UrbanDigs Toes right on the money with this article...

Nice. I think this article is on the money also. My place had two offers turn into a bidding war after less than a week on the market. Things aren't as bad as most here would have you believe.

wow she idolizes suze orman as a "financial guru"

stopped reading after that

Cassie, congratulations......Things aren't as bad as most here would have you believe..and the media would have you believe also

It's the media's fault. Them and the Trilateral Commission. And the Bilderbergers.

so she was in a real estate forum which said real estate prices will never go down.
now, that never happens - so this must be true

buy NOW before you get priced out FOR EVER

n

eric.....I like this part of the commentary the most....

Could prices dip a bit this fall because there is more inventory on the market? I don't have a crystal ball. But I have a lot of buyers out there looking every weekend, just waiting for the right deal. If prices dip even a little bit, they are going to pounce.

She misses the point that prices in nyc has risen by multiples while incomes have stayed relatively flat. Also leaves out who those new people are moving to nyc...ibanks won't be hiring and imigrants aren't buying million dollar apts on the upper west side.

There are a lot of families here but the over crowding of city schools is worrisome to them and when bankers and lawyers and other professionals can't afford private school they start looking at other options.

I love this city and have been here for 20 years, I also have a young child. Long term if you love it here you might as well own your place. Short term though prices will come down. Read all the cheery stuff you want, at the end of the day people who live and work here have to be able to afford the real estate.

The only ones not to get the memo are clearly Brokers. Shocking. I wish anyone who buys in this environment the best of luck, just remember that your realtor will tell you anything to close the deal.

Cassie, would love to see a link to your listing - if only for an example of a great apt. that has induced a bidding war in this frozen market.

steveF: more anecdotal evidence (do you really expect me to take a broker's word that there is a bidding war on a property she is representing? REALLY?)

can you please show me a non-broker non-builder financed data point about stabilizing real estate prices in manhattan (let alone going up)?

I'm not a broker. I used a broker though, two guys. I'm a little worried I'll jinx myself by posting the listing before the contract is signed. What are the chances the buyers will read this thread?

cassie - leave it alone until your deal is DONE! Not worth it.

Cassie: please do post your link after it closes.

after its in contract is fine

I guess all we needed was for a broker to tell us the market was fine. Now we can get back to the business of buying $4 mil condos with our unemployment checks.

urbandigs - you go on vacation and look what happens! For a second I thought that you were drinking the KoolAid - good to know that you are still looking at the fundamentals (as noted in the comments of your blog).

We just sold our UWS 2BR/2bath for about 18% more than we paid 2 years ago. So I agree that it's not all bad news. Granted half of that was taken by taxes and broker fees, but we were still very happy.

585, likely you got a great deal 2 years ago, or a really great deal now.

most likely, both.

Hmm.... it takes a "great deal" to generate a 4% annual return....

"Things aren't as bad as most here would have you believe..and the media would have you believe also"

Yes, here come the, uh, brokers to set the record straight!

Buy now or be priced out forever!

October - ha! Thanks for laugh. Im off tomorrow AM. No kool aid for me. You know that by now!

doomers worst news = any (potentially) good news

You mean there's something wrong with the Kool Aid?!

I'm really not a broker. I'm buying and selling a place so I came on here to see what the market is doing.

I'll put up a link when I'm in contract and you'll see I'm not a broker. True story.

I'm definitely into shorting the nyc real estate mkt in the near term. That said I don't believe it's all bad, people need a place to live and some people are simply buyers not renters. What I do believe, and this forum has shown it, is that most people haven't digested the new market conditions.

Finance still runs this city. Certainly there are other industries, but this is the one with the single biggest impact to the most locals, and with the biggest ripple effect.

--Personal wealth has evaporated in the equities markets.
--There won't be bonuses of any substance.
--Not a single major financial institution has an appetite to hire
--Dollar's finally going up and the EU has started to feel the recession contagion.

Add all those things up and if you've got a modest apartment to sell then a huge segment of your potential buyers have just dropped out. Truly if you are looking to sell a place do it now before everyone understands the new reality. And if you've got a secure job and want to live here for the forseeable future, then by all means go out and buy a place.

> doomers worst news = any (potentially) good news

Junkman, that you call THIS "news"... well, it shows why you also trust the Toren sales brochure for your "facts"

"What I do believe, and this forum has shown it, is that most people haven't digested the new market conditions. "

I think you hit it right on...

I agree the housing market in NYC is not all bad.....yet.... It will just take a few months more for reality to catch up. I was on the fringe thinking of buying on a 10-15% dip, so were some of the people I know personally. Now we all think it needs to fall more than that... Sellers out here - if you can sell at a reasonable price, please do. I don't wish losses to any of the hard working citydwellers out there. My best wishes to you. Buyers - beware... the multiplier effect of all thats happening around us has to show up in pricing soon. Prices will dip a lot. Even if they dont, they are not going up anytime in the next 2-3 years. You will get your time to buy it at a relatively affordable level. After Bear, now with Lehman gone, its ugly. Its like 2% of the city population out of the market. LP1 already laid out the logic. I wish these real estate seminars and publications stop pushing new buyers into potential losses.

eric_cartman, I think we actually overpaid by about 5% when we bought 2 years ago. I did not know about streeteasy back then, so I did not do any homework on comps in the building - shocker that my broker neglected to do it either (2 apts sold right before us for less money and were better units for sure). So I think we got all the luck (and a lot of it) on the sell side. Incidentally, when our broker told us the price he wanted to list it for I said he was crazy and had no chance of getting it. Luckily I was wrong. So, brokers are great sometimes.

any (potentially) good news = where do you find it?

Notice that the guy who actually writes urbandigs has disowned this post...

http://www.streeteasy.com/nyc/talk/discussion/4996-everyone-is-walking-around-like-they-have-just-been-tasered

"that is why I dont go to new dev conferences. Very biased and to me, simply a sales pitch to unsuspecting brokers who don't quite GET IT.

Toes got her share for that article, and there were many things I disagreed with, posted in comments section. Its not her fault, she was writing on what she took from the conference and what shee sees in her little world of real estate. I know she has tons of buy side demand, and continues to get more calls, so its hard for her to agree with some of the macro forces I discuss constantly.

Some of the comments from speakers at the conf were outright ridicoulous, but can we expect anything less? No. Foreigners already bought, confidence trumps the currency trade, and the recession is now global. Done & done. "

I don't know why people don't listen to what real-estate brokers are saying when they say that the collapse of most of Wall Street won't have an effect on Manhattan real estate, since global buyers are marching in right now.

Fools.

"> doomers worst news = any (potentially) good news

Junkman, that you call THIS "news"... well, it shows why you also trust the Toren sales brochure for your "facts"

Careful nyc10022, if you keep confusing me with Junkman I will start refering to you as nyc90210

The "pent-up buy-side demand argument" is important, but it has much less effect on price than you might think. There are complex economic models to explain this relationship, but I prefer the following simple illustration: There is huge demand for sesame noodles on the Upper West Side, and many residents could afford to pay $100 for a portion. Yet Ollie's, the market leader, charges only $4.75. In other words, the fact that many people with lots of money want to buy your product is just one factor among many in determining price. (And yes, I know that the supply of classic sixes is much less elastic than the supply of sesame paste and scallions, but still...)

Wow, sorry JuiceMan, you are absolutely correct. I'm sorry I did that. I'd hate to be compared to JunkMan as well...

I've been looking at various properties, then I think to myself that I'll wait a bit, look for the next small price chop or a stale listing and ask for 10% less.

And invariably, the a few looks later on the broker's site, and it is listed as in contract.

I'm an investor with a huge inventory who DESPERATELY needs the NYC market to stay strong/get stronger, so I always look at things with rose colored glasses. That said, I think the combination of:

A) Collapse of the financial sector
B) Strengthening dollar, reducing the value for foreign investors
C) The tightening of the availability of credit
D) The glut of new 'luxury construction'

will indeed cause a significant drop in the luxury Manhattan market.

Granted, there are a number of reasons to think Manhattan actually WON'T sustain a significant hit. The fact that NYC is the most alluring magnet for people from all over the country, the fact that during the bubble the market here wasn't driven up by artificial speculator demand the way it was in other parts of the country, and the fact that the City is as safe and desirable to live in as it has been in generations, all mitigate in favor of Manhattan being able to weather the blow. All that said, the collapse of major banks and concomitant significant loss of employment/bonuses for the wealthiest New Yorkers, coupled with the devaluation of the Euro viz. the dollar, eliminates the two primary groups that kept the NYC luxury market afloat. Add to that the difficulty in obtaining credit even for those who want to buy and the enormous increase in inventory as a result of the construction boom, and I think anyone would be foolish to think Manhattan luxury prices won't dip. Will there be an outright collapse in values the way REALLY overdeveloped and less desirable areas like Miami or Vegas has suffered? No. This is still Manhattan, the crown jewel of the world - and, being an island, our space is limited no matter how tall the skyscrapers can build. But a 'correction' of sorts is bound to happen.

What you don't hear people talking about as much is the stability of outer-boro, off the radar neighborhoods. Conventional wisdom suggests that in a tough market, those on the fringes of the economy would be more likely to see their home values plummet. But I think (and hope!) that's actually less likely to occur than a collapse in prime Manhattan prices. Again, unlike the rest of the country, prices in decent, but non-prime neighborhoods in Brooklyn, Queens and the Bronx were NOT driven by speculators during the boom, but did increase significantly. This, I believe, was driven more by an urban rennaissance and VAST improvement in the livability of neighborhoods than any artificial, easily reversible reason. In addition, prices may well have been artificially LOW prior to the boom. If the average 2-BR apartment in a decent, safe, but non-fancy neighborhood in the outer-boros is in the $175 - $225K range, that's a very reasonable sum. More importantly, it's an affordable sum for your typical $40 - 50K per person, per year dual income household. Municipal and other government workers are not losing their jobs, and, barring a major economic collapse, most other blue collar workers aren't losing their jobs either (even today's 'high' 6% unemployment rate is significantly below what was considered 'full employment' a few decades ago.) Ironically, it's those with the most money who run the risk of suddenly finding themselves unable to sustain their lifestyle and homes. Slow and steady wins the race.

SomeonewhoKnows "Municipal and other government workers are not losing their jobs, and, barring a major economic collapse, most other blue collar workers aren't losing their jobs"

Are you telling me that, Municipal and other government workers, are the ones buying, $700.000- 1M new construction condos in Brooklyn and Queens. Do you have any idea how much money a cop or fireman makes. Trust me I lots of friends that are municipal workers and I assure you they are not buying those units, unless their spouse make a lot better money.

Neighborhoods like LIC, Williamsburg, DT Brooklyn, Cobblehill, JC, Hoboken..... have been developed with wall street money in mind. Rents in LIC for a 2 bed/ 2 bath go for $3500-4000/month. How many cops and firemen do you know that could afford that. No way Jose. I'm not buying your fringe analysis at all.

SteveF. I don't buy it. If you have all these buyers loaded in the barrel waiting to "pounce" when prices dip just a little bit, what's going to stop them from waiting just a little bit more for prices to dip a little bit more? And on and on until prices have dipped substantially?

Prices have already dipped on many properties. If sideline buyers are so tense and eager, why haven't they bought?

I agree that there are people on the sidelines with the money and intent to buy, but the economic news is bad and getting worse. There's really no question about that. This is why real estate prices drop -- no one wants to buy for more today when they think they can buy for less tomorrow. Until the deals are undeniably compelling (and sellers wake up to the new reality), I don't see the majority of buyers "pouncing" anytime soon.

Most uniformed city workers make more than $40-50k. More like $70-80k.

I believe its a fairly small share of city workers that are uniformed...

But the bigger point is, even on 70-80k they can't afford those prices. And to say that there was no outer-borough speculation... thats just wrong...

Uh, DCO, apparently you didn't read my analysis at all before you bashed it.

I'm not referring to $1M Queens condos, and I made that abundantly clear in the last post. I wasn't at ALL talking about outer-boro 'prime neighborhood' (i.e. LIC, Park Slope, Williamsburg, etc.) prices being stable. On the contrary, I think that if/as the economy continues to worsen, it is indeed these hyped up, virtually-Manhattan-priced fancy-shmancy outer-boro properties that have seen an extraordinary run-up in values in recent years that are likely to take as big, if not a bigger hit, than Manhattan new construction.

What I was talking about in the previous post, and which I in fact delineated very clearly, are the vast swaths of Brooklyn, Queens, the Bronx, and Staten Island - where the vast majority of NYC's 8 million residents live - in which your typical 2-BR apartment in a decent residential, but non-chic neighborhood runs anywhere in the $175 - $325K range. While it's true that those prices are significantly higher than what comparable apartments in those neighborhoods were going for before the boom, that is an increase that I believe IS sustainable even if the economy does continue to falter (barring a catastrophic depression of course). Because for blue collar workers making anywhere from $40 - $80K a year, and especially in a double-income household, $175 - $225K is a reasonable sum to pay and afford for a family apartment. If anything, these types of properties were UNDERPRICED before the boom, and the boom has corrected those figures to the appropriate numbers. There has not been a glut of new construction in outlying areas as there has been in Manhattan and prime outer-boro areas, and yet the desirability of these neighborhoods has increased as urban living becomes a more attractive option for working families who, in previous generations, considered fleeing to the suburbs the pinnacle of the American dream.

This analysis has already been done by city government and other sources. The short answer is, across the entire city, residents can't afford local prices.

And, btw, a one bedroom in trump village brooklyn, a hair away from the projects, as far out on the subway as you can get, goes for $200k...

> If anything, these types of properties were UNDERPRICED before the boom

Ok, do you actually live here?

SomeonewhoKnows- I'm sorry and you are right I didn't understand your definition of fringe. I agree that those high end areas in Brooklyn and Queens will see large decreases. I'm just not sure that other areas located "deeper" withing the borough where to low and are now corrected. Perhaps they just look like that because all of the desirable ares just way ahead of themselves. Nonetheless, again I'm sorry and I did jump to conclusion.

LICC- I'm I to assume that, you are in agreement, that uniformed municipal employees, are unable to afford those areas. I do agree that their salaries are more in the range you stated. It's still no where near enough to buy in these areas. Unfortunately these lower paying jobs are the one that are the most secure.

NYC -

I was born, raised, and have continued to live on the Upper West Side my entire life. My inventory of real estate, however, is concentrated primarily in those non-chic parts of the outer-boros I referred to in my post. Yes, my heavily leveraged position may well influence my take on things, but I really don't think asking blue collar workers making anywhere from $70 - $130K combined (in a dual income household) to pony up $200K or even $300K for a 2 or 3-BR in a decent neighborhood is asking them to stretch themselves too far. As DCO pointed out, those lower paying jobs are indeed the most secure. Though on the whole, the values of these apartments have increased by a greater percentage than their 7-digit cousins in Manhattan, I really think (and hope!) that the numbers there are far more sustainable than values in much more heavily desired Manhattan, and CERTAINLY, as DCO pointed out, a helluva lot more likely to retain value than the incredibly overpriced glut of condos in Williamsburg, Dumbo, etc.

I wonder what Toes will think if Lehman does files BK tonight.. no impact on Manhattan RE?

Come to think of it, Lehman had been acting like a 'home owner' in denial over the price of their house, looks like the market has shown them their real value..

You know, after major crashes there is always an article or two folks point at to show "wow, folks were really THAT stupid".

I think we found that article....

;-)