Comp shows market movement in prime Greenwich Village

I don't count offering something for basically the same price as somebody paid anytime during 2007 as market movement. The fact that they listed it at $1.695 is irrelevant - that listing was overpriced.

The movement is to the previous closing kspeak, not the asking price they couldn't get. If you ask the same you paid, that means two things:

1. If you get the exact same price you paid, you are out 6% in broker fees, plus transactional costs, plus inflation.

2. In a declining market there is strong down pressure on asking prices, meaning that it is highly likely that they would be willing to accept an offer 5-10% below this ask even today.

So I am comfortable saying this represents movement.

"I don't count offering something for basically the same price as somebody paid anytime during 2007 as market movement."

You're kidding, right? Add in all the transaction costs, and these people are in for a huge 6-figure loss (if they can get that price).

"The fact that they listed it at $1.695 is irrelevant - that listing was overpriced."

Really? They didn't seem to think so.

"The movement is to the previous closing kspeak, not the asking price they couldn't get."

>>> Exactly my point. They're trying to get what they paid for it in 2007 less $5,000- I don't think this is realistic. That's basically the 2007 price.

"The fact that they listed it at $1.695 is irrelevant - that listing was overpriced. Really? They didn't seem to think so."

>>> Clearly they did because they reduced the price !!!

"In a declining market there is strong down pressure on asking prices, meaning that it is highly likely that they would be willing to accept an offer 5-10% below this ask even today."

>>>> They might, and probably will. But that's still an assumption - not demonstrating movement directly. If you're going to create a post saying "demonstrating" market movement, then, by definition, it should be DEMONSTRATED, not implied.

"If you get the exact same price you paid, you are out 6% in broker fees, plus transactional costs, plus inflation"

>>> Clearly the seller is going to lose money - thanks for the transactions 101 lesson. But that is not the issue at hand. I never said they wouldn't lose money on this.

Note, I am NOT arguing that real estate is not declining - I think we're in for some big declines. I just think to point to somebody who basically is listing their place for what they paid for it in 2007 (less 0.3%) is a really terrible example of demonstrating market movement. That's somebody who is trying to hold their 2007 price and 2007 prices set records!!!!!

kspeak, you're parsing in a silly way. If you agree that these people would lose around 10% of their investment on the deal even if they got the price they are asking, which you agree they won't (and which they almost assuredly know they won't) then you have pretty much conceded that this demonstrates movement. Is it the best demonstration of movement imaginable? No. But I live on the Gold Coast and this is one of the last places to decline so I am hyper sensitive to movement.

happyrenter
26 minutes ago
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So I am comfortable saying this represents movement.

how can it be movement if a buyer who purchases in 2008 pays the same as a buyer in 2007?

lol, ootin, apparently you didn't read the conversation.

"how can it be movement if a buyer who purchases in 2008 pays the same as a buyer in 2007?"

>>>> That's exactly my point. I don't think I am parsing, I just think listing something now for what you paid in 2007 doesn't show anything other than the fact that the seller has NOT accepted a new reality.. Sure, you can speculate that they'll accept less than asking, but then, by definition, it's not demonstrating anything.

I think ootin did read - I think he agrees with me. Bottom line: they are asking the 2007 price.

By the way, inflation adjustment alone means that asking the same price you paid represents a loss. I assume you don't disagree with that.

No, I did read the conversation.

Price today = price yesterday. Same price. S A M E P R I C E

Kspeak. you seem to think I am trying to say something other than what I am trying to say. I am not saying that this is evidence of "a new reality" (whatever the means). I am simply saying that when you are willing to take a 10% loss on an investment, that means your investment has lost money or, in other words, that the market for your product has deteriorated. That's all.

We should see what the close is at - quite possibly will be under the new ask. However, transaction costs are *not* a factor in any market movement discussion. Not every buyer in prime greenwich village bought in 2007 - in fact, most didn't. So, when talking about the entire prime greenwich village market, transaction costs for 1 flipper aren't an issue.

That 1 couple made a bad choice. Its not indicative of the entire market though.

"By the way, inflation adjustment alone means that asking the same price you paid represents a loss. I assume you don't disagree with that."

>>> I suppose it depends upon the time frame. If you are comparing 1985 to today, it makes sense to adjust out inflation. But one year ago? Insignificant. Besides, I am not sure there has been inflation in 2008. You'd have to go category by category but pretty sure that in September - October of this years prices for most things (food, energy) fell way below 2007 levels.

I'm not trying to pick at you here - I just think it's funny to create an entire thread saying you demonstrated market movement when you haven't. It would be one thing if it was an existing thread about market movement and you said "Here's a weak example of somebody listing for a tiny tiny tiny bit less than 2007 and I bet they'd take less."

I'm a bit confused, tech guy. Are you saying that people who bought in years past didn't have transaction costs? When I sold my apartment in 2007 I certainly included the transaction costs I had paid in 2002 in calculating the return on my investment.

kspeak, i apologize if i offended your sense of streeteasy etiquette. As to inflation, you are simply wrong. Inflation of around 3% this year (i can go look it up if you want the exact numbers).

If I bought a bar of gold from Monex and sold it back to them same day, I'd lose money on transaction costs. If I bought MSFT on the NASDAQ and sold it back at the same price, I'd lose money too. But, as the same price, the next buyer would be paying the same price I paid.

What I object to is suggesting that this one specific listing speaks (either well or negatively) about "...market movement in prime Greenwich Village..." as a whole. No matter what the listing, it's pretty idiotic to extrapolate an entire area's market movement based on one singular listing, regardless of whether it shows a bullish or bearish tendency. It's just one data point, nothing more, nothing less. It's like making an argument about market movement in the entire prime UWS based on 15 CPW.

agree

"Clearly they did because they reduced the price !!!"

04/11/2008 Previously listed in StreetEasy by Bellmarc for $1,695,000
07/16/2008 Bellmarc listing unavailable at $1,645,000
11/08/2008 Listed in StreetEasy by Corcoran at $1,495,000

They thought it was too high after it didn't sell for 7 months. Slow decision makers.

More sage words from tech_guy:

"transaction costs are *not* a factor in any market movement discussion."

They most certainly are a factor in EVERY market movement. If you borrow money at 5% and invest it at 4%, are you saying the cost of borrowing is not included in your total return?

If so, that's ridiculous. Transaction costs are a huge part of the expense of buying real estate. They must be amortized over the length of the transaction to obtain the true price paid.

"Not every buyer in prime greenwich village bought in 2007 - in fact, most didn't. So, when talking about the entire prime greenwich village market, transaction costs for 1 flipper aren't an issue."

1) Who said they were "flipping"? Seems not to be the case.

2) The transaction costs are the same for everyone, regardless of when they are incurred.

"That 1 couple made a bad choice. Its not indicative of the entire market though."

1) How do you know it's a couple?

2) Those prices ARE indicative of the entire market - unless you can prove otherwise.

"it's pretty idiotic to extrapolate an entire area's market movement based on one singular listing, regardless of whether it shows a bullish or bearish tendency."

"Single listing," not "singular listing." 15 CPW would be "singular." Nonetheless, we know you own in the WV malraux, but except for extreme outliers (like 15 CPW), markets tend to move in tandem.

"It's just one data point, nothing more, nothing less."

Aggregate data points make up the universe of data. 41 5th Avenue (I looked there a few years back) is a nice building very indicative of what people expect for that area. It's not 15 CPW, so to say that "It's like making an argument about market movement in the entire prime UWS based on 15 CPW" would be incorrect. 41 5th is pretty fungible with a lot of buildings in that area.

interesting contribution stevejhx

among other pieces of wisdom:
1 - questioning if the buyer was a couple or a family or a single person
2 - clarifying single vs. singular

the rest of the statements are even odder. One listing is indicative of the market?

Bottom line, price didn't change in a year. Yes, that is deflationary. Certainly, just for the one listing, it indicates prices couldn't be justified to rise. Does it indicate that prices are dropping. No, not at all. Are prices overall dropping - yes I believe that they are. Does this listing prove it? Again, no, not at all.

["transaction costs are *not* a factor in any market movement discussion."

They most certainly are a factor in EVERY market movement. If you borrow money at 5% and invest it at 4%, are you saying the cost of borrowing is not included in your total return?]

You think mortgage interest is a transaction cost? I thought you claimed to know a thing or two about economics?

Of course transaction costs should be considered for individuals. But we're talking about market movement in prime greenwich village. The fact that 1 couple has 10% transaction costs amortized over 1 year instead of 10 years doesn't mean squat for the rest of greenwich village.

"One listing is indicative of the market?"

How could it not be, if it's part of the market and is not an obvious out-of-the-bell-curve property?

"price didn't change in a year."

Yes it did, and by an even greater factor when transaction costs are included.

"Does it indicate that prices are dropping. No, not at all."

How can you support that and then say "prices overall dropping - yes I believe that they are"

"Does this listing prove it? Again, no, not at all."

It doesn't prove it entirely, but it does partially.

Whether they thought the apartment was fairly priced at $1.695mm or not is really irrelevant - the point is it WAS overpriced because it didn't sell. Saying the price was slashed to $1.495 mm means prices have fallen whatever percent is stupid (that's like the people who buy things that are "on sale" at a store just because it's "on sale" when they may have been able to buy in regular price at another store for less money")

I agree with TechGuy - transaction costs are NOT a factor when looking at market movement. If you buy something for $1,000 and pay $50 in transaction fees, then sell it to me for $1,000, I don't really care that you only got $950 after fees and lost money; I only care what I paid. It matters for the seller's ROI analysis but not to the market.

As for what inflation is, I said I wasn't sure, but that's not really the point. It's insignificant. It's just completly ridiculout to point to a listing in 2008 that is the SAME PRICE AS 2007 and call it movement

stevejhx
6 minutes ago
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How could it not be, if it's part of the market and is not an obvious out-of-the-bell-curve property?

:1 listing out of how many? 1 listing where a number of other factors could be involved

"price didn't change in a year."

Yes it did, and by an even greater factor when transaction costs are included.

:No, the price last year is identital (within a couple tho) to this year.
:A buyer today would pay the same as a buyer yesterday.
:If it sat on the market for a full year at the same price, would you consider that a price chop?

"Does it indicate that prices are dropping. No, not at all."

How can you support that and then say "prices overall dropping - yes I believe that they are"

:I believe based on other market factors that prices are dropping, not because one listing showed that the price of an apartment is the same as it was a year ago.

"Does this listing prove it? Again, no, not at all."

It doesn't prove it entirely, but it does partially.

:Proofs are not partial. They aren't even partially partial. Because I'll show you another listing that "proves" something else and then you'll have two proofs that contradict each other. That isn't proof.

"You think mortgage interest is a transaction cost?"

Transaction costs refer to many different things, and yes, mortgage interest is a transaction cost.

Proof: If you take out a mortgage and pay points, is that a transaction cost?

Yes.

What are "points"?

Prepaid mortgage interest.

Ergo mortgage interest is a transaction cost, albeit a long-term one.

"But we're talking about market movement in prime greenwich village."

Doesn't matter if it's prime Greenwich Village or Lower Slobovia. Markets move in tandem, and transaction costs are part of that movement.

"The fact that 1 couple has 10% transaction costs amortized over 1 year instead of 10 years doesn't mean squat for the rest of greenwich village."

It most certainly does. No single property exists in a vacuum. Prices all rose at the same time, and they are all falling at the same time. If a neighborhood is considered a micromarket, then Greenwich Village will behave as a whole more closely than Manhattan as a whole. Therefore, since we're talking about 1 property in 1 micromarket with a very small universe, one data point is much more significant than it would be for the entire United States market.

"Proofs are not partial."

Really? Google "partial proof" and get back to me.

"Proofs are not partial."

Really? Google "partial proof" and get back to me.

ok, so I googled "partial proof". What exactly was I supposed to learn? What did you learn when you typed it in to the search box? I can google stevejhx and I see a lot of postings on streeteasy, a couple links to spyware, your real name, and even where someone referred to you as Barney Frank. Now what?

There's no point arguing with you ... I'm not sure if your intention is to always be right, or to always be angry. A couple of moments of reflection, maybe a little "time out" might serve you well once in a while.

And still, I didn't get a response to this more direct point:

Prior poster: "price didn't change in a year."

You: Yes it did, and by an even greater factor when transaction costs are included.

Me: No, the price last year is identical (within a couple thousant) to this year.
:A buyer today would pay the same as a buyer yesterday.
:If it sat on the market for a full year at the same price, would you consider that a price chop?

I agree that this price point seems to show that the sellers are trying to cling to a flat price point. It would be more impressive if the listing price was $1 million or less. Now THAT would show movement.

Points are transaction costs. Interest isn't. Until you learn these simple economic concepts that everybody else takes for granted, nobody will listen to your economic theories.

Amortized transaction costs still don't matter when analyzing the market. A buyer doesn't care if the comps they look at were from people amortizing transaction costs over 1 year, 10 years, or 50 years. Until you learn this simple concept, nobody will listen to your housing theories.

You could be right about the direction (it is a 50-50 shot after all) but having non-sensical reasons for why you believe what you believe discounts everything else.

"No, the price last year is identical (within a couple thousant) to this year."

Even if the price were the same, there is inflation, and transaction costs, both of which affect the real price.

"ok, so I googled "partial proof". What exactly was I supposed to learn?"

That they exist.

spyware? Don't know how.

For any single data point you give me showing the market going either up or down in a specific market, I can find one that exhibits the opposite point of view. A singularity, no matter how "fungible," is still that. Of course, it goes without saying that I recognize the general state of Manhattan (and specifically West Village) residential real estate market movements in the current economy - there's no disagreement on that point - but no matter what you say, one apartment (no matter how representative you say it is) is not a market movement trend, no matter how much you elaborate and try to convince us otherwise. And I know 41 5th avenue quite well - I used to own a two bedroom unit there.

"Points are transaction costs. Interest isn't."

Full proof:

1. Points = prepaid interest.

2. Prepaid interest = transaction costs.

3. Prepaid interest = interest.

4. Interest <> transaction costs.

Excellent, Mr. Computer Programmer Guy! Excellent!

"Until you learn these simple economic concepts that everybody else takes for granted, nobody will listen to your economic theories."

I don't care if anybody listens to "my" economic theories. They're not even "mine" - they are accepted economic theories.

"Amortized transaction costs still don't matter when analyzing the market. A buyer doesn't care if the comps they look at were from people amortizing transaction costs over 1 year, 10 years, or 50 years. Until you learn this simple concept, nobody will listen to your housing theories."

In fact, amortized transaction costs enter into every rational buyer's mind, which is why it is commonly accepted that it is not worthwhile to buy a place to live with a threshold to live there of less than 7 years: it can take up to that much time to recoup all your transaction costs.

But of course you are of the theory that - transaction costs excluded - it makes no sense at today's prices to buy an apartment to rent it out to a third party because you'd lose your shirt (even with all the tax "benefits" included) yet it makes absolute sense to buy at today's prices to rent that same apartment to yourself. Arguing with that, and your contention that amortized transaction costs do not affect the market, and that prepaid interest is a transaction cost but interest itself is not, and it seems hopeless to continue.

Indeed, I even provided you with a mathematical example of how - not even adjusting for risk - your contention that there is a "tax benefit" to owning is incorrect. You choose not to answer that one, either.

"I don't really care that you only got $950 after fees and lost money; I only care what I paid."

That may be true for you, but most people when they make an "investment" (which owner-occupied residential real estate is not) consider not only what they are paying for an asset, but how much they can sell it for.

Moreover, there are transaction costs on the buyer's side AND the seller's side. Among the buyer's side transactions costs are attorneys' fees, sometimes mansions tax, sometimes mortgage tax, closing fees, etc. And on the seller's side there is transfer tax, real estate brokerage fees, stamp tax, flip tax, capital gains tax. It's a huge amount of money.

"They're not even "mine" - they are accepted economic theories."

Nobody else accepts that my monthly mortgage payments are a transaction cost on my apartment.

"Indeed, I even provided you with a mathematical example"

The first thing they teach you in mathematics is you need a common language, definitions, axioms that are universally accepted as true, before you can build proofs on top of that. The real world has such a set of axioms - your own redefinitions of everything (see above) mean that your proofs are meaningless in the real world.

"Excellent, Mr. Computer Programmer Guy! Excellent!"

I bit my tongue the last time you made a jab at my profession, but now I'm not holding back. You're a *typist*. A half step above a secretary. You should learn that saying about glass houses. Better yet, you should stick to typing because your economics is clearly and severely lacking.

Thank you for demonstrting that transaction costs do exist. Yes, they are real and they are matter. It's just making me upset how stupid the argument here is. You're saying the market moved because somebody bought something for X in 2007 and then is trying to sell it for X-negigible amount in 2008. When I pointed out that this wasn't really significant movement, you said "well, it is because of transactions costs."

Do you realize I could go buy a place tomorrow for $1 million and list it the very next day for $ 1 million. If my transaction costs were 6%, does that mean the market moved by 6%????

This is so stupid it's making me upset.

Bottom line, for the 10th time. Somebody listing a place for ALMOST THE EXACT SAME PRICE THEY BOUGGHT IT FOR AT THE PEAK OF THE MARKET DOES NOT DEMONSTRATE MARKET MOVEMENT !!!!!

"You're a *typist*. A half step above a secretary."

Really? Well first, I was a computer programmer starting in 1982 and I worked my way to half-step above a secretary. Tell you what - you study what I do and I'll study what you do, and see who has the shorter learning curve.

"Nobody else accepts that my monthly mortgage payments are a transaction cost on my apartment."

Actually, yes, because it is a long-term transaction, and the cost is amortized over its life. If you borrow money to engage in a transaction - mortgage in this case - then the cost of that money is part of the cost of the transaction. Under your theory, PMI is a transaction cost if you pay it up front, but not if you amortize it along with the mortgage. That can't be true, as it's the same thing: PMI.

"The real world has such a set of axioms"

Full proof:

1. Points = prepaid interest.

2. Prepaid interest = transaction costs.

3. Prepaid interest = interest.

4. Interest <> transaction costs.

I'm the one with the honors degree in Economics.

"If my transaction costs were 6%, does that mean the market moved by 6%????"

That's not my point, but I understand your upset. My point is that when you're calculating the price real price, transaction costs are included in them. But I understand what you mean and from that perspective you are correct.

Are broker fees in Manhattan still 6%? I own a house in NJ and I can get a full service broekr at 4% in the snap of a finger. There are so many hungry brokers, I can pin them against each other and drive down their commissions.

"Tell you what - you study what I do and I'll study what you do, and see who has the shorter learning curve."

I find retyping someone else's work so mindnumbingly boring that they very thought of it puts me in a bad mood. No way in hell could I do what you do. You win!

In fact, I'm suddenly starting to realize why you must come up with the theories you do... if I had your job, I'd probably go a bit crazy myself...

stevejhx
about 5 hours ago
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That's not my point, but I understand your upset. My point is that when you're calculating the price real price, transaction costs are included in them. But I understand what you mean and from that perspective you are correct.

This is about as good as you can get as an acknowledgment from steve when he's wrong.

"find retyping someone else's work so mindnumbingly boring that they very thought of it puts me in a bad mood. No way in hell could I do what you do. You win!"

Muy bien. Me alegro que te hayas dado por vencido. Porque si tú te pusieses a estudiar lo que yo puedo hacer, y yo my pusiera a estudiar lo que tú haces, voy a lograr a ser ganador yo.

I found computer programming - even as a RACF systems programmer, and managing consultant for Price Waterhouse specializing in network security - mindnumbingly boring.

My "theories," techy, aren't "mine." I've posted link after link of where they come from and why they are supported by the data. You point to housemath.us w/o even being able to provide a link to their algorithm, which apparently takes "opportunity cost" on the unleveraged down payment rather than the full amount at risk. But of course I could go on and on about why you are (still) a computer programmer & why I advanced to being a secretary, but that would be useless.

"This is about as good as you can get as an acknowledgment from steve when he's wrong."

Go back through my threads, ootin. I am one of the few who admits he's wrong when he is.

tevejhx
5 minutes ago
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"find retyping someone else's work so mindnumbingly boring that they very thought of it puts me in a bad mood. No way in hell could I do what you do. You win!"

Muy bien. Me alegro que te hayas dado por vencido. Porque si tú te pusieses a estudiar lo que yo puedo hacer, y yo my pusiera a estudiar lo que tú haces, voy a lograr a ser ganador yo.

Hello, this is America. Those of us in power speak Englisha

stevejhx
5 minutes ago
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My "theories," techy, aren't "mine." I've posted link after link of where they come from and why they are supported by the data.

Ok, when I challenged your logic on proofs, you merely suggested a google search. You couldn't do better?

stevejhx
2 minutes ago
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"This is about as good as you can get as an acknowledgment from steve when he's wrong."
Go back through my threads, ootin. I am one of the few who admits he's wrong when he is.

:For one example, have you clearly and definitively disavowed your statement that renting is ALWAYS better than buying? (caps yours) or all of the other inaccuracies of your discussion therein?

"But of course I could go on and on about why you are (still) a computer programmer & why I advanced to being a secretary, but that would be useless."

Its gotten to the point where I don't even need to respond - I can just highlight the best parts of your posts :) Because quite obviously, every computer programmer really views Money Magazine's #1 best profession as a mere stepping stone to be a translating secretary.

http://money.cnn.com/magazines/moneymag/moneymag_archive/2006/05/01/8375749/index.htm

"Those of us in power speak English"

Ootin's a racist!

"Ok, when I challenged your logic on proofs, you merely suggested a google search. You couldn't do better?"

You didn't "challenge" my logic on proofs. You said there is no such thing as a "partial proof," which is absurd.

Actually, tech_guy, I wasn't at all insulting your profession since I used to do it many years ago. I was criticizing your logic, as you claim that if an expense is prepaid it is a transaction cost, yet if it is amortized it is not. But the expense is for the same thing, and therefore it must BE the same thing.

You can consider me to be a secretary if you like, but if I am, I'm a very successful one. "$80,500 AVERAGE PAY" for programmers.

Yawn.

I know a secretary who makes four times that amount, and works from his home.

You say that like nation-wide averages mean anything. But with your twisted logic, I shouldn't be surprised. Remind me why one person paying points changes market movement of their neighborhood? You always claim so much logic, yet the points you try to make are always so absurd.

So, back to the original topic...

This is prime gold coast, lower fifth, greenwich village apt in a well-regarded building. True, it's at the same price as 2007, but I think it is an important data point because a) the buyer is obviously seeing a lack of demand where it has been historically stronger than even the rest of the market due to the rarity of availability in these pre-war buildings (Emory Roth, Rosario Candela, Bing & Bing) and b) the buyer is psychologically committed to taking a loss (even though it's been a year). Once that happens, the price chops on the place may accelerate with time....

THANK YOU buster for returning us to the subject. That is exactly why I put it up--as someone who lives on lower 5th and follows these apartments closely, this looks to me to be a rather important data point. There are very few of these apartments--it isn't like the upper west side where there are hundreds of these prewar buildings all over the place--so each individual data point is that much more significant.

Is it me, or are the doubters missing this... it won't sell for 2007 price, it will sell for lower. Its a hair lower right now, and that is just ASKING... isn't the average discount something like 5-8% now?

You're talking about a nominal loss on this apartment, and likely a significant real loss after carrying costs...

I definitely agree that on lower fifth individual data points are more important, and that it is one of the more desirable parts of the city. I guess I still think it's funny that this buyer is unrealistic enough to list this for basically the 2007 price - even if it is a nominal loss, it is still really the exact same price as 2007 (within a half a percentage point). I think this listing is more of an attempt to tap into "buyer pyschology" and be able to say to buyers "see, you're getting in cheaper than 2007." But 2007 is still basically record highs, so I think it's not good enough. There are lots of people who STILL believe that prices in the *best* parts of Manhattan won't fall but basically stay flat to 5% down for 5 years. This listing doesn't tell us whether the seller is in the camp I just described or the "I am a serious seller and am willing to take a big loss" camp.

Personally I think it goes for well less than 5%-8% below asking. To me, it is the sellers like this who get burned the most. The ones who keep "slashing" price but still list price above where the real market is. So nobody bites, and they finally realize they need to slash prices even further, so they do. But by this time, the market has fallen even farther, so they need to discount even farther. Of course, it's also true that Gold Coast may not have as far to fall as the rest of the city ...

kspeak-
your point is well-taken but doesn't seem to contradict anything else said by me, nyc10022, or buster. i agree that these sellers are very unrealistic and would be served by a significant decrease. the point is that EVEN IF they got the normal 5-8% under ask that governs in the market right now, they would be out close to 15% in one year. That is the relevance of the data point. But I don't see anyone who disagrees with you that these sellers are in big trouble, and will probably sell for way less than a 5-8% haircut from ask.

i would also add that the gold coast had a huge run-up in 2004-2006, much more than other prime areas. so i would think it will have a pretty bad fall.

Yes, "...Comp shows market movement in prime Greenwich Village..."

Right around the corner from 40 Fifth Avenue, on THE gold coast street of the Village (11th, between 5th and 6th Avenues) is MY comp -

http://www.streeteasy.com/nyc/closing/758529

13 West 11th Street, #6C/D
Closed 7/22/05 for $2,590,000
Resold and closed 9/29/08 for $4,060,000 (2.5% ABOVE the asking price of $3,960,000!)
Not a bad modest return, eh?

And let me be clear - this is simply a single data point, nothing more, nothing less. It augers neither a bullish, nor bearish, future trending in the overall direction of Village residential real estate.

Unless you say it does.

But that, I think we can all agree, would be a pretty stupid claim to make.

LOL Malraux, so this comp is a data point demonstrating that the market rose between 2005 and late Spring 2008 (when the contract was signed). What an insight! I think we can all agree that this is not an anomaly at all, it is a powerful piece of evidence that over that 3 year period real estate in the Central Village rose significantly. And....the data point is borne out by all other evidence.

Your argument is that apartment prices are irrelevant to determining the direction of apartment prices? Seems like that's the stupid claim to make.

"Unless you say it does."

No, actually, malraux, it shows precisely why prices are going to collapse. That's not the only apartment that rose astronomically between 2005 and 2008.

A 156% "return" on real estate in 3 years? 50% a year? Sustainable?

Absolutely not, even though that price is NOT in the same range as the apartments we were discussing.

Let's look at these two:

09/09/05 5U $572,000
09/22/04 4U $422,000

A 36% increase in 1 year.

How about this:

08/04/04 3DEF $1,282,000
10/10/08 3DEF $1,950,000

A 52% increase in 4 years.

NOW we're starting to see where the problem began: 2003-2004.

And here's a current listing:

3WX* 2-BR/2-Bath $1,500,00

And here's what it cost to buy them:

01/24/07 3W $433,000
09/03/03 3X $335,000

So what cost $768,000 is now suddenly worth $1.5 million?

And here's the price history of 3W:

01/24/07 3W $433,000
10/22/03 3W $225,000

The same pattern: A 92% increase in 4 years.

http://350bleecker.com/policy/sales.html

So yes, malraux, your "data point" proves EXACTLY my point: what happened to all apartments in all of Manhattan, from a cheapo studio to super luxury, increased suddenly and precipitously between 2003 and 2005, and excessively in terms of historic (sustainable) values based on normal growth in income and credit availability.

Thank you for proving exactly the opposite of what you did.

Steve

"of what you THOUGHT YOU did."

Sorry!

No, happyrenter, I'm arguing that using ONE specific comp unit, no matter how "represetative," is not the way to determine the title of this thread, which was "...Comp shows market movement in prime Greenwich Village..." As I said above, ONE comp, no matter HOW bullish or bearish, means nothing. Lay out ten, or twenty, or thirty comps over a soild representative sampling of Village coops, condos, and townhouses, and THEN we can have a discussion about 'market movement.' But holding up ONE comp and saying it represents the ENTIRE Village is a stupid claim to make.

ROTFLMAO, indeed.

"But holding up ONE comp and saying it represents the ENTIRE Village is a stupid claim to make."

Not when it's demonstrably true, malraux, as I've proved above with several apartments in a broad price range, and every other apartment that you pick will show - it is proved by market median price per square foot, as well:

2007 $1,120 psf +8.7%
2006 $1,030 psf +7.7%
2005 $956 psf +24.5%
2004 $767 psf +14.0%
2003 $672 psf +8.9%
2002 $617 psf +4.2%
2001 $592 psf +4.2%
2000 $522 psf +13.0%
1999 $400 psf +30.5%
1998 $397 psf +0.7%

Does something look odd here? Maybe 1998-1999? Maybe 2003-2004? Maybe 2004-2005?

The datum that you criticized is real. The datum you posted is real. The data I posted are real. They all say the same thing: this is unsustainable.

Extrapolation IS a logical fallacy, but it doesn't mean it doesn't work. Just like if you're paranoid, it doesn't mean that somebody's not out to get you.

And sorry, let's try those percentages again:

2007 $1,120 psf +9%
2006 $1,030 psf +8%
2005 $956 psf +41%
2004 $676 psf +1%
2003 $672 psf +9%
2002 $617 psf +4%
2001 $592 psf +13%
2000 $522 psf +31%
1999 $400 psf +1%
1998 $397

""But holding up ONE comp and saying it represents the ENTIRE Village is a stupid claim to make."

Not when it's demonstrably true, malraux, as I've proved above with several apartments in a broad price range, and every other apartment that you pick will show - it is proved by market median price per square foot"

umm, did you just say that holding up one comp is not stupid, and "proved" it by holding up a bunch more comps? Isn't that the point?

Not my day.

2004 $767 +14%

Not sustainable does not necessarily imply that there will be a crash. Of course we won't get +9% this year again. But there's a wide range between +9% and -30%.

Though, if you use downward comps as proof that you're right, and upward comps as proof that you're right (you do both in this thread), why bother?

The hedge fund I have some money in happens to be up this year (net to me after fees) 20% thus far. I guess my comp is a picture perfect example market movement in the average majority of hedge funds and indices thus far this year.

"did you just say that holding up one comp is not stupid, and "proved" it by holding up a bunch more comps? Isn't that the point?"

No. Throughout the thread I said that all of Manhattan followed the same price trajectory over the years, and that the one in the initial post is indicative of that. Since some people can't seem to understand how that works, I posted a bunch more, all of which point to the same thing, and all of which would be valid individually. Then I went further and showed that the average price per square foot increased at the same rate throughout the city just as those individual "data points" did individually, or collectively.

That is what I said. And here are the figures again (correct this time, I hope!):

2007 $1,120 psf +8.7%
2006 $1,030 psf +7.7%
2005 $956 psf +24.6%
2004 $767 psf +14.1%
2003 $672 psf +8.9%
2002 $617 psf +4.2%
2001 $592 psf +13.4%
2000 $522 psf +30.5%
1999 $400 psf +0.8%
1998 $397

Do you see anything anomalous about the YOY increases in 2000, 2004, 2005?

"guess my comp is a picture perfect example market movement in the average majority of hedge funds and indices thus far this year."

If you are extrapolating from hedge funds to real estate, then you are seriously deluded malraux. That's like saying that oranges are growing well in Florida, so apples must be abloom in Oregon.

"Not sustainable does not necessarily imply that there will be a crash."

You're right - not "necessarily," and it depends on what you call a "crash." It could be slow and drawn out like 1988-1998, or precipitous like the rest of the country in the last 3 years. My vote, given the oft-cited fundamentals, is on a crash, but it is not necessary.

It's hard for me to believe that malraux, who claims a flip at 15 CPW, and that he's an art collector (that market dried up except a Juan Gris, from what I can tell), is the same person who made the claim about what Case-Shiller said for "Prime Manhattan Real Estate" a few months ago, or who now claims that real estate market movements are akin to stock market movements (as stock markets can be shorted, real estate cannot.

How lucky that he picked the absolute correct hedge fund to be in this year, as well. According to the Wall Street Journal, not one hedge fund in the world is up 20% this year, with or without fees:

The Standout Performers

* $35 billion Paulson & Co: +18% ytd
* $26.3 billion Brevan Howard: +16% ytd
* $37.1 billion D.E. Shaw: +8% ytd
* $30.9 billion Bridgewater Associates: +6% ytd
* $33.3 billion Och-Ziff Capital: +0.5% ytd
* $16 billion Winston Capital: +10% ytd
* $10 billion Caxton Associates: +5% ytd
* $17 billion Tudor Investment Corp: +3% ytd
* $16 billion SAC Capital: +1.5% ytd

And this was from Friday, September 5, 2008. It's even worse now.

Come on, malraux, you're less and less credible by the day.

oh, steve! RACF?!

Wow, I'm totally timewarping

>> ad ...........
>> dd ...........

It also becomes a self-fulfilling prophecy.

Folks paid increasingly ridiculous prices believing they would only increase. Once the bad numbers are in, not only do prices decline, but so does the "value" folks see in an apartment purchase. This is how things spiral down.

After it goes up 20%, RE looks like a bad investment so it goes up more. Guess what happens after it goes down 20%...

"oh, steve! RACF?!"

Alas, it's true.

But the product still exists, doing quite well. Just glad I'm not working with it anymore.

http://www-03.ibm.com/servers/eserver/zseries/zos/racf/

I started with it in 1985, ended in 1993. That was enough. My VSAM, VTAM, MVS, VM days are thankfully over!

"No. Throughout the thread I said that all of Manhattan followed the same price trajectory over the years, and that the one in the initial post is indicative of that. Since some people can't seem to understand how that works, I posted a bunch more, all of which point to the same thing, and all of which would be valid individually. Then I went further and showed that the average price per square foot increased at the same rate throughout the city just as those individual "data points" did individually, or collectively.

That is what I said. And here are the figures again (correct this time, I hope!):

2007 $1,120 psf +8.7%
2006 $1,030 psf +7.7%
2005 $956 psf +24.6%
2004 $767 psf +14.1%
2003 $672 psf +8.9%
2002 $617 psf +4.2%
2001 $592 psf +13.4%
2000 $522 psf +30.5%
1999 $400 psf +0.8%
1998 $397

Do you see anything anomalous about the YOY increases in 2000, 2004, 2005? "

steve you need to chill, you're in such a frenzy all the time, you don't even seem to read what you're responding to, and thus you often don't make any sense.

The fact is malraux's point above that 1 comp by itself is meaningless is correct. You don't change or disprove that by providing more comp's. When you do its no longer one comp, get it?

No one (well not me anyway) is arguing that the price appreciation wasn't out of whack or that the market isn't on its way down.

Malraux,

Certainly no one believes that one data point in and of itself proves that the market is moving one way or another. That is very different from your claim that individual data points are irrelevant. Given that the market is made up of individual data points, it would seem relatively straightforward that each data point provides part of the overall picture.

I started this thread. My intention was to show that downward price pressure had descended on the central village. I do believe that this listing shows that. If you can show me evidence that apartments are currently going into contract in the village at prices at or above peak levels, please do! That will be additional data to take into consideration.

malraux
about 3 hours ago
ignore this person
13 West 11th Street, #6C/D
Closed 7/22/05 for $2,590,000
Resold and closed 9/29/08 for $4,060,000 (2.5% ABOVE the asking price of $3,960,000!)
Not a bad modest return, eh?

-Malraux, now we have another partial proof. (for those of you who don't know what partial proof is, just google it like stevejhx suggested). Unfortunately, this partial proof contradicts the earlier partial proof, so don't let your heads spin... never let fact get in the way of a good story, eh steve?

oh, ootin!

"his partial proof contradicts the earlier partial proof"

41 5th Avenue 3E on the market for $1.495

Here's the history:

03/15/2007 Previous sale closed for $1,500,000
04/11/2008 Previously listed in StreetEasy by Bellmarc for $1,695,000
07/16/2008 Bellmarc listing unavailable at $1,645,000
11/08/2008 Listed in StreetEasy by Corcoran at $1,495,000

And then malraux's:

Closed 7/22/05 for $2,590,000
Resold and closed 9/29/08 for $4,060,000

So, OO, you're claiming that one listing between 2005 and 2008 CONTRADICTS another one between 2007 and 2008?

Silly boy:

2007 $1,120 psf +8.7%
2006 $1,030 psf +7.7%
2005 $956 psf +24.6%

What we are comparing hasn't even shown up in the figures yet!

Don't let your head spin.

steve WB:

As for the hedge fund returns, it's one of my friends who shares a pretty serious interest in art collecting, and we've bought/invested together in art in the past. It's just a 'friend' thing, and the fund returns have been, well, honestly, luck and timing based on my part (not his, of course - he's very talented, obviously, which absolutely nothing to do with me!). Antway, that's how it fits together, like it or not - there's no shortage of those in hedgistan who have been collecting art over the past 10 year period. Also, I don't claim a flip at 15 CPW - I still own the joint and am renting it out, as I have said before.

More interestng, of course, is that your only commentary was to label me a liar (or not credible) instead of addressing my primary point. "...If you are extrapolating from hedge funds to real estate, then you are seriously deluded malraux. That's like saying that oranges are growing well in Florida, so apples must be abloom in Oregon..." No, wrong. If one piece of real estate can be used to prove the theory that it can be used alone, by itself, as all that is required to illustrate market movement in an entire area of Manhattan, than by the same token, one hedge fund alone should be a perfect indicator/predictor of how the results of all other hedge fund of the same approximate type and size have done over the same period. After all, the title of this thread is

"...Comp (singular) shows market movement in prime Greenwich Village...," not -

"...Comp(S) (plural) shows market movement in prime Greenwich Village..."

The only poster not to be considered credible here is you. And calm down the rhetoric. You can be a nice guy. So be nice, still make your point, and stop accusing other people who have differing points of view from you as being not credible.

To happyrenter:

"...Certainly no one believes that one data point in and of itself proves that the market is moving one way or another. That is very different from your claim that individual data points are irrelevant..." I agree with you, and only meant to state that no one believes that one data point in and of itself proves that the market is moving one way or another. If I accidently implied or stated that 'individual data points are irrelevant,' I did NOT mean that, and I apologize for the confusion.

ALlo, I should add that the hedge funds you exhibited are the Hedgesaurus Rex of funds - my money is in a fund that's got a grand total under management of something like $250M - very, very small change, in comparison.

How's your art market doin', malraux? OOOOOOOOOOOOOOOOOOOOOF!

Actually, quite well, my aptly named avatar.

As anyone wise would have, I sold off heavily into the last auction cycle last May and into the market at Basel in June (a lot of Russian and Indian buyers), and only held those artworks that were (for my middle range price point, at least) super blue chip and that I wanted to live with for a long time. All the younger artists, all the crazy over-priced up-market work, all the speculative stuff - all gone. Sold the Princes and Hirsts (actually, I kept one circular Hirst painting consisting of masses of butterfly wings because my wife really loved it), and am now left holding only about two dozen works, mostly Minimal and Pop, mostly from the 60's. Believe me, nothing (and I mean NOTHING!) has ever come remotely close to the returns I achieved on artwork I sold. Not real estate, not equities, not anything. I'll NEVER see a market like that one in my lifetime ever again. It was amazing while it lasted, but it is most definitely over and dead, no doubt about it.

"label me a liar (or not credible)"

Malraux - there's a huge difference between the two. I said not credible.

"If one piece of real estate can be used to prove the theory...."

Absolutely, positively not. If you have 2 hedge funds invested in the exact same thing - oil futures, for instance - then their returns will by definition be nearly identical. If you have a 2x short hedge fund since September 17 and a 2x long one, the results will be exactly opposite.

Real estate in Manhattan has all moved in the same direction over time - akin to 2 hedge funds invested in the same assets. Will each piece of property behave absolutely identical? No. But they will all behave in the same pattern.

Any sophisticated investor would tell you the same thing.

"The only poster not to be considered credible here is you."

Really? Well judging by where the market is going, I seem to be the only one who has been right.

And the art market does suck - except for Juan Gris, for a good reason: there aren't that many of them, and he is far, far superior to Picasso, who stole his idea and ran with it.

"...I seem to be the only one who has been right..."

Surely, you jest. You're the only one? THE ONLY ONE?!? As if NOBODY ELSE saw the inevitable coming (and was actually able to react in more financially successful manner than you)? Puh-leeeeeeeez.

As for Gris/Picasso - it doesn't matter who had an idea first, or who stole what from whom. Being first means nothing - doing it the very best is all that matters. I like both, if a particular work is really strong. But they both have plenty of clunkers as well. As for the market, there are still opportunities (and more coming), but like the real estate market, you've got to have a (really) long time horizon.

I've seen almost all of Juan Gris on display from my time in Madrid - he was far more innovative and meaningful than Picasso, IMHO.

"As if NOBODY ELSE saw the inevitable coming"

I think you said down 5% or something like that. I'm sticking to my original prediction of down 50% - quite a difference.

And I assume that since it's fairly obvious that assets of a single class - Manhattan real estate - will behave more similarly than assets of different classes - like hedge fund investments - you've come to agree with me on the silliness of your point.

And that I didn't call you a liar. Though you did call me "incredible" - I think so too, just not in the same way you seem to.

WB.

I NEVER said down 5% (after my living through the last correction here in 1987-1997, how/why would I say such a thing?). I disagreed with your TIMING of the call.

And I don't agree with your primary point. We will simply have to agree to disagree.

P.S. I must of mis-spelled - I apologize. I meant to write that you were "inedible," not "incredible."

"inedible"

Well if you're interested in a taste, malraux, I'll send you my deets.

malraux, have you considered moving your investment money from the hedge fund into a fund managed by stevejhx? I seem to recall a few months ago where he said he got 60% returns on an annual basis for the past 10 years. Yes really

kspeak: There are lots of people who STILL believe that prices in the *best* parts of Manhattan won't fall but basically stay flat to 5% down for 5 years.

Actually, I believe they will be much higher. Much. Read Richard Florida.

??? I am confused why you are addressing me. Are you saying prime manhattan will go up more?

My point is this - real estate prices are sticky. When a downturn happens, sellers ssslllllllowwwwwwwllly reduce their prices. A few of them find "market-clearing" prices at 10% or 15% of peak - the buyers who think they've gotten a deal (all it takes is a few). Eventually, the number of those buyers is reduced and to find the next group buyers, sellers must slash even further. That's why smart sellers stay ahead of the curve and sell as quickly as possible once the market has turned.

kspeak: Are you saying prime manhattan will go up more?

Yes, of course. Much more. Over 5 years I don't even think this is much of a reasonable question. Prices are not expensive now, based on historical price to rent ratios, and compared to other world-class cities.

prices actually are out of whack compared to historical priece to rent ratios ... i hear your point that ny is not that bad compared to other global cities, but inby an economic downturn peope won't pay more to buy than to rent ...

happy owner:

you probably thought prices on Nasdaq stocks were set to soar from the year 2000. When the market declined from 5000 to 1200, most of my friends thought it would be back at 5000 within 3-5 years. The truth? eight years later it's at 2,289. Bull markets do not continue forever and bubbles burst.

"Prices are not expensive now, based on historical price to rent ratios"

They are twice their historical ratio of 12x annual rent = purchase price.

steve - You are simply wrong. Long term price to rent ratios in Manhattan are about 20, going back to the days of Astor. He bought Manhattan real estate during a crash and then rented them back to the sellers at 5 percent a year of the purchase price. This is how the Astor fortune was made. I only looked at this site because I am helping a relative buy a place for herself this year. Most prices I see are about 20 times rent, which is a fair number. Perhaps we will find a stupid or desperate seller giving the place away for less, but 20 times is the long term fair price. A price to rent of 12-15 is more typical of Cleveland or Des Moines which has unlimited building opportunity and no important place in the global economy.

All non-cash assets around the world are on sale now - stocks, bonds, NYC real estate. The only question I have is which is better (probably stocks, but you need a place to live first).

kspeak: but inby an economic downturn peope won't pay more to buy than to rent ...

You clearly want to buy a place cheap. So does everyone. Keep dreaming. Smart liquid sellers will not lower prices. There may be a few desperate people over the next year who have to sell into an illiquid situation, which is why I am helping a relative finally buy a place this year.

Happy house hunting!!

>>"Prices are not expensive now, based on historical price to rent ratios"

>>They are twice their historical ratio of 12x annual rent = purchase price.

When was the last time in NYC or Manhattan history that we had this 12x historical ratio? If now it is higher, when was it below 12x such that the average over the long-term comes out to this 12x that is being stated?

"You are simply wrong. Long term price to rent ratios in Manhattan are about 20, going back to the days of Astor."

No. It's 11.7x for New York if you use the p/e ratio. The link has been published many times, and is repeated below. A 20x figure could be obtained if using the owners' equivalent rent figure, which specifically takes into account future expected price increases. Alas, if prices are expected to fall, that ratio turns negative, meaning no one will buy.

"He bought Manhattan real estate during a crash and then rented them back to the sellers at 5 percent a year of the purchase price. This is how the Astor fortune was made."

First, John Jacob Astor made his money in fur trading. I don't know which specific Astor you're talking about, but until Vincent they were notorious New York slumlords. Any particular business dealing they did before the Great Depression is really unworthy of discussion here.

"I only looked at this site because I am helping a relative buy a place for herself this year. Most prices I see are about 20 times rent, which is a fair number."

I don't know but you're starting to sound a lot like LICC = tech_guy.

Pity your poor relative.

"Perhaps we will find a stupid or desperate seller giving the place away for less, but 20 times is the long term fair price."

Proved repeatedly not to be true on a p/e basis. Go here:

http://money.cnn.com/magazines/fortune/price_rent_ratios/

"A price to rent of 12-15 is more typical of Cleveland or Des Moines which has unlimited building opportunity and no important place in the global economy."

click on p/r ratios, look at New York's 15-year average: 11.7. Cleveland's is 14.3, and thus higher than New York's.

You can also read more about it here:

http://www.cnbc.com/id/25625777/

Happy House Hunting!

One more theory bites the dust.

ClintonB, in 1998 the p/e ratio was about 8x. I did the calculations elsewhere based on an apartment I rented versus one I bought, adjusting for differences in square feet.

>>> "Smart liquid sellers will not lower prices. There may be a few desperate people over the next year who have to sell into an illiquid situation, which is why I am helping a relative finally buy a place this year."

People have to sell for lots of reasons - lack of liquidity, life changes (marriage/divorce/kids), job in a new city. People don't always have a choice. The people who have to sell will sell and then comps will drop. Some people may chose not to sell or "wait it out" but they'll find this harder once new comps are set at lower prices. People do not HAVE to buy - especially in NYC where there are always attractive options for rentals. Also remember this - not everybody bought in 2005 or 2006 or 2007. Even if prices fall 40%, a lot of people bought in the 1990s or 2000 and will still make money.

I am not going to speculate on where price/rent ratios are going like many posters do or claim that 12x is the "right" price. I think it's fair to say that the monthly cost of buying is more than the monthly cost of renting right now as general rule - although I myself have found exceptions. Why would a rational person spend more to own than to rent when rents are softening. I am not one of those uber-bears who thinks rents will plummet - but there is clear evidence they are softening. In 2005-2007, when rents were skyrocketing, buyers could convince themselves that it might cost more to buy than to rent right now, but rents were increasing so quickly that could change. This is no longer true.

Remind me what the cover of the nytimes real estate section was last week?

steve - click on p/r ratios, look at New York's 15-year average: 11.7. Cleveland's is 14.3, and thus higher than New York's.

Ok, now I know not to take you seriously. Higher p/r ratios are for cities with higher future rental growth rates - i.e. world class cities and not regional hubs with lots of building land. You can buy apartments in Indiana for a p/r of 10 or even 8. Why? Because there is no future growth there. John Jacob Astor took some modest fur profits and became legendary-rich buying Manhattan real estate at a p/r of 20. Again, this is simple history.

kspeak - People do not HAVE to buy

No, they can face a lifetime of rental increases until they are forced out of the city, I suppose.

I fully understand the point of "locking in" a place by buying.

But rents are declining right now - and it is not reasonable to assume rents will grow faster than wages over the long-term. Wages have decreased and taxes are going to increase, so I think it's safe to say they are not going to be increasing much in the near future.

happyowner = LICC = tech_guy.

Just FYI.

John Jacob Astor died in 1848. Whatever he did in real estate in New York before it was even a unified city, and before the Civil War, is immaterial.

"Ok, now I know not to take you seriously."

Don't take me seriously, then. I didn't make the data up; they are confirmed data published by Forbes Magazine.

How much land is available for development has no bearing on prices. There was just as much land in Manhattan in 1998 when the p/e multiple was about 8x annual rent.

If rentals are relatively expensive compared to purchasing, then the p/e multiple will be higher. If they're relatively cheap, then the p/e ratio will be lower. And given what I pay in rent, renting is significantly less expensive than buying right now.

"No, they can face a lifetime of rental increases until they are forced out of the city, I suppose."

Or they can get their rents reduced and invest in a better asset class.

There goes steve again with his irrational 12x rent ratio theory. How many times does this guy have to be made to look foolish before he wisens up and stops repeating his wrong theories, like this and like his marginal/effective tax rate mistakes?