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GS take on NYC RE
Started by aj202
almost 17 years ago
Posts: 49
Member since: Nov 2008
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NYC RE take From GS chief economist Hatzius- US Daily: The Valuation of the New York Apartment Market (Hatzius) January 7, 2009 · We use the recently introduced S&P/Case-Shiller index for condominium prices to assess the valuation of the New York apartment market. Although housing market valuation typically has little predictive value for the near term, it is useful for anticipating... [more]
NYC RE take From GS chief economist Hatzius- US Daily: The Valuation of the New York Apartment Market (Hatzius) January 7, 2009 · We use the recently introduced S&P/Case-Shiller index for condominium prices to assess the valuation of the New York apartment market. Although housing market valuation typically has little predictive value for the near term, it is useful for anticipating longer-term moves, especially when prices are far away from equilibrium. Indeed, New York apartment prices are very high relative to the observable fundamentals. Using three alternative yardsticks—price/rent, price/income, and affordability—we find that prices would need to decline by 35%-44% to return to the valuation levels seen in the 1995-1999 period, before the start of the recent boom. · The uncertainty is substantial. On the one hand, the picture would worsen further if per-capita incomes in Manhattan returned from their current level of 3 times the national norm toward the pre-1990s average of 2 times the national norm. On the other hand, it would brighten somewhat if jumbo mortgage rates converged toward conforming rates, perhaps because of a broadening of the Fed’s support measures. In addition, societal and demographic changes could also help, though these types of arguments are difficult to quantify and are often heard just prior to a real estate market downturn. Following a decade-long boom, activity in the New York City apartment market is now slowing sharply. The sales reports for the fourth quarter of 2008 released on Monday by two of the largest New York real estate brokers—the Corcoran Group and Prudential Douglas Elliman—suggest that sales dropped by 25%-30% from the fourth quarter of 2007 (see “Striking Declines Seen in Manhattan Real Estate Market,” New York Times, January 6, 2009, page A20). Although the prices of closed sales were little changed from a year earlier, one analyst estimated that the prices of apartments that were under contract but had not yet closed fell by 20% from August to December. Moreover, it is well known that prices lag sales activity in the housing market, so most observers agree that both contract and closing prices are likely to decline in the near term. Information on sales and price momentum is very helpful for predicting near-term moves in the real estate market. But in order to gauge the longer-term outlook, it is better to look at fundamental valuation indicators, such as the level of prices relative to rents or incomes, either directly or adjusted by mortgage interest rates. These types of variables don’t have much predictive power over the near term, but they start to become much more powerful at horizons longer than 1-2 years. Until recently, a fundamental analysis of the New York apartment market was hampered by the lack of high-quality price data. The various brokerage firms publish mean and median prices for both coops and condos on a quarterly basis, but these are difficult to interpret due to significant changes over time in the size and quality of apartments being sold. In addition, research firm Radar Logic, Inc., publishes a “price per square foot” series for the New York condo market. However, there is data even though the Radar Logic approach does control for variations in size. But the data situation has improved dramatically with the recent broadening of the S&P/Case-Shiller (CS) repeat sales home price index to cover five of the nation’s largest condominium markets, including New York. These indexes stretch back to 1995—not as far as we would like but much better than what is available currently—and they adjust for changes in both size and quality of the condos by using only matched price observations involving successive transactions in the same condominium for estimating the overall change in prices. Admittedly, a repeat sales index does not perfectly adjust for quality changes. In theory, the bias could work in either direction. On the one hand, wear and tear will reduce the value of a given condominium over time if the owner does not look after the property well. On the other hand, upgrades such as new flooring or a nicer kitchen may raise the value. While the CS index seeks to eliminate the influence of these factors by downweighting price change observations that are far out of line with local comparables, this is unlikely to eliminate all sources of bias. Still, we believe that a repeat sales index is far superior to the available alternatives for the purpose of measures changes in underlying real estate prices. In analyzing the data, it is useful to look first at the raw numbers for New York condo prices. As shown in the table below, nominal prices tripled from 1995 to 2006, went essentially sideways in 2007, and have declined by about 3% in 2008. The stability since 2005 is somewhat at odds with reports from the New York real estate brokers that still show meaningful gains in mean and median prices over this period. However, we suspect that the apparent contrast is resolved by a shift in transactions toward larger and higher-quality apartments over this period, which would increase the mean and median price figures but leave the CS index unaffected. Index (Jan 2000=100) Oct-95 75.3 Oct-96 75.4 Oct-97 80.6 Oct-98 89.2 Oct-99 97.5 Oct-00 111.3 Oct-01 126.7 Oct-02 144.3 Oct-03 161.2 Oct-04 188.8 Oct-05 222.6 Oct-06 227.4 Oct-07 226.7 Oct-08 221.1 Source: Standard and Poor’s. But are the price gains sustainable? To assess this, we focus on three primary valuation measures: 1. Price/rent ratio. We divide the CS index by the Bureau of Labor Statistics’ index of owners’ equivalent rent for the New York metropolitan area, and index the resulting ratio to 100 for the average of the 1995-1999 period. We choose this base period because it mostly precedes the recent boom but covers a period when the quality of life in Manhattan had already improved significantly from the 1980s and early 1990s. Hence, a return to the average 1995-1999 valuation level might seem like a fairly neutral assumption. 2. Price/income ratio. We divide the CS index by the Bureau of Economic Analysis’ measure of personal income per capita, and again index the resulting ratio to 100 for 1995-1999. Although the condo price index covers the entire New York metro area, we use an income series for the County of New York (i.e., Manhattan) rather than the entire metro area. The New York condo market is quite concentrated in Manhattan; this concentration is particularly pronounced in the CS index because it is weighted by value rather than units and therefore typically assigns a much greater weight to condo sales on Fifth Avenue than in Queens. (Note that New York County income is only available through 2006; we somewhat optimistically assume that it has grown at the average national rate since then.) 3. Affordability. Using a standard mortgage calculator and assuming both a jumbo mortgage and a 30-year maturity, we calculate (an index of) the share of Manhattan per-capita income spent on condo mortgage payments at the current level of the CS index and the current level of jumbo mortgage rates. We again index the resulting ratio to 100 for 1995-1999. The table below shows what all three of our indicators say about the current valuation level, as of October 2008. We focus on the percentage decline in nominal condo prices that would be required to bring our three valuation measures back to the 1995-1999 average, assuming no changes in other inputs such as rents, incomes, and mortgage rates. Price/Rent Price/Income Affordability Required Decline* -44% -37% -35% * In order to return to 1995-1999 valuation levels. Source: Our calculations. See text for additional explanations. Our indicators suggest that New York condo prices would need to fall by between 35% and 44% to return to a neutral valuation level, depending on the valuation measure we choose. Under the (admittedly unrealistic) assumption that prices decline by the same percentage in each market segment, this type of drop would imply that a 1-bedroom condo whose price currently averages roughly $800,000 million would decline to $480,000; a 2-bedroom condo would decline from $1.7 million to $1 million; and a 3-bedroom condo would decline from $3 million to $1.8 million. (All these figures are approximate and are loosely based on the brokerage firms’ fourth-quarter reports.) Since economies typically grow over time, one would normally hesitate to predict that “mean reversion” in a price/income or price/rent ratio should occur entirely via a decline in prices rather than an increase in incomes or rents. In our case, however, the assumption of flat nominal incomes and rents does not seem excessively pessimistic. In fact, it is quite possible that nominal Manhattan incomes will decline for a while. Such a nominal decline would be extremely unusual at the national level but did occur in Manhattan following the 2001 recession, which was much less severe than the downturn we are currently seeing. In fact, it is instructive to consider the potential implications of a return of relative Manhattan incomes toward the national norm prevailing before the Wall Street boom of the past two decades, either because of pay cuts in the financial industry or because of a possible out-migration of affluent individuals. From 1969 to 1986, Manhattan per-capita income averaged 2 times the national average, with no clear trend. Over the next two decades, however, it grew to 3 times the national average. If incomes fell back to the pre-1986 level of 2 times the national average—and if national per capita income remained unchanged—prices would need to fall as much as 58% to return to the 1995-1999 price/income ratio. (The 58% drop is calculated as the 37% drop shown in the table assuming constant income, plus the 33% drop in per capita incomes, minus a term for negative compounding.) So is there any hope for the New York apartment market? Apart from a dramatic turnaround in the city’s economic fortunes, the most plausible story is a drop in jumbo mortgage rates. So far, jumbo rates have not benefited much from the recent decline in mortgage rates, but this could change if the Fed (presumably in conjunction with the Treasury) decided in the course of 2009 to broaden its support from the conforming market to the private-label mortgage market. To make an extreme assumption, if the jumbo mortgage rate fell from the current 7% to 5%, this would reduce the “required” price decline from 35% to 19%. Of course, this assumes that affordability is the only measure that matters for home prices and there is no role for the “raw” price/rent or price/income ratio, and that Manhattan incomes stay at 3 times the national average. In addition, it could be that societal and demographic changes will keep New York apartment valuations above the levels that prevailed in earlier periods. For example, one might argue that the memory of high crime rates was still fresh enough in 1995-1999 to make this period an excessively pessimistic benchmark. If crime stays low during the current economic downturn, perhaps Manhattan real estate will retain its higher valuation in coming years. Alternatively, one might argue that the aging of the baby boomers will continue to support the New York market as “empty nesters” want to live closer to the city’s attractions. These types of arguments are difficult to quantify and are often heard just prior to the start of a real estate downturn, but they do underscore that our analysis of the observable data on prices, rents, incomes, and interest rates only provides a very partial view of the New York apartment market. [less]
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"Using three alternative yardsticks—price/rent, price/income, and affordability—we find that prices would need to decline by 35%-44% to return to the valuation levels seen in the 1995-1999 period, before the start of the recent boom. "
and....
"the picture would worsen further if per-capita incomes in Manhattan returned from their current level of 3 times the national norm toward the pre-1990s average of 2 times the national norm."
very sophisticated analysis makes a lot of sense. with the horrible situation on wall street the 58% number actually sounds more plausible than the 37% number.
Great post.
He uses the word "condo" in here a lot. Is he using this as a generic term for all NYC real estate? Does the study include co-ops?
"The various brokerage firms publish mean and median prices for both coops and condos on a quarterly basis, but these are difficult to interpret due to significant changes over time in the size and quality of apartments being sold. In addition, research firm Radar Logic, Inc., publishes a “price per square foot” series for the New York condo market. However, there is data even though the Radar Logic approach does control for variations in size."
Stevejhx in response to my use of median price per square foot. “Why would that matter - it's a stupid measure. WHO CARES what the median price per square foot is? You don't see the properties. You show me where anybody but in NY claims that that is a useful measure.
Looks like another credible plug for price per square ft. Also looks like it is does "control for variations in size."
What happens if jumbo rates hit 10%?
Case Schiller does not include co-ops, just condos from a few counties around NYC. So it's not just manhattan either. Even with it's heavier weighting, it's pretty clear that many surrounding areas have been pulled along in similar trajectories as NYC.
Hatzius's analysis is very telling, esp b/c he's not counting for the most recent rental data (which the BLS has not updated yet) but he does allude to it..I still think the scarcity of education choices keeps NYC prices higher than the down 50% or so, but down 35%-40% still seems the right #...I calculated avg HPA vs income growth in NYC in a similar time frame, although using '98 as my baseline, and the HPA outperformance of over 800 bps vs. personal income growth is (I'm guessing) historically unparalled. If you use Schiller's 100-150 bps of REAL HPA vs. inflation over the long term- then my math gets to down 40% or so from the peak, assuming FLAT personal income growth. This move has a ways to go.
Michael Hudson once said: "Chicago mercantile exchange tried to make RE index, but found out that any index that government publishes doesn’t have any sense. Once you betting on the index, you are not betting on reality anymore, you betting on what somebody reports and it’s a card game."
elena
(broker)
> but down 35%-40% still seems the right #.
If we went down 20% in just a couple of months, I don't see how we don't hit 30% shortly after that... just intertia...
"Michael Hudson once said: "Chicago mercantile exchange tried to make RE index, but found out that any index that government publishes doesn’t have any sense. Once you betting on the index, you are not betting on reality anymore, you betting on what somebody reports and it’s a card game.""
Chicago merc is the one that trades the Shiller indexes...
"Using three alternative yardsticks—price/rent, price/income, and affordability — we find that prices would need to decline by 35%-44% to return to the valuation levels seen in the 1995-1999 period, before the start of the recent boom. "
- Affordability and price/income - has been strictly financial manipulation (interest went down, interest only mortgages, ets..). It doesn’t mean people have more money to spend on housing, it means prices for RE are doubled without people have to pay more out of their pay check every month.
Real Estate boom are primarily financial boom (bubble). 70% of financial loans in US are made for real estate mortgages. So the banking system and the financial system is based on Real Estate primarily.
Most American savings is invested in Real estate. It’s because the savings go to banks and insurance companies, they then turn around and pump them into real estate. So when you talking about RE boom, you not only talking about financial growth, and in every country the growth of savings is exponential, because the growth of debt is exponential, and one person savings is another's debts. So when you put your savings in the bank, or when you pay insurance policies (life or health), or when you make other kinds of payments most of these end up being recycled in to real estate market and that’s one of the major dynamics that has been pushing up RE prices for the last 20 years.
Now according to article all these have to return to the valuation level of 1995-1999 period?
barskaya,
you have it half right. yes: financial loosening has been the primary driver of the real estate bubble. but that would indicate exactly what you seem to doubt: that financial tightening will drive the real estate market down.
The NY metro area is huge. Would be interesting to know what the Manhattan asset allocation is of this index. I'm "guessing" it's no more than 50%.
I think the suburbs have less downside risk than Manhattan.
I'd still feel comfortable with a Manhattan price target of -50%.
Nice posting, though. Thanks!
"Case Schiller does not include co-ops, just condos from a few counties around NYC. So it's not just manhattan either."
So we are talking a nominal 35%-44% decrease on whatever mix of condos are included within Manhattan and other NY metro areas? Huh? Does this include Jersey City, Ft. Lee, Brooklyn, Queens, Harlem?
"I'd still feel comfortable with a Manhattan price target of -50%."
Topper, there is nothing in this article that supports a 50% drop in Manhattan.
"What happens if jumbo rates hit 10%?"
The shit really hits the fan
juiceman,
how can you say that nothing in the article supports a 50% decline in manhattan when the article itself clearly states a very realistic scenario for a 60% decline? you may think the article is wrong, but the analysis provided very certainly does support the possibility of a 50% decline.
"but the analysis provided very certainly does support the possibility of a 50% decline."
Fair point happyrenter, I thought the same thing when I first read it. The issue is the data set not the methodology. First, it only looks at the condo market which is a small % of Manhattan inventory. Second, it looks at all condos in the NY Metro area. I'm not sure exactly what this consists of, but my guess is that there are a lot of new condos in the surrounding areas that could have significantly more price pressure than Manhattan.
I actually agree that there are some condos in Manhattan that are 35-44% overpriced but the impact of those units decreasing will not have a 35-44% impact on the ENTIRE Manhattan market.
NY metro is very large. Includes all of Fairfield county in CT, for example.
Oh, happyrenter, I don't doubt the direction; I doubt the valuation level of 1995-1999. Why not feudal society?
According to M.Hudson people talking about US being an industrial economy, but we basically a real estate economy. And some economists make a euphemism for this “postindustrial society”, but actually you can call it near-feudal society, because feudal society use to be land and usery. And wWhat we seeing in US is retrogression away from the industrial production to an old rent and interest. When instead of industrial wealth you have more and more of the economy actually take a form of RE wealth or increasing the price of all the property that are already in place.
***
Not long time ago so many people thought that they can make money on RE, that Chicago Mercantile Exchange that sells index futures for commodities, thought that they would going to start RE index. They called couple of economists and asked if they would gather the sales package for this RE Index. “Let’s get rich in no time”.
And what they found is that there was no good RE Index. Originally they thought to have RE index for every city (Miami, NY, ets. ) but there was no way to distinguish area… For example in Miami you have a lot of Latin American flight capital. It’s really cocaine capital, but the polite word is flight capital. And Miami downtown was covered with huge condominiums. They all empty. You go to Florida, you want to be near the sea shore, you don’t want to be in downtown Miami and get mugged at night. So you have all those condominiums built by Latin America Millionaires in the same index as other properties, so they found that they couldn’t find any kind of reasonable property index so it was the end of the idea.
juiceman,
you are overlaying your own analysis on top of the article, which is fine, but of course your analysis is just as debatable as the article's. first, you don't provide any evidence that condos outside manhattan have declined or will decline more than those in manhattan. second, you make an unsubstantiated argument that condos will fall less than other types of units (single family, cooperative, etc.). maybe, maybe not, but you would certainly have to present some evidence to back up your claim.
there are some condos in manhattan that are 300% overpriced, forget about 30%. have you taken a look at the units on the market in the plaza lately? there are some coops that are 300% overpriced as well. not every unit will have the exact same percentage decline, just like not every unit had the exact same percentage surge. but as a whole, the market is heading in a very clear direction.
What is with all the guessing?
We're now IN the decline, maybe its better to look at the actuals? Maybe apply the pace of decline to traditional bubble bursts?
If you compare us to Miami/Vegas, we've declined quicker... and they're already in the 40%s...
Juiceman- it takes 12 seconds to find the methodology for Case-Schiller but here it is anyway..
http://www2.standardandpoors.com/spf/pdf/index/SPCS_MetroArea_HomePrices_Methodology.pdf
The list of NY counties is substantial. Look at it yourself. And if you've paid attention to the RE market outside of NYC, you would know that appreciation in those markets that you seem to denigrate has been as large, if not larger, in the last 5 yrs, than Manhattan..
Barskaya- "Most American savings is invested in Real estate"
Couldn't be more wrong and not sure where you come up with that information but I do think it's a popular misconception. Here's the data- http://www.federalreserve.gov/releases/Z1/current/z1r-5.pdf
and it shows that housing as % of net worth is on the order of 20%, not even close to most so be careful spouting what you consider to be facts w/o knowing the data.
"you are overlaying your own analysis on top of the article"
No I'm not, there is no analysis in my post. It is an opinion.
"first, you don't provide any evidence that condos outside manhattan have declined or will decline more than those in manhattan."
I have no idea what the condo market is outside of Manhattan, but I would bet on Manhattan before I would be on the Bronx or Brooklyn.
"you make an unsubstantiated argument that condos will fall less than other types of units (single family, cooperative, etc.). maybe, maybe not, but you would certainly have to present some evidence to back up your claim."
(I think you meant condos will fall more)
I did not provide data because I assumed it was well known that co-ops did not have the same price run up as condos. Co-op’s may face price pressure, but it is a different formula than condos and they should not fall as sharply. This chart may help to "substantiate my claim".
http://www.millersamuel.com/charts/gallery-view.php?ViewNode=1208449530UATUX&Record=3
"there are some condos in manhattan that are 300% overpriced"
I agree, but people still buy them.
"but as a whole, the market is heading in a very clear direction."
That's fine happyrenter, I would not disagree but please explain this to me. In your quest to "substantiate my claims" I don’t understand why are you not equally as vigorous substantiating claims of a 50% decrease in Manhattan? There is far less data out there to support this (and certainly this article does not) then what I posted. Why so one-sided?
"Juiceman- it takes 12 seconds to find the methodology for Case-Schiller but here it is anyway"
aj202, thanks for saving me the twelve seconds, my time is money. Can you get me a coffee as well? Black.
"And if you've paid attention to the RE market outside of NYC, you would know that appreciation in those markets that you seem to denigrate has been as large, if not larger, in the last 5 yrs, than Manhattan"
Is this the twilight zone? That is EXACTLY my point. This article states a 35%-44% in condos across all these markets. Who gives a shit? That tells me very little about Manhattan which is all I really care about. How does a 40% decrease in Union, NJ condos translate to a 50% decrease in Manhattan?
Here is the list of areas included in the study:
Fairfield CT, New Haven CT, Bergen NJ,
Essex NJ, Hudson NJ, Hunterdon NJ, Mercer
NJ, Middlesex NJ, Monmouth NJ, Morris
NJ, Ocean NJ, Passaic NJ, Somerset NJ,
Sussex NJ, Union NJ, Warren NJ, Bronx
NY, Dutchess NY, Kings NY, Nassau NY,
New York NY, Orange NY, Putnam NY,
Queens NY, Richmond NY, Rockland NY,
Suffolk NY, Westchester NY, Pike PA
Still think this study is an accurate predictor of Manhattan?
You know, I just realized that we've come a long way.
Noone argues that the market will go up anymore. We also don't even have the "will it be 5% or 20%" arguments. Notice how the arguments are now "will it be down 20% or 40-50%".
Times have definitely changed.
I could cry.
people still buy the 300% overpriced apartments in the plaza? actually, they don't. that's why nothing is moving. i hope you are not basing your confidence in manhattan real estate on the greater fool theory, because at some point every market runs out of fools.
there is tons of data supporting a decline of fifty percent or more in manhattan real estate as you well know. take 300 west end. at the peak apartments sold for $6 million and rented for 20k per month. subtract out 4.5k in cc and you get 15.5/month. that gives you a CAP rate of 3%. So if rents decline 10% and the CAP rate doubles to a reasonable 6%, you have the apartment selling at $2.7 million. this is in a rock solid coop building on 74th and west end.
or look at the plaza, where the cap rate on some of those units is currently less than 1.5%. doesn't take a genius to see them falling be 75% or more.
The report states the index is value-weighted. I would think Manhattan is a pretty sizeable % of the overall index in that case.
> people still buy the 300% overpriced apartments in the plaza? actually, they don't. that's why
> nothing is moving
Actually, not only are they not buying, the sellers are offering at prices that would be losses. So you're looking at either not being able to sell at a loss, or being able to sell at an even bigger loss.
Juiceman,
Since you've demonstrated an ability to copy and paste, but not read, you should note the index is VALUE-weighted...I'm sure glad Fairfield, Westchester, Bergen and others have NOTHING to do with Wall Street or NYC- try telling that to any resident trying to sell a house there..Ridiculous
Like many posts on this forum, I think this report is a good indicator, but not the end all be all of the market given that 1) the report does not include coops, which are a significant part of the market and 2) the report includes non-manhattan areas. While I believe that condo prices will have an effect on coop prices, they are very different animals given the requirements of significant financial reserves, etc. Happyrenter, while I don't have the data either, I would be extremely surpirsed if areas like LICC, which have increased tremendously in the past, will not decline faster than core manhattan, because as they are more fringe areas, with less services, restaurants, etc, but only time will tell.
Commercial real estate might already be -60%. I just got this from an investment bank (not Goldman):
"We were just chatting to a senior CRE broker that works at CB Richard Ellis. He said that UBS has 3 floors or 30k sq foot available...they were asking $100/sq ft in August now asking for $60/sq ft and any deal will likely get done in the $40/sq ft range. PFE has 600k sq ft. available as well. This sublease space is going to put pressure on primary office space."
"Like many posts on this forum, I think this report is a good indicator, but not the end all be all of the market given that 1) the report does not include coops, which are a significant part of the market and 2) the report includes non-manhattan areas."
If you want co-ops and Manhattan only... then just ask Miller Samuel.
Their number... 20% down off peak, 75% decline in sales volume.
Thanks NYC. Isn't the corresponding downturn in condos 20% also - given that perhaps the coop and condo prices are more intertwined than I thought.
"there is tons of data supporting a decline of fifty percent or more in manhattan real estate as you well know. take 300 west end. at the peak apartments sold for $6 million and rented for 20k per month. subtract out 4.5k in cc and you get 15.5/month. that gives you a CAP rate of 3%. So if rents decline 10% and the CAP rate doubles to a reasonable 6%, you have the apartment selling at $2.7 million. this is in a rock solid coop building on 74th and west end."
happyrenter, do you believe if you find a 50% overpriced apartment that the entire market will decrease by 50%? I can find an apartment that is only 10% overpriced, does that mean I can say the market will only decrease by 10%?
"Since you've demonstrated an ability to copy and paste, but not read, you should note the index is VALUE-weighted"
No, I read the areas of the source data and was laughing so hard, I forgot to read the rest.
"I'm sure glad Fairfield, Westchester, Bergen and others have NOTHING to do with Wall Street or NYC- try telling that to any resident trying to sell a house there..Ridiculous"
Huh? Where did I say these areas had nothing to do with Wall St? Please proof read your posts before posting. You don’t make any sense.
juiceman,
i didn't show you an apartment 50% and overvalued and say that it proved the market was 50% overvalued. first of all, to support a market decline of 50% the market would have to be 100% overvalued, so get your math right. i showed you an apartment that is 400% overvalued, and yes, i do consider that an important data point to consider when talking about an overall 50% decline in the market.
"i showed you an apartment that is 400% overvalued, and yes, i do consider that an important data point to consider when talking about an overall 50% decline in the market."
For someone so interested in valuation and math you have terrible logic skills. A data point is one thing, but stating that the entire Manhattan market is going down 50% based on condo's in Union NJ and an overpriced pile of shit at 74th and west end is a bit far reaching isn't it? This is what you call "substantiated claims"?
Doosh-man,
"Who gives a shit? That tells me very little about Manhattan which is all I really care about. How does a 40% decrease in Union, NJ condos translate to a 50% decrease in Manhattan?"
Union, NJ I can't speak to- but many of those other counties who have much higher transaction values and impact that series more meaningfully, are directly related to the NYC economy, so RE prices will correlate closely. If they correlate closely, then they'll MOVE TOGETHER...So if they move together, AND they have a large weighting in the index, then maybe the price information contained in the index is a good proxy of Manhattan condos? Not sure why this is hard to understand but I wanted to make it R-E-A-L-L-Y simple since your "time is money" theme clearly means you've got tons going on...like spending your day acting the ass on streeteasy.
Not sure why this is hard to understand. Your concept tha
errr . . . i think 300 WEA is a pretty nice building . . . was nice enough for harry belafonte for a number of years and nice enough for abby disney (of the Disney disney's) to buy in, if not actually move into . . . not sure it ever was overpriced, just an indication of how things change . . . though I confess that every time I look at those floor plans I wish there was a way to expand and incorporate the kitchen into the flow of the apartment. i think if there were we'd be seriously looking at it, or at least asking everyone here what they thought it was worth . . .
juiceman, we've never had the pleasure before . . . is it grapefruit, or prune?
Yes, the various sub-markets are probably fairly highly correlated. But from my own experience (I own in Fairfield, CT), most of these markets are lower beta markets than Manhattan. The percentage price increase in Manhattan during the 2000s has been substantially higher than what was experienced in the suburbs.
I would expect Manhattan to fall much harder than the suburbs during the bear market. Manhattan is hypersensitive to foreign buying and Wall Street.
"You know, I just realized that we've come a long way.
Noone argues that the market will go up anymore. We also don't even have the "will it be 5% or 20%" arguments. Notice how the arguments are now "will it be down 20% or 40-50%".
Times have definitely changed.
I could cry."
Do you want a cookie?
Yalie wanna cookie?
The CS New York condo market really doesn't represent Manhattan. In addition to all the suburban counties included in the index, it's important to note that most of the Manhattan condo/coop market value today comes from coops and not condos.
Hopefully, Manhattan will eventually be broken out.
"If you want co-ops and Manhattan only... then just ask Miller Samuel.
Their number... 20% down off peak, 75% decline in sales volume."
The Miller Samuel data actually shows a 12% decline off peak median sales price ($1.025m in Q2 to $900k currently). As for sales volume, it's a 26% drop. We will almost surely see higher percentage drops in the Q1 report, but worth noting (again) that this is wilfull misdirection.
> but worth noting (again) that this is wilfull misdirection.
The misdirection is yours and yours alone (again)... you're looking at past stats, closed contracts from months back.
The miller samuel numbers for NEW contracts are just as I said.
I assume you know that the (15% to) 20% figure mentioned was related to "contract" sales, not closings.
btw, its funny... I remember bjw trying to scold me for saying the market was down double digits, back in November.
Funny that he's now (a little late though) trying to use the data from that same same period - which I was right on about - to tell me I'm wrong again...
In fact, 12% was exactly what I said, and he complained....
Topper, exactly, and therefore it's not comparable. nyc10022, your agenda belies the actual data. I said very clearly that the Q1 stats may well show further drops in prices and sales volumes, but you're saying the Miller Samuel data says something it doesn't. If you don't believe it, run it yourself: http://www.millersamuel.com/data/
> but you're saying the Miller Samuel data says something it doesn't
Nope, just saying that you're looking at outdated data...
"Funny that he's now (a little late though) trying to use the data from that same same period - which I was right on about - to tell me I'm wrong again...
In fact, 12% was exactly what I said, and he complained...."
Wrong (again!) - you were trying to make that claim from the Q3 data and I pointed out that you purposely ignored the two other reports (one of which was Streeteasy's, which could be argued is the least subject to broker "spin") that did not show such a drop.
"Nope, just saying that you're looking at outdated data..."
Except it's the most recent, reliable data. I know you desperately want to be right RIGHT NOW, but be patient.
i believe it would be prune juice.... 50% by Q2 09'... and yes I'd like a cookie :)
"Wrong (again!) - you were trying to make that claim from the Q3 data and I pointed out that you purposely ignored the two other reports (one of which was Streeteasy's, which could be argued is the least subject to broker "spin") that did not show such a drop."
Yes, and all the data you used then was wrong... even the report you like shows the drop you denied.
> Except it's the most recent, reliable data.
Thats like saying you wanted to know the price of gas, but you went with the report on corn prices because its more reliable.
Data from the wrong period is simply not reliable, particularly when much of it is from PRE the event that folks are trying to determine the effects of.
Reliable meaningless data is still meaningless data...
> I know you desperately want to be right RIGHT NOW, but be patient.
Doesn't matter when YOU find out, if I'm right, I'm right.... whether you know it or not.
;-)
> i believe it would be prune juice.... 50% by Q2 09'... and yes I'd like a cookie :)
lol
Where was this article published? Is there a link? Thanks.
"Yes, and all the data you used then was wrong... even the report you like shows the drop you denied."
This is patently untrue. Look at the Streeteasy Quarterly reports. Median price in Q2 was up 8.1% from Q1, and then -5.5% from Q2 to Q3. That's hardly the -12% (from Q1) you kept bandying about. The Corcoran report showed a slight decline, but again, NOT what you were saying. I don't deny drops - I just prefer having legit data posted here, and you seem not to care for that.
"Thats like saying you wanted to know the price of gas, but you went with the report on corn prices because its more reliable.
Data from the wrong period is simply not reliable, particularly when much of it is from PRE the event that folks are trying to determine the effects of.
Reliable meaningless data is still meaningless data..."
That's a pretty atrocious analogy. I'm comparing the prices of Manhattan apartments to... Manhattan apartments. I know you don't like the data, but it's there, and it's the most recent. There is nothing more reliable and current out there right now - sorry, Fed Beige Book is not comparable, as it's mostly narrative (and the one sentence in there isn't even talking about closings!).
"Doosh-man"
I'm confused aj202. You are the one who 1) doesn't understand his own posts and 2) can't comprehend mine, and I'm the douche?
"but many of those other counties who have much higher transaction values and impact that series more meaningfully, are directly related to the NYC economy, so RE prices will correlate closely."
Really? I can't wait for your white paper describing the correlation between 15 CPW and Skyview at Carriage City. Here are the benefits of Skyview:
Community Features & Amenities
– Only minutes from shopping at Woodbridge Center and Menlo Park, and only 11 miles to the Mall at Short Hills
– Close to several large corporations including Merck & Co., Schering Plough, Lucent Technologies, Novartis
– Close to many institutions of higher learning: Rutgers, Princeton, Kean & others
– Excellent central location within minutes of major highway and public transportation including train and bus service
– Located midway between Manhattan and the New Jersey Shore area
– 30 minutes to Manhattan by train
– 17 minutes to Newark Airport
– 32 minutes to Princeton
– 45 minutes to Trenton
– 35 minutes to the Jersey Shore
Wow, you can live in a mall!! LMAO!
"like spending your day acting the ass on streeteasy."
I would rather be an ass than an idiot. I can choose not to be an ass, you will always be an idiot.
nyc - Noone argues that the market will go up anymore. We also don't even have the "will it be 5% or 20%" arguments. Notice how the arguments are now "will it be down 20% or 40-50%".
You forgot me!! *waves hand*
I agree with Cramer that the next few months will be weak for the occasional sellers who get panicked and throw away their apartments, but then it will recover nicely. Q1 2010 will surpass Q1 2009. Thanks for playing!!
BTW, the data says co-ops per foot are down about 3 percent. Whoopee! Most Q4s are a bit weak.
"I know you desperately want to be right RIGHT NOW, but be patient."
bjw2103, I caught nyc10022 doing this the other day. He said Q3 median prices went up in the UWS because of 15 CPW closings. He then compared Q4 UWS numbers to Q3 UWS numbers, claimed a huge decrease in prices (20%) but never mentioned 15 CPW. Why do you think he does it?
it's going lower
Excuse me Mr. Juiceman, I believe ass=idiot, and contrary to your belief if you can choose to be an ass (on and off) then you are by definition an idiot... like I'll be an ass to my wife, but be okay to the hot dog guys... see the problem? no, Well, then you are an assdoucheidiot....
happyowner.... happywishing.... if that doesn't work fein hardship and drag yourself to bankruptcy court... apparently the US gov't is all about bailing out anyone who is under water...
http://www.nytimes.com/2009/01/09/business/economy/09loan.html?hp
Maybe I can become a bank holding company and getz me some TARP $.... if Discover Credit card can do it, bc they know the "sh-t" bowl of consumer credit that's going to be handed out in the next 3 qtrs.. .then happyowner should have no problem faking hardship to re-cut his mortgage....
Let's just bail out the over-leveraged idiots... GO OBAMA! Can't believe I voted for that idiot, but shooting under-water homeowners ala Palin isn't too fun either... :)
You are one weird dude w67th
happyowner - "I agree with Cramer" Did you really just write that? Wow.
I agree with Greenspan. I agree that he totally underestimated the financial community's ability to screw itself beyond recognition, and overestimated its ability to look forward and self-regulate to minimize or avoid said destruction.
w67th, I'm a bit despondent myself about Obama these days. One can hope, but the well is awfully low.
JuiceMan, I noticed that as well. I am not surprised though.
67, you fuckin rock! screw those who don't get it. Its like the first time you ever heard Bob Dillon, you either got it, or you didn't. And if you don't, well, we can't it explain to you!
patient09, who is Bob Dillon?
once again..that's the goof, get it?..dillon=dylan....67, we knew one would fall for it
You got me! I was slightly incredulous someone would misspell his name - glad it wasn't really so!
patient09... no, you double fuckin ROCK! Me, I likez me ABBA and Spandau Ballet :)
and Dylan :)