Great News..Manhattan buyers out in force and deals are happening

"All 100% meaningless if you don't know what aggressive is...

And you don't need to know volume to be aggressive... you only came about the volume on 1 apartment as a buyer. I'm not saying its of zero value, but its certainly nowhere near as valuable as accurate price data."

Of course - I never said you ignore prices. Again, you need a good sense of prices AND volumes to really gauge a good, aggressive bid. You were advocating that we stop looking at volume altogether! For someone so obstinate, I'll take a backpedal!

You are confused... I said as a PREDICTOR of prices. Now you are talking about dealmaking in the current.

Thats not backpedalling, thats you changing the subject...

Well, then you should have been more explicit when you said this:

"Actually, why is anyone looking at volume anymore?"

Almost 2000 listings on the UWS and not a single sale in the last two weeks. Everyone must be in the middle of negotiations.

The real estate market in Manhattan is in the early stages of a massive correction. Full stop. The macro environment as well as the micro are both strongly aligned against the real estate market in NYC.

Volume may pick up over the coming months but there's virtually no doubt prices will continue to deteriorate.

Some of the issues facing the Manhattan market:

DEMAND DRIVERS:
1. Massive job loss in finance and, soon, publishing and advertising. This will suppress demand.
2. Significant reduction in compensation even after the head-count reduction in finance. This will suppress demand.
3. As the city budget gets slashed, so will public services leading to increased crime and homelessness, and reduced quality of life. This will suppress demand. It will also lead to increased taxes, again reducing demand.
4. While mortgage rates are lower than they have been recently, lending standards are tighter. Gone are the days of 100% leverage. We're back to 20% down for condos and higher FICO scores to boot. Increased equity requirements will suppress demand.
5. The Euro and the Pound have collapsed against the dollar. At least for the time being, Europeans will not be so quick to plunk down money for a pied-a-terre in NYC. This will suppress demand.

SUPPLY DRIVERS:
1. New York has seen tremendous development over the last 5 years. Many of the johnny-come-lately developers are now choking on their leverage. Eventually their units will be puked onto the market at reduced prices. This will increase supply.
2. Boomers will need to take whatever equity they have left out of their apartments to supplement their battered 401-k income. This will increase supply.
3. As prices fall, more and more owners approach their inflection point where they're underwater on their mortgage. More and more of them become panic sellers as they're desperate not to be stuck in a home with negative equity. This dynamic creates a negative feedback loop with lower prices bringing more and more panic sellers to market. This will increase supply.

There are probably a couple drivers I'm forgetting at the moment, but the bottom line is that all of them are pushing in the wrong direction. Basic economics dictates that higher supply and lower demand lead to lower prices. The reason the volume has dried up is that sellers are largely in denial at this point. The pricing will become apparent as sellers move from the "would like to sell" to the "must sell" category for whatever reason.

On a broader note, real estate doesn't appreciate at 12% a year normally. Reversion to mean would suggest that prices in NYC need to fall another 20% so to get back to the long term price trend. Another way of looking at the market might be to examine what the macro drivers were for real estate pricing in NYC. Median pricing has gone from $350-400/ft in 2001 to around $1000/ft in 2008. What drove those price increases? Was it permanent wage growth or increased leverage? I would argue mostly the latter with a little of the former. Now the leverage will revert and finance will never pay out the way it did over the last decade. I would even go so far as to argue that of the 250k layoffs expected in 2009, many of those working in finance will never again work in the industry. This is a permanent change in the size of the industry. Until NYC finds another growth driver, prices will continue to decline.

Agreed

couldnt agree more. And by the way, because as we all know markets overshoot in both directions, I predict price declines of more than 40 % from peak in most areas of Manhattan. I expect higher points to suffer even worse declines.

> Well, then you should have been more explicit when you said this:
> "Actually, why is anyone looking at volume anymore?"

I was. Read the sentences *directly after* that one.

Either you aren't reading carefully, or just being silly.