Why do sellers feel entitled to double their investment?

Becuase sellers need enough money to buy their next property, so they can't lower their prices unless every other seller does the exact same. If other sellers are asking doubel what they paid, then they need to do the same.

These people need to either sit on the apt until the market gets better..probably 5 years...or sell for a decent price...current market value ...then rent..... If you bought before 2001 your apt should be worth 2 1/2 x what you bought for. It's a real renters market and buyers market right now. Sometimes you just have to wait it out.

"Becuase sellers need enough money to buy their next property, so they can't lower their prices unless every other seller does the exact same. If other sellers are asking doubel what they paid, then they need to do the same"

Huh? Wha...?

Sellers can't lower their prices unless other sellers do the same??

alpine292 - your answer is a joke, right? If so, apologies for my missing the humor right away.

But that thinking doesn't take into account that no one is getting the ask and that they can preserve what they have already made or invested by getting out now, or that they can still buy their next property in a different area... It's a race to the bottom and the sooner your out of the race the better.

(Let's exclude apts of over 1 million from this discussion)

THere's not much selling these days, but if you look at what is going to contract in November, December and now in January, it's pretty much at 2004 prices. And we all know it's still going lower. So why don't owners see this and lower there prices? Is it a combination of ignorance (not knowing the market) or bad advice from brokers, or arrogance?

Even people who have had apts for 15-20 years who obviously paid 1/3 to 1/4 what they are now asking, and probably have very little mortgage, if any left to pay don't seem to be able to shake free of the entitlement to 2007 prices.

No, it's not a joke. I am a seller and I can assure you that asking prices of properties I am interested in have a major affect on what I price my house at. And many other sellers have the same mindset. Nobody wants to be the first one to drop their price. LOts of sellers are relucatant to drop their prices because, if they do, there is always the chance that everyone else will follow. And the last thing the seller wants to do is shoot themself in the foot.

The truth is...the apts in manhattan...all of them...any neighborhood or ridiculously overpriced....i bought back in 1999....could hardly afford it....now....to move to fit my family....can not afford it...so the truth is ...manhattan has always been overpriced....i'm not saying it's not worth living here...it's just really hard if you can't afford 1million and up apt. but I still love it here...I will be patient ...

alpine292 - hence why you haven't sold your place.

alpine - your logic makes no sense. If you drop your price first and everyone else follows then you may be the first one to sell. THen, you can be the first one to buy the lower priced apartments. You need to be a trend setter not a follower. That's what I did. I knew I had to sell fast, so I did. I barely broke even from my purchase in 2006, but now I have a ton of cash and if I wanted to I could buy a larger apartment in the same building I moved from right now. Apts that were asking $50,000 more than what I was asking in September are now ask $50,000 less than I was asking. It's very simple - this housing market is like a house on fire. I got out when I smelled smoke. Others can feel the heat are are leaving. You and other sellers are waiting until the flame is right in your face. When that happens you are all going to try to stampede out the door at once. If you want to sell now you need to be the first one out the door, that way you can be the first one back in when the fire is put out.

alpine - you need to understand how to value an apt. It's not based on market comps, or historic prices, or even fundamentals. If you take a real estate class you'll learn (and then ignore once you become an agent)(which I never did) that The price of an apartment is whatever I buyer is willing to pay and whatever a seller is willing to accept. That's it. Ignore what you saw the past three years. It was a fake economy. It wasn't real. It sucks, but it's true. You can be honest about it, or ignore reality. Too many sellers are Wilie COyote, in the air off of a cliff. They just haven't looked down yet...

Right on. Your last paragraph is extremely well put. Folks have to stop looking at "what was" because that was a fantasy. 1800s tulip prices do not matter now.

In a declining market, sell quick within reason. Trying to "wait it out" makes no sense. And once you go to contract on what you sell, then you look to buy.... any delay should work in your favor.

Actually, you might be better waiting out the market if you are downsizing because your larger apartment loses more in value dollar wise than smaller units do. What would you rather lose: 20% on a $500k condo or 20% on a $1 million condo? In contrast, when prices go up, you gain more in value dollar wiise than smaller units. Declining markets only help those who are looking to upgrade.

Thanks. I mean, I can't see prices going below $450/sf for downtown manhattan studios and 1BRs but I think it'd be realistic and a sign of a healthy market if we got to $600/sf by March.

I'm not in a position to even consider condos. It's strictly coops for me.

Also, I'm trying to make a lateral move in size and trying to trade up ('downtown') in location (UES to E.vil)

"Actually, you might be better waiting out the market if you are downsizing because your larger apartment loses more in value dollar wise than smaller units do."

Alpine292 - "waiting out the market" only helps with regard to BUYING, not SELLING. Have you ever heard of selling HIGH, buying LOW? You're making an argument for is selling low and buying low.

alpine - with all due respect, have you anchored to a particular price? I ask because your arguments and rationalizations are pure nonsense, which suggests to me the mindset of someone who does not want to accept the reality of a swiftly declining market.

Why can't you wait out the market if you are selling? The market WILL recover one day. Not everybody is desperate to sell. ANd no, I am not anchored to a price. SInce I originally listed, I reduced by $200,000. But I am not reducing anymore. I'm done with price reductions. If I can't find a buyer, then I will just keep the place as a rental.

>>LOts of sellers are relucatant to drop their prices because, if they do, there is always the chance that everyone else will follow. And the last thing the seller wants to do is shoot themself in the foot.<<

I see. So it's better to stubbornly stick to an overinflated ask and not sell than to lower the price and make a deal? If your goal is to sell, that strategy is plain dumb. Adjusting one's price to reflect current market norms isn't shooting oneself in the foot, it's the way to make a deal happen.

"Why can't you wait out the market if you are selling? The market WILL recover one day. Not everybody is desperate to sell."

alpine - who told you the market WILL recover one day? WILL it? I don't think it will. People lose a LOT of money by hoping. HOPE is a huge money-loser.

alpine - also, reconcile the following two statements: (1) "no, I am not anchored to a price" (2) "I'm done with price reductions". Do you hear yourself?

You're simply not making sense, my friend. This is a big, bad, bloody market and I suspect you will be stuck in your apartment for a very very long time if you decide to wait because "the market WILL recover one day". That, or you'll capitulate at a much lower price.

So the country can recover from the Great Depression, but it's can't recover from a recession? Are you that delusional?

Look, alpine - keep clinging to hope, my friend. Don't pay any attention to fundamentals, don't look at past real estate busts in the U.S. and the world (Tokyo), ignore the economic headwinds, ignore the large and growing inventory on the market.

But most importantly, pay no attention to the fact that you haven't sold your apartment yet. Stick to your guns. If you never get your price, it's somebody else's loss, dammit!! The market doesn't know anything. Only YOU know how much your apartment is worth.

We'll see you at the bottom, chief.

"So the country can recover from the Great Depression, but it's can't recover from a recession? Are you that delusional?"

Waaaaaaaaaay too many people confuse "recovery" with "reversion to bubble prices".

That seems to be the biggest delusion of them all.

We've recovered from a LOT of things, but that doesn't mean the same insane prices come back. Hell, look at dot com stocks. We recovered from that, but they were still a lousy investment.

Why do you have to keep your head in the sand? Markets have ALWAYS recovered. I am making a decent profit in rental incoem so there is no urgency to sell. I have a recession proof job.

most dot com stocks have not even approached their bubble highs. Look at INTC, CSCO, and GE. Even before the current crash they never recovered. THere is no guarantee that you will ever be able to sell your apt for peak 2007 prices alpine. If you own a condo you are lucky that you can rent it out. So good luck to you.

"Why do you have to keep your head in the sand?"

We call that "projection".

nyc10022 - to your point, dot com prices never recovered. NASDAQ never recovered. Bubbles don't cycle. Bubbles pop.

alpine - here's some math for you. Let's assume that you have a property and the value goes down 40% from the peak. Let's then suppose that real estate prices revert to normal growth (rather than bubble growth) and grow at inflation at, let's say 3% per year. Do you know how long it would take to recover to your peak value?

18 years.

Shall we touch base in 2027? Because you will be SO right!

exactly. thanks for the math beatyerputz. So many people don't understand simple percentages like that.

Real estate prices have ALWAYS recovered after busts. My grandparents bought in Brooklyn at the peak of the 80s bust for $50,000 (2 family house). Today their house is worth about $600,000. MY uncle also bought on Staten Island. He sold in the mid 90s for pretty much exactly what he paid. The only thing he lost was the cost of the above ground pool he added.

oh, and normal RE growth is typically 5-6% a year. Your numbers are not correct.

I have no idea where you got 5-6% a year. Never heard that one, please provide your source.

It doesn't matter, though, alpine, a stale property is your problem, not mine. Best of luck with that sale!

Accoridng to Professor Shiller, the average appreciation from 1940-2007 was 5.45%. But hey, I'm collecting rent and your paying rent. So that's your problem, not mine.

http://freeby50.blogspot.com/2008/05/more-on-historical-home-appreciation.html

"the average appreciation from 1940-2007"

I get it, the trick is to pick a range that ends at the peak of a bubble. Good call, alpine292.

"But hey, I'm collecting rent and your paying rent. So that's your problem, not mine."

what, is spunky back? Dude, you're trying to SELL an apartment. And you're failing because you don't understand reality and have made up a basket of rationalizations that are just going to hurt you even more. Just tryin to help you, man.

Listen, Alpine is in denial. He's going to believe what he wants to believe. He will ignore all the facts he needs to to that end.

Btw, tech "always recovered" at one point, too... until it didn't.

We are talking about the biggest real estate bubble of all time. If you want to call "recovery" breaking even after 50 years, fine. Except, whoops, most houses are bought on margin.

> Accoridng to Professor Shiller, the average appreciation from 1940-2007 was 5.45%.

According to that SAME professor shiller, the long term real return on RE is... wait for it...

Basically Zero.

Whoops.

alpine292... I thought you were cool.. .but then this post. JESUS... plz.... get a grip.... market gives and market takes away.... enjoy delicious denial... for the next 20 years.... yep you'll get your price of $1MM for your property but a bagel will cost like $1,000.00.... LMAO..... that also goes for 407PAS or whatever... undercut get out... or forever live in your 1bdrm... gonna get tight when the third kids comes along :)

My 1 bedroom apartment? Oh, your poor little bubble head. I own a 4,000 square foot house in northern NJ. Yeah, the house is really cramped. Unfortunately, my lviing room will only accomodates a 60 inch tv. There is not enough room for a 70 inch. Can you belive that? How the heck am I supposed to watch 24 on a tv that is only 60 inches???

alpine292 and all you other deniers out there :)
http://www.cartoonbank.com/product_details.asp?mscssid=PQH5NRCB40RP9GF6XRJMCFKUST1A4L6D&sitetype=1&did=4&sid=52487&pid=&keyword=economy&section=prints&title=Economy&whichpage=6&sortBy=popular

Yes, right, of course! Markets always recover! In the long run. But, (as Keynes would say) In the long-run we're all dead.

Honestly, it's not their fault. THere's been a disease in the brains of many new yorkers for the past several years when it comes to real estate, a severe sickness far worse than gold fever. We're just seeing signs of withdrawal from the junkies who can no longer get their fix of rising prices. We should show sympathy rather than pity them! ;-)

alpine - according to the link you sent for data by Shiller, you completely misunderstood his message:

1890's 0.53%
1900's 1.40%
1910's 3.30%
1920's -0.70%
1930's -0.45%
1940's 8.16%
1950's 2.67%
1960's 2.57%
1970's 8.12%
1980's 5.86%
1990's 2.84%
2000+ 9.27%

We just had a decade of the highest annual prices and now we could have a decade of flat or negative prices... pay attention to details next time.

tell us more about your recession proof job.

columbiacounty - right. In denial about his house. May be in denial about his job, too.

alpine - another question. You say you are taking in rental income. Does this mean you are currently renting out your 4,000 sf house? If so, where are you living? Or have you taken in a boarder?

sellers should be lucky to get out at flat on their remaining mortgage payment on their zero-down, negative amortization piggy back loan so that their f--kin credit doesn't get trashed in this market...it's going lower...

agree with columbia & beatyerputz. Most, not all, but most sellers are in denial and they believe their home to be worth more than it is. Emotions play a huge role here. Denial is a very strong force. Hope is not far behind.

I love the "I'll just rent it out" argument. Rents are dropping like crazy right now as every seller who can't sell falls back on the exact same idea - renting. So inventory climbs and maybe you will be the lucky one to find the good tenant that will pay what you ask, but overall the laws of supply and demand are pushing market rents back down, too.

I'm not answering any more questions about my personal life. Too many mentally disturbed people on this forum.

alpine,

i agree that it is not a good idea to blab about your personal life on here. but your arguments are totally delusional.

> Too many mentally disturbed people on this forum.

Is utter denial a form of being disturbed? If so, then I agree.

UD - "agree with columbia & beatyerputz. Most, not all, but most sellers are in denial and they believe their home to be worth more than it is. Emotions play a huge role here. Denial is a very strong force. Hope is not far behind. "

Absolutely. Tons of emotion on the way up, and even more on the way down. Folks just want to believe the facts right in front of their faces because of all they have invested in it.

But the crash is in...

Alpine,

You have been more than happy to:

-Boast about your real estate investment success (as if it took some sort of specific genius to have accomplished it);

-Defend it with absolutely ridiculous "arguments" (which make me wonder if you really have the slightest objective sense of how the real estate market works or of investment risk/reward analysis);

-Make a self-serving claim that RE growth has been "5-6%" by quoting "Professor Shiller" (who, as one poster pointed out believes that the return on RE investment is "basically zero") and then provding a series of decade RE growth data points that include a 9.4% bubble growth rate in this decade. Not only is this completely delusional but it again demonstrates your complete lack of objectivity and analytical skills (which I sincerely hope you DON'T need at your "recession proof job" (which to me, means you most likely work for your family));

-and finally you have the gall to label "jealous" those that believe that the 2000-2007 real estate bubble was excessive - simply because, as you claimed, they didn't benefit from it... (even as this RE bubble was the main contributor to the potential devastation of the world's economy).

... and you have the nerve to call others "mentally disturbed"...

You act as if others haven't made or lost money in RE and other investments and thus don't understand how investments can increase and decrease in value.

I have news for you: Just because you own a house or an apartment doesn't mean that it is any different that other investments that can go up or down - especially after a 7 year price bubble that has sent this country and most of the world into an economic spiral.

I have made good and bad (and horrible) investments and decisions as a trader. I have learned to be as honest and objective as possible and accept that markets don't care if I own an asset or not and that past price levels and trends don't necessarily apply to the future. Just because you own an asset doesn't make it "special" or exempt from natural market forces - as far too many RE owners seem to believe.

Far too many people who have invested in RE over the past 10 years or so have fallen under the impression that RE has ALWAYS been that way. That is the farthest thing from the truth and it shocks me that such "RE geniuses" seem to be absolutely determined to ignore that fact.

If I am delusional, then so is everyone who thinks prices are going to fall 50%. BEcause they are not. Manhattan is not Detroit. There are going to be no 50% drops and if you don't like it, then keep renting your 5th floor walkups.

alpine292
about 22 hours ago
ignore this person
report abuse Becuase sellers need enough money to buy their next property, so they can't lower their prices unless every other seller does the exact same. If other sellers are asking doubel what they paid, then they need to do the same.

Yes, that is a market based argument and it is true. But in those situations, what you have is a reduction in volume, movement only on the fringes.

As for 50% drop in Manhattan real estate, probably best to put it in context of where prices were 5 and 10 years ago.

And as far as alpine's particular situation - if you are looking to upgrade, then the wise thing would be to sell in advance - certainly even if you make the argument that prices aren't going to plummet, you would be hard pressed to make an argument that they will rise over the next year and therefore you should sell first and buy later especially if the buy is for a bigger property than the sell.

me thinkz.. me buy u house for 75% off peak, and combine with mariachi and nanny neighbor and combine it into a large crack house... that'll bring Alpine down 90% of peak and I'll own an entire town in Jersey for the price of my dream CPW 7 :)

> If I am delusional, then so is everyone who thinks prices are going to fall 50%.

Ironically, Alpine said this EXACT same thing about prices going down 20%.

That seems to have worked out well.

> There are going to be no 50% drops and if you don't like it, then keep renting your 5th floor
> walkups.

What a logical, well thought our argument. It must be true.

Sorry, but we're getting into strawman/stupidity arguments here. We can always debate how deep, but when using it to cover denial about the crash in the first place, the arguments are just nonsese.

We're already down 20%, and still dropping. It is pretty clear that we were in a major bubble now, and we might never return to those prices in real terms in our lifetimes.

Denial is a VERY powerful thing, and we certainly have a lot of victims here...

We have alpine's point of view, and we have 10022's point of view. Neither of you needs to keep reposting your point of view. The person with the last word on a message board is not the winner.

Correct, the person with the facts is...

Prices are not down 20%. I only see prices being down 10-16%. This place sold for a 16% discount:

www.urbandigs.com

some brokers are saying that buyers want home prices to mimic the drop in the stock market. taken literally that would mean they want home prices to be what they were a full decade ago.

at the end of the day, what will determine manhattan's prices during the next couple of years is the amount of distressed sales. there is going to be a lot of them, more than people expect, but how many nobody knows for sure. the best remedy for feelings of entitlement is the current crisis, when the SHTF feeling entitled to anything will go out of fashion.

The housing market is not going to mirror the stock market. That is insane. And for distress sales, there will be very few of them because co-op baords are very careful about who they approve. There are no zero down no doc subprime loans in Manhattan.

alpine, with the 1st one i'm not saying it's the way it should be, i'm saying buyers seem to use that analogy for last year's only, it would be better for them to use a decade. that's it. about your second: ROFL! keep dreaming darling, the credit crash is by no means a "subprime" issue, that's only the easy way to explain it on the local news.

btw, i liked this post on Noah's:

"the percentage of folks who bought their 3 bed or more back in the 80s or maybe very early 90s and have presumed it would be their retirement nest egg, is huge. think about it, you paid $400k for something that peaked at $3mm or more and now you really would like to lock in the gains - these folks can price cut well below the new stock's cost basis in a heart beat. its a vicious cycle and is going to really suck for a lot of people but we have to get back to the 5x median income range in order for there to be any long term reason to buy real estate. "

Alpine,

I have to say I agree with what many of the others are saying. You shouldnt be concerned about what other sellers "think" or do because you lower your price. The bottom line is there are two ways to look at it right now. First, everyone realizes that prices will continue this freefall. This means you can look to cut your losses and price the apartment (today) at what you think someone will buy it for (today). Keeping in mind of course that the price someone will pay in 6 months will be a lot lower, thats really your best move. Screw the other sellers and what they are doing. The second thing you can do (as you mention) is to wait it out. If you dont care that it will likely be a few years (at least) before you can ask (and get any serious response) 2007 prices then hold onto the place. If you dont need to sell now then dont, BUT dont kid yourself that you will get a high price in this market or anytime in the near future.

alpine, how do you propose we clear 3 year's worth of inventory (and rising)?

hey back off on alpine... you'll just create rufus 2.0 :)

Damn... the chinese want payment in women and children comment was deleted... that wasn't so bad was it?

We do not have 3 years worth of inventory... more like 1 year.

Inventory=12.9mo
Why?
Everyone remembers the high water mark. Ask someone what their apartment is worth and they will quote you the highest price EVER asked for an apartment in their line. This my friend is human nature. People have good memories of these high worth numbers. Remember, you only need ONE buyer to sell an apartment. It's that one last sucker. As we know the suckers have all left town or finished the purchases 6-7 months ago. Now we wait for reality to set in. This takes time...lots of time. I'll tell you when this market will hit bottom...wait.........where did I put that information....OH YEAH!, here it is...
let me just pull it out of my ass....15 months from today...rock bottom.
Hope you find this information helpful.

whew... glad you didn't pull it out of the other hole... u girl right falcogold? :)

How many girls do you know that use that expression?

word.

> Prices are not down 20%. I only see prices being down 10-16%. This place sold for a 16% discount:

Yes, the one anecdote is proof!

Pay no attention to what the real estate appraisal firm actually looking at contracts signed is saying!
www.millersamuel.com

Wait, I'm not sure why I even bothered. This is the guy that 2 weeks ago said there was no decline. And then last week said "its official, rents are not dropping".

http://www.streeteasy.com/nyc/talk/discussion/7782-its-official-rents-are-not-falling

"It's Official: Rents are NOT falling"

Actually, yet another mistake here...

"%. I only see prices being down 10-16%. This place sold for a 16% discount"

That place originally sold August 2007. That wasn't peak.... meaning a 16% decline from a lower point means an even greater decline off peak...

August of 2007 was the peak. The only reason the quarterly reports showed rising prices in 08 is because the data was skewed by high end sales.

August 2007 was a short term peak. May 2009 was a short term bottom. We are headed back up above August 2007. 30-40 months. Mark it.