Lower end Manhattan market

7E closed in August 2004 for $299k, so this has much further to fall. Our current economic problems and factors influencing the direction of NYC RE are in no way limited to the high end.

I'd wait. This is just the start. Big layoffs' effect is yet to fully take place. More layoffs across the country, which would lead to less spending and which would eventually affect here in NYC. Thousands of condo units from new developments to come on the market this year. Personally, I think there is still 20 to 30% room on the downside. A total market adjustment of 50% is not unreasonable.

The apartment you linked to is 750 sq. ft. A quick glance at UES rentals on SE of that size leads me to believe that you can rent that space at 2K-2.5K today. Why buy in a falling market?

the apartment was originally listed over $500k and now it's dropped $100k that should give you an indication that the seller is willing to drop and will drop further.

I'd wait.

That said, $580 per square foot does look tempting. Looks like nice space.

One potential negative - at least for future marketability - is the phrase,

"Pet friendly: No dogs"

Kind of an oxymoron IMHO.

All good points. It's just wierd being in a situation that I want to buy but will wait due to the economics. Thanks for talking some sense back into me!

We are looking for the exact same thing on the UES - but as a pied-a-terre. Gave up looking 2 years ago and rented for 2K/month, at least 1K less than we could have bought in the coop building we are renting in.

We are also actively looking but think there is a lot more downside before we jump in. For us the rent-buy numbers are the comfort level for knowing when to pull the trigger. The buildings we are following have had no apartments go into contract in our price range since Christmas -- very telling. Plenty of reductions though.

"'d wait. This is just the start. Big layoffs' effect is yet to fully take place. More layoffs across the country, which would lead to less spending and which would eventually affect here in NYC. Thousands of condo units from new developments to come on the market this year. Personally, I think there is still 20 to 30% room on the downside. A total market adjustment of 50% is not unreasonable."

Reddog, here's the bottom line: NO ONE can predict the future. Not even Alan Greenspan. And I doubt tobytoby is anywhere near Alan. It's all speculation, particularly on this board.

If the apartment is perfect, and the price is right for YOU ... over the long term ... and you can afford the mortgage (30-year fixed, of course), then it's the right time to buy.

No one can predict the bottom, but this is going to be our huge plunge into the market. Toby-squared makes the honest point that the fundamentals aren't in favor of an up-turn anytime soon. At best, you'll see a stabilization of prices, at worst you'll a further downturn (or is it the other way around). If we were talking a $250K townhouse in Rahway, NJ then I wouldn't be so worried about timing the market. However, we are admittedly stretching ourselves to buy a place in Manhattan so we are more senstive to any movement in the market either way. Latest we start putting in offers will be January 2010 though.

I'd think January might be very good timing. Stuff that didn't get sold during the fall season, at least some of the correction (and possibly a great deal of it) will have occurred.

Do your best not to stretch, if you can. Just my opinion, but I accidentally did it (unforeseeable reduction in income post 9/11), and it isn't at all pleasant.

Reddog, are you an insider? Take a look at 523-533 East 84th, the apartment that is listed, and then the history of 4B. It's just a snapshot of one building, but it might make you feel a little better about waiting. Good luck.

reddog, I was seriously looking at buying for the past 6 months since prices have softened and lowered. I turned for advice here, too, and have found that by and large, most of the advice you receive on streeteasy is completely inaccurate.

So I stopped looking for advice and used my own awareness of the world, the economy and my finances to determine my real estate goals. For the most part, streeteasy discussion boards are (oddly enough) dominated by people that have no interest in buying anytime soon and turn to each other to affirm the sideline sitting.

You cannot time the bottom. No one knows what the bottom will be. I don't know. I just found the perfect condo in Brooklyn for myself and have used the uncertainty of the market to my negotiating favor. What will the total top to bottom price decline be? Who the hell knows. No one. Maybe 25%. Maybe 40%. No one knows, especially streeteasy posters.

There is a lot of inventory now and you can be more demanding about renovations, location, prices, so if you find something that fits your "must have list" then go for it. NYC has tons of mediocre apartments, especially in your price range, that when the perfect one comes up, go for it.

Good luck.

And advice from a REAL buyer. Don't listen to a single person on streeteasy. Read the news. Look at your finances. Look at your situation. Remember, streeteasy discussion boards were filled with the end of the world scenarios in September and October. They were saying that NYC would be deserted and crime would soar. That we would be another Japan in economic recession for years. All of these predictions have proven false. Just the hype that they get off on spreading here. Remember, misery loves company.

"That we would be another Japan in economic recession for years. All of these predictions have proven false. "

Has it? I agree that it probably wont be, but until the recession ACTUALLY ends, how can you possibly say its DEFINTIELY not like the Japan situation? Remember, Japan had several stock market rallies and several fake recoveries during its "lost decade." Ditto for the US in the 1930s. So nothing has been "proven."

"Don't listen to a single person on streeteasy."

Hmmm...well, prices "are" down ~20% since 2Q2008.

Check out the data tab on the Miller Samuel website for a reasonably long-term history of Manhattan condo/coop prices. The early nineties were brutal.

http://www.millersamuel.com/data/

"History doesn't repeat itself but it does rhyme."

BTW, both Bernanke and Greenspan have had a particularly poor forecasting record when it comes to residential real estate. Keep in mind that their "job description" is basically "cheerleader-in-chief" for the economy. Fed Chairmen never forecast sharp market declines.

"If the apartment is perfect, and the price is right for YOU ... over the long term ... and you can afford the mortgage (30-year fixed, of course), then it's the right time to buy."

NYCMatt, given all the uncertainty in the economy/job market, who (other than someone with tenure at an employer that won't default on its obligations) can know what s/he'll really be able to afford over the long term? Even medical professionals aren't safe with potential health care reform.

"reddog, I was seriously looking at buying for the past 6 months since prices have softened and lowered. I turned for advice here, too, and have found that by and large, most of the advice you receive on streeteasy is completely inaccurate."

I completely agree. No one knows your finance better than you and your wife. It's all about income and affordability.

One last note, I think 99% of posters here posting bearish thoughts will never buy a place. Why? My guess is because they can't afford it.

Yeah, we're pretty stable (NYC Math teacher and a paralegal) with income. Moved up to Inwood the last two years to amp up our savings. Probably going to spend the summer shoring up our down payment/closing costs and reserve fund. Posts on this board have been interesting. There are the 'sky is falling' bears, the rational bears, those who feel there is some advantage to buying now and of course... the brokers whom we all know and love!

Are you going to have children? Not worth it to risk savings on a 1bed if so.

Oh!

I feel like such a loser!

reddog, we're in the same situation as you and have been looking for the last 5 months. actually we saw the place on 77th that you listed. it gets really good light but does need work, especially the kitchen.

i would take any bearish comments, especially on these boards, with a grain of salt. people always overreact, one way or the other. when things are down, no one thinks they'll ever be up again. and when thing's are up (like say, circa 2004), no one thinks they would go south. if you can afford it and plan on staying long term, go for it. for example, we're only looking at places that, when taken into account tax saving, would cost less monthly than our rent now.

oh and in case you don't know, you need about 1-2 years of post-closing liquidity for pass a co-op board, especially these days. that means if you have 20% - $90k saved up, that might not be enough. you'll need closer to $150k to do anything. i know, crazy.

reddog2669, you've pretty much pegged SE.

Nobody timed their buys perfectly, except by accident. You're in no danger of missing the bottom anytime soon, so your plan to keep stashing it away until 1Q 2010 makes sense. No matter what you do, the worst case wouldn't be all that horrible. (The Rahway spectre excepted.)

I think liulide's comment is worthy of it's own thread, so I started one:
http://www.streeteasy.com/nyc/talk/discussion/10999-actual-liquidity-needed

Hi reddog, tried to pull up my own reference for you and couldn't did another search and got it). so here it is. take a look. i know nothing about the building, listing, etc.

http://www.streeteasy.com/nyc/sale/386498-coop-533-east-84th-street-yorkville-new-york

FWIW Topper...when you try to compare the early 1990s real estate and then predict that history will repeat itself, I say, how simple of you. Simple mind, simple understanding.

Is NYC the same city it was in the early 1990s? Are we the crime plagued, homicide record breaking city we were in 1991? Is it the norm now like it was then that when you got married and had kids, you moved to the suburbs? Are businesses lined up to move to Connecticut or NJ like they were then?

Absolutely not.

Because NYC is such an incredibly different city now, it is impossible to simply predict that the housing trends will repeat. People are no longer looking for any excuse to skip out on town and move to safer, cleaner environs no matter what their selling price is.

If you haven't figured that out yet, then you haven't lived in NY long enough. This city used to be rotten. Crime used to be a constant thought. Schools were hopeless. Now there is hope. People are moving back from the suburbs to be here.

These variables have substantial weight in determining the direction and the lows that we will experience. Simply looking at a historical housing recession is not accurate. There are far too many variables and factors that didn't exist before to take into account.

Simple people like simply answers. There is no simple answer in how and when the real estate market will go.

funny, i don't feel simple. i love nuance.

Of course, kingdeka. Anyone that disagrees with your opinion must be a simpleton. Ignore the fact that a part of the reason that Manhattan real estate flew so high was because of that same decrease in crime. Or the fact that almost every major city in the country, including many of the cities that have seen real estate prices plummet, also saw major declines in crime.

As you said, "There is no simple answer in how and when the real estate market will go." But there is a lot of evidence that current prices can't be sustained based on current income (and yes, I know there are a lot of rich people that don't have to work in this town)...no matter how safe it is.

AR, I haven't gone to see that apartment because of the walk up. I am assuming that 5B means my legs are going to hurt! I did post a few examples of pricing coming down on the Upper East Side comps thread. My favorite chasing down the market is between 4A and 9A of this building. They keep chopping below thew other one... http://www.streeteasy.com/nyc/building/446-east-86-street-new_york .

My strategy now is to look at apartments, save them on SE, see what they sell for (if they sell) and make a move in early 2010. Every once in awhile I have to fight off the emotional side of me that wants back into the Upper East Side (currently in Inwood, we hate it up here but its cheap),

reddog, i don't want you to go see the apartment. I want you to take a look-see at the listing history for the building. I believe 4B closed for $600k in 06/08, and somewhere around $350k in 04. That was my point. You need to consider the ability of the seller to go low. If it hasn't closed since 2004, you have to consider that they spent quite a bit less than asking on their purchase, which gives you MUCH more negotiating room.

True, there is another apartment where the seller paid $560K in 2008 but is now on the market for $499K. I`m sure he`s going to hold out hoping to get the $499K at least. You are right though, those who bought awhile back are are more likely to take a lower bid since they have more equity and will make money ont he deal.

One thing to take into account is that historically many more foreclosures occur at the lower end. This in turn means that when the foreclosures start, there is lots of REO in the lower end. When the banks start to accumulate excess inventory of REO, they start to "dump" properties, and it's the easiest to dump the lower end one's first. now, when this happens, the REO sales "make the market". It often makes it impossible for "real" sellers to compete and can lock these owners into not putting their units on the market even if they want to sell. My famous example: there is a building at 200 West 20th street with has all studios and one 1BR units per floor, so basically you've got 180 studios and 15 1 BR's (plus some combined units). It was a "late conversion" (i.e. post crash) in ?1989? and prices of the studios were about $90,000 to $120,000.

In the first half of 1992, I sold 6 REO units in the building (roughly 1 per month). The price range was $27,500 to $41,000. As you might imagine, it made is close to impossible for any of the original purchasers to make a "market" sale while my clients were dumping their excess stock.