Crumbling on Park Avenue

Holy moses... heading for a 25%+ loss...

The mirrored wall is a tip-off for 70s decor. So figure #14D needs some work. Still, quite a turnaround.

stay tuned for all the explanations about how this apartment doesn't count, it faces the wrong way, wrong paint color, the apartment number is satanic, etc, etc.

When I saw the subject line on this, I was so sure it was Cracker Boy.

nyc10022, it's near Spanish Harlem. ;)

ROTFL. No, thats only if its on LEX. This is 100x the neighborhood of one block over.

nyc10022: Not only does it count, it looks like exactly the kind of empty-nester that's going to pull the Upper East Side back to earth when buyers stop throwing stupid amounts of bonus money at fairly ordinary apartments.

I love this area. It's near the 4/5 express, multiple museums, and there's a grocery right around the corner. But even with all that, it's good to see prices on Park Ave coming down to something approaching historical norms.

Absoloutely.... this is my "when I'm old" apartment. I dig it from the listing.

If *this* can fall 25%+, what can't?

"the apartment number is satanic"

Love that!

Um - the 50% down may be somewhat of a concern. You need over a mil in hard cold cash to buy this place! And then have enough left over to qualify for a million dollar loan and pass the coop. Not trying to discount the drop, but I think that's a fairly significant factor, no?

Now we're talking! We're looking for a classic 7 in the same area preferrably with outdoors space. Will we see this in 2009 or do we have to wait for 2010?

joepa, the financials that you outlined are very typical for Park Avenue buildings. There are very few coops that allow less than 50% down. The fact is that such apartments have been trading at higher and higher prices for years now, even with these strict financial rules. It's possible that a Park Avenue address will both shield and hurt its residents. If you already live there and have no intention of moving, then you have the security of knowing that your neighbors are solvent (at least at time of purchase). For those that need to sell, it's a much more difficult (and less profitable?) game now.

we are beginning to see the early stages of who is swimming naked and has to sell! These guys will start the adjustment, and others will follow to the new comps.

l0888, good luck if you want outdoor space. It's *almost* non-existent in UES pre-war buildings in this area. Penthouse level is the only option.

Urbandigs: With regard to prime family apartments, I don't think we're seeing many people who HAVE to sell yet. I think we're mostly seeing inventory accumulating from the owners who would sell in any market - good, bad or indifferent - particularly estates and empty nesters. They can drop prices very quickly because their cost basis and debt load are absurdly low.

I don't think many laid-off Masters of the Universe have put their apartments on the market yet, at least not because they had to. The problem at this point is that the Masters of the Universe are no longer in the market as BUYERS, so Grandma's classic six on Park Avenue isn't sparking a bidding war any more. If the MoUs become heavy sellers, the sky could really fall, but I haven't seen much evidence of that happening so far.

I still root for apartment 666 on the 13th floor. That's the one I want, until there can be an apartment 13 on the 666th floor.

Mwaaah!

I viewed this apt. back in 2007(not for me but for my mother). It looks good in the pictures but I can tell you first hand that it is a wreck. The whole kitchen/office thing needs to totally renovated as do most of the bathrooms. Even at this price it is no bargain.

Steve, now that your Pines lanai is no longer your HQ, you can move your biz to Suite 666 in 666 Fifth -- the goosebumps building.

[Plus it's near the flagship A&F, the funniest place in NY.]

"we are beginning to see the early stages of who is swimming naked and has to sell! These guys will start the adjustment, and others will follow to the new comps. "

Bingo... illiquid markets being defined at the margins.

West81 and others: there is no such thing as 'needs a little work' in a building like this. To do anything besides painting and refinishing floors is a major deal - designing, filing and getting plans approved, not to mention getting approved contractors, etc. You can't just update a bathroom at a time - not only is it going to be very costly to do it like that, and you'll have a hard time finding a quality contractor, but the co-op board isn't going to look kindly at your coming back to do more disruptive work at at separate time.
The point is, a full renovation of an 1800 sq. ft apartment on Park Avenue is easily going to run you $4-700k, so added to the new ask, its not nearly as big a difference. I'm not saying the mkt isn't down, of course it is, but people here too easily dismiss condition when looking at comps. Renovations in quality buildings are all-or-none propositions.

Stealth1/Printer: Thanks. I sort of suspected there might be a "money pit" aspect to this listing, but I didn't want to make a big deal over it without having seen the apartment

did this thing go into total disrepair in a year?

No, the comp is one floor down.

kas - I hear you, all I'm saying is that I don't think looking at an apartment that requires 50% down is a good gauge on the state of the market as a whole. These Park Avenue co-op type apartments that require 50% down are clearly a unique subset of the market. It's hard enough to attract a purchaser for an apartment with these financial requirements when the economy is good - when it is bad, it becomes almost impossible. It's hard to extrapolate this situation to the market as a whole.

"the goosebumps building."

I like the thought of that.

When I bought in South Beach I was on the 16th floor. When I closed I was on the 17th floor. Same apartment - nobody would buy on the 13th floor, so they renumbered.

Who can blame them?

you'll have to wait for that West81st! As long as buyers disappear, it will happen. Its all on the buyers.

I just love all of the arguments why this isn't evidence: it needs work (yes, it does), it requires 50% down (yes, it does), and so what? You think none of the apartments that sold at the peak needed work or required 50% down? This is a great building, great layout, prime park avenue, down 25% to the comp. That's movement.

Watch this one. if it prints at all it will be for $2,730,000.
This is the crowd that will feel the 1st wave of Park ave pain. The 3mm-5mm trade in 2005-2006.
This unit is the "type" the will be a bellweather for "crumbling on Park Avenue"

Additional Details at www.corcoran.com
06/09/2006
Previous sale closed for $3,250,000
05/21/2008
Listed in StreetEasy by Corcoran at $4,950,000
09/09/2008
Price decreased to $4,750,000
10/16/2008
Price decreased to $4,395,000

btw, I don't sense as much "anger" about pets as I did in 2006!

I have a question about the 50% down thing. Was it actually possible to get other sneaky (non-mortgage) loans and/or "collateralize" other assets to, unbeknownst to the Board, finance much of the non-mortgaged 50% ?

And if so, are those games more difficult/impossible in today's credit environment?

happyrenter: Of course it's evidence. But as a fellow data-driven bear, I would urge you not to overstate the significance of this particular listing (or any single listing, for that matter). I think it's sufficient to say that selling an estate-condition, prime Park Avenue six (across the street from Felix and Oscar!) is no longer a picnic. Trying to pinpoint the percentage drop is fairly pointless.

You know perfectly well that Felix & Oscar lived in the San Remo, at CPW and 74th. They just throw that 1049 Park stuff in to confuse you, just the way the two Darrins/Dicks always had you wondering what was up. Not to mention that Son swap-out on My Three Sons. Crazy, man, crazy.

alanhart: Bravo. The scary thing is, I DID know that, and my Odd Couple (Matthau and Lemmon) will always be Upper West Siders. But to a generation of TV watchers, it's Klugman and Randall, and the canopy over that cigar-on-the-umbrella shot defines where they lived.

Kas - a PH sounds perfect! We did see a couple and both actually went into contract this week.

Alanhart - I heard that you could come to an arrangement with the bank for all cash buildings too so there must be a way on 50% downs... or should I say must have been... We tried to get a loan for a coop about 6 weeks ago and the bank asked for 50% down. Took us a month and a half to get an exception for 35% (building was only 25% down) but by then we'd passed on the deal. A few short weeks before we were pre-approved without a problem for 25% down on a condo but I don't know if that would still stick.

Patient09 - do you have a link to that apartment?

West 81st, "trying to pinpoint the percentage drop is fairly pointless". I generally respect your posts a lot, but here you lost me. Isn't it, on the contrary, not pointless at all to try to pinpoint the percentage drop? If I am interested in eventually buying another apartment in NYC, does it not behoove me to figure out how much other apartments have dropped in price?

happyrenter - I meant exactly that: you can't PINPOINT the decline, and it's not clear that pinpointing it precisely would do you much good. Even if this were a same-unit resale and you could say, with relative certainty, that the value of that apartment has declined at least 24.31% since Q2 2007, what are you going to do with that information? I think it's just as useful to know that apartments of this general character appear to be down somewhere between 10% and 30% in the last year and a half. Why? Because a market for non-fungible assets doesn't move in lock-step. In other words, YMMV.

At the end of the day, you still have to find an apartment you want and negotiate a price you can live with. If you find that apartment, and the seller draws a line in the sand at 20% below mid-2007 comps, are you really going to walk away because a listing at 1050 Park (that you didn't want)suggests the haircut should be a few percentage points higher? There may be excellent reasons to walk away, but I think that's a pretty weak one.

There's no real disagreement here. I agree that gathering data to assess broad market trends is very important and valuable. I just think, in applying the results of that analysis to the pricing of specific properties, we should maintain a degree of restraint and humility.

West81st,
As to the Masters of the Universe listing their apartments, most of these comp discussion (which I think are great, btw) focus on uptown. Below 23rd Street (and in some midtown buildings) you've been seeing quite a bit, not the steep reductions like this (and sometimes the reductions are from listing prices that were higher than in 2006), but the reductions have begun and are gaining momentum. I think once severance pay is finish(ed)(ing), you'll see more. Go to www.lowermanhattan.info, take a look at the new development roster. I would assume that at least some of these new developments will be able to/have to undercut those who recently bought and have to resell. If the buildings don't go under themselves.

lo888..
here is the listing, unless I made another typo!
http://www.corcoran.com/property/listing.aspx?Region=NYC&listingid=1232526

West81st, I misunderstood your earlier point. Indeed, pinpointing the percentage decline is not relevant for the reason you state: individual apartments won't rise or fall in lock step with the market. But I hope we can be more specific than 10-30%! To say that things are off between 10 and 30% is barely more than saying things are down somewhere between moderately and precipitously. If I'm buying an apartment I certainly want to know whether we are in a moderate or severe decline.

Does this one apartment prove that the overall market is off 24%? Clearly not. I do consider it part of a small universe of data that indicates a decline of 20% or more has already taken place. I say "or more" because so many apartments remain on the market after severe cuts.

My pet theory for why we haven't seen even more cuts is that so little is selling they want to wait until the market finds a price. If your apartment is sitting on the market at $6 million, but it would also sit on the market at $5, or at $4, and maybe even at $3, then what's the point of cutting it? Until the market establishes a new price level, I think this standoff will continue.

happyrenter - If someone shows a listing of a Bugatti that has decreased 20% YOY, do you think that's a good measuring stick to claim that Honda's will experience a similar drop in price? They may, but the Bugatti listing is tenuous support for that argument. Clearly, this apartment demonstrates that these specific types of apartments are declining. As West states, though, I think using this data to poinpoint percentage decline in the market as a whole is weak.

"a decline of 20% or more has already taken place."

"My pet theory for why we haven't seen even more cuts is that so little is selling they want to wait until the market finds a price."

happyrenter, I may have misunderstood you here, but these two thoughts don't really work together. There haven't been widespread "20% or more" cuts yet - I don't think you mean to say that this listing demonstrates as much, but your second sentiment is more accurate, I think. We are still in a bit of a stalemate stage. Real drops are coming - you just may have to wait until they hit an apartment you actually want.

Well, cuts are sort of the red herring at this point. Who knows if they started too high. What matters is the price at which buyers and sellers meet (or their not meeting at all). Cuts are sort of beside the point already, especially when there is some sales data on individual apartments. Very curious to see the Q4 total market numbers.

bjw:

I do think that there have been relatively widespread price declines of 20% or more from peak price. Most apartments clearly have not been re-priced that for down, but none of them are selling, and enough HAVE been repriced that I do consider it widespread. The fascinating thing is that even apartments that have been slashed and that compare favorably to comps from 2005, 2006, and 2007, still haven't sold. The market has not found a new price level, and my guess is that when it does it is going to be far, far lower than most sellers expect.

this is going to sound obnoxious but what i see on this board is desperation. the not rich are dying to see the rich punished or humbled. in this case though real estate values. i suppose there is a cross section of people who will be humbled and have to move on and settle in a cheaper home, outside the city. but my guess is that given only 30% of NYers ever do own a home than they are already more well off than most of the middle class people on this site rebranding themselves a "bears". in most cases, renters do not own for one reason: they cannot afford it or never took the chance because the thought the market was overvalued. this is a theme. i agree, at the moment and for the last year the market has been overpriced. but what many failt o realize is that most homeowners will not be hurt in the long or medium term. recessions and corrections hurt the poor first, the middle class next and the rich last. why are people so insane to bend that reality? and what will they get even if they manage to? a gold statue to put in their rental?

happyrenter, you may be right, but as of Q3 (according to the reports), that is not so. Q4 may show that, but frankly, I'd be surprised to see a 20% drop that quickly. Maybe if you only go by the Elliman/Miller Samuel data.

"and what will they get even if they manage to? a gold statue to put in their rental?"

eah, don't underestimate the power and respect gained from repeatedly saying "I told you so" on an anonymous message board. I'd trade my place for that any day of the week!

this is true. i should realign my priorities to be able to gloat on an anon. blog. if only someone could convince me what i should gloat over...maybe that at one time trump was bankrupt? or that gates never finished harvard. or that branson had/has learning disabilities. yes, that's it. let me disreagrd that i will never, ever be as wealthy as they are and gloat on the one area where i may have "beat" them.

eah,

you were right: that sounded obnoxious. i'm sure there are plenty of people enjoying their schadenfreude, but most of us are either:
1. real estate professionals trying to understand the changes taking place in the market,
2. owners who are worried about the value of our homes,
3. renters who want to buy in and wonder when the best time might be.

your post just replicates the totally unwarranted preference for owning v. renting that helped get us into this mess. i bought my apartment in 2002 when it was approximately the same cost to rent and to own. i considered selling in 2005 when the cost of ownership had gone up dramatically, but thought that the difference wasn't enough to make it worth the transaction costs. i finally sold in 2007 because the price available was so out of proportion to the cost of renting a comparable apartment. now i rent a similar apartment--slightly nicer, i'd say--in the same neighborhood, for approximately 1/2 the cost of owning my previous apartment.

what i hear in your comment is desperation--the desperation of someone who didn't sell when he had the chance. look: i feel bad for you (and for others) stuck with overpriced assets that no one wants. i don't wish you ill. but while recessions certainly hurt the poor, market corrections do not. poor people in new york don't own apartments, and they will not be hurt one iota if apartments at 15 CPW trade for 5,000/sf, 2,000/sf or 1,000/sf.

happyrenter. thank you for feeling sorry for me. you may want to use your energies in a more productive way, but hey..any attention is positive attention so carry on. i am not sorry i didn't sell as my family is still growing up and taking their home from them at this time might not be the best for them. also, the roughly 75 (assuming the applications are filled out honestly) renters I have seem to enjoy having me as their landlord. and my property manager enjoys her job.

your post indicates that you owned one property and sold it and now have a cash position. if i have some extra energy, i will feel sorry for you that you could afford only one load and shot it. :)

I don't think Bill Gates became the richest man in the world by clinging to overvalued, non-productive assets.

eah, you misread my sarcasm - it was directed towards those "dying to see the rich punished or humbled."

Huh? eah that didn't even make any sense. i am 27 years old. When I graduated from college I bought myself an apartment using (this is true) part of my winnings from a game show as a down payment. I sold the apartment when it no longer made economic sense to continue to own it. I did have a significant cash position up until a few weeks ago--and I am glad I did! Cash has been one of the best possible investments over the past year. I wish I had had more cash, quite frankly.

I am extremely lucky--the money I made from the sale of my apartment is not particularly significant to me. But just because I could have easily afforded to own an overvalued, unproductive asset doesn't mean it would have been a good idea to do so.

And just to be clear, I have plenty of loads to shoot.

> but what many failt o realize is that most homeowners will not be hurt in the long or medium term.

Maybe the failure to realize it is because it might just be absolutely untrue.

In there is the assumption that prices will recover and things will go back to "normal" in X years. I'm not quite sure that is the case. In Manhattan, we're not talking about a business cycle, we are talking about the possibility of fundamental change.

I get that folks who have been living in the same place for 20 years, and didn't refinance, absolutely don't have to worry if they still have income. But that doesn't cover "most" people in this market. I think its the minority.

And there is a difference between "won't be hurt" and "can stomach the pain".

no--i did catch and appreciate the sarcasm bjw--it was funny..i think we're in the same boat.

i bet bill gates raies his family in an 'overvalued, non-productive asset.'

happyrenter..glad you have plenty of loads to shoot. that's the spirit...not his whining and bitching like an old woman on a pension about movements of the the real estate market. if you're 27 and spending a good portion of your day on this site, you may want to reconsider how you spend your time.

"dying to see the rich punished or humbled."

I'm sure there is some of that, absolutely.

But, I think there is also the desire to see perpetrators humbled as well. And this comes from poor folks, as well as folks with money (that now have a little less).

perpetrators? who are the perpetrators? real estate agents who talked people into buying? appraisers who assigned false value? banks who gave away money? bankers who created insane trading models? buyers who didn't know what they were getting into?

probably a little of everything.... but I'm sure different people have their opinions.

Just noting that I know a good number of folks with Wall Street or more money who didn't get it from Wall Street who are pretty pissed...

eah, if you have kids, a spouse, and a 75 unit apartment building, YOU might consider getting off this blog yourself.

i'm actively hunting for an apartment and i discovered this site about a week ago, it's very helpful.

eah,

This board is not about schadenfreude, punishing or humbling the rich. Like many boards on the net, people want to discuss the state of a particular market, whether that market is RE or equities. Here, the focus is NYC residential RE market and how that market has been effected by the downward economy, the RE bubble bust and loss of Wall St.

it's not a 75 unit building, it's several apartments and a few multi unit townhomes. i'll probably not be on the site much in 6 or so weeks. new baby.