Market ‘Tipping Towards Buyers’ In New York
Inman News has this on New York. “Sales of existing single-family homes in New York fell by double digits between July 2005 and July 2006, according to preliminary single-family sales data accumulated by the New York State Association of Realtors.” “There were 9,392 sales recorded statewide in July, a decrease of 11.3 percent from the 10,681 homes sold in July 2005, according to the preliminary data. Last month’s sales total was down 7.6 percent from June’s level of 10,166 sales.”
“The statewide median selling price rose 3.7 percent in July to $269,700, compared with the $260,000 median recorded in July 2005. The July 2006 median price, however, was down by 3.3 percent compared to the previous month.”
“‘There is no ‘housing bubble’ bursting in New York state,’ said Charles M. Staro, NYSAR chief executive officer. ‘The data through July 31 simply show the expected softening of sales and slowing in median sales price increases after several years of exceptional growth. After years of a hot sellers’ market, we are seeing a return to balance, if not a tipping toward buyers as sales prices level.’”
The Providence Journal from Rhode Island. “The recent downturn in condominium sales statewide doesn’t concern the developers of three luxury condo towers in downtown Providence. Intercontinental Real Estate Corp., The Procaccianti Group and BlueChip Properties are in the midst of constructing 426 high-end condos that are priced between $400,000 and $2.5 million each.”
“All three developers said this week that interest from buyers has remained strong and they are confident condos in the complexes will continue to sell. ‘I’m not worried about [the market] at all,’ said (developer) Nicholas Iselin with Boston’s Intercontinental Real Estate, which is putting up two towers next to the Providence train station that will contain 193 condos.”
“Buyers have already signed purchase-and-sale agreements on eight of the units, said Iselin, and in total, 33 are under reservation. While that’s down from the 80 units under reservation last year, he said, the developer doesn’t see it as a problem.” “‘There’s not a huge incentive to jump off the sidelines and I think people can afford to have a wait-and-see attitude. And that’s fine,’ said Iselin.”
“Condominium sales across the state were off significantly during the second quarter of the year, dropping 22.6 percent compared with the second quarter of 2005, according to the Rhode Island Association of Realtors.”
“For BlueChip Properties, about 19 of the 130 condos it is under agreement, said Jerry O’Connor, development director for the project. ‘There’s been a traditional summer slowdown, but we’re happy where we are on sales,’ he said.”
“Buyers have already signed purchase-and-sale agreements on eight of the units, said Iselin, and in total, 33 are under reservation. While that’s down from the 80 units under reservation last year, he said, the developer doesn’t see it as a problem.”
Reservations down from 80 to 33. Nope, nothing wrong here.
- “‘There is no ‘housing bubble’ bursting in New York state,’ said Charles M. Staro, NYSAR chief executive officer.
Thanks Chuck … I’ll use my heloc to get that new Hummer.
Whatever happy drugs this developer’s on, I want some.
When the happy drugs wear off, I wonder which floor of the high rise he’ll be jumping off.
tipping”?
cascading,dumping,hurling
11% is not a cascade.
rate of change my boy, rate of change
” Last month’s sales total was down 7.6 percent from June’s level of 10,166 sales.”
That would be a
[(1-.076)^12 - 1] X 100% = -61%
annualized rate of decline. In other words, A HARD LANDING.
‘two towers next to the Providence train station that will contain 193 condos…33 are under reservation…that’s down from the 80 units under reservation last year, he said’
Loks like these condo are becoming ‘unsold.’ Homeowners are still buying statues in Massachusetts.
The developers might try reading this blog for a day or two. They are going to lose their shirts going forward
I free statue with every flipper purchase should entice them to buy.
Reality Check: The Providence downtown has recently (in the last 5 years since Buddy Cianci tore everything up, and built the Providence Place Mall) come around, but it is absolutely not the place I would like to live, or have my children living in.
You can go to the Providence Place mall at any hour, except when school is out and all the gangs come to meet there. You can go out for a stroll in providence at any hour as long as it is not dark, and there is no water-fire happening. Providence has one of the worst traffic problems in the nation (#36), so getting through it is a nightmare at rush hour, albeit a short one as providence proper is small and surrounded by much less appealing sites like East Providence, Pawtucket Central Falls, and Cranston.
Amenities include Federal Hill, wonderful Italian Restaurants, with no credit cards accepted, and please mind your own business, as business is being transacted in the table next to you….
All in all, there are not enough buyers, employers, or employees that will sustain north of 500 “high end” condos in this smallest of the small states. Maybe one for Buddy once he gets off in 2010!
“‘There is no ‘housing bubble’ bursting in New York state,’ said Charles M. Staro, NYSAR chief executive officer. ‘The data through July 31 simply show the expected softening of sales and slowing in median sales price increases after several years of exceptional growth. After years of a hot sellers’ market, we are seeing a return to balance, if not a tipping toward buyers as sales prices level.’”
what we have this year is pretty much a normal market where it takes months to sell property. of course spoiled sellers and newbie RE agents are panicking because all they know is the last 2-3 years.
we’ll see what happens next year. i did some research on ACRIS and most of the people selling are old people who’s mortgages are paid off or those who bought in the 1990’s. why they are selling i don’t know.
it will be interesting to see what happens. there is literally no room to build because of NIMBY and the only new construction is crazy expensive. too expensive for a lot of people.
we’ll see what happens next year. i did some research on ACRIS and most of the people selling are old people who’s mortgages are paid off or those who bought in the 1990’s. why they are selling i don’t know.
That might be true in some markets, but certainly not in the new outer developments in Ariz., Calif., or Loudoun Co., Virginia. There aren’t any ‘old buyers’ in places like that, but still a sea of ‘for sale’ signs. Heck, in some of those, the frickin’ subdivisions are even finished yet. I’m sure some ‘old buyers’ are trying to cash out before things fall, but I suspect a greater driver of the market is specuvestors who missed the last gravy train out in Q2 2005…
Ahh, it’s just the “traditional summer slowdown” in the housing market????!!!! I feel much better now…
Dba are you a realtor? Why do you think NY is different? I am not trying to be rude, but I just want to see where you are coming from (ie do you have any skin in the game as a real estate professional)?. I know that last year the bulls from LV, PHX, OC, FL, all thought there area was different and it turns out they were wrong. Thanks!
I bought in the ’90s in NYC and sold a year ago. But I still see sales for incredibly high prices. The apartment I sold for $535,000 could sell for $600,000 today. A studio in the same, shabby, tenement building is 300 Sq.Ft. and just sold for $400,000. There might be a bit more inventory in NYC right now, but I don’t see this market dropping. I sold when I thought we were at the peak of the bubble. I had tried to sell two years earlier but didn’t get my price then, and I thought that was the peak. I’ve been wrong about NYC being at the top for 5 out of the past 5 years.
When did that $400K 300 sq. ft. studio sell? Right now you can take your pick of large studios in decent (non-walkup, post-war) upper east side buildings for $375K (asking).
“$375K”
i see plenty of studios advertised in the nytimes for $300K and less on the UWS. and increasingly, that ‘asking’ price will be nothing but WISHING price.
but new yorkers are obstinate, and prices are likely to be as sticky on the way down than many other parts of the country. much of the remaining inventory will be pulled off the market when people don’t get their wish prices. there will be a long desert of ‘existing’ inventory. and then the developers will pancake the market with all the overhang of new/pre construction that is already deluging the market.
so the sign of the next stage of the manhattan bust will be a REDUCTION in existing co-op inventory. probably not until spring ‘07.
As to the $300K or less on the UWS you are correct. that’s why I was surprised to see $400K for a 300 sq. ft. studio.
“The apartment I sold for $535,000 could sell for $600,000 today. A studio in the same, shabby, tenement building is 300 s.f. and sold for $400K.”
there are always greater fools, even after the peak. but they are a lot fewer and farther between. when the nytimes advises to offer 6% less than asked (as it did a few days ago), the market has cooled considerably from just 2 years ago, when there would have multiple bids for that same place and price.
no, but the conditions here are different from other places like LV and PHX. you have to look at each market individually and ask yourself why do you think prices will go up or down.
I also own my own place so i’m not wishing for prices to drop just to stop renting. going back to 1997 when the runup began, a lot of prices were too low compared to incomes. current prices, at least outside of manhattan in the outer boroughs are a little too high but not bubbly.
I’ll say it again, this year is not a bubble popping. a bubble popping is 2 years worth of inventory and people being desperate. this is not going to happen until sometime next year at the earliest. at least in nyc, this year sellers aren’t getting the price premiums they want. ACRIS proves this if you look at real records.
biggest risk for NYC is not new condos because if you look at census numbers, NYC gained population over the last 6 years. 25,000 new condos is about what we need to handle these new people. biggest risk to NYC is people here investing in other markets with their equity and having to sell here to pay off losses somewhere else. and of course the old people who bought their $600,000 for $10,000 decades ago and own it outright.
Amazing how people who live in “NYC” don’t seem to realize there is a whole state above them. Try doing some research into Dutchess county and then tell us the bubble isn’t popping.
i don’t care about duchess county since NYC market is the five boroughs and to a lesser extent nassau, suffolk, NJ and parts of connecticut. NYC and anything north of westchester might as well be 2 different states.
Just because prices declined up to 80% in some cases in NYC in the early 1990’s doesn’t mean they will this time. conditions are different. there is a risk of declining prices, but the reasons for them are different this time than 15 years ago.
NYC is also not one market, but a collection of a few dozen markets with prices ranging from $100,000 to over $500,000 for similar properties depending on the location. even buildings a block apart will command different prices because good buildings command a premium here.
wishing for a bubble won’t make it so. you have to look at price declines, current reasons for price appreciation and ask yourself why people are going to accept lower prices and whether there are enough desperate sellers to make prices take a dive.
“Just because prices declined up to 80% in some cases in NYC in the early 1990’s doesn’t mean they will this time. conditions are different. there is a risk of declining prices, but the reasons for them are different this time than 15 years ago.”
It’s different this time! Love to hear those words!”-}
It is different in this, affordability is so much lower than it ever was in the 80s, before the last bust, that this bust should be far worse.
NYC may have increased in population, but few can afford todays prices without risking their future.
I trust Shiller’s numbers of a return to 1997 prices plus 20% give or take.
That should mean a 50%-60% drop in the outer boroughs.
NYC is not the rest of the country since apartments are the big market here. plenty of affordable apartments here if you look at the numbers. maybe not in manhattan, but in the outer boroughs. there are just a bunch of people who want to live in neighborhoods they can’t afford and won’t face reality. like my wife.
i told her the budget for a house and now she is wishing for prices to drop. reality is we’ll probably have to move away from the tri-state area if we want a house. a lot of people are willing to pay the price for here.
They realize, they just don’t care.
I’ve lived in Brooklyn all my life - the NY Times just printed article giving average family median income in Brooklyn at 37K - now you tell me how that supports 200K starter 1 bedroom co-ops and 500K starter homes - it doesn’t. The sales for last couple years have been primarily to immigrants stacking up extended families in the cheaper private homes & refugees from higher priced places have walked the ladder down throughout old brownstone & victorian areas (ie: Manhattanite sells $1 million condo & buys Heights brownstone, Heights co-op owner sells & buys brownstone in Windsor Terrace) the old Brooklyn co-ops are largely being bought by new immigrant singles & couples who are maxing out finances to get entry to ownership & also to refugees from Manhattan who just can’t make the Manhattan $ stretch no matter what they do. I know this firsthand having been a board member at a large co-op in Midwood and going to hundreds of open houses & talking to realtors & prospective buyers over last 5 years. The immigrant population has been the main buttress for these prices, but at some point, they will be maxed out as well.
“NYC is also not one market, but a collection of a few dozen markets with prices ranging from $100,000 to over $500,000 for similar properties depending on the location. even buildings a block apart will command different prices because good buildings command a premium here.”
Ditto for the USA (not one bubble market — just a lot of locally frothy little ones). What you don’t git is that markets in close proximity are linked by hedonic equilibrium relationships. If house B across the street is nicer than house A you live in, then price B will always be valued higher than house A, whether at bubble or bust prices.
Your post reads like that of a novice real estate investor who is about to get a hard real-world lesson in economics. Maybe you should find a bullish flipper blog to post on, because the kind of nonsense you wrote has been discredited so often on this board that nobody pays much attention to it any more.
What “real records” are you referring to on Acris exactly? And how did you derive your percentages? There are plenty of people of all ages who were selling, and flipping during the boom times.
Also would like a cite on your census stats - in NYC, it seems more folks are leaving rather than staying, and any pop. increase may be due to more births.
Last census data reported on in NYC showed slight dip in poulation. (reported around March 16 of this year)
and here are migration figures
http://www.demographia.com/db-nycmigra.htm
http://www.census.gov
Nice try.
there is literally no room to build because of NIMBY and the only new construction is crazy expensive. too expensive for a lot of people
____________________________________________________
Also, this comment. If no one can afford these homes then won’t prices have to come down to meet the demand or will they just build and have no one live in these apts/condos/co=ops? Eventually supply and demand have to meet!
it’s called a conundrum and we’ll see how it turns out by next year. wife does some consulting for social services and sees people living in paid off homes worth $800,000 that they bought a long time ago. property taxes in NYC are very low and about the national average making it affordable for seniors to own a home outright here even if it’s not a luxurious lifestyle.
what i see in NYC is citywide gentrification. manhattan is for the super-rich and gradually people move out to the outer boroughs. Brooklyn was the place to buy in the early 1990’s. Park Slope took in the manhattan refugees and was transformed. We’ll see what happens in this latest downturn.
you also have a lot of small business people here making good money under the table. i see the houses being owned only by small business people and apartments by us wage slaves.
We’ll see what happens next year, but i’m guessing years of flat prices except for a few neighborhoods where the manhattan refugees flock to and jack up the prices. Forest Hills is one example.
I agree with DBA, and I want this to be a bubble. But wanting won’t make it so. My babysitter lives in Flushing, Queens. She lives with 10 people in a four bedroom apartment, everyone pays $400/month. This market is different from Pheonix.
This is a bubble - what you see is a side effect of the bubble - when 10 people have to shack up in a 4 bedroom apartment to make it affordable - SOMETHING IS WRONG - and it will be fixed, the market will make it that way - NYC is sticky because people will live that way to think they’re “making it in NYC” but they are not. It took my brother ten years of waiting out the crashed 90’s market to break even on modest studio he bought near Lincoln Center in early 90’s. NYC is only “slightly” different.
dba,
you’re PROBABLY a nice fellow. but you are DEFINITELY a troll.
If you look at a close-up snap shot of the market today it might look like a return to a normal market or a soft landing.
If you add in the history and fundamentals, and zoom out for a wide view, it dba, comments look pretty blue sky.
dba — you speak like an investor whistlin’ past the graveyard…
didn’t trump say no downturn because of foreign money?
That’s the BS they’re being fed in South Florida too.
I am glad you are posting more on NY. There seems to be some posters who still believe NY is “different”. I think this is a national housing & credit bubble and NO AREA will be spared some level of decline.
There are some peculiarities to the Manhattan housing market that can cushion the blows … BUT … that is not the same thing as saying that NYC is immune to market forces. It is not, and prices can and do decline there.
manhattan prices have already fallen approximately 10% from a year ago, and they’ll probably fall another 10% by the end of the year. and then another 10%-20%, gradually over the next 5 years. and then they’ll sit there on the bottom for another 5 years!
and manhattan has been growing new condo projects like weeds for the past 5 years. inventory has doubled in the last 2 years. we are headed DOWN.
No doubt about it - i thought Brooklyn condomania was insane, but I was in Flushing recently and every single block had SF knockdown lots with little condo towers going up. There are so many holes in the ground in Kings & Queens, It feels like you are in a beehive with all the activity.
You cannot geograpically excape fundamentals. If you’re area has experienced a irrational spike over mean appreciation, if your affordibilty index is at a all time low, if your rent vs own is completely out of whack, if toxic loans are what kept people buying homes in your area, then you don’t need to go flipping rocks in your neighborhood looking for reasons why you’ll excape the currently unfolding housing bust. It may not be happening in your neck of the woods yet, but if you meet all or some of the above criteria you will not go unscathed. It just doesn’t work that way.
I’m worthless without spell check.
FYI “toxic” loans are not that common in Manhattan. Coop boards don’t allow them.
Also NYC and Manhattan are not the same.
I live in Manhattan.
Did something magical happen to Manhattan in the last five years? Hasn’t it always been a desirable place to live?
People argue it has gotten safer. Perhaps.
And there are 14,000 new condos coming on the market next year. Manhattan may have a lot of high-paying jobs but that’s an unreal amount of inventory.
Two buildings that were condo-conversions near my place have quietly gone back to rentals. (And these are prime UWS locations.)
Google for pics of Manhattan in the ’70s. Apartments on the LES went for $500. In the 80s it was a crackhouse ghetto. I was there. You have no idea what much of Manhattan was like 20 years ago.
Fine. I know that.
What’s with the “happy, clappy” Manhattan talk? Everyone in this town seems to think it’s immune from economic fundamentals.
Four scant years ago, I remember the Christmas shopping season. It was a retail disaster. I remember two shopping assistants fighting over the commission on a pair of gloves I was buying.
New York has one of the most precarious economies I have seen. It’s a two-trick pony (finance & media) with a third pony (health-care) to support the first two.
Yep, but it’s different here. Sure!
And who will feed the ponies when the recession comes?
You forgot the 3rd trick - Real Estate - all the corcoran and other fancy brokers making 6% commissions on insane sales prices, all thge construction workers for all the towers and all the illegals for all the mini condos in outer boros - half the immigrants I know - and that is quite a few - work in construction/rehab trades and are feverishly renovating & flipping homes in the outer boros - mostly within their own communities - I am positive that there is a huge problem of predatory lending/selling to each other in these communities (mostly Pakistani/Mexican/Russian/Chinese in my experience)
It’s gotten safer? After the WTC went down? I’d be scared to death to live there.
we may be in mortal danger as far as terrorist attacks, but as far as everyday crime, nyc is the safest big city in the country, by far. recent statistics prove this.
And we’re still more likely to be mugged than to die in a terrorist attack. Also, despite the impression you get from images in the media, any attack - even one as devastating as 9/11 - is bound to be highly localized and won’t directly affect the majority in Manhattan, let alone the other four boroughs. I was at work on the UWS on 9/11, and looking out our windows you’d never know what was happening just a few miles downtown.
I’m more afraid of the crazy-ass drivers, and the shady characters than hang around outside my apartment building from time to time than I am of terrorists.
i ride an electric minibike about the size of a large mosquito, and i can assure you taxi drivers are the greatest threat to my health.
Look at these stats. Dallas has more than four times the crime per capita than NYC.
http://www.areaconnect.com/crime/compare.htm?c1=new+york&s1=NY&c2=dallas&s2=TX
If you’re afraid of NYC due to terrorism, then the terrorists have won!
Things really have changed in NYC, I have to agree. In 1980 you could have your pick of prewar, full-floor co-ops on Park Ave. for around $75-100k. Those same apartments are now untouchable for less than $10 million.
It’s mostly about the plummeting crime rate and the cleanup of the subways, central park, etc.
NYC is a great place to live, but the housing prices of the top 25% of housing are currently all tailored to the richest 3% of the people, and that can’t last. Sellers will soon capitulate and we’ll see a nice correction.
However, even after the correction, buying in NY will always seem like a huge ripoff - there are just too many people who are emotionally invested in living here and won’t even acknowledge anywhere else exists.
Astute observations
I am a bubble believer, but NYC is different. Re: Foreign money… 36% of people living in NYC today are foreign born. Some were poor when they got here and made the American Dream happen; but many left their countries because they were rich… very rich. Of the new immigrant communities here; the highest percentage of new homeowners are Jamaican. Go figure. Gordo NYC
Yep, all these Jamaicans are single-handedly going to hold up the entire Manhattan market.
Ever look up the GDP of Jamaica?
LMAO!!
well, as proven a few threads ago, there are still many people in complete denial: see sunset beach guy’s party description for a real idea of just how clueless the sheeple are!
I’m not sure statewide data for NY State are meaningful, given the radically different conditions Upstate and Downstate.
Upstate, prices have been slipping for years, not due to a bubble but due to ongoing new home construction and stagnant population. It is some of the cheapest housing anywhere. So if he is speaking from upstate he is correct: no bubble, no burst.
Downstate we had a bubble similar to that in the 1980s, and will have a bust similar to the early 1990s. I don’t expect a severe recession here, but prices are too high nonetheless.
upstate NY is different? where?
not buffalo
HPI for Buffalo
HPI for Kingston
HPI for Syracuse
those charts from rustbelt NY aren’t much different from NY or LI- a sharp upturn from 2000.
HPI for NYC
HPI for Nassau
sorry I don’t know what happened to my links for buf/king/syr
wow, midwest states have a flat strisght up curve !
One thing I haven’t heard mentioned in regard to the NYC area is how big a role the NYPD played in rising home values. The ’90s reduction in crime set the stage for the resurgence of the outer boroughs. Now that Bloomberg is running the job into the ground, how long before this starts to affect perceptions and value? Watch for the murder numbers to be up this year with lots of spin coming from city hall regarding the other tracked stats…
If the Mayor keeps it up down the road some of these outer borough yuppies that have paid through the nose will look like they’re in a bizarro version of “Fresh Prince of Belair”
Only another 40% more to go:
http://graphics10.nytimes.com/images/2006/08/26/weekinreview/27leon_graph2.large.gif
“For BlueChip Properties, about 19 of the 130 condos it is under agreement, said Jerry O’Connor, development director for the project. ‘There’s been a traditional summer slowdown, but we’re happy where we are on sales,’
LOL. Sure, 19/130 is merely a “traditional slowdown”, and you’re happy as a clam about it. Pass the koolaid.
“The statewide median selling price rose 3.7 percent in July to $269,700, compared with the $260,000 median recorded in July 2005. The July 2006 median price, however, was down by 3.3 percent compared to the previous month.”
Let’s parse that passage a bit: “The statewide median selling price rose 3.7 percent in July (which,) however, was (also) down by 3.3 percent compared to the previous month.”
Curiouser and curiouser…
Yes, these prices certainly look like a “return to balance” and “level”:
http://graphics10.nytimes.com/images/2006/08/26/weekinreview/27leon_graph2.large.gif
Staro’s credibility heading well into negative territory…
I live in Brooklyn and am a lawyer. With a low six figure family income, it is simply impossible to buy ANYTHING in my neighborhood. NY is special, but it ain’t that special. I can sneeze in any direction and condos are under construction. And that’s not even considering the proposed Atlantic yards project that would add thousands of units over a few years. The NY market is bubble-icious. I’m planning a move to the west coast, so it’s neither here nor there from my perspective. I am, however, looking forward to buying in LA 2-3 years from now.
This is the point - NYC incomes are still much out of line with house prices. Every house in every nabe here can’t be worth a half a mil or more, when the median income income is only 50-60K. This is unsustainable, and will blow up in our faces sharply when buyers — hoodwinked by NYC’s army of fast-talking mortage brokers and lenders– lose their homes.
75% of NYC market is co-op apartments. houses are in the teens at most
Not quite. Accoridng to REBNY:
Co-op units make up more than three times the number of condos in New York City. There were 375,202 residential coop units for the fiscal year ending June 30, 2005, Department of Finance statistics show. There were 122,384 residential condo units, 1,237,997 rental units, and 1,058,238 one-, two-, or three-family homes and “condops”
Thanks Lex. I’m beginning to think think DBA stands for Data, Badly Asserted.
thanks for those stats. as usual, dba is sharing disinformation.
although i’m not professionally involved in r.e. (or finance) in any way, i’ve been the president of a manhattan co-op board, negotiated the original deal with the sponsor, and worked on and off board in varying capacities for the past 25 yrs, and have lived in manhattan for 30 years. i’ve got a pretty good pulse on the UWS RSD manhattan market. and i gain NOTHING by the bubble busting. not much to lose either, except for dream confetti profits.
and i still say it’s going down, down, down.
If DBA is talking straight Manhattan, then he may be a bit high, but I bet the 75/25 split for co-ops/is pretty close. Manhattan is highly co-op, with the rest of the boroughs being not so much. This is changing with the new development, however.
This is precisely the point. If incomes and house prices are so out of whack, who’s going to buy them?
Dude, you’re going to take ANOTHER bar exam? God bless you.
Manhattan is unique, without a doubt, though certainly not immune from the laws of economics. From what I’ve seen, though, much of the rest of greater NYC looks like your average inner suburb that is really seedy and reached its peak 50 years ago. I’m sure that there are very nice areas that I haven’t seen, but I certainly can’t see paying the crazy prices that people in suburban NY currently pay.
Anecdotal but… I spoke to a relative who lives in Westchester county, NY. Says the market has definitely slowed. Last year he bought two houses in Eastchester to renovate (redid kitchens, floors, bathrooms — yes granite countertops) and filp . One sold at his price, the other sits. In order to sell the second he may have to give back what he made on the first, maybe more. This would never have happened two years ago. He says he missed the boat.
I really wish someone would call out these talking heads when they talk about an “expected softening” or “as we expected”. These jackasses were predicting soft landings which mean sideways movementin price, not downward. The new strategy is to make the bubble pop look like “an expected part of the business cycle”. If it was so expected why are these guys constantly wrong? It’s like a politician saying after 9/11, “the expected attack”.
I tend to roam a bit between DBA and Manhattanite. I think there will be a tightening of the co-op/condo spread in prices. Condos now trade at about a 35% premium on a ppsf basis. I am guessing that comes down about 15 to 20 percentage points.
take a look at the nytimes uws listings $600K-$900K. even with a 40% haircut (over 5 years), manhattan r.e. will seem insanely overpriced to most of us (even to those who own it)! i love my pad, but there is no way on earth i could afford to buy it today at what it’s supposedly ‘worth’ on the market.
my point about the $600K-$900K was the huge inventory of new/pre-construction portion of that market. they can afford to come down in price as the market commands. and they will do just that. so much for and so long to 2005 prices.
Developers may not have that much leeway, as they only have as much room as their construction lenders will aloow. You may see substantial discounts when the seller is Citi or the Royal Bank of ___________ (fill in the blank). As for the condo/coop psf spread, I would expect it to narrow in favor of coops over time, mainly when the initial tax abatements for new construction (virtually all condos) expire.
i’m sure millersamuel.com will provide the stats ppsf basis. a 35% premium for condos sounds insanely high; i know for a fact the spread has narrowed considerably, so that they are now almost equal in price ppsf, now, i believe. the reason the prices of condos and co-ops has equalized in the last few years is because condos have become stricter so as almost to be as restrictive in every way (other than board interview) as co-ops. please provide the basis for your 35% condoprice premium.
actually, i realize that the obvious reason that condos might trade at a significantly higher premium is because they are new luxury construction . . . which will only amplify the contraction when these supposedly more lavish apartments are brought into direct competition with the dowdier prewar construction. a heavier pancake!
Hhahaha. Also can’t wait to see the Attorney General’s roster when the “luxury” makeup washes away to reveal the flaws underneath. Builders love to sell crappy construction to NYC buyers because so many of them are so ignorant about good construction, and so few spend the money to hire a legit structural engineer before they buy. And you know they’re really slappin ‘em together now just as fast and cheap as they can as they see the bust looming. I’ll definitely not buy anywhere near one of these things when the time comes.
Can I marry you, housegeek?
I am looking at the latest Corcoran report. 2Q06. 977 for co-ops and 1318 for co-ops.
977 for co-ops and 1318 for condos. I need to post and then smoke crack.
dba-
Step away from the BONG! It is clouding your vision.
This is quite literally the definition of a bubble.
If your income cannot support the house you live in, and your income is “typical” of tha neighborhood, your house is absurdly overpriced.
I was trying to recall any new coops for sale in NYC, and then, of course (slaps head) the Ritz-Carlton conversion on CPS. Why? It’s subject to a land lease.
Does anyone remember NYC back in the 70s? You could not GIVE an apartment away. Maintainence was easily twice the mortgage on many buildings. Landlords were walking away from buildings in droves. The city still ouns thousands of these buildings occupied by squatters, some in the same apartment 30 years later. Just walk around Avenue B and C to refresh your memory( one block from Sty town presently on sale for $5 billion.) Could happen again
NY state is already in correction. NYC is different, but it is not that different.
Back in the 80s well paid financial executives found nothing under a million available in any of the best neighborhoods and that will still be true after the correction depending on how exactly one defines these areas. For some time it has been the habit to subdivide individual bedrooms into two or even more sleeping areas and this will continue to be the case. Immigrants will continue to stream in, packing themselves tight in ghettos at the low end and leading to extraordinarily resilient demand at the high end.
All of these and other special features will endure, but prices will fall back down. Last time, if you add a fudge factor for undeclared incomes, unit prices fell to around 3-5x household incomes in the last major downturn. Whatever you might think about Richard Florida’s research and conclusions, he did pretty much prove that the highest growth areas always have the highest growth in housing prices and housing price volitility. NYC will continue to be special, and extreme volitility is a part of that. The winds blow very strong up near the top of the mountain.
just took a loan application for a customer that makes 6k month that bought a 400k home in indiana, current dti is 85%
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