how foolish it may seem to others.

@nada - I think you are right that it happens more at the high end. It's not just because they have more money to burn on RE losses, but because they are also more insulated from the inconvenience.

If you have multiple homes, and you have people to deal with the minutiae of moving (beyond just movers) then it's not really much of an inconvenience to you at all.

One visit to the city you stay in apartment X, post transaction, the next visit you stay in apartment Y.

Someone else has sorted out the coned/verizon/monthlies billing/setup the wifi/setup the hvac system schedule/decorated/stocked the pantry/booked all the contractors/done all the maintenance work/etc.

I suppose at a certain level homes are almost like hotels. You can pay for a lot of magic behind the scenes to remove the friction of actually living in a space.

Re "I suppose at a certain level homes are almost like hotels. You can pay for a lot of magic behind the scenes to remove the friction of actually living in a space."

A Hollywood producer moved to DC not that long ago and sent a team of many to completely redo the chosen house and furnishings many months before arrival so that it was turnkey when the family arrived in time for the kid to start school. The reason for the move was apparently that the teenager is a promising lacrosse player, and Maryland (along with Long Island) is competitive at a higher level than LA.

We share a landscaping company with the house in question, and the manager was marveling at the whole thing. I actually went to high school with the wife, who ran in the same circle in LA with some of the higher profile Varsity Blues parents. I will give her and her husband credit for not faking their kid's talent to get into college, but wow.

>> If you have multiple homes, and you have people to deal with the minutiae of moving (beyond just movers) then it's not really much of an inconvenience to you at all.

I know that’s how it may appear to function in theory, but in practice you have to deal with the sheer square footage. Setting up 10k sq ft is just 10x the work of a 1K sq ft home. More like 20x if there a difference in terms of higher-end appliances and systems. Sure, you can (and better) outsource as much as possible. But even if you are able to outsource 90% of the work, you’re still left with 2x the work of a “normal” place.

@MCR - thats what im talking about.
At a slightly lower tier, I think that's like the idea of some of these Hotel/Residences arrangements too.
Browsing the Ritz Carlton Residences site for one of their locations outside NYC it sounds like a high end staffed condo/coop in NYC and then it adds a bunch of other stuff. Sort of like enough money for more than a doorman building but not enough money for your own personal staff?

They offer built in (and in some cases 3rd party contracted) services including: child/pet/plantcare, grocery & general shopping, chef or room service catering while you are around. Arrival prep before you arrive, regular maintenance, car & jet booking, etc.

So it sounds like for a price you can basically say "I'll be in town on Friday, have it all ready for me" and then "I'm leaving for 3 months, please look after everything while I'm away" on the way out.

@steve123 - Exactly. The lower tier is the target market for the fractional ownership model at both The Phillips Club in NY and the Ritz Carlton Residences in SF, where Mr. MCR and I are happy owners. The product is niche, but perfect for those who want a full-service furnished two-bedroom condo with every amenity on an as needed basis without having to do anything.

"Why would you want to keep an apartment you never use?"

ZIRP/low opportunity costs.

On a related note, how about this -
https://streeteasy.com/building/the-ritz-carlton/25c

Asking rent within the same range since 2006.. !

That is definitly unusual. The 2006-2019 trajectory of flat is not all that rare, but most places have had a meaningful post-pandemic bump. I wonder what’s up here.

Looking at that building, note how low the monthlies are, but then there is that "security" fee. What do you think that is about?

And look at recent sale 28G - looks like someone is creatively harvesting some capital losses.

Unless you understand something that I do not, I don’t think selling your home to an LLC where you are the beneficial owner yields a legal capital loss for two reasons. First, capital losses on residences (whether primary or secondary) may not be deducted or used to offset other capital gains because they are considered personal property. This property was never listed for rent according to SE, so it’s unlikely to be an investment property. Second, related party rules would render such a transaction as a wash sale, thereby eliminating the possibility of capital loss harvesting.

Tax code often embeds free options into certain structures. Most of these are of the form whereby the taxpayer gains the benefit of the free option. GRATs are a prime example of this, whereby if investments go up, you pass money free of estate taxes. If they go down, … well you lose the money, but there is no offsetting tax consequence. Roth IRA conversion recharacterizations are a more universally accessible form of this. You convert, you sign up to pay the taxes upon conversion, and if investment goes up, well you get ROTH-ified tax free gains. If investment goes down, well then you recharacterize the conversion back into a normal IRA and take a backsie on the taxes associated with the conversion.

With residences, the interesting thing is that the beneficiary of the free option is the government. Gains are taxed but losses are excluded. Sure, there’s the $250k/$500k exemption on primary residences. But nothing on secondary residences, and as you go up in price point, the exemption becomes less and less meaningful.

@ nada - No, I certainly don't understand something you don't; indeed, I understand FAR less! What do you make of that transaction? Why would I sell something to myself via conversion to LLC holding at a considerable loss?

P.S. - Somewhat embarrassing since I know first hand that there is no tax benefit to losses on residences. Our first NY apartment is the first instance where that delightful scenario materialized in my real estate life, even with a seven-year hold period.

I thought maybe it was being sold to a family member, but based on those numbers that could trigger a gift of equity situation with the IRS. Certainly the lower price favors lower transaction costs.... But you're not doing yourself any favors if you plan on doing an arms length transaction sometime in the future.

The registered deed in the ACRIS filing shows only a sale price of $10. (with no 'and other good and valuable consideration' statement), and the Dept of Finance page shows only a filing fee and recording fee. No real property or real estate transfer tax. Am I missing something, or could this just be an estate planning device? (which may also be tax planning...)

@Aaron - Transfer with nominal consideration makes sense to me for any number if reasons, and the public record you brought to light clears up my confusion. I wonder where SE got that $1.5M figure we see for the recent sale. Maybe a data entry glitch somewhere.

@aaron are you looking a 28g?? This is the info on the office of the registers page:

Detailed Document Information
Current Search Criteria:
Document ID: 2023122600511001
DOCUMENT ID: 2023122600511001 CRFN: 2023000336214 COLLATERAL: N/A
# of PAGES: 5 REEL-PAGE: N/A-N/A EXPIRATION DATE: N/A
DOC. TYPE: DEED
FILE NUMBER: N/A ASSESSMENT DATE: N/A
DOC. DATE: 10/25/2023 RECORDED / FILED: 12/28/2023 3:21:58 PM SLID #: N/A
DOC. AMOUNT: $1,500,000.00 BOROUGH: MANHATTAN
% TRANSFERRED: 100% RPTT #: N/A MAP SEQUENCE #: N/A
MESSAGE: N/A

@keith: Yes, I'm seeing that, but went to the 'view document' option at the bottom of the page to see the actual docs (pgs 1 and 2 of that doc, which show no other fees/taxes (and pg1 notes that it's 28G). It's a mystery to me what the $1.5m number in the summary references. (the prior sale was for $2,138,325 per the earlier records for the unit (block 16, lot 9070, if you're playing along at home). And that earlier deed did have a 'good and valuable' consideration phrase. The legal eagles on the board can explain the pros and cons of using that locution.

Such transactions are typical when placing a unit into a trust or other estate planning issues.

A change in the deed vesting need not have arms length consideration. $10 is good and valuable consideration. In fact a single peppercorn is typically enough.

>> What do you make of that transaction? Why would I sell something to myself via conversion to LLC holding at a considerable loss?

I’m not sure what to make of it.

So if prices are basically at 2014 levels why have rents skyrocketed over that period of time. Rents hover at near record levels despite falling sales prices. Odd disconnect.

Higher rents are partially offset by higher real estate taxes, cc/maintenance and interest rates. The rest is work from home related movement. Then there is a lack of supply in certain segments such as 1 bed rooms

2014 was the beginning of the de Blasio mayorality.

Higher monthly costs. Labor, energy, RE taxes, compliance with city regulations.

> So if prices are basically at 2014 levels why have rents skyrocketed over that period of time. Rents hover at near record levels despite falling sales prices. Odd disconnect.

I think you have to look at it in terms of monthlies.

RE tax, insurance, maintenance (labor portion particularly) have all gone up in the last decade.
Further, with the last 2 years of rates increases, the monthly mortgage payment for the same amount of apartment is up tremendously as well.

So for people cross shopping rent-vs-buy, even at 2014 prices, a Manhattan apartment costs a lot more on a monthly basis than in 2014. This increases the breakeven rent level where someone would decide buying makes more sense.

And then landlords are passing through all the increased costs they incur onto renters...

And finally, renters have higher incomes than in 2014 and are able to shoulder the burden.

Not all renters and therein lies the problem.

>> So if prices are basically at 2014 levels why have rents skyrocketed over that period of time. Rents hover at near record levels despite falling sales prices. Odd disconnect.

“Skyrocketed” is an odd description. Using the SE rent index of same-home re-rents, there was a 31% increase in rents since 2014. Since 2007 (when the index first starts), a 50% increase. Over these same periods, CPI increased 31% and 52%.

I believe rent increases at these sorts of rates — 2.4%/yr over 17 years — is part of the Fed’s monetary plan. Anyone expecting less, or more, is just not paying attention or willfully ignoring those who control what money means. Rent forms about a third of CPI, and the Fed will control money to keep inflation at ~2%/yr.

The Fed does not look at home prices, nor affect of interest rates on the “cost” of owning a home, in determining inflation. As such, it has become a speculative asset as far as prices are concerned. This is reflected in the fact that prices in NYC approximately doubled over a 5-year period and then went flat for the next 20 years.

In other words, you might as well have been asking “Why did prices double over those 5 years when rents only went up 10%?”

@nada - precisely

Manhattan price to rent ratio can remain seemingly irrational for far longer than anyone can reasonably "wait it out" if you are looking for some magic number to trigger your buy.

They are, in a way, like two completely different products. There are not a lot of people who rent-or-buy opportunistically. Typically all our friends either rent forever, or reach some income level where they feel they 'have to own" and then never rent again.

Your income/lifestyle/housing needs will change faster than the price to rent ratio will.

In a way it makes sense that people buy at levels that seem economically irrational as a result.

Well put @steve123

Rates where they are , empty stores still sitting, crime still a bit worrisome, makes for a poor reason to live in NYC, but there are always exceptions.

Market still clearing to some degree.
Price cuts seem to be more prevalent at Studio and 1Br , but 2BR seem to be steady

I’m seeing 1br co-ops on Park Avenue asking less than they sold for a decade ago. Brutal investments.

605 Park Ave, #17C. 2BR/2BA:

Last close: ~9 yrs ago: 30 Jan 2015, $2,168,833. Current offering price: $1,995,000, with no takers since Feb 2023 when it listed at 2,495,000. Pretty good floorplan, ordinary white brick building, not unreasonable maintenance. (And an 'entry' and a 'foyer', for those of you keeping track of these things).

That’s incredible. On the 1Br side, 1230 Park Avenue 6A sold for $580,000 in 2016, now asking $575,000. Unbelievable. What’s going on?

Isn't 605 Park kind of suboptimal in that its post-war construction rental turned 80s coop conversion?
9 foot ceilings & 80s quality interior walls. Plus what look like PTAC units for air and parquet floors. So no pre-war charm, nor modern conveniences?

E 65th probably a bit of a heavy traffic cross street as its the eastbound exit for crossing Central Park. And finally possible views from a couple windows up Park Ave, and then line of sight from rest of the windows window appears to be.. into another building.

The plus side is this is an ideal "UESider who wants a walking commute to Midtown Northeast", though that may be a dying breed.

Probably a haves vs have nots market and no one is lining up for units like this.

We experienced this recently with a listing on lower Park avenue, which we took over from another broker that was unsuccessful. Everyone is talking about inventory being In short supply. However, I would also point out that buyer activity is extremely constrained, primarily in Manhattan.

When I took a look at inventory for one bedrooms in the $700 to $800,000 price range across the upper west side, I found quite a bit of competition. I'm not sure how these inventory numbers stack up year over year? However, I think the reason many of them are languishing on the market is the absolute dearth of buyer activity.

Brooklyn has been another story for the most part.

Keith Burkhardt
TBG

@Keith Yes, younger people I know definitely looking at Brooklyn and have no interest in Manhattan, particularly UES. I wonder where the buyers, if any, for UES 1brs will come from in the future? We were interested but so turned off by the co-op process. And we ain’t young!

@George/Keith - I wonder about the NYC 1BR (and to a degree studio) apartment sales market future generally. For a long while people would buy these with the intention of trading up as their RE appreciated, they made more money and they coupled up / maybe had kids.

Given low RE appreciation in NYC for what is soon to be 20 years, and the end of ZIRP era rates.. who is the marginal buyer for these types of units? That is - who truly plans to live in a small apartment for 10+ years?

In my condo, the studio/1BRs are almost all owned by investors for rental. Where does that leave studio/1BR coops?

Would this lead to even more competition in the under built 2BR market?

In my personal history I had 2 bouts of irrationality thinking I'd buy in a studio in 2007 and later a 1BR in 2016 that thankfully washed away. Can't help but imagine being stuck underwater in a small apartment with my wife through GFC or COVID.

@Steve: Parquet floors = *post-war* charm!

But yes, a slightly noisier location, but not the worst, certainly. I have friends on a much busier street, and they've got terrific windows -- their unit is very quiet. For the younger, unless you're dropping lots of money, you aren't getting 10' ceilings anyway (and the kids might not have had them growing up wherever they did, so won't miss them). In my experience, even the white brick 1940s-1960s era buildings are generally better built (block/solid walls, better designs, etc.) than much that came after -- there are certainly some stinkers in the lot though.

The big plus of the 'lower upper east' is indeed the walk to midtown work. The two newest people on the floor of my co-op (one in a 1BR, the other in a studio) are younger (early 30s) finance types, also midtown workers. They like access to the midtown amenities (which for them is often business oriented - they're generally not taking clients to the LES or Brooklyn). I think there's still a trade-up model, but it may be a trade-out model, with marriage / kid / second home purchase (whichever comes first) resulting in them leaving NYC. And they keep the apt as a pied a terre for the days they do have to work in the city.

On some of the one bedrooms, such as in 67 Park avenue. You can buy with 30% down for about $700,000/$5200 per month. Or rent it for between $4200-4400 per month.

Keith Burkhardt

Whatever is going on with 1BR coops in the UES is rather tame compared to the high end. Here’s an example of what’s happening by there — a drop of 36% compared to a 2015 contract price in new dev:

https://streeteasy.com/building/432-park-avenue-new_york/84a

The seller in this case couldn’t care less about the money on this pied-a-terre — he’s one of the 50th richest people in the world. So it serves as an example of “just sell it at market price already so we can be done” without immediately dumping it (it’d been on the market for 3 years).

This was quoted in a broader article about litigation and woes in the building, but as the article notes the woes are not unique to the building but rather present in comparable buildings:

https://www.wsj.com/real-estate/luxury-homes/432-park-avenue-lawsuit-sales-0302e9fb?st=49vw613kdea0gdi&reflink=article_imessage_share

That's brutal! At least his agent was able to negotiate a 2.7% discount on the original purchase ; ) These Uber wealthy buyers really need to embrace my commission rebate model... Other than the views, it's kind of a bland apartment in my humble opinion.

One thing about the mid century buildings is they tend to have good closet space.

So I used to work in a tower with views into the building, and one thing I noticed (now confirmed by a sponsor listing) is that there were units left completely unfinished.
https://streeteasy.com/building/432-park-avenue-new_york/29e?showcase=1

Not sure if this is a common high end thing or not, but was quite bizarre to me. I am talking bare concrete floors and ceiling.

Not that uncommon Steve. Those are delivered in what they call white box or designer ready.