NYT Article: NY Real Estate Still Moving in the Millions Range

"Admiral, you're assuming a few things here:

a) that once prices start to rise, they will continue to do so.
b) that you can accurately gauge when prices are rising. Because comps are really the best tool we have, and these are lagging indicators (at least several months to over a year or more in some cases), it is very tricky to pick your spots with much confidence.

You're also looking over the fact that different neighborhoods, buildings, and product types don't necessarily move in conjunction with each other, which can make gauging the market even tougher when you're looking to buy. This is why I think I maintain that staying informed (well beyond reading Streeteasy - I mean going to open houses, seeing what's on the market, what can be negotiated) and being aggressive in your bidding should be constants."

I agree that going to open houses and other anecdotal sources of information are very very important. And of course, things do vary by neighborhood, although in large secular macro swings like the one we're engaged in (i.e, real estate crashing from LA to Miami to NY to Spain to China...), that is less important as the "tide" is going to overwash the regional differences.

I disagree with your comment that i am incorrectly assuming that "once prices start to rise, they will continue to do so." Real estate tends to tick upwards for many years (8-15) and then downward sharply for 2 yrs or so. this recent case could be like Japan in the 1990's (down for a decade), but either way you'll know when the market turns. You can see it anecdotally, you can see it in the lagging data (a few months is nothing in real estate terms, unless you're on a VICIOUS down slope like we've been on since November).

"Now I am off to golf 18 holes then hit the Spa at the Ritz."

Which Ritz, petrfitz? I love the Ritz, particularly in South Beach, Key Biscayne, etc.

We're gonna call you "petrRitz"...

w67,
our posts crossed. Thanks for the answer. I should ax my atty. Don't know if I agree with you: You're saying that we as LC holders wouldn't be considered depositors in the bank went bk. Maybe. Jeez, dude, read something happy, you're giving me nightmares.

Nope... we should hang the regulators and S&P/moody's for missing credit derivatives and giving anyone with SS# a AAA rating. I for one never imagined we'd be bailing out Citibank.

Here's the happy thought of the day.. when you were young what did it take you to make yourself happy... me a BMX bike or a frisbee in Central Park. I still got a frisbee... :)

"you become just another unsecured creditor and will most likely get crammed down to a junior position."

No. Letters of credit are contingent liabilities and don't show up on the balance sheet until they are executed. If you have the letter & the bank goes bust, you need to get a new letter right away.

Moreover, if it is a bankruptcy there is no provision in bankruptcy law for debtor-in-possession or restructuring of banks. The debtor is liquidated immediately. Since the LC is contingent, it simply does not exist.

> gee more rambling attacks that are not backed up by any logic

Did SuckerPete really just accuse someone else of rambling attacks not backed up by logic???

Hillarious.

> he can still not point to 1 single opportunity to make money in real estate.

I pointed to 3 ones that I called in advance.... all would have made lots. They were all shorts of course, but thats what happens when a market tanks.

Yes, some things are cheaper, but a bargain about to become a bigger bargain is no bargain at all!

> he holds to his argument that putting out $50K per year in CASH to a landlord is a better investment
> in his opinion than being a landlord who nets $150K in cash from his tenants.

No, renting is not an investment.

But it is also not a stupid investment like yours.

By your claims, you own $5 mil in real estate, so you lost about one million in equity. That you got $150k in cash doesn't really fix that, now does it?

I'm sorry you don't understand what cash flow positive losses are, but you are riding them back to bankruptcy again.

Your stupidity won't save you.

> this is the level of logic and reason from this moron. No wonder why he got laid off from his junior
> level wall street job and is a bitter moron who hangs out on RE boards all day.

Wait, this is the idiot who complains about insults?

You are the jackass who called BUY at the peak of the market.

Doesn't get much more idiotic than that.

And why would I be bitter? I called it right.... you're taking the losses, I'm the one who gets to take advantage of that.

Thanks!

> Now I am off to golf 18 holes then hit the Spa at the Ritz.

And then probably kill himself.

W67th - your doomsday scenario really resonates with me. I think it's not far-fetched at all. I'm with you that at least we can feed ourselves. Forget Manhattan real estate, I'm thinking that we have a few months before the sh*t hits the fan. Right now, we're 100% cash and looking around for somewhere to park it. USD is going to take a big hit. This is the lull, where you can still buy some foreign currency at decent rates.

steve.. I think i stand corrected. Should've studied harder :)

ahhhh.. I'll keep a fire going for you in Central Park.. :) nyc10023

stevehjx... did not know that about banks in backruptcy court. Did a lot of DIP financing in my days, but never a bank.. so I'll defer to you. However, dwell me thinks the Fed would most likely try to find a buyer for any bank in trouble going forward (Lehman was not a bank).. and as part of the "purchase" the new bank would most likely be required to honor outstanding LCs. FWIW.

Stevie is right again.. .in my lease, there is a clause on substitute LCs if my tenants' bank LC does go bellyup... that's why I pay him $500/hr. Hoo Rah!

In your doomsday scenario, NYC is the last place I would be. I'd leave for a socialist haven, where there is tight social cohesion.

nyc10023... dude I'm digging a bomb shelter on 60th and CPW.. .tonite at midnite. :)

w67, I was a bank auditor for years before switching to translating what I used to write. LC's are really complicated, and contingent liabilities are a bitch to quantify.

"Lehman was not a bank." Yes it was, but it was not a commercial bank, so it was regulated by the SEC, not the Fed or the FDIC or the Comptroller of the Currency.

Glass Steagall separated the two:

http://www.investopedia.com/articles/03/071603.asp

Sandy Weill got it repealed. One more great thing he did for finance, after Chuck Prince.

Thanks, Steve. My LC is an Ever Green, does that make a differnce re: being a contingency?

Yeah, W67, I'll check my lease too.

But, agree, highly unlikely that US gov would allow a commercial bank, like JPM, to go BK.

dwell, not if the bank goes under. It is still a contingent liability, however, because it hasn't been executed.

As an auditor contingent liabilities was the first job they gave me. I said, "F*ck," I'd never heard of one. I'll say this about Macke on Fast Money: he's right about bank accounting - they can say the liability is worth whatever they want. There's no way to know whether anyone will execute the LC.

@dwell: Steve: If we had been in school together, I'd probably always be asking you to copy your notes (& maybe your answers), so, please give me the formula:

Dwell, I think you are half right. I'd probably have copied Steve's notes too, but I definitely wouldn't copy his answers. Steve is the studious neat type - good characteristics - but he's not the bright type. He's a solid B- student, ranked in the 20-25% range in his class, George Washington University, etc.
You want to copy the answers of the smart guy who probably didn't take very good notes at all.

Oh great, another discussion about real estate devolved into armageddon and then into another lesson where steve "proves" how much he knows about bank finances.

Thanks Steve. Will run this by my lawyer.

ranter: Steve's a pretty smart guy. I bet Steve's notes were great (proly has legible handwriting), that's why I'd copy them, proly his answers too cuz objective was to pass de class. Once school was out, my genius brain could do its own thang.

Illegible handwriting. Specifically chose GWU because that's where I wanted to go, and I come from a poor family and got a 50% scholarship. Ridicule what you like.

Illegible?? Dude, what would I do? I bet I could have figured out your chicken scratch. I bet at least they were coherent & I could figure out what would be on the test.

I have trouble filling in the circles on multiple-choice tests.

dwell. it didn't sit well with me that Stevie was right and that I "naked" on the LC... but I realized it's really about timing. If your tenant and bank (with LC) declares bankruptcy within a couple of days of each other.. then you are screwed. Otherwise if your tenant goes bellyup first, you go to bank and demand payment. If the bank (with LC) goes bellyup.. you go to tenant and ask for substitute...

Whew!... now I can sleep better again. :)

http://www.nytimes.com/2009/01/08/business/worldbusiness/08yuan.html?_r=1&hp

Hey the Chinese are selling.... I better dig the bomb shelter quickly :)