I looked at this apartment when it was on the market before

This place is worth $500k.

8 years ago you could buy an entire Greenwich Village brownstone for $2 million. Don't think that we're that far away, as those owners are the ones who were the worst hit.

I agree - $500,000 or less.

Is it generally true that maintenance in townhouse units are extremely high? Since there are no amenities or doorman and the tax base for the entire townhouse is low.. where are all these monthlies paying for as there are 6 units?

Really? Only half a mil? It's got a private terrace and the finishes are very nice. And it's a primo location.

I'm a prospective buyer, I'm all for low prices, but I'm just surprised to see that kind of estimate on this place.

I'm an old-fashioned New Yorker, fine old houses are worth more to me than ugly new condos.

"Fine old houses" are wonderful. Just not at $2 million a bedroom.

This place is certainly worth more than $500k even in Steve's 50% future fantasy land. Manhattan has not turned into Detroit.

And according to Miller Samuel, average price per square foot for a Manhattan townhouse TRIPLED from 1998-2007.

When was the last time EVER that real estate tripled in value in 10 years? That is 13% compound annual return on an asset that produces no income.

Doubt it.

Pardon me Steve, I am as bearish as anyone but there is absolutely no way that apartment is worth $500,000. A large townhouse floorthrough with a separate dining room and living room, plus a terrace, in the prime village, with those finishes would rent for at least $7,000 in today's market--that's a conservative estimate. I should know: I rent a townhouse floor through in the prime village, with no terrace, and with far inferior finishes, and I pay...well, suffice it to say I pay enough to know that this one would rent for $7,000 or more.

At 10x annual rent that's $840,000; at 12x it's $980,000. Since I think that apartment would probably rent for more that $7,000/month, I think the apartment is worth a little more than that. I don't predict the direction of markets: it is certainly possible that some day this apartment will sell for $500,000. But in today's market that's not what it's worth.

rents will fall by 30-50% as well. then the math changes.

did you just pull that 30-50% out of your ass, or is based on an actual evaluation of market fundamentals? jeez, like i said, i am major bear when it comes to new york real estate, but i am beginning to understand why so many people find the bears on here, well, unbearable.

I completely agree - rents aren't falling 30-50%. Rents typically don't fall THAT much in a downturn (mostly they just stop increasing). I realize this is not your typical downturn, but nonetheless, that is an extreme scenario. If nothing else, I think that inflation/stagflation in 2010-2011 (which will likely happen from all the money dumped into the system) will prevent this from hapenning.

And that is an absolutely gorgeous rennovation. I think it's worth around $900l - $1 million ultimately(the likely buyer I think is a wealthy couple with grown up kids who wants a pied a tier in the city and is willing to pay for a "trophy" property in an ideal location). It looks like it could be a 2 bedroom but they put an extra sitting room in it.

kspeak, only on streeteasy could we be accused of bullishness for suggesting that an apartment that sold for $1.1 million, and then had a $500k makeover, will sell 3 years later for $1 million!

Exactly. Rents have basically slightly more than doubled since 1991-1992 (when they sort of bottomed after the late 80s real estate shakeout and spike in crime), and that is only in NOMINAL terms.
You adjust out inflation, and the fact that New York is safer/more desirable now, and I think that makes sense. Obviously the rental market is going to soften but I think a 30% decline is highly unlikely.

And before somebody says "in the early 90s I rented a studio in Alphabet City for $200 a month" - I am comparing rents in "prime" Manhattan (so the early 90s figure is really Upper East side). Obviously "prime" manhattan is bigger now.

"A large townhouse floorthrough with a separate dining room and living room,"

I don't see a floor plan, but if it is 1100 square feet (unlikely given the size of lots in Manhattan) that would still put it at $1,600 per square foot for a likely very noisy place given the street it's on. 4 years ago you could have gotten it for $1,000 per square foot.

You could buy an entire townhouse for a lot less than that per square foot, in a better part of town:

http://www.streeteasy.com/nyc/sale/345181-townhouse-97-barrow-street-west-village-new-york

"rents have basically slightly more than doubled since 1991-1992"

Then property prices should have only doubled since then. Since they have quintupled, we have a long way to fall.

About 50%.

This floorthrough is overpriced.

Agree about property values - they should have fallen in half.

But a 50% fall on this place means $900k or so I like I said, not $500k.

THere are no buyers. "People afraid to buy a sweater let alone an apartment." Go buy this and then I will offer you $500 per square foot in 6 months.

"But a 50% fall on this place means $900k or so I like I said, not $500k."

That's still $1,000 a square foot, which are 2006 prices. A 50% fall from a realistic price. This price is not realistic. Not only because it's overpriced, but being a small co-op, a loan in the best of times is virtually impossible.

And that's a very, very noisy block.

Maintenance in townhouses is typically high because there are so few units to maintain the building. For example, if a building with the same footprint has 20 floors, the roof would still be the same size. There would be a zillion more people to pay for maintaining the roof than the townhouse has. Same for the sidewalk vault, furnace, etc. Economies of scale make is less money for an owner in a larger building than a smaller one. And in a townhouse, if there is a catastrophic event affecting the structure, the money to fix it will come from 8-10 people maybe instead of a hundred or more. That is expensive.

Also, in a large, modern building, you don't usually hear the noise of the people above or below you. Not true with wooden joists.

I do agree that living in a townhouse would be nice, but there are also practical considerations - cost, old plumbing, old electrics, financing, lack of parking, security. It's nice to know that it's not too easy to steal my possessions as somebody would have to lug them through the lobby, which might raise suspicions.

weaselboy -

"...And that's a very, very noisy block..."

You are absolutely out of your mind. I LIVE ON THAT VERY BLOCK!!! It is incredibly quiet (unless you live directly on the Park in a building like 32 West Washington Square), aided by what is basically a one way deadend street (Washington Place one ways ending into the Park, upon which you can only turn south on MacDougal, which is much more efficiently accessed in another manner via West 4th anyway, meaning there is VERY little thru traffic). As to foot traffic from students, it's just not a very traveled block at all, particularly in the evenings, because there's nothing on it except for residences - students tend to want to walk on West 8th, 4th, or 3rd, where it's much more lively. In fact, I chose this specific Village block to live on because it is, without a doubt, one of THE quietest blocks in the Village within a one block walk to the Park (and I am really sensitive to noise, especially when I'm trying to fall asleep). Get your facts straight - you don't know what the hell you're talking about in this case - unless you actually live on this very block, as do I!

As to price of the unit in question (which is something with alot more room for a variance of opinion), look, even I think the asking is really super high. On that we can agree. I think (going on nothing more than my experience investing in this very market for the past 20 years and that I physically live down the block) that the 'right' price, based on the fact that the market needs to correct (and has not yet) feels to be around $700K-ish, +/-.

Below $500K? Not happening.

Really nice townhouses in the Village in solid move-in condition with good layouts and finishes for under $2MM? Not happening.

Malraux, if you live on the other side of 6th Avenue it's quiet, but not right there. An old hangout.

Not to mention the drug peddlers who are still in the park.

Sorry.

But the other streets you mention ARE noisier, with that I wil agree.

I'm glad you believe it's super-overpriced.

"the 'right' price, based on the fact that the market needs to correct"

Well, I respect that you've been investing in the city for 20 years, I only have 10. Nonetheless, I have seen what's happened in Miami, Los Angeles, San Diego, firsthand, and what will happen here will be worse. They were stricken by subprime, Alt-A, and flippers - we are stricken by the death of an industry, a business model, disposable income. Whether you like it or not you must admit that you've never seen a real estate market like this, just as I'd never seen a stock market like this. I was, in hindsight, blind, but I've made a lot of money in real estate and I've seen property booms and busts in the US and in London and Madrid, and this feels worse than any of them.

"Really nice townhouses in the Village in solid move-in condition with good layouts and finishes for under $2MM? Not happening."

Want to bet? :) It's not that far back - just 5 years. And who owns all these townhouses but the Masters of the Universe, whose start just imploded?

WB:

I specifically live between 6th Avenue and the Park.

Nice to know it's and OLD hangout for you - I live here - NOW.

There are drug peddlers all over the Village, but very little on my block, as they have moved to West 8th, 4th, and 3rd, following student traffic patterns, and we also now have a very active neighborhhod block watch that has pretty much cleaned up that specific situation. Oh - but since you don't live here - NOW - I guess you're not quite up to speed on the minor matter.

It is very - VERY - quiet.

You are indeed very - VERY - sorry.

As for the market issue of 69 WaPl and townhouses in general, well, we can agree to disagree. I just think you're wrong, that's all.

"You are indeed very - VERY - sorry."

No, I'm not sorry at all. But thanks for your concern.

"I just think you're wrong, that's all."

I may be, but I don't think so.

I happen to know the person who bought this:

http://www.streeteasy.com/nyc/house/230-west-10-street-manhattan

For about $650,000 about 7 years ago. Now he wants $16,950,000, down from $20 million. Okay he did some stupid things, like eliminate the ground floor garage and dig out the basement, but do you really believe it's worth that much money?

I posted this earlier:

But they tried for a 50% profit in 9 months, that is, 67% on an annualized basis:

StreetEasy History

01/08/2008 Previous sale closed for $1,500,000
09/11/2008 Listed at $2,250,000
10/23/2008 Price decreased to $2,150,000
11/05/2008 Price decreased to $1,995,000

Okay, the previous sale was for $1.5 million in JANUARY:

49 EAST 96TH STREET, 17A Manhattan 1/8/2008 $1,500,000

SO! We're to expect a 50% profit in less than a year, are we, based on the original asking price?

Now down to a MERE 33% in less than a year?

WHO ARE WE KIDDING?

http://www.streeteasy.com/nyc/sale/348439-coop-49-east-96th-street-carnegie-hill-new-york

These prices are FAKE, malraux, based not on fundamentals but on the fantasy that a) people make this much money and will continue to; and b) there's this much credit available.

Nothing supports today's price levels. Nothing. Not for townhouses, not for co-ops where they want 66% profits in a year. Not for anything.

you could buy a nice townhouse in the village 5 years ago for 2mil?

bummer

Yes you could, ccdevi.

First, if you can find me an example a renovated, 20 foot wide, single-family townhouse in the prime west village that sold for $2 million dollars within the last five years, please be my guest. When you say "nothing supports today's price levels," you are obviously very mistaken. Today's price levels are supported by the fact that yesterday apartments sold of exactly these prices. That may not be a good reason to pay these prices for an apartment--I wouldn't pay them either--but to say that nothing supports them is just silly.

Second, this is NOT a noisy block, it is not a drug-infested block, it is not a block overrun with students. This is an absolutely gorgeous, quiet, tree-lined block in a prime area of the village.

Third, this apartment is a true 1,100 square feet with a brand new, half million dollar renovation. It has a beautiful terrace. It has a separate living room, dining room, sitting room, kitchen, and bedroom. It is a floor through in a townhouse in the village. I agree that it is terribly overpriced in today's market, but compare it to rents and then name a price. This apartment would clearly rent for over $7,000 a month. To justify a $500,000 price you would have to assume rent of $4000 per month or less, and that is just nowhere near what this place would rent for.

It is one thing to be bearish, and it is another thing to create totally unrealistic criticisms of a beautiful apartment.

By the way, my townhouse floorthru is the quietest apartment I've ever had. Late 1800's and it's solid as a rock. No lateral neighbors and at most a rare muffled sound from above when the upstairs neighbor, say, drops his television. And the rear looks out on leafy (well not so much these days) trees filled chirping birds, cooing morning doves and stoic bluejays. My experience with newer construction is it can be pretty flimsy.

...now if only it was the parlor floor with a backyard..

i totally agree kgg, my parlor floor (great ceiling height and original details, but no outdoor space, and pretty poor condition at this point) is just fantastic. nice and quiet, lovely views of trees and gardens.

I know Steve tells a bit too much of his personal life ... today we learned exactly which building on 21st street he lives in.

Nevertheless, Steve saying that a location in NYU-land is an "old" hangout really reflects the core of steve. It isn't a core that is unappreciated, but sometimes it gets the best of him. Steve is late 40s. Hanging out in this location, well, that would be early 20s. Steve generally has glorified the NYC of 20 years ago. That was a good place, it had its problems too, but it isn't today. And it isn't even 10 years ago, which is where Steve thinks price should be.

There's no Greenwich Village townhouse that could have been bought for $2MM just a few years ago.

"Today's price levels are supported by the fact that yesterday apartments sold of exactly these prices."

That's like saying it's raining today because it was sunny yesterday. That is not a cause and effect.

"Third, this apartment is a true 1,100 square feet with a brand new, half million dollar renovation. It has a beautiful terrace. It has a separate living room, dining room, sitting room, kitchen, and bedroom"

I haven't seen the layout, but nice it has a separate bedroom and kitchen, because otherwise it would be a studio.

I didn't say the apartment wasn't beautiful. However, the fact that they spent a lot of money to renovate it doesn't directly affect the market price. Goods are priced on their output value, not their input value.

"today we learned exactly which building on 21st street he lives in."

I've never made a secret of that. You can see me walk in and out of it every day. If you want to creep people out and stalk, now you can stalk malraux, too.

"Steve is late 40s. Hanging out in this location, well, that would be early 20s."

I didn't hang out there in my 20's - I lived in DC and London and Miami in my 20's.

"Steve generally has glorified the NYC of 20 years ago."

I moved here 10 years ago. Sorry.

"There's no Greenwich Village townhouse that could have been bought for $2MM just a few years ago."

Yes there were.

Steve, since I can't prove a negative, would you please provide some, I don't know, EVIDENCE, of a renovated, single family, 20 ft wide (or more) townhouse in the prime village that sold for $2 million within the last five years? I'd take evidence of ANY townhouse in ANY condition in the priime village without tenants that sold for $2 million.

I know there hasn't been. If there had been I would have bought it.

As for "nothing supporting todays prices," do you then also believe that nothing supported the prices paid yesterday--which were the same as the prices being paid today? I agree that prices are too high, and I agree that they were too high yesterday. But it is simply not true to say that "nothing" supports them. If absolutely nothing supported these prices, thousands of people would not have paid them.

I would agree that there is not enough support for these prices to justify them, but it's hubristic to say nothing.

If you can't prove a negative, how can I? I showed you a townhouse bought about 7 years ago for about $650,000, that now they want $19 million for. I know the owner.

"do you then also believe that nothing supported the prices paid yesterday--which were the same as the prices being paid today?"

That's an entirely different issue. Yesterday's prices will not affect today's prices. Yesterday's market conditions affected yesterday's prices. In an environment like this, comps mean nothing.

"I agree that prices are too high, and I agree that they were too high yesterday. But it is simply not true to say that "nothing" supports them. If absolutely nothing supported these prices, thousands of people would not have paid them."

I wish you would stop confusing your verb tenses. "Nothing supports them" is very different from "nothing supported them." Something DID support them: obscene bonuses for taking obscene risks, and an endless supply of credit with no underwriting standards. Those factors no longer exist. Ergo, nothing supports these prices.

I'm not asking you to prove a negative--I am asking you to prove a POSITIVE. That is, the POSITIVE that there is a townhouse in the village that sold for $2 million in the village. I cannot prove the NEGATIVE that NO townhouse sold at that price, since you can always simply say that there may be an example out there that I can't find. That's kind of, well, logic 101.

If you believe that the past and present have no relationship to each other, then we really have nothing to talk about.

Unfortunately, happyrenter, that would require me to look up every townhouse in the city on ACRIS, which is not possible. However, since I used to live on Bleecker & Charles with a view of the Charles Street townhouses, I can assure you that those are the prices they went for. Confirming this is Miller Samuel, which published that over the past 10 years price per square foot for townhouses has tripled. More for prime GV.

I believe in causality, and prices are not causally related. If my Lexus costs $80,000 does it mean that a Ford Fiesta costs $15,000? No. If a Mercedes Benz costs $150,000 does it mean that my Lexus costs $80,000? No.

Now then, yesterday's prices may have an effect on today's asking prices, but not on today's sale prices. There is no causality, because what something sold for yesterday does not make it worth that today. Else Mr. Fuld would have got more for his artwork.

"If you believe that the past and present have no relationship to each other, then we really have nothing to talk about."

Cool.

Steve, there are so many problems with your last comment:

1. You claimed that townhouses sold for $2 million 5 years ago, yet you cite a Miller Samuel statistic that townhouse prices have tripled over 10 years. That says nothing about prices 5 years ago.

2. You don't need to luck up EVERY townhouse. If you know that the townhouses on your own block sold for $2 million, it should be very easy to look them up and find just one that sold at that price.

3. The correct relationship is not between the price of a mercedes and the price of a lexus. it is the relationship between a price of a mercedes today and the price of a mercedes yesterday. does one determine the other? no. are they related? yes.

4. You have just acknowledged that you believe that there is no relationship between past events and the present. That means that pressing a key on your computer keyboard has no relationship to the letter that appears on your screen. It means that there is no such thing as cause and effect. It means that being fired doesn't reduce your income. It means that eating a sandwich doesn't make you less hungry five minutes later. You might want to reconsider.

There may be a handful that sold for $2 million a few years ago - the reason I say this is because I think there are a few on the market now for around $5 million (I know this because I was looking at townhouses in Central Harlem for a while and was trying to get a feel for what they cost elsewhere in the city).

But the $5 million ones are tiny townhouses that are like 2 floors high - not the spacious ones that you see, for example, between fifth and sixth avenue or the one that this floor through is in.

"You have just acknowledged that you believe that there is no relationship between past events and the present."

I did no such thing. I said that just because something occurred in the past does not mean that what happens today is the cause of it. Let me educate you a bit:

causality: the relationship between cause and effect.

Just because something was worth something yesterday does not make it worth that today. What made it worth something yesterday was the relationship between yesterday's supply and demand curves. What makes it worth something today is today's supply and demand curves. If you can't see that supply has increased dramatically while demand has dropped to about zero, then you will never understand Econ 101.

It doesn't matter what properties sold for last year, just like it doesn't matter that the Dow was at 14,000 last year. The circumstances are different.

"If you know that the townhouses on your own block sold for $2 million, it should be very easy to look them up and find just one that sold at that price."

That means going back, looking up the address, join streeteasy, all to make you happy. It's not going to happen. Just go to Miller Samuel's townhouse report, look at the average price for downtown townhouses over the past 10 years, and you will see that it was about $1.5 million, and the median was about $1.385 million. For the city as a whole the average for the past 10 years was about $2 million, the mean $1.67 million.

http://millersamuel.com/reports/pdf-reports/MTHR07.pdf

Case closed. No more research needed.

Happyrenter, I'm done with you.

"is the effect of it."

Sorry.

And here is where you denied the relationship between the past and the present:

"If you believe that the past and present have no relationship to each other, then we really have nothing to talk about."

Cool.

In any case, we are indeed done. The numbers you quote from the Miller Samuel report are not accurate, and even if they were, don't do anything to prove your point. You are clearly just a ranting, angry guy. The fact that you happen to be a bear does nothing to change the fact that you know absolutely nothing.

Just to be clear: the report is accurate. what you claim the report says is inaccurate.

"And here is where you denied the relationship between the past and the present"

Wow. Black and white thinker. Some past events have a bearing on present events, but not all. Does it matter that the Dow was at 14,000 last year?

No.

"The numbers you quote from the Miller Samuel report are not accurate,"

Okay, fine. Those are the numbers they published in the report that I gave you the link for.

"and even if they were, don't do anything to prove your point."

Actually, they do.

"You are clearly just a ranting, angry guy."

Am I coming across as ranting? Or angry? I don't think so.

"The fact that you happen to be a bear does nothing to change the fact that you know absolutely nothing."

Dude - go to the Miller Samuel report and tell me what the prices of townhouses were. About $2 million. Which is also in line with what happened to apartment prices: 7 years ago an apartment that today would sell for $1.2 million would have sold for about $350,000. Sorry, but it's true.

And doing a cause and effect thing, just because an apartment sold for $350,000 7 years ago does it mean that it will sell for that today?

No.

steve, I'm surprised you won't take the time to look for just ONE example of a sub-$2m townhouse in a specific area. Did I also catch that you're not a Streeteasy (paying) member? That is even more surprising for someone who spends this much time here. Anyway, I suspect there may have been a few examples, but was not the norm. I did a quick search, found 21 King St sold for $500k in July 2004. I have no idea what kind of house this is or what shape it was in, and it's technically Soho, but it's a noteworthy sale price at least. Anyone know more about that address?

King Street sucks - full of traffic as it's the only way onto Houston Street from Varick. You need to make a left onto King and a right onto Houston.

Alas, I'm too busy to go through every townhouse listing in the city, and even that won't tell me what the price was for: a divided up building with rent-controlled or -stabilized apartments, or a pristine renovation on a to-die-for block. The Miller Samuel data are enough for this discussion - until streeteasy, they were all the data there were.

And sorry - yesterday's prices (either from 1997 or 2007) do not cause today's prices. They may have a psychological effect (and they do) but they are not causitive. What is causitive is the shape of the supply and demand curve, and the supply curve is showing plenty of supply, and the demand curve is showing virtually no demand.

Ergo - prices are falling, quickly, even for townhouses, or maybe especially for townhouses, since the MotU's were the ones buying them.

"Just to be clear: the report is accurate. what you claim the report says is inaccurate."

Wow. I claimed the report said what it says (because it does), you claim that the report is accurate but what I claim it says is inaccurate. But if I'm claiming it says what it says because it does, how can my claim be inaccurate?

Wow.

King Street sucks too! I'm beginning to wonder if there are any good streets left in this city. Washington Place Sucks, Park Avenue South Sucks, King Street Sucks. Pretty incredible that a lot of the most coveted streets in the world's foremost city actually suck. Thanks for enlightening us.

"Just go to Miller Samuel's townhouse report, look at the average price for downtown townhouses over the past 10 years, and you will see that it was about $1.5 million." Actually, the report doesn't say that. Doesn't say anything like that. And given that we all have seen prices for downtown townhouses in the $4-10 million range, it seems pretty obvious that the average price for such townhouses over that period has been $1.5 million.

read: has not been $1.5 million.

Perhaps, not being a paid member of streeteasy, you are under the impression at all of the townhouses that have sold with asking prices of $5 million or more have actually sold for under $1.5 million. You would be mistaken.

steve, I know about King St itself (which doesn't suck nearly as much as you make it sound - Patti Smith lives on that block!) - I was asking about the specific house.

As for the Miller Samuel report, it's far too vague to prove what you're claiming.

"Actually, the report doesn't say that. Doesn't say anything like that."

Actually, it does say that. "Past decade" it says.

"not being a paid member of streeteasy,

Yes, I'm a second-class citizen.

"you are under the impression at all of the townhouses that have sold with asking prices of $5 million or more have actually sold for under $1.5 million."

I never said such a thing, your making such a claim is ridiculous. What I said was what I said, and I do not retract it. It is borne out by the MS data.

Today's prices are unaffected by yesterday's. Just as there is inflation, there is deflation.

Guys,
One basic question. If the stock market can go back to 1998 levels on a nominal basis, why is it not conceivable for real estate prices in general to go back to say 2001-2002 levels over time when this apt could go for $500K (although i dont believe we will see that on this particular apt. if the seller were to move this quickly down to 800-900K).

inflation means prices increasing from a current level to a new level. deflation, a decline in prices. in both cases the new price is very strongly related to the previous price.

iamlooking, there's no question prices can go back to 1998 levels. Prices can go to zero, how the hell do I know? The question is what this apartment could reasonably sell for in this market, not what it might sell for at some future date.

WB (steve):

It's weird.

Sometimes, you can put forth your opinions in a cogent, yet reasonably calm, and accepting manner.

Othertimes, it's like you become this total borderline OCD, spastic, relentless, hyper angry, mammelian brained streeteasy troll who actually believes that the data he bases his conclusions on is absolutely infallible (like, oh, say, Washington Place between 6th Avenue and the Park is a 'very, very noisy block' with many 'drug peddlers,' because it's an 'OLD hangout' of yours - GIGO).

Just chill out. We get your point. The joint at 69 WaPl is over priced. Check. You wouldn't pay more than 500K for it. Check. Prime, well located 20 foot wide Village townhouses in excellent condition inside and out should be priced between $650K and $2MM, max. Check.

Roger that - over and out.

What is "mammelian"?

"many 'drug peddlers'"

I don't remember saying "many."

"inflation means prices increasing from a current level to a new level. deflation, a decline in prices. in both cases the new price is very strongly related to the previous price."

Your definition is right, your conclusion is wrong. The current price has nothing to do with the future price or the past price. To make that claim would mean you would be saying, "Today the price is $1. Therefore, tomorrow it must be $2."

Whether the price tomorrow is $2, or $0.50, depends on supply and demand (and, in the case of inflation, the money supply). It is completely unrelated to today's price. That is, just because something costs one price today, you can make no logical conclusion about what the price will be tomorrow, nor what it was yesterday.

I have a widget. It costs $5. Tell me what the price was yesterday, and what it will be tomorrow.

so you think that demand today has no relationship to demand tomorrow? that supply today has no relationship to supply tomorrow? that's simply incoherent.

anyway, enough. i thought we had ended this conversation.

500k

"you think that demand today has no relationship to demand tomorrow? that supply today has no relationship to supply tomorrow?"

Not only do I think that's true, it's demonstrably true. Look up any economics textbook about deriving supply and demand curves, and nowhere will you see yesterday's or tomorrow's prices mentioned.

"I have a widget. It costs $5. Tell me what the price was yesterday, and what it will be tomorrow."

I'll make it even easier for you: inflation is 50% per day. What will tomorrow's price be?

You can't say.

Hey - I am all for buying but pretty little apartment in the Village or not, almost $2 mil for a 1 bedroom walk up? "Short flight" or not - - - This puppy will sit a while at this price.

Umm. If you have a widget that sells for $5 dollars today and inflation is 50% a day, the price tomorrow will be $7.50. Not a very hard one.

If you have a widget that you can sell for $5 today but need financing that you cannot get to do so, is it still worth $5 today?

you need financing to sell things? i thought you needed financing to buy things.

If you have a widget that you can sell for $5 today but the buyer need financing that buyer cannot get to do so, is it still worth $5 today?

that's not logical. if the buyer needs financing to buy the widget for $5, then by definition you CAN'T sell it for $5 today.

So its not worth $5 now is it.

you can't sell it for $5, so $5 is simply an asking price. if you can't get your price, then no, it isn't worth that price.

Exactly. Or you need to find another customer, perhaps an all cash one.

"the price tomorrow will be $7.50. Not a very hard one."

Exactly why you don't know what you're talking about. You have NO CLUE what the price could be. The "widget" could be a cure for cancer - price tomorrow, $100,000. Or it could be a cure for being stung by a duck-billed platypus, market demand = just about 0.

Stocks went down today. General Motors went up. Neither inflation nor deflation nor today's nor yesterday's prices can predict tomorrow's.

If they could, we would all be a lot richer.

I suppose, like tech_guy & LICC before you, you will argue this point.

"i thought you needed financing to buy things."

Not that it's relevant, but you do need financing to sell things (sometimes). Look at a company's balance sheet, check out debt, and let me know.

"if the buyer needs financing to buy the widget for $5, then by definition you CAN'T sell it for $5 today."

Wrong again, if the buyer gets the financing.

HR - you don't know what you're talking about. Find me ONE economics text that says that to find out tomorrow's price you start with today's or yesterday's. Can't be done. They will talk about the shape of the curves, but not about historic prices.

That apartment isn't worth 1/3 what they have it on the market for.

Just to bring the argument down to your level:

"i thought you needed financing to buy things."

Credit cards.

stevejhx, if you insist on stupid arguments, then fine, here's my response:

1. If inflation IN THE PRICE OF WIDGETS is 50% per day, then the price of widgets will increase from today's price of $5 to $7.50 tomorrow. Since the only market you referred to was the market for widgets, the obvious inference was that the inflation rate was for that market.

2. You do not need financing to sell something. You may need financing to sell it the way you want to sell it--for salesmen, for marketing, for rent, etc. Clearly you can require financing to make things, to market them, etc. But if you have a product with value, you can sell it, at some price, with no financing.

3. Goingup presented a scenario in which financing was unavailable for the purchase of a widget. In such a scenario, if the buyer needs financing to buy the widget, he will be unable to make the purchase.

The reason a curve has a shape through time, rather than random dots all over the place, is that from one day to another most factors that influence pricing cannot, for various reasons, change dramatically. A very obvious example of the relationship between prices from one day to the next: Jeans go on sale at Smith's Jean Shop for $30. They expect to sell 50 pairs that day, but only sell 20. As a result, they lower their price to $25. Now they sell 60 pairs a day. The price from the previous day led to a certain level of sales. Based on the information gathered from selling at that price, they have changed the price. Hence, pricing from day one is related to pricing on day two.

"If inflation IN THE PRICE OF WIDGET"

I never said that. Backpeddling, HR = LICC = tech_guy, now that I know who you are.

"Since the only market you referred to was the market for widgets"

Did I say, "the market for widgets"? No. I said "inflation," "the price of widgets."

"You do not need financing to sell something."

No, you don't NEED financing, but as your example demonstrates, you MIGHT need financing. Which, contrary to what YOU said, is what I said: "but you do need financing to sell things (sometimes)."

"Goingup presented a scenario in which financing was unavailable for the purchase of a widget. In such a scenario, if the buyer needs financing to buy the widget, he will be unable to make the purchase."

And goingup rightly said, "Or you need to find another customer, perhaps an all cash one."

"The reason a curve has a shape through time, rather than random dots all over the place, is that from one day to another most factors that influence pricing cannot, for various reasons, change dramatically"

Yes, you are LICC = tech_guy, demonstrating an absolute, complete lack of understanding of economics. Here's something easy, that you might understand:

http://en.wikipedia.org/wiki/Supply_and_demand

Supply and demand are not "random dots all over the place." They are a curve, derived from statistical data. They can never be "random dots all over the place." It is absolutely impossible.

"from one day to another most factors that influence pricing cannot, for various reasons, change dramatically"

Really?

Click here: http://en.wikipedia.org/wiki/Image:Black_Monday_Dow_Jones.png

get back to me.

happyrenter = LICC = tech_guy, your ignorance belies who you really are.