Tuesday AM Linkage

1.

10 year high of inventory? Wow!!!

What is the broker spin on that one? Where are you guys? Come on, let's hear how strong this market is.....

2.

I'll play babs.

"Now is a great time to buy! Greater selection means greater opportunity! Get in now before you're priced out!"

Is that about right?

3.

Here's a novel idea to solve the excess inventory condition. Lower prices? No one wants to admit & acknowledge the party is over. If you bought in '05 & '06, the price you paid is a result of low bar loose lending hyper fueled by i/o products....not the actual value of your Apt. Agents & brokers successfully lined their pockets convincing their clients to overbid by $25K - $50K. Don't worry about your payments, after all, with the i/o you're only paying interest and by the time you you actually have to pay on the loan...you'll just refi of sell....your apt will be worth hundreds of thousands more by then, what's to worry?...it'll take care of it self. The real estate industry "primed the pump" real well there or a number of years.

The artificial nonsense & shananigans that conjured the prices people paid....those days are gone. Why all the excess inventory? Prices are based on demand....developers are counting on things away from the market to drive the sale of their properties (loose lending, low i rates, i/o, plasma TVs, major perks to agents/brokers). Sellers will do anything but actully lower the price. Once that starts...the flood gates will open and the avalanche commences...

4.

The market is strong and now is the best time to buy. Furthermore Iraq had weopons of mass destruction, WorldCom is a "Strong BUY" and O.J. is innocent.

5.

I love hearing all the "sky is falling" commentators. So many words, so little knowledge.

Inventory is higher than in years past because the amount of new construction/coversions is higher than in years past.

If you had even the slightest knowledge of current markets in other major cities, you would know that the NYC market is amazingly strong. The increase in inventory is nothing compared to cities like LA, Chicago, Miami, etc.

NYC market is the strongest market in the country. Its probably also among the safest. (no I am not a broker nor an owner).

6.

You are totally right #6. Forget about the laws of supply and demand. Pure hogwash. Still a great time to buy. I am off to Dumbo to do some apartment hunting.

7.

So when shit will finally hit the fan, will properties be worth pennies on the dollar?? Will sellers endup giving apartments/properties away? Will anyone want to live in New York City when real estate has crashed? So what exactly is the doomsday scenario here? Extinction of real estate brokerage houses/brokers? What?? Just askin.....

8.

Nothing is a safer investment then housing. People will always want to live in New York City. Inventory is high because sellers are looking to trade upwards within New York City.

9.

Worst case scenario:

Equity crash caused by monetary contration caused by busting of credit bubble and housing bubble.

US begins in earnest its period of predestined deflationary depression. Real estate will not be on people's mind, but job security. If you have cash and a safe job and no debt you will survive. If you have no savings, a $500,000-1mil mortgage, cc debt and a job in the financial sector you are fried.

NYC real estate loses value slowly over the course of 8 years - the bottom reaching 2014.

In order to re-invigorate the economy the Fed lowers interest rates to no avail, but the effect is the destruction of US dollar caused by the hyper-inflationary actions of Bernanke. The US dollar is removed as reserve currency. The US dollar is replaced by the "amero" or a euro equivalent.

The US becomes a second-tier country, completely dependent on foreign interests who proceed to loot any remaining assets of the country.

US workers become serfs to central bankers/oligarchs - with those unable to pay their debts sent to debtors prisons built by Halliburton.

10.

jmr - I think I saw that movie. It's the one with Arnold and the game show, right?

11.

How can this be a surprise to anybody. There's been record Condo construction in Manhattan( much still in various phases of construction)coupled with previous speculative purchases. The glut will get worse before it gets better. Expect prices to be reduced by those that can't afford the negative cost of carry(rental income cannot be expected to cover the cost of common charges,mortgage and taxes). This party is just getting started.

12.

How can this be a surprise to anybody. There's been record Condo construction in Manhattan( much still in various phases of completion)coupled with previous speculative purchases. The glut will get worse before it gets better. Expect prices to be reduced by those that can't afford the negative cost of carry(rental income cannot be expected to cover the cost of common charges,mortgage and taxes). This party is just getting started.

13.

The debtor's prisons contracts will probably go to Wackenhut, not Halliburton.

Even if it doesn't get that bad, there's basically no way out of the current debt bubble without a recession. Real estate markets across the country are stalled or declining, foreclosures and bankruptcies are on the rise and accelerating. Some banks will fail. Pretending that New York will be unaffected while the rest of the country goes into recession is foolish; New York is completely dependent on the rest of the economy.

14.

the sky is falling! the sky is falling!

15.

Well that just answers it. Time to start looking for another job. I'm so doomed by the state of America and all that economic hooha. I think I need a much needed vacation. Maybe Bodrum. I think I'll sell sea shells by the seashore.

16.

After New York City is decimated by Hezbolla and Osama and Cheney, what would become of Curbed.com? What would every poster be posting about? You know, when there isn't a New York City real estate, a Barbara Corcoran, Dolly Lenz, Shvo, new developments...etc..??? What? Just askin....

I think I need to update my membership to Manhunt.net.

17.

Sassy-- what you smokin and where can I get some??

18.

Sassy, you lil' child, everyone will be posting about me! I made this site more popular than ever. Since I am a true NEW YORKER and actually OWN some properties I have my say in everything. For all you who are "renting" and making LESS than 6 figures, zip it!

Hugs and Kisses!

19.

i hope that real estate prices go down as they are a contributing factor to inflation.

20.

CPI is off of rents not price to buy

21.

jmr - that is a severe, and fortunately very unlikely, worst-case scenario. the macro market is unquestionably overvalued and some areas will experience a lengthy plateau of prices (read: now) followed by a moderate price reduction of approximately 10% in NYC that will occur over the next few years. the reduction will be higher in some areas such as South Florida, San Diego, Boston, Vegas, etc.

the truth is that while inventories are rising, the marketing period to sell a unit is only approximately 150 days - in other words, its back to its normal level of 5 years ago before the irrational buying spree. there's still nothing to get TOO worried about as selling time is at its traditional norm and prices are still rising (albeit in the single digits now). further, the NYC market is rather impervious to the fluctuations we can expect to see in the markets mentioned above as NYC has a reversed renter-ownership ratio compared to the rest of hte nation, thus always maintaining a huge glut of people looking to move from renter to owner. in short, don't worry too much about a bubble in NYC.

in light of the above, watch what happens to Brooklyn, Jersey, et al, when the market does begin to push downwards. the classic supply-demand practice will come to play - are you going to buy in brooklyn or NYC if you have the choice? in other words, if you're thinking of buying in brooklyn, you're probably better renewing your lease for another year or two and getting a lot more for your dough in '08.

just one guy's thoughts...

22.

The downside is that it's going to have to go down by a lot to get back to where it's reasonable. Studios in my building, which were $40-$50K ten years ago, are selling north of $300K. There would literally have to be an 80% price drop before the NYC market would be at what used to be called reasonable.

But the ramifications of such a price drop would be wild....

23.

for the optimists out there, let me throw some cold water your way... the instrinsic value of a Condo/Coop could be best thought of the instinsic net value of the opportunity cost of renting it out.

Well I don't know of any reasonable opportunites where one could buy an apartment in Manhattan and rent it out and most importantly achieve even a 0% return. For the CMBS guys out there we call that cAP rate.

If prices were to truly fall in line rents would have to escalate big time or prices come down equally.

Probably neither will happen, so expect no price appreciation over the next TEN years.