And Out Come The Lagging Manhattan Market Reports
A: You will often find discrepancies between what I say here on UrbanDigs.com and what you see in the quarterly reports issued by the major Manhattan brokerage firms. The reason is that these reports are lagging in nature; by quite a bit I might add. I'll explain below. What you need to know is that the next three quarterly reports will be compared to Q4-2008 to Q2-2009, and you get comparisons that will likely look pretty good as we get to that 3rd report. The downturn for Manhattan real estate was defined by Q4-2008 up until about the end of Q1-2009 or so. Since these reports are lagging it took a few quarters to really show up in the media - as early April were the first shocking Bloomberg reports of how hard our market was getting hit! So, you have to understand that this blog tells you what is happening real time and discusses changes as I see them occur in this marketplace; as opposed to lagging quarterly reports that amount to nothing more than a glance in the rear view mirror.
Take note to understand the lagging concept here with these quarterly reports, and use caution when interpreting the reports to mean this is what is going on right now in the Manhattan marketplace.
I look at when the contract is signed as the moment that captures the state of the market as of today; i.e. if we had contract signed data as it happens it would be as real time as you can possibly get as to where the bids are for properties. It's where the trade will take place! Now, in this market it takes about 2-4 months, sometimes longer, to go from contract signing to actual closing when the trade gets reported as public record. It is at this time the closed sale is calculated into the quarterly report and analyzed. Therefore, the Q4 report that is about to come out today for the Manhattan marketplace - which takes into account trades from OCT-DEC of 2009, are really a snapshot in time of the contracts that were signed from June through September 2009! Aha, the eureka moment. The downturn took 7 months to be captured by the mass media via the quarterly reports and the reflation I discuss now will likely take another 6-7 months to be captured by the lagging reports - so you have to wait to see what I said here in the past few months to get caught and reported on!
FLASHBACK: April 2nd, 2009 ---> "Manhattan Co-Op Prices Decline 22%, Most Since 1995 ":
Manhattan co-op prices dropped the most since 1995 and transactions for all apartments plummeted 48 percent in the first quarter from a year earlier as the recession and Wall Street unemployment cut demand.That was the first real report showing the adjustment Manhattan experienced starting about 6 1/2 months earlier; after Lehman failed and sparked a fear based selloff in all markets that came to a head in March of 2009. As for our markets, the failure of Lehman led to a disappearance of buyers that lasted about 7 months with the best deals taking place right at the tail end of that freeze-up. Since then, its been all about rising sales volume which led to the pricing out of fear, which sustained itself into a full blown reflation trade that seemed to have affected all asset classes. Right now the reports are capturing the beginning of the pricing out of fear part of the process.
The median price for co-operative apartments fell 22 percent to $587,500, according to a report today by New York appraiser Miller Samuel Inc. and broker Prudential Douglas Elliman Real Estate.
The report today, "Manhattan Apartment Prices Fall as New York Loses Finance Jobs":
Manhattan apartment prices fell for a third consecutive quarter as Wall Street job losses drained demand and the decline in co-op and condominium values reached 21 percent since the market peak.Future reports will slowly show the stabilization in prices and then ultimately show a slight rise in prices probably in Q2 or Q3's report that comes out later in 2010. I see it in the field and eventually it will come out.
The median price slid 10 percent to $810,000 in the fourth quarter from a year earlier, down from almost $1.03 million in 2008, New York appraiser Miller Samuel Inc. and broker Prudential Douglas Elliman Real Estate said today. The number of sales jumped 8.4 percent to 2,473 as lower prices pushed transactions above the 10-year quarterly average.
In the last 6 months, I show:
ACTIVE INVENTORY ---> Down 27% to about 7,181 units
PENDING SALES --> Down 0.9% to about 4,724 units
LISTINGS REMOVED FROM MARKET --> Up 8.2% to about 11,118 units
The reason pending sales is down over the past 6 months is that the bulk of the action took place around June, July and August when we saw about 1,200-1,250 contracts signed a month - the so called pent up demand jumping in with much lower prices and a delayed seasonality effect from the freeze up period that consumed much of January, February, March, and early April. This was the time when fear started to get priced out of the marketplace.
When I say 'delayed seasonality' what I mean is that the adjustment down distorted the period of time that our marketplace is usually more active - and the seasonality effect got delayed and pushed forward. With the typical wall street bonus season seeing more action than summer months, 2009 became the year that lost its 'active' season as the market adjusted to a new, lower level. Once that comfort zone was hit, sales started to rise - and during the entire process we saw deals at every price.
Today, I see a market with much less inventory than only 10 months ago and noticeably improved bids and trades coming through. I am now seeing some multiple bidding situations in all price points as buyers get frustrated with the lack of good options that are priced right. When I say lack of 'good options' or quality product, I am talking about properties that have that desired mix of raw space, layout, renovations, natural sunlight, desired exposures, and open views in a building whose monthly carrying costs are not out of whack with the norms and whose asking price is not 'testing the market'.
I cannot deny the shift this market experienced over the past 10 months or so. It has been dramatic to say the least; the data says it all. Which brings us to what comes next? At first I questioned the sustainability of the pickup in activity, calling it a countertrend surge in action embedded in a longer term corrective process. Well, it turned out to be more than that. As a result, I have to adjust that phrase a bit as I see this market staying strong for another few months or so as long as inventory is as tight as it is and the reflation trade continues to bring willing & able buyers to the market. The main questions I have over the next few months are:
1) How will shadow inventory affect current active levels? We know many listings were removed, so how many are coming right back?
2) How will new listings add to inventory levels now that the market seems to be trading at improved levels?
3) How long will buyers' bids continue to improve to grab the property that is desired now that options seem to have declined? Will the reflation last forever? What happens when it reverses?
4) Will sell side optimism outpace the improvement in bids leading to another period of slow sales volume? At some point, I see this occurring as the reflation affected both buyers & sellers.
5) At what level will higher rates start to impact buyer's willingness to improve bids as affordability once again is taken into account. 5.5% lending rates? 6%? 7%? When do we even hit these kinds of lending rates?
Take it for what it is, a lagging report on a strengthening market since the March lows. It will take another two quarterly reports or so to see what has been discussed here as of late; so you make the call what you want to listen to. When the market changes, I'll report on it and I always try to keep commentary real time and unbiased. Lets continue to keep it real!
Happy New Year all!
Posted by SteveF
Tue Jan 5th, 2010 09:07 AM
Noah,
IMHO this is an excellent snapshot of the past year. As I have said before you were the def. the "first media person" to call the 12/07-6/09(?) recession. I know we've had our debates in the past but I respect your opinions and look forward to reading your daily reports. One thing, if possible, since you are an agent out there, can you provide us with more frequent updates for sales activity, maybe including your numerous contacts. Thanks.
Posted by Kevin
Tue Jan 5th, 2010 09:21 AM
I was a little skeptical of this, until I looked up the "Q4" 2008 statistics- and indeed, they showed a ~5% price increase from the year before, despite "armageddon" occurring.
What about the surge of closings from new buildings- from what I recall, there was a 1-2 year lag on those contracts being signed and closed- do you think those have cleared out of the system yet? I read today that construction permits in NYC are down 90%- could this be a long term lag on median and average sales prices?
-K
Posted by Noah
Tue Jan 5th, 2010 09:29 AM
SteveF - thanks, and yes I will certainly try to provide more real time commentary on the markets once I launch the new site. When you see what I have been working on, you'll know what took so long. I think it will be a great tool for you guys, but it took us months to get the data to a level of quality before we could even start to build the system that will be used.
Debates are always good, and I always enjoy them. Lets just keep them going! Nobody is every always right, and there is nothing wrong with talking about a bad call every once in a while. With that said, this market truly does amaze me. Im curious to see how long this lasts.
Posted by Noah
Tue Jan 5th, 2010 09:37 AM
Kevin - excellent question on the new dev closings. I think most of the new dev surge and closings from the boom years of 2005,2006,2007 for the most part were completed and closed. Not to say all of them, but definitely the major wave of closings I think is passed. So we will still have to get the units that didnt sell and the new devs late to the party to come through the system, but I wonder what level those deals are happening at now that an adjustment did occur.
The thing I discussed here, that I said would affect quarterly reports, was the peak level of new dev closings that were signed into contract BEFORE the adjustment, yet had to wait until after the adjustment to close and that skewed the reports and covered over any slight price move down in the beginning of the process. But we are past that I think now. Also, most reports now separate new dev sales and existing resales to better see whats happening out there - that was not the case years ago!
As for construction permits, the expiration of the 421-a exemption has alot to do with that PLUS the natural market forces that make the build decision harder to justify; especially with price levels seen 8-10 months ago! Its great that bids improved and this market saw a surge in volume from the freeze up period, but we have to question how long it all lasts or what level of sales volume might be in store for the years ahead? 1,000 contracts signed a month? 800? I know at peak, we saw about 1,100-1,150 or so contracts signed a month, so I dont expect that level to sustain itself for long.
Posted by OT
Tue Jan 5th, 2010 09:42 AM
Just thumbed through the MS report - average price per square foot is up 18% quarter on quarter and down only .6% from Q4 '08! That metric is the only relevant one in my opinion and I am astonished at the turn-around. East & West sides have recovered considerably. Not sure what the future holds, but I know that the bears must be kicking themselves just a little.
Posted by Noah
Tue Jan 5th, 2010 09:46 AM
thanks for pointing out OT...yes, it had to show some qtr-qtr improvement although I tend not to look at those for seasonal reasons mostly. But in this situation, that does jive with the content of this post.
thanks.
Posted by Noah
Tue Jan 5th, 2010 09:53 AM
HEY STEVEF - what happened to SE discussion forum?? I see it empty on my screen.
Posted by OT
Tue Jan 5th, 2010 10:12 AM
Empty for me too - the regulars must be having a fit. All of a sudden, their lives have no meaning ;)
Posted by Noah
Tue Jan 5th, 2010 10:19 AM
hehe..now thats funny.
Posted by kevin
Tue Jan 5th, 2010 10:19 AM
OT- As a bear (and owner/renter- well actually I own investment property outside of nyc and rent across the river) I am still holding my breath until we see how the financial bonus season turns out. Unemployment in finance is still quite high, which should drive down compensation, which may be bad news for RE. There are also many signs that the fed will have to turn off the spigot this year, and that could drive the dollar up, reducing foreign demand (haven't heard much about that lately though and whether foreigners are still a significant component of buyers).
In either case, I think the outer burroughs and suburbs are going to continue to get hit hard, and despite the fact that there will always be people that have to live in Manhattan, the price differential can only be so wide before people start looking at Brooklyn or the burbs.
We shall see what happens, but I really doubt nyc prices are going to go anywhere significant this year, if they go up at all.
Just my $.02
Posted by OT
Tue Jan 5th, 2010 10:29 AM
Kevin - good points. I am not predicting what may or may not happen in 2010. I just know that the doom/gloom scenarios for prime Manhattan did not, and IMHO, will not materialize. Inventory is still shockingly low given global demand, and NYC has not lost its cachet or slipped into some downward crime-ridden spiral as some predicted. It is still, for me and many others, the only livable city in the US. I am not sure if the finance jobs will impact the market as much as some think. Out of 45 units in my building, we have a WIDE diversity of employment, from elementary school teacher, to sommelier, to hedge fund PM.
Posted by Fred
Tue Jan 5th, 2010 11:23 AM
OT - This is not a quarter on quarter time frame; it is real estate and closer to glacial than not. The themes for ownership in Manhattan are some very strong headwinds - increasing taxes, insurance & energy cost; retiring boomers (which is a particularly important issue for Manhattan); declining employment; declining wages; rising interest rates within a year and most importantly, a persistent failure to recognize that what drove prices to 2007 levels were conditions in the credit markets that will not return.
A dead cat bounce always feels good but as we just saw this AM with the housing numbers, this Fed can not raise rates anytime soon which means the TED spread will continue to widen and growth is that much further off. Until those conditions change, we can't expect the employment base, in Manhattan especially, to improve.
What I found particularly interesting are the number of units pulled from the market, especially at the higher end.
Posted by OT
Tue Jan 5th, 2010 12:25 PM
Fred - not sure I agree. The headwinds you mention - taxes, insurance, energy costs - are certainly real, but by no means specific to Manhattan. If anything, by forgoing a car, many Manhattanites are shielded from such increases. Not sure what impact retiring boomers will have on Manhattan. It has been, and will continue to be, a young and creative hub. In addition, wealthy retirees love having their Manhattan crash pads which may have a positive impact on the $2-5MM range. I also disagree that credit conditions drove the runup in Manhattan. Certainly, there was some degree of this among condo purchasers, but the number of people paying all cash or better than 25% in down payments is probably higher in prime Manhattan than anywhere else in the country. This explains why our rates of foreclosure are miniscule.
I think the biggest factors to affect real estate in prime Manhattan will be white collar unemployment (which is much smaller than overall unemployment), inventory and the health of the stock market. Shadow inventory may have an impact, but as Jon Miller notes, there are about 6000 units on the sidelines, many of which I expect will be turned rental.
I suppose we'll see what happens over the year...
Posted by asaf
Tue Jan 5th, 2010 01:10 PM
Hello Noah,
Do you follow MBA data? Not NYC specific, but seasonally adjusted purchase applications appear to be down in past few weeks.
In your opinion, is this a good leading indicator of residential real estate sales?
Do you or Jeff observe different mortgage trends in NY?
-A
Posted by SteveF
Tue Jan 5th, 2010 01:14 PM
Sorry Noah, I saw SE was down earlier but one of my small caps is getting hammered today for no reason so I was off doing a little due dil. Yes, I'm looking forward to your new site(inventory and all). I hope your discussion boards continue to maintain their high level of civility unlike SE. Well..have a great day!
Posted by FINALLYSOMESENSE
Tue Jan 5th, 2010 02:20 PM
Thank you OT for making sense. I find Fred unrealistically BEARISH.
Posted by Thisson
Tue Jan 5th, 2010 03:42 PM
Fred is unrealistically BEARISH? I think Fred is an optimist!
The uptrend in prices we are seeing now is the same thing that happened during the beginning of the depression when everyone was saying "it's over, we're in recovery." We're not in recovery, we are in the cover-up "extend and pretend" stage.
We are in a Japanese style deflationary depression: the fundamentals are getting worse every day and this year (2010) is going to be *horrible* - the only question is what is going to blow up first?
My answer: state budgets will cause a massive crisis as state spending collapses and we have a wave of state/muni bond defaults.
Posted by Fred
Tue Jan 5th, 2010 03:51 PM
OT - Boomers will impact b/c new yorkers tend to have a much larger share of net worth tied up in their home. It's a product of the last 30 years' appreciation - a big chunk of equity ownership is old real estate equity with as close to a zero cost basis as you can get. These guys will want their retirement money and they will be sellers. The point is we are entering a decade or longer of more sellers than buyers, which is the reverse of the last 20 years. To think that retiring boomers are going to prop up the $2mm to $5mm is a big stretch - not going to happen. As to my other points, you can disagree, but i think you are fooling yourself if you don't think the cost of ownership isn't going up in a big way. NY State just finished the year with a negative general account balance - first time in history. Taxes and general operating expenses are going up. BTW, do you know what it costs to operate one of those $2mm to $5mm "retirement" pads? Unless you are a Carnegie boomer, it is not the mainstream kind of boomer.
FINALLYSOMENONSENSE - Thanks for the plug but I just try to call it as I see it. The point of blogs like this is to exchange ideas around an issue. Sorry to rain on your parade but at least I try to back it up with critical thought.
Posted by anonymous
Tue Jan 5th, 2010 04:45 PM
"The headwinds you mention - taxes, insurance, energy costs - are certainly real, but by no means specific to Manhattan. If anything, by forgoing a car, many Manhattanites are shielded from such increases."
I find this statement strange. When I moved to Manhattan, my electric bill skyrocketed. Probably double what it would cost elsewhere. Taxes, are you joking? I pay much more taxes ever since I moved here (income tax, sales tax, etc.), and given the state of the budget, I'm sure it's if income taxes don't go up, property taxes will. These expenses can be more significant in NY than elsewhere. In fact, I can easily pay for a car with just the difference in taxes that I incur living here.
Your other points re retirees moving here in significant numbers isn't realistic. Manhattan is not exactly a haven for the old given its hectic, crowded, and fast paced lifestyle, and is definitely an expensive retirement option. Most elderly are seeking a lower cost of living, especially given the poor financial planning by many.
Posted by Thisson
Tue Jan 5th, 2010 05:05 PM
Look, no doubt Manhattan is not an idyllic retirement for everybody, but it's great for a lot of oldsters (like my parents).
Doormen to help them with packages, access to the best doctors money can buy, great public transportation, proximity to children and grandchildren, great food (restaurants) and culture (art galleries, museums, theatre), no shoveling snow. The main drawback is the climate.
I think Fred is largely right about the demographic trend but I think it that factor may play out over a long time and through alternative mechanisms such as reverse mortgages.
Posted by somewhere else
Tue Jan 5th, 2010 05:35 PM
poor, poor steveF.
Man, you swore we'd be up already... and we're DOWN another 5%!!!
Posted by Eddie
Tue Jan 5th, 2010 06:29 PM
"Not sure what the future holds, but I know that the bears must be kicking themselves just a little."
Hmmm... tons of inventory available at 20% discounts. And the latest report still shows continued declines. And the fundamentals not looking much better.
What exactly am I kicking myself about? Not buying at the peak of market and losing 100% of my equity? Thanks, but no thanks.
For folks who waited, this is positively AWESOME.
Posted by Noah
Tue Jan 5th, 2010 06:34 PM
well I can tell you that there certainly is not tons of inventory right now. in fact, I just lost two multiple bidding situations today alone, one in 1.5m area the other in 2.9m area, where in my opinion the bids were very strong and both were lost to significantly higher offers Im told. Time will tell where that level is.
But my clients certainly do not see many quality products to choose from...properties with no unique features, cookie cutter layouts, unrenovated, no special exposures and no view to really talk about, sure...a bunch of those out there with pricey asks that dont seem to be moving.
Posted by Eddie
Tue Jan 5th, 2010 06:45 PM
"well I can tell you that there certainly is not tons of inventory right now."
Perhaps we're looking at different apartment types, but even your numbers show we're at a historical high.
Plus, that was just an aside in a post that was addressing the bitter owner. Point is, bears are pretty content and smug these days.... and in no rush.
That being said, Noah, I think you're very intelligent, and one of the guys who called it, and maybe the most honest broker out there... but I do believe you did predict that this quarter market report median would be up.....
Amd I not remembering correctly?
If thats the case, even with your factors - which I agree with - the horrible panic over, it still wasn't enough to turn the tide.
Posted by Somewhere Else
Tue Jan 5th, 2010 07:17 PM
SteveF, poor SteveF.
You can keep talking and changing the subject, but, wow, not a word from you on the ADDITIONAL 5% DROP. You've been telling everyone to buy for, what, 18 months now.
Can I get a...
WHOOPS?
Posted by OT
Tue Jan 5th, 2010 09:26 PM
Wow - active discussion. OK, so some counterpoints:
Thisson - you are making macro-economic projections that may or may not play out. I am not arguing one way or the other on this. I just question the impact of macro-economic fundamentals on Manhattan real estate.
Fred- good point about Manhattan owners having a large percentage of their net worth tied up in home equity. I feel that for many however, they may see this as the most solid component of their volatile portfolios. Those that need the cash will certainly sell. Those that are comfortable and planning estate transitions may choose to leave their heirs something more tangible than a stock portfolio. Not sure which direction this trend ultimately takes us.
Anonymous - when you moved to Manhattan, your power bill skyrocketed??? I don't see how this is possible. For one thing, most people live in smaller spaces. Even at a higher cost per kilowatt, lighting/cooling/heating/running a 3000 sq. ft. house will always be more expensive than the same for a 1200 sq. ft. apartment. There is the NYC income tax which none of us like, but the real estate valuations and taxes are comically low. I pay $500 month as real estate tax on a $1M apartment (as part of my maintenance). A property with the same value in a nice town in Westchester or Long Island will easily come with a $1500 month property tax tag.
Also, never claimed that Manhattan was a "haven for the elderly". I do have several friends whose parents have purchased pied a terres in properties such as MOMA towers that they use to visit, send business associates etc. Most are in their 60's and 70's, have done reasonably well as entrepreneurs, doctors, etc. and are by no means descended of the Carnegies.
Eddie - tons of inventory? Inventory is down over 25% from peak, and Miller Samuel's Q4 data shows that average price per square foot is up 18% from Q3, and down only 0.6% from Q4 08 (which was 1 quarter off the peak). Good luck finding a quality 2 bed 2 bath for under $1.2. Average and median prices are down, but that is simply because larger, more expensive properties are not moving. This affects a very small segment of buyers.
Any way, good discussion for the most part.
Posted by Noah
Tue Jan 5th, 2010 10:48 PM
Hey Eddie, thanks for words, just felt a need to say what I see out there. I dont recall saying anyting in regards to median price being up in Q4 2008. I may have said to expect some qtr-to-qtr improvements, as I saw it in the field and I believe the numbers did show that in the reports released today. But those are narrow sighted improvements and subject to seasonality...best to compare to prior year qtr..
wait for Q2 2010, released in early July compared to Q2 2009s report!
What Im seeing today is quite amazing, honestly. Most of my clients are over the 1.5M range, so I dont really know whats happening in stdio and 1br market. But for 2BR, 3BRs and up, there is not that much quality product that is priced right for recent trades....again, priced high sure, but priced right, a lack of them.
Posted by OT
Tue Jan 5th, 2010 11:09 PM
Hold the horses! MS has updated his data. Average PPSF is up only 5% quarter on quarter and down significantly from last year. Too tired to reassess my position given the new data, but wow, bit of a black eye, Mr. Miller.
Posted by Emma77
Wed Jan 6th, 2010 11:58 AM
I agree wholeheartedly with Noah. Inventory is way down. I think it's big city and people have different needs. Don't let your personal take blindside that the population here is large and the needs are varied & vast. In my personal experience Noah is right on the money. I can't find a 2 bed 2 bath priced right for what the product is. I saw something on the upper east a year ago which is now off the market. I under bid, and I under bid seriously - but it was perfect, FOR ME. The seller said no and didn't want to entertain a counter because they felt my bid was ridiculous. The apartment was listed at 1.2 and I bid 750k for it. Brand new renovated, gorgeous to my taste and really a terrific layout, the bedrooms were HUGE. I can't find anything like it right now and I'm pretty sure when and if I do, it'll be more than what I could have gotten it for if I hadn't underbid like a maniac. The inventory just is not what it was last year and I think in prior posts Noah has said that seller optimism could be a problem. In my personal experience, sellers are tougher and it's not like there is an easier negotiation process out there. I personally would be thrilled to see things go down more in 2010 because I would like to buy something at a discount. But my experience right now is that it is not easy and my view on what the discount should be and where the trades are happening are different. I look at things in the 1.2-1.3 range for 2Bed 2 Bath's but I haven't pulled the trigger because in my mind I think they should be lower but the seller's aren't budging. Things priced right disappear.
Posted by FINALLYSOMESENSE
Wed Jan 6th, 2010 05:26 PM
OT: Will you marry me? EXACTLY!! I couldn't have said it better. Thank you! - jk on the proposal :) but I like how you think.
Posted by mph
Thu Jan 7th, 2010 12:28 PM
"I can't find a 2 bed 2 bath priced right for what the product is."
Then the market is already climbing back into a bad place for buyers. Now try looking for a 2 bed 2 bath to rent for the right price and I bet you find it in about 25 minutes. If the last nine years has taught us anything it is that the cult of homeownership is nonsense. If you can rent your 2 bed 2 bath at a monthly cost equal to or lower than your adjusted costs of ownership do it, and let's all stop treating apartments like internet stocks that might make us rich some day if we keep our fingers crossed.
Posted by Noah
Thu Jan 7th, 2010 01:08 PM
right mph that is the concern..that we improved too far too fast...if it continues we may run into another sluggish period. the reflation menatality and 0% rates, govt meddling, artificial stimulus is all contributing...so when that comes out, there will be an effect
Posted by Eddie
Thu Jan 7th, 2010 01:31 PM
> Eddie - tons of inventory? Inventory is down > over 25% from peak
And still way above historical norms. Your logic is horrible. Its like saying Kareem isn't tall because Shawn Bradley was taller.
Seriously...
> and Miller Samuel's Q4 data shows that average
> price per square foot is up 18% from Q3
Avg psf hit under $1k for the first time in YEARS. And you are of course completely ignoring the basket effect.
Sorry, but you are grasing at straws.
> Good luck finding a quality 2 bed 2 bath for
> under $1.2.
> Average and median prices are down, but that
> is simply because larger, more expensive
> properties are not moving. This affects a very
> small segment of buyers.
Your logic is AWFUL here. If its a small segment of properties, then there wouldn't be a substantial move on MEDIAN.
You need to look up what a median is.
Amazing, the Manhattan standard index drops another 5%, and folks are pretending its good news for owners.
I love it...
Posted by Eddie
Thu Jan 7th, 2010 02:13 PM
"Then the market is already climbing back into a bad place for buyers. Now try looking for a 2 bed 2 bath to rent for the right price and I bet you find it in about 25 minutes. If the last nine years has taught us anything it is that the cult of homeownership is nonsense. If you can rent your 2 bed 2 bath at a monthly cost equal to or lower than your adjusted costs of ownership do it, and let's all stop treating apartments like internet stocks that might make us rich some day if we keep our fingers crossed. "
Bing, well said.
Calling owner-occupied Re, where you generally have *more* than your net worth tied up in ONE apartment in ONE building in ONE location in ONE city is awful as diversification goes, and doesn't really fit the definition of "investment" given that it costs you money. Yes, you get to live it in, but your car isn't an investment because you get to drive it.
If you want to lock in where you are, great. If you love the place and need it, like you need that black dress, great.
But if you need forced savings, there are better ways to do it without putting you in a lousy investment.
And if you want a good investment, start by looking up what that means. Diversification and long-term growth might be the next factors to look at...
Posted by anonymous
Thu Jan 7th, 2010 02:36 PM
Eddie - lose your temper much?
What is your source for claiming that inventory is "still way above historical norms"? My source for rebutting this is the MS 10 year inventory chart at the link below:
http://www.millersamuel.com/charts/gallery-view.php?ViewNode=1168396827bKurV&Record=7
Based on this, over the past 40 quarters, there were 18 quarters with inventory higher than the current quarter and 21 that were below. This wouldn't appear to me to be way above historical norms, probably slightly above.
Besides, inventory is somewhat irrelevant in the absence of sales volume. The 2 together give us the absorption rate, which has shown improvement recently.
http://matrix.millersamuel.com/?p=6775
As for PPSF, I already explained that I was working from bad data, prior to your post. Nothing I can do about that.
As for median price, I appreciate your point about the affect of a small sample on the median point. If we take another look at the median numbers, overall median is down 4.7% quarter on quarter and down 10% year on year. Certainly bad. However, we see that change in median price for resales (majority of the market) is down .7% for the quarter and actually up 1.7% for the year.
My only point is that the recent data, while not great, does not bear out the predictions of Armageddon, and for those looking for some bullish signals, seems to provide this. The calls for down 30-40% simply did not play out.
I stand by my comment, good luck finding a decent 2 bed 2 bath for under $1.2.
Posted by OT
Thu Jan 7th, 2010 02:37 PM
I posted the above, not sure why my name didn't carry through.
Posted by Thisson
Thu Jan 14th, 2010 12:26 PM
It's sad that you need a ~$400k annual income to afford a decent 2 bedroom in NYC, too.
Posted by Agent marketing
Sat Apr 10th, 2010 02:17 AM
This was awesome real estate blog. THNX.
Posted by coach handbags
Thu Aug 12th, 2010 09:37 PM
As for median price, I appreciate your point about the affect of a small sample on the median point. If we take another look at the median numbers, overall median is down 4.7% quarter on quarter and down 10% year on year. Certainly bad. However, we see that change in median price for resales (majority of the market) is down .7% for the quarter and actually up 1.7% for the year.