delusions...alive and well

very expensive, also considering tax & maint. I sometimes wonder if people think of maintenance costs as a proportion of apartment value (rather than a drag on it), for instance:

( Maint + Tax ) * arbitary multiplier = ask price
( 1009 + 692 ) * 825 ~= $1.4MM

Looks like the buyer paid $1,288,000 for it in 2007. Doubt that it goes for higher than $995K. Bummer...

$695,000.

Steve - don't know if we're down 46% just yet. Careful what you wish for...

ba_da_boom, i think you have your equation wrong

( Maint + Tax ) * arbitary multiplier = ask price

as the higher the maint + tax the lower the asking price should be (everything else equal). so it should be more like:

[10* ( Maint + Tax ) + ask price ] / surface = $ per sq foot

to be used for comps of similar apartments. the (Maint + Tax) is in annual terms. the 10 is arbitrary, it could be 12 (the more averse you are to carrying costs) or 8. it's "proven" that the 10 is acceptable in terms of how increases in property taxes lower property values.

OTNYC, we will be.

That's where (falling) rents currently are.

"Careful what you wish for..." what is this? housing affordability is sth that the economy needs, not sth to be scared of. funny how people didn't use fear tactics when they should have (ie: when home prices and rents were going up faster than incomes).

"don't know if we're down 46% just yet."
"That's where (falling) rents currently are."

Where is that stat from?

admin - if prices fall 46%, NYC as you know it will no longer exist. that is all i meant. there are many who hope for this and that is their choice. i personally was OK with the direction things were going.

steve - rents are down 9% last i checked. don't think this factors all the incentives that are being dangled (2 free months, no broker's fee, etc.). added together, rents are down probably 15-20%. yes, i am sure you can find anecdotal evidence of apartments that were over-priced and had to make huge cuts to find tenants, but the macro trends are what they are.

i think we can all agree we are in for a whole WORLD of hurt... but let's not make it any worse by making up numbers. prognostication is a whole other thing and we are all entitled to our opinion there.

"i think we can all agree we are in for a whole WORLD of hurt... "

again, it was lack of housing affordability what hurt nyc. prices going back to reality are more than good news. unless you are a broker or a flipper, nyc is better off with housing affordability than without it.

"Where is that stat from?"

Historically, that's what it would take for you to buy a property with a 30-year fixed mortgage, rent it out to an unrelated third party, and break even on a cash-flow basis.

Historically, that is the ratio between purchase prices and rents. Unfortunately, on the whole, in Manhattan, purchase prices need to fall at least 50% from peak to reach that point.

admin - i agree, housing affordability is a good thing and is necessary. i personally don't think affordability was as big a problem in nyc as it appears at first blush. before you jump all over me, let me explain why.

1. By affordability, i assume you are referring to the ratio of median price to median income. I think that in the case of NYC, this is somewhat misleading due to the number of rent-regulated apartments (1.6 million). If you are living in a rent-regulated apartment with $800 in monthly rent, pretty easy to get by on the median income. A more telling metric might be the ratio of media price to median income of home owners which I suspect will be much smaller.

2. An overwhelming majority of real estate for sale in NYC is of the co-op variety. The boards that screened tenants weeded out speculators, people that were overly-leveraged, and people that were likely to be unable to afford their monthly burden. Exotic loan products were rarely allowed. Simply put, the co-ops acted as a buffer against people getting in over their heads.

3. Relative to other locations, there is a high percentage of all cash, or close to all cash transactions in Manhattan. Foreign investors, corporate apartment purchasers, wealthy pied a terre owners typically paid all cash, and many high end co-ops essentially required all cash even if they allowed you to have a mortgage (50% down, but you better have the other 50% in liquid instruments if you wish to buy).

Now the math has certainly changed due to the large layoffs, shrinking portfolios, job uncertainty, etc. But I know many, many people that have owned in the last 5 years and not a single one was struggling to pay their mortgage (unlike other cities).

So I agree with you affordability is paramount, but given the marketplace of buyers that have typically been interested in NYC real estate, NYC was not quite as unaffordable as the standard ratios and measures would have one believe. $900K seems like a high median price, but when the pool of buyers are earning on average $300K or more per year, it becomes less dramatic. Now, how many people are left that make over $300K per year remains to be seen...

"i personally don't think affordability was as big a problem in nyc as it appears at first blush. "

in nyc in 2005 25% of the population was spending more than 50% of their income on housing (either renting or owning). that was the real crisis to which nobody was paying attention (besides the unlucky ones that tended to be young newcomers). the only solution is having prices fall fast, as salaries take a long time to catch up.

"Where is that stat from?"

"Historically, that's what it would take for you to buy a property with a 30-year fixed mortgage, rent it out to an unrelated third party, and break even on a cash-flow basis."

So, if I understand you correctly, you made up the stat because its where you think we should be.

So, housing prices are down 46% because you think rents SHOULD be down 46% (except they actually aren't).

I don't quite get the logic.

"So, if I understand you correctly, you made up the stat because its where you think we should be."

No. Why would you buy an apartment to essentially rent it out to yourself when you wouldn't buy it to rent out to an unrelated third party?

Do the math, check out competing market-rate no-fee rentals on nybits.com, get back to me. You can rent a 2-bedroom 2-bath apartment on Amsterdam in the 90's for $4,000 a month. How much would it cost you to buy it?

'if prices fall 46%, NYC as you know it will no longer exist.'

Welcome to the New York of my youth, the 1970s.
Anyone want to stroll with me down memory lane? The Charles Bronson 'Vigilanty' New York.
How about outside Madison Square Garden circa 1977? How creepy was that zone?
Walk with me, talk with me as we transverse 42nd Street.
Could I interest you in an out door drug sex market(low end)?
Lets take our bikes to central park where rooming groupes of kids from 'above the park' can threaten us and steal our wheels.
Crossing the block mid street because persons of questionable character approach.
Is there good news?
easy parking!

"Cruising," starring Al Pacino.

We won't get there, luckily. Just become affordable again like it was 10 years ago.

Now if you need a little breathing room and your completely mental...
http://www.streeteasy.com/nyc/sale/193121-condo-117-east-29th-street-kips-bay-new-york

Go ahead.
It's Friday
Enjoy the unbridled optimism of others.
They said that they could never put a man on the moon, but, they did.
Bet they put another man on the moon before this apt goes for these $$$

"In nyc in 2005 25% of the population was spending more than 50% of their income on housing (either renting or owning). "

Admin - please back this stat up. There is no co-op that would come close to allowing this. I have served on 2 separate boards in lax co-ops and 25% of income was our limit for both renters and buyers. And given that co-ops still make up 80% of the market, I find this stat VERY hard to believe.

Also, when I did rent, buildings required 40 times monthly rent in income ($2000 monthly unit required $80K income, equalling 30%).

I think you are making this stat up.

With unemployment going up and income going down, we certainly have to discover a new equilibrium, but a more telling metric is the rent to purchase ratio, assuming 25% down.

I'll actually take the under on Steve's $695K. Two small bedrooms, maintenance on the high side, an area people don't generally love to live. SF overstated by 25% or so, as usual.

Sucks for seller, but no one to blame except themselves.

OTNYC --

No idea on admins number, but i have to pick a bone with you on coops. This is hard for people in NYC to understand, but I'll give it a shot -- restrictive coop rules have no effect on overall housing prices in NYC. The fallacy of your logic is the following: "given that co-ops still make up 80% of the market" wrong, coops make up 80 percent of the inhabitable dwellings, not 80 percent of what is for sale TO-DAY. What is for sale TO-DAY is what makes up the market -- per Streeteasy, Manhattan condos == 6,903 Manhattan coops == 5,301. Let me know if this makes sense, I'd be happy to go into more detail explaining this.

I once had a client, that when I told him what the fee would be on a loft I showed him on Wooster street replied, "I would rather stick pins in my eyes than pay you that". He looked at me dead serious when he said this, I must admit I almost fell over laughing.

I would say the same thing about living on East 29th street. lol.

> "So, if I understand you correctly, you made up the stat because its where you think we should be."

> No. Why would you buy an apartment to essentially rent it out to yourself when you wouldn't buy it
> to rent out to an unrelated third party?

YES.

Steve made up the stat. He can say "should" or whatever he wants, but claiming rents are down 46% is simply wrong. No "should" or "could" logic makes one number equal a different number.

Rents are not down 46%, Steve just made it up to support an argument.

Stop being silly, Steve.

theburkhardtgroup: "I once had a client, that when I told him what the fee would be on a loft I showed him on Wooster street replied, "I would rather stick pins in my eyes than pay you that". He looked at me dead serious when he said this, I must admit I almost fell over laughing."

Why would you laugh? Of course he was serious. Get used to the sentiment. You're a vulture. And your days of making money for doing sh%t are over.

By the way, my fee for bankruptcy work is $300 an hour.

S11217 - Why would you laugh? Of course he was serious. Get used to the sentiment. You're a vulture. And your days of making money for doing sh%t are over.

Random anger is bad for you. You will be taken over by the Dark Side of the Force. Remember what happened to Anakin Skywalker.

"In nyc in 2005 25% of the population was spending more than 50% of their income on housing (either renting or owning). "

I've rented in NYC for 6 years and in 3 separate buildings I've always needed to show 40x a month's rent in earnings. In my current building they asked for 60x which was pretty high but wasn't a problem.

If that statement were true, then 25% of population took out mortgages for over 50% of their income which means affordability and housing prices wasn't the problem, living beyond your financial means was. If I had to spend half my income on rent, I'd just move to one of the other boroughs.

Does anyone know when the most activity in the Manhattan RE market occurs? As in which months or seasons we typically see the most transactions.

Eveyone just relax..................
We are all on the same side. This is our town. The brokers don't care what the price of the RE is...they just want you to buy it, or sell it, so they can move on with their lives and and find the next little monkey that will buy or sell their cage. Don't be a hater. What are you, the non-professional, expecting? Albert Einstein is going to show you a few apartments maybe? When was the last time you interacted with any sales person and walked away thinking,'now there's a genius!'
To be fair, their are many RE agents who totally have their professional act together but, boom times bring out the dopes who obscure the pros. Two years of this market will clean out the wood and, no doubt, polish the profession. Untill then hold on to your water, rely on your own ability to do homework and, ferret out the pros for help.

Anyone spot any delusions out at the BIG OH this weekend?

here is another place with price over $1200

http://www.streeteasy.com/nyc/sale/386253-coop-720-greenwich-street-west-village-new-york

Uhhhh, real estate prices being lower is NOT what made NYC unsafe in the 1970s...crime was higher in EVERY major city in America in the 1970s, and NYC had its own peculiar mismanagement to boot. Its simply absurd to conflate the two.

'real estate prices being lower is NOT what made NYC unsafe in the 1970s'

jason,
What made NYC unsafe more than any other consideration I can think (WRT causation) of is economic conditions. There are a miriad of other socialogical and demographic factors at play but, you show me a prolonged adverse-fiscal/unemployment condition and I'll show you some crime(the up front and personal type). Quality of life crime in the apple is already on the increase. Sooooo, if current RE values are any indication of our current economic condition, which I believe they are, we might be on the road to a up-tick in muggings, etc.
I hope you don't have to get hit over the head and have you wallet taken for you to believe me.
My advice going foward...Ladies, watch your purses.

Gun registrations go up!