Is anyone buying?

well, it all depends, there are so many opinions out there, and I do not think anyone truly knows when the market is going to start bouncing back again strongly. Some people say that it will occur towards the end of this year. I really do not tell my buyers what to do, what I do is send them as much information as possible and know that whatever they decided is best for them based on as much information as possible. Some people say that prices are down by a certain percentage, but I think it is contextual, you can't apply a general formula to every property, as each property has it is own characterization that gives it it is value relevant to market conditions but very much also similar to other properties like it. Some people also say that if you purchase a fixer upper, or purchase under certain value, the risk is less. I highly doubt that the Manhattan market is going to go down the tubes, it is still a valuable asset for many and with strong financial bases. I do know, you really have to look into this, perhaps wait a bit longer, really be on top of all types of information and data.

ps if you can negotiate yourself something nice, and a real deal, then, go for it! if you want to reside in the apartment long term, I think that's really what is also important, this is not the time to buy to sell in a few years. Make a good sensible purchase that you feel comfortable with, when you feel comfortable.

some people need to buy b/c of their life's circumstances.

and when they do, they should negotiate hard.

oldbuyers is (are?) right. There are so many factors beyond price.

With this said, after hearing on CNBC (?) about Tokyo RE which has supposedly remained at something like 50% of its peak value for the last 10 years, I guess it might be a long and painful process toward recovery. But their bubble was waaaay more ridiculous compared to ours--reportedly well beyond 200% "artificial growth," so who knows?

Besides the general uncertainty about the economy, buyers have to factor in other expenses such as the inevitable increase in state and city income taxes. The state and city can't run deficits and there is no vibrant credit markets to place debt so they will have to increase taxes. This is true for real estate taxes (common/maintenance charges), and taxes on other municipal services as well.
After what has transpired in the equity markets, who comfortably knows where the bottom is.

"some people need to buy b/c of their life's circumstances. "

who? you can always rent while prices keep on falling.

those increases are coming mets, no doubt about it. somehow home prices don't reflect them till they hit, so better to wait if possible. given that unions own albany, rise in taxes is more likely than a cut in unfunded pension benefits.

The latest stats said contract sales down 75%. So, somebody is buying, there are just a lot less of 'em...

admin, I'd pay an extra 20% on a property now, before the supposed decline, just to avoid having to move twice. You may not agree, but some of us feel that way and CAN AFFORD IT.

"some people need to buy b/c of their life's circumstances. "

I know plenty of people who've done things much more ridiculous than buy a home in a falling market in order to appease a spouse.

falcogold1:

"When do you buy???"

When the remaining RE bulls in this board finally go away and it truly becomes all gloom and doom, even when talking about long term time frames.

That's when DotBust bottomed. When all the DotBust bulls finally stopped "calling bottoms" and saying "now is the time to buy, look how cheap tech stocks are!!" and spinning data in the tech stock boards. Basically, when everyone gives up hope and we get true capitulation.

We're getting closer, but we're not there yet. Thanks to the illiquid nature of RE, it's going to take some time.

Plus, we haven't even seen the real crisis yet. All that has happened so far is just the appetizer. Once the global currency crisis hits, then we shall see what the true effect to RE this downturn cycle will bring. That's what may lead to the capitulation I'm talking about.

"I know plenty of people who've done things much more ridiculous than buy a home in a falling market in order to appease a spouse."

wow! that's so true!!! most women think it's cute to fall in love with the house and demand the guy to pay up, not me.

duvravcic, about moving and affording to overpay 20%, do if you want. i'd rather have an income producing portfolio worth 20% more (which have a double purchasing power on an after crash stock mkt) and pay guys to do the moving. but those are personal preferences for sure. but, my field is finance, if yours is not chances are you don't like to invest.

After looking for a 2B/2BA condo on the UWS for over a year in 2006/7 we purchased in April 2007. We paid around $150K more than I felt the place was worth, but the long term price of divorce and attorney fees could not be financed quite so easily. Recently the place appraised for only $40K less than we paid, so we're still in relatively good shape and no split of assets.

raddoc, what do you think happen to couples once it's deeply under water? the party that pushed for the deal to get done gets blamed by the other that was more rational? hence, divorce happens anyway?

raddoc, LOL.

As potential buyers and sellers (we own a studio, and want something bigger) the problem is not judging prices to "call the bottom," it's credit. I can probably borrow half of what I could have two years ago, off the base of a higher income.

ali r.
{downtown broker}

I read a report from goldman that was published recently that said prices would need to fall by 35 to 44% in Manhattan to return to a neutral valuation level (a return to 1995-1999 valuation levels). The report also said that many other variables could change their estimates, such as Manhattan per capita income, possible change in Jumbo rates, demographic changes, crime, return of empty nesters, etc. So basically to get back to the base period chosen, 95-99, (because it preceeds the recent boom) the article states one bedroom condos would fall from an average of $800k to $480k, 2 bedroom from $1.7M to $1.0M, and 3 bedroom condos would go from $3M to $1.8M. Their math is based on rental prices, incomes, and affordibility.
No mention on how long they estimate this correction would take. The drop seem drastic and we'll have to see how salaries change in the upcoming year. Outside of this report a lot of what is written & studied about the Manhattan housing market is from RE agencies, such as corcoran, douglas elliman, etc. Good to see a somewhat independent publishing.

"The drop seem drastic and we'll have to see how salaries change in the upcoming year"

more than salaries it will be unemployment. many of the the unemployed from financial services and also real estate (underemployed in the last case also given the drop in transaction volume) will not be able to keep up with a big mtg and big maintenance costs. we will see this happening next year though as many will try to stay in the city to try to get a new job, some will succeed but many will move out. so, in a year from now i expect most transactions to be distressed sales pushing prices down (but they will not be the most desirable properties though).

One of the wonderful things about this purchase was we didn't stretch at all to acquire it. We bought so far below our means that the property would have to become absolutely worthless and extremely costly on a monthly basis to make us think twice about it. Our primary residence is long paid off; we have never lived an extravagant lifestyle and this place was a minor splurge. Some folks lose more in depreciation on their Bimmer over two years.

I sit at a desk in a hedge fund. All day I hear about declining fees for funds, more and more mass lay-offs at the investment banks (see MER and BAC this week alone), corporate lawyers with less and less work to do (and therefore less hours to bill). Those that do have jobs have severely reduced compensation expectations on top of increased job insecurity. Bottom line, NY is going into a financial service related severe depression. Nothing more than basic emperical evidence tells you that real estate prices are going to continue to crater. Hundreds perhaps thousands of people that bought props in the last few years will not be able to afford the $10K/mth mortgage servicings. Hence supply is set to accelerate and prices will crash further and further. $500/sqft is easy easy achievable. I've been to a bunch of open houses recently and prices are still ridiculous

Also, I don't know why somebody (the same guy who said he'd choose to lose 200K or 400K in value of a property and BUY NOW instead of renting, because he doesn't want to move twice) stated that the Japanese decade-long 50% drop from peak prices was justified because their bubble inflated prices by 200% and ours didn't. Hey pal: get your statistics right. Since 1995, countless places have gone up 300-400% here in NYC while wages and cost of living have not gone up more than 50%. Ergo, our bubble couldn't be more Japanese in size. Face the consequences. And go ahead and BUY, BTW.

you'd rather lose 20% of your purchase price than move twice? i hope you are exceptionally rich and that you are buying a pretty cheap place. the places i'm looking at are mostly in the 2-3 million range. the idea of losing 400-600k simply to avoid an extra move seems just insane to me. i could afford it, it wouldn't hurt my overall finances that badly, but it would just be completely irresponsible.

i also don't see why waiting a year to buy forces you to move twice. why can't you continue living where you are right now?

...or 30%, happyrenter. People have different financial circumstances and value priorities. I am not sure why some people just don't get it. I am looking in the $1m range, and it makes ABSOLUTELY NO DIFFERENCE to me. Seriously. I am not saying my case is typical, but I want you to know that I can comfortably pay 30% extra to avoid moving twice.

Charltop: I also work at a hedge fund. And the newsflow you mention is exactly the reason I am looking right now. I still think sellers are delusional, but I want to know the market (and the buildings) very well, so that when inventory starts to climb and prices soften, I am ready to pounce. But I am also conservative, and would never take on a mortgage that I couldn't pay with my base salary.

duvravcic,

more power to you. but i think there is a difference between being able to pay an extra 30% to avoid moving twice, and being willing to pay an extra 30% to avoid moving twice. i am able to rip up hundred dollar bills and flush them down the toilet, but i do not choose to do so. the difference between moving once and moving twice is actually worth $300,000 to you? if it is, then as i say, more power to you. i guess i just don't get what's that horrible about moving.

for $300k i could fly myself first class to bhutan while the movers move my stuff, trek through the himalayas, stop off in paris on the way home and buy, i don't know, an entire new wardrobe and all new furniture (so i guess i wouldn't need movers at all--i could just burn my old stuff), have it shipped back UPS and professionally unpacked in my new home, and I just arrive and put my feet up. And I'd probably have $100,000 left over. Or I could avoid the extra move, have my same old shit, not go to Bhutan, not trek through the himalayas, not visit paris, and not have 100k left over. It doesn't seem like a hard decision.

>When do you buy??? <

Let's start by facing that this is not your run of the mill economic recession for the financial services industry, it's a depression. IMO, anyone that jumps in now either has a ton of cash and doesn't care or has no clue as to the severity of the current economic downturn.

Assuming history repeats itself (and it does), buying today would be the equivalent of signing the dotted line during the fist half of 1989. That would suggest facing at least four years of downward market pressure combined with a nearly illiquid market. RE cycles are long in their duration and some folks miss the fact that it took this market 12 LONG years to arrive at the current bubble state. It will take quite sometime to unwind it.

Good post happyrenter. Duvravcic's plight is sooo moving that I just don't know how Hollywood moguls have overlooked such a charged dramatic dilemma: burn 300K on a whim or move twice? Hamlet-worth, let me tell you.

Happy, now I want to go to Bhutan and trek the himalayas and get a new wardrobe.

Moving is frequently cited as one of the top three stressors, along with death of a family member and divorce. Plus it's expensive. No need to be glib, haters.

ok, lets settle. duvravcic i'll do your whole moving, as you want it to the millimeter for $300k. my retirement account is doing great with the stock mkt crash (i was/am short). still, the $300k you are willing to overpay will come very handy during bottom fishing. please!!!

duvi you still got a hard on? tina.. u broker, right?

Here's the new marketing line from CORCORAN: BUY now to never move again!

ha ha ha. wow w67th, it is a good thing you do not pick on me :)

>BUY now to never move again!<

lol! Nice one, w67thstreet. :)

Just a hunch but it might take a heck of a lot of creative marketing to move the ever bulging inventory of this over priced air space.

it is going down, do not buy

@charltop

"I sit at a desk in a hedge fund"

Give me a break dude as if working at a hedge fund gives you some qualified opinion of where the market is heading - I work at a hedge fund too and let me tell you those tools have just about as much of a clue in the future of the financial markets as they did in September - look how well that positioned them.

So do you work for Madoff? Fortress? You work for John Thain? Which fabulous priveledge institution do you work for.

I am so sick and tired of anyone thinking they can predict anything especially someone who works on wall street as do i that gets some ego trip by being able to say that as if it gives them some sort of crystal ball.

What a dipshit you are. Havent you learned anything in the last 4 months? No one knows what the fuck is going to happen if they did they wouldnt have lost trillions of dollars....

You mean the emperor has no clothes, Mike?!

Amen Topper...

Look people - real estate isnt that hard to figure out. You can try to predict all the variables of how GDP is going to impact the unemployment rate as it relates to the friggin bell curve at a 95% VAR alpha cooefficient - but guess what - it aint gonna give you anything more than a god damn headache.

Is real estate overprice right now - probably. Should you buy? Let me help you answer that question by a best judgement assumption.

Take the property that you want to buy. Lets say its a 1 bedroom in the West Village. What does that property cost if you were to rent it. $2500? $3000? Maybe $3500 as a rental? Ok Great!!! you love it though and could see yourself live there for at least 3 to 5 years. Ok now you want to buy it. Based on the mortgage of todays current rate if you locked in for 30 years Are you paying less then lets say 20-30% a month premium (excluding tax adjustments). Yes i do believe its worth about 20% more to OWN a property then what it would be to rent especially in Manhattan.

Can you answer yes to that question? Ok Great - buy the place. Still make you uncomfortable? Pick your ass and sit on the side and hope the market comes to that price.

Shit man it really isnt that hard - yes prices got out of whack - are they now? that is all relative based on the property. But fuck just cause you work at a hedge fund doesnt give you the license to sit there and say Manhattan apartments are going to fall another 50% because you know you work at a fucking hedge fund. You have no right to say that - look at where the fuck that arrogance got Lehman. Need I go on?

Funny enough, I actually see both happyrenter's point and duvracic's point. 20% premium to avoid moving twice is A LOT, and I don't think I would pay that. However, would I buy knowing there's A CHANCE I overpaid by 20%? Maybe.

As a growing family, you usually move when you outgrow a place. There is a lot more to moving than the cost of movers - the time and frustration of looking, packing, living in boxes, etc. At a minumum, you are not enjoying either the old or new place for a couple weeks. More likely, a couple months. There's a real cost to that.

We outgrew our last place in 2008. Thought about buying for a variety of reasons, including HATING the idea of moving twice. Got over it because (1) didn't find anything we loved, (2) all the signs were already pointing to a decline, but it wasn't happening fast enough to benefit us (3) we would've had to stretch a bit to afford a place we could live in for 7-10 years, and didn't want to do that (4) the math was just so, so far out of whack.

We'll probably outgrow our current place sometime in the next 2-3 years. I don't have a crystal ball, not do I expect to get one by then. So I won't know how well we're timing the market, but our strong bias at that point is to buy. If we time it imperfectly and end up overpaying by a bit, so be it.

I am a mortgage broker here in the city. The volume has picked up considerably in the last couple of weeks and it is not just from refinances. I am seeing along with my entire office a lot more purchase borrowers. You can speculate all you want on how people are losing their jobs and the wealth leaving this city.

But just because you are affected and some of the people you are around are affected by the downturn does not mean that everyone has.

The personal financial information I have seen for the last couple of weeks and not just from my borrowers has made me realize there is still A LOT of people with A LOT of money. I see staggering amounts of wealth from so many people who buy in Manhattan. And it is buyers from all over the world.

Like it or not, the wealth isn't all being lost - there is still plenty of people with money in the city. They may have lost some but when you start out with several millions of dollars, losing a couple doesn't exactly make you poor nor will it stop you from buying a home.

wow i am so relieved anonymous poster number 1

wait your anonymous poster number 10. sorry to get your name wrong.

newbuyer,

That's just a silly post. "However, would I buy knowing there's A CHANCE I overpaid by 20%? Maybe." Umm, if you ever buy an apartment you are buying with "A CHANCE" that you overpaid by 100%. That's the difference between owning and renting: when you own, you put your capital at risk, and in exchange you can stay in the apartment as long as you want at a fixed cost. But there is always, in any market, a chance that you have bought into a complete disaster that will end up being worth nothing--that's why they call it risk. Clearly you know this.

The issue at hand was whether one would knowingly overpay by 30% to avoid the hassle of a move.

pardon me--that should read: "A CHANCE" that you will love 100% of your investment.

anonymous number 10,

oh where do i begin. somehow i doubt that someone who doesn't know how to conjugate verbs properly is dealing with mortgages at a very high level (there is still plenty of people). but more substantively, have you ever seen anyone claim that all wealth has been destroyed, or that no one is purchasing real estate in new york city? that would be absurd. clearly all wealth has not been destroyed; the point is that much wealth has been destroyed. not to mention the lost income and the lost income potential. why don't you take a look at the actual data which is publicly available rather than pass on dubious rumors and analysis based on the brilliant observation that not all wealth has been destroyed.

Admin -- I am a WOMAN married to a MAN who is completely irresponsible about buying and renovating property -- and I resent your sexist implication that it is always women who fall in love and don't pay, in my case it is the exact opposite. I am about to divorce this irresponsible man who brought our family to the brink -- and possibly over the brink-- of bankruptcy because of his addiction to opm (other people's money). All I can do is save myself and my kids from financial armageddon. So watch your assumptions.

maybe you should marry a WOMAN?

Here's a new question for the 2009 PSAT:

Joe marries Estebel for her money. Estebel has $1 million. Joe has $0. Joe invests 50% of Estebel's money in real estate. Joe loses all of it. Estebel divorces Joe.

How much money does Estebel have after the divorce?

Here are follow-up questions:

Joe marries Estebel for her money. Estebel has $1 million. Joe has $0. Joe invests 50% of Estebel's money in real estate. Joe loses all of it. Estebel divorces Joe.

How much money does Joe have after the divorce?

Why did Estebel marry Joe in the first place?

Mike_s55 - "look at where the fuck that arrogance got Lehman. Need I go on?"

What are you talking about?! "Lehman arrogance" - are you so dumb not to see that it was Paulson, tryin to save his ex-Goldman buddy, Thain.

beaty, "Why did Estebel marry Joe in the first place?" it's too harsh on Estebel. marrying is one of the biggest gambles of your life, you never know how the guy will behave down the road.

Estebel, i'm a woman myself and told it like i see it happening. of course, there are some cases that don't fit my stereotype, but it's informative of what i see. of course, many are super responsible working single mothers, many are very careful with the money the husband earns while they stay at home. but as far as i see, somehow females fall harder for "catching up with the jones" type of bullshit. no idea why, glad to be told i'm wrong.

projects_suck - look at the context of what I was writing about dont get caught up in the detail of the one statement. I was referring to the fact that charltop preceeded his statement by saying he sits at the desk of a hedge fund - and then goes on to ramble about Manhattan real estate as if that gave him the expertise in understanding the future of it. Lehman arrogance is in reference to a very very large financial institution that you would have thought should no alot about finance - but in the end got caught up in the real estate bubble as well. Therefore just because you work on Wall Street does not mean you can predict markets - as evidence of lehman's collapse - comprende?

mike, "I sit at a desk in a hedge fund. All day I hear about declining fees for funds, more and more mass lay-offs at the investment banks (see MER and BAC this week alone), corporate lawyers with less and less work to do (and therefore less hours to bill)." informs you how the guy knows what he is telling you that's happening as we speak. this is no forecasting, this is fact.

that said, people working in finance (hf included) had been indoctrinated to go into name dropping, showcase ivy league degrees, show expertise in a hard core science... while making a point that maybe only requires common sense. it's all BS, all a big fallacy, but very hard wired. hopefully people like you keep on picking on it so that it goes away. i'm so sick of it.

admin - agree, was a bit harsh.

as for who's more prone to try to keep up with the joneses, I find it's pretty split between men and women, though over the past five years the tendency for women to dig for gold in this city has reached absurd proportions.

"but as far as i see, somehow females fall harder for "catching up with the jones" type of bullshit. no idea why"

What? Are you saying it is NOT a coincidence that, when we go to the shopping mall, we see nine stores selling women's shoes, dresses, purses, and useless knick-knacks for every ONE store aimed at men? Amazing observation!

In other news, Russian scientists today announced that the sun will rise in the EAST tomorrow...

My husband would be happy if I were to pick up some nice, overpriced stillettos.

Regarding the golddiggers, yes, but there were also a lot more men who thought they were gold.

"there were also a lot more men who thought they were gold"

LOL. They didn't think they were gold; they thought they were easy...

Estebel said: "I resent your sexist implication that it is always women who fall in love and don't pay"

No one said "always", Este. Sometimes it's the opposite. But it's quite the exception. I once read about a man in Los Angeles who fell out of a 20 story building and LIVED. But that's quite the exception - I don't recommend people jump out of 20 story buildings expecting to live. And I don't recommend men get married expectign their wives to be good with money.

"I am about to divorce this irresponsible man" - You're being true to your gender, once again...it's women who file for the vast majority of divorces. ("because the man hit them/cheated on them/was an alcoholic" you will no doubt reply, but the real reason is they got bored, since women's minds are more fickle then mens).

Finally, a blog where people aren't afraid to tell the truth. I like it!

Adm and 67 here's a little fodder:

My favorite line so far during this entire Wall street fiasco since HSBC first said they were going write down some sub-prme, call it 3 months before the 2 Bear hedge funds imploded. About 4 months ago a single friend of mine says. "you know, the only upside to this mess? there is a whole bunch of humble pussy out there now"

wow, there are some great posts on this one, boys and girls. I have to stick up for my kind though, boys, and say if this little wifey didn't manage the households money we would have squandered it all on fuel cell stocks and 911 turbos. I laugh because I think my husband DID marry me because I'm a saver.

Did anyone hit up open houses today? Anyone interested in a read on 4 condos in Chelsea in the 2-3mil range?, 'cause that's what I dragged my caveman to today...

No, "mrsbuffet", but I did host two open houses today, one in the UWS, and another in the West Village. I was pleasantly surprised to see a warm crowd on such a cold day! People seemed optimistic instead of depressed. Aside from discussing the features of the apartment, we sometimes discuss the market, condition, their needs, wants, desires, expectations in our socioeconomic landscape at this moment. While some felt that this was the right time to buy, others really did not know, or were not sure, however - still happy to be visiting open houses :) certainly more activity than a few months ago it feels like...

"you know, the only upside to this mess? there is a whole bunch of humble pussy out there now"

LOL. Life is tough even for ex-strippers in this economy.

lol

bmw, what size apts?

2 bedrm in the uws, and a large studio in the wv

Stop hijacking the thread, they were just talking about strippers! Much more interesting.

"admin, I'd pay an extra 20% on a property now, before the supposed decline, just to avoid having to move twice. You may not agree, but some of us feel that way and CAN AFFORD IT."

You realize you can PAY SOMEBODY to move you?

And it won't cost hundreds of thousands....

Damn, how did I miss this...

forget wall street, forget doctors, forget irish carpenters...

PEOPLE WHO DON'T WANT TO MOVE WILL SAVE US!

;-)

Like all things it comes down to time and price. It would seem that the time has yet to arrive. From the above posts I'm thinking...about 10 to 14 months from now. That means it's time to begin the hunt. Time to educate one's self to the possabilities...

"You realize you can PAY SOMEBODY to move you?

And it won't cost hundreds of thousands...."

of course! Admin & Co charges were offered already.

sorry, i meant services, not charges LOL