NYC vs LV

Paris vs Bombay

It's not the RE itself.

It's the state of the buyer pool.

there is little comparison between LV and NYC. LV has one of the highest forelcoure rates in the country. NYC has one of the lowest.

No one wants Vegas except retirees. They will not reenergize that area unfortunately.

As for New York, I will dare to say what's most forbidden and denied: people want to be, live (rent or own), and work in New York.

Just take a look at the SE board. It's nuts. People post every minute. You'll never see this activity on a board in a dead real estate market. People want a piece of the real estate, in the form of renting or owning, but just have different price points, tolerances and capacities.

There are 8 million people in NYC and ~20 million in the metro area. Of course there's more activity on this board than some place with barely a million people, mostly retirees.

Are NYC and LV different? Of course! Las Vegas is nearly 50% down already, maybe it'll stop at 50%, maybe 60%. Who knows. NYC (at least stuff I'm following) is down 15-20% and I expect it'll come down further. How much? How knows.

Personally, I'd like to move to NYC but if I can't afford a place that I'll enjoy living for the next 10+ years then I won't. Unfortunately, despite prices coming down, other living expenses (like taxes) are going up and that doesn't help demand.

> How is Las Vegas better positioned than NYC

VERY SIMPLE. It is already much cheaper.

You are completely ignoring the biggest factor. Manhattan prices are SEVERAL TIMES that of Las Vegas.

Manhattan has a lot more room to fall.

prices in NYC are ALWAYS going to several time those in LV. Vegas is a desert with tons of land. Manhattan is a tiny island.

Not to mention that there are tons of homeowners in Vegas up to their necks in subprime loans. Not so in Manhattan due to the ever-feared all mighty co-op boards.

But the casinos aren't being taken over by the government after losing 20 years worth of profit.

> prices in NYC are ALWAYS going to several time those in LV. Vegas is a desert with tons of land.
> Manhattan is a tiny island.

If you ever come to visit from New Jersey, you'll learn that NYC is not just Manhattan.

When you look at all of NYC, there is PLENTY of space now that yuppies have taken over Brooklyn and Queens.... also several times the price of Las Vegas.

Bigger picture, NYC can come down 75% and still be several times the price of LV.

Its not gonna be pretty here..

for the sake of the discussions on SE, when people say "NYC," they usually mean Manhattan. After all, without Manhattan, there would be no NYC. Come on, it's like Florida without Disney World!

> Come on, it's like Florida without Disney World!

Yes, but no one in their right mind would determine Florida real estate prices by averaging sales at Epcot Center...

Sure, Manhattan prices should be "several" times those of Las Vegas.

But, is "10 times" really "several times?"

Manhattan prices are still simply "goofy" relative to most of the country.

There is no price comparison between Las Vegas and NYC. Las Vegas was built purely by speculation. It had the highest percentage of homes owned by speculators, almost 33% at the peak.

When the housing boom went bust in this nation about 3 years ago, it became harder and harder to rent these investment properties.

Las Vegas is a city that is wholly dependent on tourism to survive. NYC is not. Every city is suffering right now, including NY, but NY is much more economically diverse than Las Vegas.

Las Vegas is in serious trouble. The only prospect it has of rebounding is retirees who decide to spend their retirement years in Vegas and relocate. Casino revenues are down as much as 30% and hotel occupancy is terrible.

When the economy does improve and the housing market stabilizes, maybe in 2010, you will see gasoline and energy prices rebound with it. That means even though the economy as a whole will improve, airline tickets will substantially increase and less trips to Vegas, prolonging their local recession.

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BTW, what were you people doing posting on streeteasy on a Saturday night? Nothing better to do or no one better to be with? (topper, alpine, nyc10022)

it's a good question - there will be a point at which it's worth it to someone to buy in New York City, and that price is very high indeed on Manhattan Island south of 96th Street - Las Vegas and other sprawls in the SW had speculative buyers who had no intention of even living there - our local economy is going to go through hell for a few years, but it will regroup as something other than a place to fly to for a weekend of r&r - also, that 15-20 million population spread out over three states contains people who may be able to shorten their commutes - no one was standing in the sidelines salivating over the prospect of picking up a ranch home in the outer subdivisions, or a condo downtown, in the event the RE market should crash in Phoenix or Las Vegas

Manhattan will always be much more expensive... But the thing driving the spread (and its widening from 2002-2007) was Wall Street and hedge funds, both on their ass. You could have prices half or more and they'd still be more than Boston, Chicago and a multiple of Las Vegas. The interesting data might be to look at New York premia vs. other major metros say in the 1990s or 1980s....or BOO! -> the 1970s. If loft space is say $300/ft in Chicago is it not calling NYC Las Vegas to imagine a retrenchment to 2002 pricing, if not 1999 pricing. There isn't an asset out there in the world that has not corrected more than intitial suspected. For all intents and purposes, NYC real estate just started falling after Lehman. Maybe there was small hints of negotiability over summer before that.

If the DOW is at 1996 levels, will real estate in Manhattan move to those levels too?

Rhino brings up an important point.

I wish I did have access to long term premia between different cities but I don't.

At what point does NYC real estate premia simply become totally excessive? At what point does NYC become uncompetitive due, in part, to costs like real estate?

I think we're there.

Kingdeka, presumably, thinks NYC can sell at any premium - 5X, 10X, 15X, 20X - and still do fine and dandy.

Nonsense!

I dont have the data, but I'll guess that the NYC premium exploded from 1998 to 2007. I will guess that the finance industry has contracted to the size it was in the late 1990s. Comp levels of those who remain in finance are probably at that level or lower. I'm pretty sure the numbers of condo units coming into the market in 2009 and 2010 remains huge. All we know for sure is what made NYC trade at a huge premium (i banks and hedge funds) are much reduced. In order to know how low NYC goes, you'd need to know what the people who are employed by other industries can afford. You know, the people who after they had a kid or two simply had to move out of Manhattan at any time in the last 10 years. Whatever price level they can afford will stem the natural outflow of families and balance the market. I'm gonna pull a number out of my ass and say when nice 2 beds trade at $600k and you can get a classic six for $1mm or so or a true 3bed for $1.2-1.4mm, you might see the couple who works in marketing dashing their plans to move to Garden City and putting a floor in the market. All we know is finance is on its ass...their are not enough finance folk employed and making the money to buy all these condos.

I agree 100%, Rhino.

Most people I know who don't work in finance earn "normal" salaries and can't come close to buying a two-bedroom apartment in Manhattan. Without I-banking and hedge funds propping up the market, that seems bound to change.

I'm in the Chelsea historic district right next to the Highline/gallery district. That area is just booming with gorgeous new condos going up on virtually every block. But the high end demand has just evaporated.

Should be a fascinating next couple of years.

In the mid 1990s my friend (recently out of college) bot a studio on Jane Street for $60,000. At that time, it was maybe a $1000/mo rental. 5x rent! Manhattan was not a warzone in mid 1990s, there just weren't hundreds of thousands of finance people making $500k two years out of business school. When I was in business school in 1999, we were all daunted by the idea that a "family apartment" in Manhattan cost at least a million bucks. -50% = easy...-65% = not a stretch, especially with some help from higher interest rates.

the real estate community is encouraging talk that they are seeing contracts at 15 to 25% off peak, because it is in their interest to have an orderly declining market. That way regular buyers don't get scared off in favor of vulture investors. But when I run the numbers on new lower rents, and factor in higher cap rates (because alternative investments like stock,s or corporate and municipal bonds have sold off), I come up with 50% off or worse.

I'm with Rhino and PMG. The machinations that brought us to these levels, outlandish Wall Street profits and salaries coupled with mortgages that had "heartbeat" as their main qualification, are gone and not coming back anytime soon. The cherry on top is that the rest of the world is no better off because, unfortunately, they ate our turd sandwiches or they're reliant on us to buy their turd sandwiches.

China will not be the savior they act like, nor we make them out to be. They're far too reliant on the goods they produce being sold to countries that are no longer buying them.

I think we could easily fall through mid-1990's levels in an overreaction or, honestly, on fundamental values coupled with oversupply. The average salary has not risen in the past 30 years when compared to inflation; but "wealthiness" did due to massive amounts of debt. Vapid debt spending and ridiculous mortgages not based on any sort of fundamental soundness are gone; what is going to fill those shoes?

It is really apples and oranges but everyone on the board who is so dismissive of Las Vegas, should realize that the population of Las Vegas doubled between 1990 and 2007. Think about that for a minutes.

So when all the optimists talk about NYC being so different because of land constraints, center of the universe, etc. they shoud consider the arguments being made in LV for the last 10 years -- no other place in the developed world has grown as quickly as LV. Why would that growth stop?

Why would that growth stop?

I dunno, ask Florida