Times - Co-Op Prices Down 28%

WOW, no comments. 28% down, people.

Or is this capitulation? Anybody still denying the double digit decline?

Is this your full-time job?

yes.

Does that make it any more true or not?

If true, it is a good time to buy a coop. ;-) I do wonder how they come up with these numbers. Are the declines the same, regardless of segment of the market? I haven't seen $600k units drop by 28%.I'm not looking to pick a fight, I just don't see these huge price cuts.

As many a bull has said before asking prices <> sales prices. We're not talking advertised prices, they're talking sales prices. Remember, the level of "discount" has increased significantly (a separate stat was posted here on that). Lets say folks lowered asks by 10%. Who knows how much lower folks are putting in bids at...

I am curious about the exact methology, but this is all I've seen so far.... they're talking about filing prices, which are public record. So these are closed sales.

Sure, I hear you. Maybe I will go back and find all of the units we looked at at the beginning of last year and see what closed and for what price. My gut feeling is that the $950k two bedrooms are not trading at a 28% discount right now, which would be $684k. What do other people think?

I think the 28% disocunt mainly applies to high end listings (over $4 million). Those buyers are mostly Wall St. However, in the low end, the buyers are MUCH more diversified so layoffs in 1 industry will not have much affect.

Just as an fyi, 10022, I recently posted the same article on Saturday and there is a discussion on it.

http://www.streeteasy.com/nyc/talk/discussion/9237-a-tale-of-two-cities-nyt-on-condo-versus-coop-markets

Just yesterday I posted an example of a perfectly acceptable unit in an OK building on 86th and 1st Ave. (444 East 86th St) which closed at 775K after an OLP of 1.2 M and when all relevant comps from the previous year had been over 1M. Considering floor, condition, layout, etc. I say this particular unit would have sold for 1,050,000 to 1.1 M in early 2008. Instead, it sold for 775K. You do the math. And I wasn't picking and choosing. It just happened that that particular unit (18 B) had been the ONLY SALE of a 2 br. in that building in the last 4 months, regardless of the fact that there another 6 similar units in the market.

That's the crisis in a nutshell, for you: sales volume 50% down and prices 28% down since 09/2008. Next question, please.

Ha ha, if only it were that easy. Those are pretty good deals in that building, and the layouts are not bad, although the second bedrooms are very small, but you are a looong way from the subway. My wife mentioned that someone who came to our open house asked where the closest subway was located. Our building is on top of a subway entrance. Location does matter....

Of course location matters. I'm not saying your building should cost the same as this one psf. I don't even know where your building is and, frankly, I don't care. The most expensive and prime apts. are actually the ones suffering the most, because their buyers are so rarefied and so tied to Wall Street that they've virtually vanished. The usual argument for a lesser decline right now is "my studio apartment is so small, conventional and inconspicuous that it'll always find a buyer".

What I'm saying is that 444 East 86th is solid enough, as a bldg., neighborhood, school catchment, etc. not to be dismissed as "oh, those declines only happen in places were nobody wants to live". And the example I gave is textbook in regard to what's going on. Sales volume spirals down, there are no sales, then someone capitulates, and boom, you have a new comp paradigm that is 30% below the previous ones.

Coops will certainly be more affected than Condos...both will fall but coops more so.

Brokerage101, I agree. This same thing happened in 1987 after the market crash. Lest anyone forget, times were different, but they were the same. Discussing which is worse is irrelevant. They were/are both bad. Living through 1987 did not seem easy. The feeling of doom and gloom was not as bad probably because of the light speed of communications and information that we have now. At that point it seemed that the world came to an end. And then coops did fall more than condos.

I'd be interested to see how this number is calculated, it doesn't match what I am seeing on all the listings that I am watching (1 and 2 beds downtown coops). I second 407PAS, I have yet to see places that typically traded for 1M last year are now going for 700k. I would say more like 900 or 850 (so 10-15%)

Either my corner of the market is not as affected, or the most likely explanation in my opinion, is that the 28% is a drop in *median* prices. With most of transactions taking place in the lower end of the market, and the upper end all but frozen, it seems to make sense that your median price would be skewed downwards. Anyhoo, it's probably better to wait until we have actual market reports, which are going to come out soon.

Re: Coop prices going down faster than Condos. I am not sure why this would happen, there are many many reasons why coop prices would actually hold steadier than Condos (screening of potential owners, limited possibilities for speculation, far more reasonable increases in prices in the past few years).

barbiduleny
Thanks for backing me up. Yeah, I also see more of a 10-15% drop in prices. If one of those 2bd places we looked at would accept $700-750, I would be more willing to move on my price. I would sign a contingent contract. I am not sure that one capitulation sets the prices for the whole market.

I also have a tendency to believe that coops were not bid up as high as condos. I wouldn't touch a condo right now. The phase in of tax abatements will always hurt your resale value and the cost structures are a lot less stable in condos than in coops, in my opinion. Plus, I don't like those 10% down places, too much risk on the downturn, and too much speculation.

Anyway, I would like to read the market reports when they come out. Keep me posted.

bardbidule, people don't have cash right now. as i'm sure u know coops require more cash down and cash on top of that at closing. if we're talking about new development condos, owned by companies with far more by way of assets than any single coop owner who can't afford to make their payment after job loss and the decline's absorption of their liquids, we're talking about two very different types of need to sell... and either which way, if a condo owner can't make their payments they can just rent their spaces until the storm passes.

Coop boards can get more lenient, in terms of subletting, when the market turns bad. The rules are generally not ironclad in terms of not allowing sublets. It depends on the building and on the board.

yes but will they get more lenient on allowed financing and required cash reserves....

No, I do not think they will relax the rules on financing and cash reserves, and I don't think they should relax those rules. Why should the coops invite more speculation? I won't touch a building with 10% deadbeats. If people don't have the cash, they should rent. Some people on here say that everybody should rent.

407PAS - Many of the market reports are based on data collected from Miller Samuel, a New York City-based real estate appraisal firm. THere is a wealth of data on their website that you can pull into customizable charts by
- neighborhood,
- type (condo, co-op, loft, etc),
- metric(median sales price, average sales price, number of sales, etc)
- timeframe (quarterly, annual)

The data is only released quarterly, so there is obviously a lag, but trends are still easy to spot, and their data is comprehensive.

You can also read all the published reports to get commentary. Douglas Elliman's quarterly report is published by them, and you can see the PDF's of those reports under http://www.millersamuel.com/reports/

Finally, if you want to see some fascinating, or downright zanny stuff, check out the charts http://www.millersamuel.com/charts/

While there are many very informative charts, there is one in particular I would direct you to, http://www.millersamuel.com/charts/gallery-view.php?ViewNode=1225896704WkBjw&Record=8 It shows the Median Sales Price, adjusted for inflation, since Q1 04. You may find the numbers surprising.

Hope this helps

Onward and Upward
~ Philip

FULL DISCLOSURE - I am the Chief Technologist at Coldwell Banker and President of Manhattan Association of Realtors. As a leader in the industry and a member of society, I have a vested interest in seeing the housing market and general economy turn around and start rising.

Hmm LES which NYC10022 berates me for being a poor investment is up 8-10% in sales prices in every category in the last year. Total sales are down but price is up. This is the investment he says that I am losing my shirt in.

Hey NYC10022 how much return did you get on that $100K you spent in rent in the last 2 years?

407 PAS, Philip's comment is spot on: it will help you notice that the 28% decline figure they came up with wasn't based in just one case. My post was based on one case. That's called an example.

"Hmm LES which NYC10022 berates me for being a poor investment is up 8-10% in sales prices in every category in the last year. Total sales are down but price is up. This is the investment he says that I am losing my shirt in."

I don't see the LES as a category here. Where are you seeing this?

page 49 East village/Lower East Side Co-ops in the manhsattan report.

Also the LES had the 4th best sales year in the last 9 years.

miller samuel report

Thanks, was using the data section of the site, where there is no LES category unfortunately. As for the full report, it's not really just LES, as it includes the East Village, Noho, a small chunk of Soho, and Nolita. I also think the point is that those 2008 numbers will represent the peak, but yes, in general, if you bought something decent here ~pre-2004/5, you should be ok. Pitt St is not decent though.

407PAS the issue is not what boards or potential buyers should or shouldn't do. the issue is that coops are seeing higher price cuts, and logically so. more cash required for coops makes them less easy to sell in a cash-tight economy, thus higher price chops.

i love it when a stooge who attacked me for being wrong actually vindicates me. NYC10022 and the other doomer stooges attacked me when I said that LES RE would be up in 2008 5-10%. Then they start a thread which actually leads to data that shows I was exactly correct.

I am waiting for the apology Eddie Wilson/aka NYC10022 aka idiot.

barbiduleny - I think you raised some excellent points that seem to make sense.

i havent seen these 28% declines in murray hill 1 bedrooms.....

"i havent seen these 28% declines in murray hill 1 bedrooms....."

Me either, and I'm selling one. ;-)

http://realestate.nytimes.com/sales/detail/253-NS81208109/407-PARK-AVENUE-SOUTH-APT-18B-New-York-NY-10016

and

http://web.me.com/mac.hive/407PAS/18B.html

What i meant is that sellers are still in denial and not really lowering on price much...from what i can see......apts are still way overpriced......407pas....nice apt but mtce is too high for my tastes......

I think sellers are looking around at their competition and pricing accordingly. Maybe everybody is delusional, I don't know.

Thanks for looking. I understand your hesitation. The only thing I can say is that the maintenance is 65% tax deductible, which is very high compared to other buildings. You don't need as much money to buy into my building because the price is lower than comparable units at $1000-1200 maintenance.

We haven't had a maintenance increase in three years and there is no increase in 2009. We refinanced the building's mortgage last year and saved a lot of money. The board's philosophy is to hold the maintenance steady.

Mhillqt - sellers are not in denial. 90% of sellers dont have to sell. they will sell if you give them their price. Or you find the 10% of sellers that need to sell and you may get your price.

It is the buyers that are in denial thinking that a majority of sellers are just going to take whatever they get offered for their property. Most sellers are long term investors. Most buyers in this market are short term market timers or not really serious buyers.

Whenever I look at a coop I always ask what the size of the underlying mortgage is associated with that individual unit. I add that mortgage on to the selling price to know what the real price is for that unit. That makes it easier to compare coops and condos. Anytime you see a high maintenance charge you can generally assume that there is a large underlying mortgage on the building.

Very few brokers will know what that figure is but most do get back to me with the information.

topper, i don't get it. can u explain? how does the mortgage of the building associated with the unit added to the price of the apt equal real price.. ? .. this doesn't make sense to me!

And at the end of the day, condos are still probably 15-30% higher in cost than coops for a similar apartment, no? I know that nobody has an exact formula and that everybody argues over this figure. Yes, condos are worth more than coops. It is all the abatement stuff that keeps me from buying a condo, because I feel that I will certainly pay too much while the tax numbers are low, and get killed on the back end.

petrfitz, I don't even know where to start - that post is a collection of unfounded statements. "Buyers are in denial?" A select few might be overly aggressive now, but so what? That's how you get a good deal. "Most sellers are long-term investors?" Based on what? "Most buyers in this market are short term market timers or not really serious buyers?" Again, based on what?

BJW - I will make this remedial for you to understand. A majority of the sellers are not market timers. They are long term investors as a majority of property is bought and held for 5 years or greater. Most sellers have owned for 10, 20, 30 years. That is called long term investment.

Buyers in denial & buyers in this market being market timers - are you following the world? do you read these boards? Due to the economic climate the majority of "potential buyers" today are the rift raft you see on this board. The ones who think that they can get a steal, or significantly under bid.They think that a majority of sellers must sell - which is not the case. They are not serious buyers, they really cant afford to buy, and wish that prices get down to their levels.

There is currently a minority that are serious buyers, that can afford to buy on cash, or finance, and are not looking to flip. This minority of long terms buyers is an aboration compared to previous years.

Any other basic understandings that you need explained to you?

Wow, I actually agree with perfitz today. For the first time in 4 months, I am going to un-ignore him! And seriously, perfitz does have a point. Read the comments sections on curbed and urban digs. There are nut jobs over there who think they are going to buy at 75% discounts. And even if prices did fall by 75%, they would not buy since I doubt they have a penny to their name.

i think that the deals are to be had by the sheer fact that people who were living large in manhattan can no longer afford to live here(ie unemployment, devalued portfolios, sheer disgust, etc) and that will make people lower their price to 'get out'.......i dont think we can categorize all sellers as long term investors and all buyers as short term investors.......the whole thing is sad but manhattan is completely OVERVALUED and prices should come down to fair levels....many who sell will still make money or break even on their apts since they have increased in value every year for the last 10+ yrs......so the only hardship is that they wont be making the double and triple profit margins...

Mhillqt how many of those deals have you found and been able to purchase?

"Most sellers have owned for 10, 20, 30 years."

I don't think that's true, especially on the high end. I wasn't exactly doubting what you said though; I was merely asking for some kind of factual basis. Do you have any?

"Due to the economic climate the majority of "potential buyers" today are the rift raft you see on this board. The ones who think that they can get a steal, or significantly under bid.They think that a majority of sellers must sell - which is not the case. They are not serious buyers, they really cant afford to buy, and wish that prices get down to their levels."

I don't know what a "rift raft" is, but I don't know how significant this is. A buyer only needs one seller for an apartment he/she likes, so I applaud people looking for a "steal." That's what they should always be doing, frankly. No one needs the majority of sellers to be desperate; they just need enough to move the market on its margins, which is happening to a degree.

"There is currently a minority that are serious buyers, that can afford to buy on cash, or finance, and are not looking to flip."

Doesn't this contradict your "sideline buyer" theory?

bjw - stay in health insurance and stay on your side of the river. The island is for the big boys who can play. it is obvious that you cant.

"bjw - stay in health insurance and stay on your side of the river. The island is for the big boys who can play. it is obvious that you cant."

ie: I have no answer for any of that.

Ok, thanks for playing then.

charming petifitz. and at all puerile!

*not at all

> I think the 28% disocunt mainly applies to high end listings (over $4 million).

Wishful thinking, alpine, but its called a MEDIAN.

"BJW - I will make this remedial for you to understand. A majority of the sellers are not market timers. They are long term investors as a majority of property is bought and held for 5 years or greater. Most sellers have owned for 10, 20, 30 years. That is called long term investment."

And perfitz talks about denial. ROTFL!

You don't need all sellers to panic. You just need enough to move the market. And its already happening!

Every share of citi does not need to change hands to see the stock tank to $1.

Same way, every apartment does not need flip for the market to move to 20% or 30% or 40% off.

And just because you didn't sell your citi stock doesn't mean you didn't lose money. If it were AIG we were talking about, of course, there would be no doubt.

But just because you didn't sell it doesn't mean you didn't have a loss, and that the market hasn't moved against you.

(then again, why am I trying to use logic with perfitz. Shame on me)

But i guess it is official... another bitter bubble buyer in denial!

Perfitz:

"bjw - stay in health insurance and stay on your side of the river. The island is for the big boys who can play"

Yes, perfitz is 100% right there.

He is one of the "big boys" who showed that they could lose all their money extremely quickly. Perfitz, Madoff, AIG.... the kings of lousy investment!

bumping this for Alpine... he definitely needs to read it.

Today he said.

"co-ops are not down 28%"

amazing how many people are denying this stat without even reading it...

http://www.streeteasy.com/nyc/talk/discussion/9399-im-going-into-contract-on-monday

Guess folks will always see what they want to see.

> I don't see the LES as a category here. Where are you seeing this?

Perfitz is using data from LAST YEAR! No wonder he's such a lousy investor.

The actual median on the LES/Chinatown, as posted on this board last week, is down 17% from peak.

Nice job, perfitz!