Curbed Roundtable: August State o' the Market Report

1.

BUY NOW!

2.

Yes, fall will be the time to buy. Fall of 2012!

3.

Are not the credit markets falling apart? The fuel that created the priming of the pump?

Today's NYT, "The big unknown is whether the housing bust will cause a recession or a bear market. Most people who have looked closely at the mortgage market argue that the answer is no and that the damage will be contained. Subprime loans still make up a distinct minority of the mortgage market. Over all, only 3.4 percent of mortgage holders are currently behind on their payments. And as Victoria Averbukh, a former mortgage analyst at Deutsche Bank now teaching at Cornell, points out, “The housing market is still a limited portion of the U.S. economy.” Consumer spending has slowed recently, but is still fairly strong. Corporate balance sheets and the job market seem fine. Rationally, the argument for optimism is pretty compelling: the economy’s strengths do look big enough to overcome its weaknesses. Yet even many of the optimists confess to an uncomfortable amount of uncertainty. There has never been a real estate bubble like the one of the last decade. So it’s impossible to know what the bust will bring, especially when there are still so many mortgages that are about to get a lot more expensive".

My opinion? The fuel is not there, the marginally qualified are no longer priming the pump, going forward it's a buyers market for the next couple of years.

However the Real Estate Industrial Complex? They will spin this train wreck that's coming somehow, of that you can be sure. Ignore the inventory levels, ignorant the ARM market, it's always a great time to buy - pass the kool-aid.

4.

There are those markets that have a life of their own, fueled by the well off.

5.

Yes, and the well off here are getting their asses pounded by hedge fund collapses and general CDO fall out.

6.

#5 - speak for yourself. My hedge fund returned 5% last month alone (!) while the market was down 3% on average. It's been a terrific year as far as we're concerned.

7.

"Brace yourself, Brooklyn, the scourge of foreclosures here is only going to get worse before it gets better, Sarah Ludwig, executive director of the Neighborhood Economic Development Advocacy Project (NEDAP), tells Crain's New York Business.

August 1, 2007
http://www.brooklyneagle.com/categories/category.php?category_id=5&id=14504

Never believe Real Estate Spin and Hype, this whole thing is total BS and going down, down, down. The industry relies on the fools to buy into the hype & cheap money.

If everything is so god damn great, why can't those facing foreclosure get out by selling their shit? No buyers...

8.

prewar and townhomes will continue to move upwards. they aren't makin any more of those.

new construction condos as they age will not fair well.

they are a dime a dozen.

9.

I'm going with my gut instinct. enormus sums of wealth is evaporating around the world as I speak.
Why? Biggest debt bubble the world has ever seen.
Sit back don't make any major long term investments.
NYC has been immune so far, its just a matter of time before the foundations start shaking here.

10.

honestly, it would make more sense to talk to a homeless person for real estate advice than most posters on here. there are no buyers, 2:54??? where do you live? the rockaways?

i was at two open houses in park slope on sunday and the first was so packed i had to leave and the second had a sign in sheet where i was the 78th person on it.

11.

Kyle,

You are right. Expect resistance here from the RE shills and those who just bought and can't even imagine the value dropping. "this is NYC, prices never go down" that sort of nonsense.

12.

funny thing is...no one says that prices can't go down. well...i take that back...some people say it...but only as an attack of others. there are few, if any people in new york who think prices can't go down. it's people like you, 2:59 who say it, not the rest of us.

problem with your theory is...yes they will go down. that's like saying the sun will set.

and you know what...they will go back up too. as the sun does each and every morning.

the sooner they go down, the closer we are to them going up again.

so thanks for your speech, captain obvious.

13.

My God We have found a new low for real estate brokers.

Not content with figuring out their 3-6% of sale price. They are attempting to do quantative heavy lifting. Please spare me the rhetoric and the pathetic analysis.

Please for the sake of efficient markets and general peace of mind, leave this sort of work for econometricians, statisticians, or the OR folk. You guys have not a clue and your opinion is not worth the pdf its printed on.

14.

thanks for the rant 3:10. sounds like you forgot your meds today.

hate to break it to you but tracking inventory levels is a job even an ape could do.

to suggest you need to have anything more than an 8th grade degree to track such a thing says leaps and bounds of your own mental capacity, however.

15.

For the NYC market (which is the only one I really care about) I'd like to see some hard figures as to whether all the buyers are these ones just managing to squeak out a purchase via shady mortage instruments or (my opinion) they are upper middle class at least and using family/parental money to purchase homes without the need for any ARMS or other tricks.

Not that this market is infalliable or can't fall back, but more that the buyers in NYC (and specifically Manhattan) are more insulated from panic selling than in other parts of the country.

16.

#11:

You are right. Expect resistance here from the negative RE shills and those who have said 'the market is going down' in 2004, 2005, 2006, and now two thirds of the way through 2007. They can't even imagine the value dropping very little or simply plateauing. They're still sitting on the sidelines as bitter renters who have watched their rent go up 5% per annum, year after year.

"It doesn't matter that this is NYC, prices are going down 30% by December," and that sort of nonsense.

17.

i agree with you, jb.

i don't think some people here realize the enormous wealth that many new yorkers have access to. both their own and from their family. my parenst gave me 40K for my downpayment, and i know about 6 other people who's parents did the same. i know people don't like to hear it, but nyc is different. it attracts the best of the best in terms of educated people, highly determined people, and yes...people who come from middle and upper classes more than probably any other u.s. city.

so basically i now after paying 20% down got to keep my 40K in retirement savings i had, have a 1500 a month mortgage and after tax savings, pay around 1100 a month to own a place in nyc.

with the 40K cushion (and i'm sure a lot of people have tons more than that) most of us here are not in the subprime foreclosure hell that others are in, in other parts of the country. thanks mom and dad!

18.

real estate in manhattan, i can't speak to brooklyn is contingent on wealth - coops routinely require liquid investments (ie none-hedgefund investments) before they accept anyone. Manhattan is one of the most densely wealthy populations in the world. The rental market is soaring, showing that people are moving to the city. So long as there is a net increase in people moving to the city, both rent and apartment prices will continue to go up. Is it possible that mass foreclosures would force down prices in the suburbs drastically to make them THAT attractive? Yes, but i'd call that unlikely given the resurgence of urban safety and convenience in NYC.
That said, this is obviously contingent on jobs. I find the connection between liquidity crunches and jobs declines to be based on quite a large number of connected dots - its like a choose your own adventure book. There are so many ways the dots could be connected that NO ONE knows the direction of the market and your bet is as good as anyone's. Jobs being lost in the residential mortgage industry fall out will go somewhere else - and the majority of those jobs are in California by the way - and as for all the hedge funds that got screwed by this crunch, there are that many more that made a killing. All of the derivatives bets were zero sum, so if one got wiped out another returned the value that got wiped out. Other jobs related will end up assisting loan servicers in foreclosures on mortgages. The world will continue spinning, armageddon did not just occur. Think back to 1998 when everyone starting crapping their pants, the cummulative events of the next 10 years, were up and down, but ultimately up. Just like the 10 years before that, and the 10 years before that. If you bought your home to live in it, then you're probably going to make back your money plus some in a few years.
My prediction, real estate prices will sink this coming year. Wall Street bonuses will be down from the liquidity crunch, but foreclosures in Manhattan will be unchanged from previous years (there's no such thing as a million dollar subprime mortgage), people will move around, and business as usual will come back in the next year. Hedge fund guys that made a killing last year, are probably rich and out of a job while a new crop of the ultra rich will start buying in January and the cycle (after all, every homebuilder knows that real estate is a cyclical business) will be ready to restart.
1998 was not the end of the world, 2001 was not the end of the world, 2003 was not the end of the world and 2007 will not be either. Invest long term and you will almost never get burned.

19.

We were about to buy something we couldn't really afford this summer and backed out. Creative financing still available, by the way, although perhaps not much longer. NYC is just too expensive and the world is just too volatile at the moment. We know a lot of interesting, dedicated long-time New Yorkers who have moved elsewhere recently, either because the housing prices are ridiculous or because the city seems to have been taken over by bankers and lawyers and kids with rich parents. How did this happen?

20.

you know why a lot of us have "rich" parents, 3:33????

i hate to break it to you, but it's because they bought and invested in real estate. they didn't rent till they were 40, 50, etc.

my parents are not rich my any means, but they bought a house for 150K that's now worth 600K and a beach house for 70K that's now worth 400K.

while they never made tons of money, they were good with it, never went into debt, didn't splurge on a new car every 2 years and now it's afforded them the luxury of helping me out when the time came to buy a place here.

they are hardworking, as a lot of us 20 and 30 something's parents are. we aren't all a bunch of spoiled brats, as you make it seem.

and btw, i ALSO have heard of 4 friends who moved out of of the city in the past few years.

all but one are back.

21.

you're right, #19.

i'd much rather the city be filled with unemployed people and those who are poor with poor parents. just like in the 70's.

those days of 2000 murders a year...now those were the days...

oh wait. i can still have those days!! i'll move to detroit!

22.

The meltdown of NYC real estate is just getting started. The Kool Aid drinkers who think the housing implosion in the rest of the world doesn't affect NYC are just plain delusional. It is no wonder that Wall Street is shitting bricks as they watch their Christmas bonuses fly out the window. And when people stop buying real estate because it's a bad investment and/or they are no longer qualified for financing, the bank balance sheets will go straight into the red. With nobody stupid enough to buy asset-backed hedge funds anymore, the financial firms will be chopping heads to stay afloat. And then how will these ex-Wall Streeters pay for their $10K/month mortgages? Can you say panic selling?

I'm LOVING this.

23.

Ed, are you just repeating fox news? You sound like you have NO IDEA what you're talking about.

24.

wow ed, bitter much??

hate to break it to you, but most wall streeters have money in the bank right now to pay their mortgages without working for the next 5 years.

i know you don't want to admit that, but it's a fact.

25.

hey ed....here's a fatal flaw of your theory...

you know what panic selling would mean!!!!????

PANIC BUYING!!!!!! LOLOLOL

god, you're a moron.

or i suppose you'll come back now and say that all those out of work would sell and become homeless.

26.

duh, every single real estate broker in manhattan will tell you to avoid putting your unit on the market until after labor day due to the belief (I think erroneous now) that New Yorkers go out of town for the summer and won't go to open houses again until September. So there's your glut.

In terms of "activity", is that measured by contracts or closings? Because if it's by closings, more buyer traffic/offers should lead to higher "activity" in October/November.

27.

since co-ops make up about 90% of nyc's inventory, and most co-ops i know of (including mine) required that i have at least as much money in the bank after i paid my downpayment as the downpayment was itself, means that most nyc homeowners are sitting on a LOT of cash.

it's a built in protection system.

i don't think most of you realize that since you're all buying up these new condos that will be so badly outdated in 10 years, that you'll have to give them away.

pre-war will always be the way to go in this city.

28.

I think we're all over analyzing things here. For example, even #6 is making 5% a month on his hedge fund investments and he or she can't even spell anonymous. Real estate prosperity in New York is obviously a "no brainer".

29.

Seven, that depends on the wall streeter, maybe the older (aka more mature) guys actually keep some of that $$ they make. Most of the (admittingly younger) guys I know actually manage to burn through all the $$ they're making at the exchange, so it's unlikely those types would have "5 years" worth of mortgage payments saved up. Then again those types probably don't think about real estate anyway, much else mortgages.

30.

Why do so many people think that because the current requirements for Co-ops include having assets equal to the value (or equal to the down payment, or whatever the multiple happens to be) that this means all the residents living in all these coops that are 90% of the market are that wealthy??

It only means that the people buying those units being sold are that wealthy. Those people who are residents of the coop may have bought it in 1968 for 10,000 or 15,000 and now only have to pay the tax and maintenance. Or maybe they bought it in 1985 for 150,000. After all, back then "insiders" received significant discounts (there were tax benefits to the building owners for coop conversions that expired around 1990).

31.

#6, How much did you pay in fees to your hedge fund last month? Now, compare that against the 5% you got from your hedge fund last month (I'm assuming your 5% return is net of the fees you have already paid and will have to pay when you cash out).

Most people have no idea that their fantastic returns are eaten away by the exorbitant fees charged by most hedge funds.

32.

Funny, some person was just talking about the nyc real estate glut in the comments of another curbed story..

Jim Cramer says "Just walk away"
http://www.youtube.com/watch?v=c7e9H4zTqk4

33.

They're not making any more air! Air is the greatest investment you can make!

There is a massive world wide asset bubble. And yes, NYC is part of the rest of the world. Real Estate, Art, Comic Books, Baseball Cards, CDO's... all these things will lose value.

If you're on the edge of being able to afford things, you're going to be in trouble. If you have a shred of common sense, you'll probably be just fine. The question is, how many people out there have invested prudently and within their means? That's what the next few years will show us. Sack up, people.

34.

Wow--just watched that video clip with Cramer--he lookslike he is TWEAKING out. Is he a coke head?

35.

#30....those that are not buying co-ops now, thus ones who bought in the 80's etc. have made ungodly amounts of money. someone who bought a 150K apartment in the 80's as you mention would probably be sitting on an apt worth a million dollars today. probably more.

my old landlord bought an entire townhouse on the upper west side in 1993 for 400,000. no doubt a lot of money.

he just sold it for 8.4. million.

that's one reason of many why there are so many wealthy people in nyc.

36.

#6, so have you closed yet?

37.

#32, Cramer said walk away in Florida, west coast and rest of US except downtown Manhattan because those areas are going to drop 20%.

No one ever got rich following Cramer's advice. He keeps changing his view:
http://www.youtube.com/watch?v=jmt5_T2WAQc&NR=1

38.

#30 - if we're talking about mortgage defaults hurting the manhattan real estate market - ie adding too much to supply - then the people who bought in the 80s are not contributing unless the refinanced stupidly. Fortunately for manhattan, it is nearly impossible to by without putting money down. On a coop you need at least 20% down. That automatically takes you out of the absurd suprime borrower land. People in coops also need to state significant amounts of personal info, so you can't get approved without things like a job, a debt- free down payment, and documentation for all those things. Subprime borrowers throughout the country were borrowing 90% - 100% of their home purchase prices(impossible on a co-op) while new homes were being built. When they default on their mortgages, these subprime properties will be sold at somewhere in the 50%-80% of purchase price range, which is well below the outstanding debt on the properties. That is why these subprime mortgage bonds will lose so much value. A prime mortgage will usually be able to be sold at or close to the debt amount.
I think there will be a pretty big hit to condos in the city, and there will be a glut of condos at cheap prices for some time (buyers in new development should also be wary of the impact of tax abatement burnoffs in the pricing of condos more than 5 years after they're built), but in coops you'll see more stable value because there will be almost no foreclosures on them, and therefore no cheaply priced glut. Although prices will be influenced in the near term, i can foresee a coop premium happening since you won't have the same owner turnover in those apartments.
Liquidity will eventually return to the market, its just a matter of getting sellable spreads worked out and buyers purchasing based on what they can afford. If you were smart enough to get a fixed rate mortgage that you can afford, you'll likely come out close to whole. Losing some equity isn't the end of the world, and being forced into bankruptcy would be a lot worse.

39.

You need to look at the basics of the real estate market to make predictions. It is always very difficult to make short term estimate (3month to 1 year) as so many small factors get into play (Bonus, markets health, mortgage rates etc...)

If you want to live in NYC you can either buy or rent. The medium term real estate market (1 year to 5 years) relies on 3 basic factors: 1) availibility of housing 2)differential between rental price and the cost of owning a property and 3)construction costs.

According to the latest projections, we are told that population in the city increase by about .5% a year. Currently there are about $8M people living in NYC and $1.5m in Manathan. (see http://www.nyc.gov/html/dcp/pdf/census/projections_briefing_booklet.pdf ), This means that we can expect a growth in population of 40,000 people a year in NYC and 7,500 people a year in Manahatan.

Cost of construction will not go down (Basic inflation and competing with the use of contruction material with emerging countries and larger world population).

The current level of construction in New York City is barely keeping up with the amount of people moving into the city. So availibility is still low in the big picture (The all of downtown has only 3,000 for sale based on the chart)

Though mortgage rates are escalating making the cost of ownership higher, so does the rents. Rents have escalated significantly the past year due to lack of inventory. Also primary homes are still the biggest tax shelter for many homeowners, so if you have enough cash for a down payment, it is still more economical to buy than to rent (and you own property in 30 years time...).

Based on all these factors I do not see the real estate market going down medium term.

Why? Becuase people still move to the large cities because this is where they can find work. This phenomena has existed for decades as the rural population shrinks and large city population increases. You just have to look at the value of Real Estate in other large cities in the world to see why New York is heading that way (We are still less expensive than many of these cities: London, Tokyo, Berlin etc...)

Anyway these are only some thoughts.

40.

Leonard Steinberg is NO expert! Its a sad day when we start listening to mornons who have no idea on the market.

41.

to further the last point, i don't even believe we're as expensive as honolulu.

new york is considered one of the world's great cities. if not greatest. it would make sense that we begin to approach a real estate market similar to these other cities you mention. i'll also add dubai, sydney and moscow to your list...ALL of which by the way are more expensive than new york.

42.

Has anyone noticed that the graph is wrong? Coops plus Condos should equal All (there aren't enough townhouses to make a difference). But the graph has wacky math and doesn't show that at all. Wrong data make the premise of what will go on in the fall meaningless.

43.

i got an exclusive today..... so this broad calls on my ad at about 10 o clock. i'm into bait and switch rental ads, especially in the summer with all these stupid rich kids moving in. but this woman, Stacy calls and wants me to come look at her one bed in gramercy that she and her husband are looking to sell. so i tell her i 'll be there at 12..
I show up, knock on the door and she opens it.. this bitch was top of the line, dime, million dollar piece of puss... i say that because she aint ganna be with nobody that aint worth a million.. so off the rip i know her husband is some pussy boy banker type..
i kick on the charm and by 1230 we are sipping wine on the terrace.. shes got this little baby blue skirt with heels to match and white tank top. we are smoking ciggarettes and talking shit for at least an hour... she had this dark black hair, kinda tan but not orange like alotta the broads you see. her body was mint though, you could tell she was in the gym 4 or 5 times a week.. i making her laugh and all bullshitting, by 3 were fucking hammered, pulling each others clothes off in the apartment her husbands paying for... i bang her on his bed and get the exclusive right to sell the joint after labor day! What a day! I love this business

44.

tommy are you a comic book character from the 50's?

didsome thugs show up? strong arm types. dumb mutts bought and paid for by the broads dope husband. they looked cross at you and you beat them to a pulp with your hams?

45.

I had taken a break from posting on Curbed last year when all the morons started predicted a crash in Manhattan real estate based on nothing other than national trends. I explained then that Manhattan is vulnerable to price depreciation, but its vulnerability stems from a different set of fundamentals than those adversely impacting national sales.
Let me explain, yet again, the factors that, taken together, could drive down prices:

1) An increase in crime and/or a dimunition in the quality of life like we had in the late 70's.
2) A local economic crisis that drove down salaries of Wall Street, Advertising, and other regional employment.
3) A spike in the dollar vs. foreign currencies, thus making Manhattan an undesirable/unaffordable place for foreigners and foreign companies to invest.
4) A lack of interest on the part of affluent boomers who are retiring to Manhattan in numbers that were inconceivable 10 to fifteen years ago.
5) A glut of inventory that exceeds demand.

Right now, none of those factors are trending downwards. Mortgage rates, and particularly sub-prime rates, are irrelevant in Manhattan because co-ops have strict financial requirements (As do many condos), and the affluent, who make up the pool of buyers for Manhattan, are nor making purchases based on a tenth of a point change up or down.

Finally, I am selling my two bedroom condo in Tribeca in a top building, and I have a great deal of traffic, as well as a number of offers 5% below my asking, which I have rejected because I am only willing to go down by 2%.

Manhattan is not immune to downturns in real estate, but those who want to start with their crash predictions, yet again, should at least acknowledge the regional fundamentals that drive Manhattan Real Estate.

46.

I'm getting bored with real estate. What's next?

47.

To 42 (Guy). You need to go back to pre-school to learn your basic math if you can't figure out that Coop (about 600) + Condo (about 2400) = all (about 3000).

48.

45, those were excellent points.

From what I've seen on curbed, there are a lot of doomsayers, but since they're always predicting it's just about to happen, they never really have to face up to it when they're wrong.

If they were really so smart about the timing of the real estate market, they'd have been smart enough to make money off of it, too, I guess. I know if I was able to predict real estate trends, I would certainly use it to my financial advantage. I wonder why they don't?

49.

#45, good points all. But the points that could be made by the doomsayers are these:

1) By the late 90s into this decade, crime in the city hit historic lows. The city is unusually safe these days, i.e. it's not normal. Since the nature of the world is that things change, and I don't expect any condition to stay the same forever, I figure there's every chance in the world that will change, eventually.

2) After the downturn of 2001/2002, this city has experienced unprecedented economic boom times. The wealthy are much, much wealthier than they ever were before. History warns me that such advances tend not to last forever, but that we will instead see upturns and downturns in a somewhat cyclical fashion. The overall trend may be up, but the point is that these particular highs will, eventually, diminish.

3) The value of the dollar relative to foreign currencies has been unusually low for the past five years. Again, I don't see why this shouldn't change over time.

4) Not sure what to say about this so let's put it aside...

5) Thanks in part to #s 1-3, there is a glut of cash floating in the market that allows demand to snap up all the supply. But 1-3 can change, which means demand can actually go down, and we know that supply is going way, way up because we're in the middle of a huge condo-building boom.

6) Finally, rates do matter. We're not just talking about UES coops, we're talking about the whole NYC market. And we're not talking about a tenth of a point - rates can and once actually did go to more than double the current rate. I'm already feeling a squeeze in my student loans, and it can (again, eventually) get a lot worse.

Main point being, of course it's folly to predict a downturn in any particular month or year. But current prices are being buoyed by a perfect storm of economic and social conditions. Many people are buying with expectations not just of steady prices (which would be a bad investment, if you have faith in other markets) but of sharply increasing prices in the foreseeable future. (Some) people are assuming that the perfect storm and its supporting conditions will stay the same forever... or even get more perfect.

Common sense tells me that's a stupid assumption. Market timing is indeed often stupid, but that means that, just as there's no bad time to invest, there's no particular good time to invest. And other factors may indicate this is a bad time to invest - like the fact that, unlike seven years ago, it's cheaper to rent than to buy right now. Common sense tells me that there will probably come a time when, like seven years ago, it will be cheaper to buy than to rent. At that point the real estate bubble, or more specifically the real estate investing/buying bubble, will have burst.

In other words, the "doomsayers" are actually predicting a near-certain eventuality. If you intelligently manage risk and make tons of money in the mean time, good for you. But there will be losers here - there always are - and the more risk-averse people don't want to be among them.

50.

Forgot to mention: much of the new supply consists of new-construction condos; their high prices buoy the prices of coops and townhouses. But their high prices are dependent on dumb tax abatements which will fade over time, and may (I daresay should) be legislated out of existence.

Just one more pillar holding up current prices, a condition which may (again, eventually) change.

51.

Wow. Fifty comments, and only one or two were completely worthless.

I'm stunned!

I spoke too soon, Lock. I retract all my whiny remarks about the worthlessness of your readers.

52.

50. Your comment is not relevant because you are predicting aan "eventuality" with no time horizon. Of course the fundamentals I listed could tren downward, I said as much in my original post. However, at the current time, the fundamentals are strong and appear to stay that way for the forseeable future. Therefor, if you want to live in Manhattan, you can rent or buy. Rental rates are very high, there are no tax advantages (for most renters), and you own nothing. By all means, if you want to burn up 500,000 in rent until the "eventualities" occur, go ahead. But be warned, the "eventualities" may be offset by other positive trends, and the unit you could buy today will have to go down a great deal to make up for the money you waste i rent, lose in tax savings, as well as the major tax credit you gain if you sell for a profit, which will almost certainly be the case if you own the apartment for five years or more.

It is an eventuality that, one day the sun won't rise, but how does that help to make real word decisions?

53.

#17, it's a pity your parents didn't invest in your education.

54.

What most people fail to realize is that even if you bought a place X number of years ago and are sitting on a huge profit, that profit is practically meaningless unless you sell. And then what happens? You sell your place for a huge gain and have no place to live. To buy back into the same market, unless you downgrade, you are essentially back to where you were before you sold.

55.

Any "tax savings" you gain from owning a home is misleading. The tax savings is not putting money in your pocket versus a renter. You still pay interest on the underlying loan, which is throwing money away, and that interest is significantly greater than the "tax savings." Many seem to believe that buying a home can actually save them money because the interest on their mortgage is tax deductible. But all that deduction does is reduce the cost of borrowing the money - a cost that wouldn't exist if you were not buying the home.

56.

A primary residence is not an investment like a stock or bond. It's place to live -- not a "long-term investment". This is personal finance 101, people.

Also, the intrinsic value of a home in which you enjoy living will not change with market fluctuation, because you are happy there no matter what someone would theorectically pay for it.

#45 is one of the few Curbed commenters who actually seems to know something about the history of and long-term trends in Manhattan real estate. Manhattan real estate has nothing to do with national real estate. One of the major reasons for problems across the US is that people buy and have no safety net - ie, they plan their budgets so tightly that as soon as one thing goes wrong (unexpected illness, hike in auto insurance due to accident, etc), they fall behind in payments. This is not true of people buying $1 million co-ops and condos.

Let's face it: There are millions of people vying for their own cube of space on a tiny island, and there's only so far up we can go. You do the math.

57.

Wow, 55 comments, and only one intelligent one (45). Keep up the good job.

58.

Average price for Tribeca condo this time next year will be 1.45 million.

59.

45 is a classic pump and dumper. Pumps up the market but he has his condo for sale. Hmmm.

Just keep believing everything is fine people. It is not. Bear Sterns CFO called the credit markets the worst in 22 years today. AHM went belly up and Accredited is not far behind. But Manhattan is immune. Even when lenders and hedge funds are blowing up left and right and no one can get a loan to save their ass.

60.

Everyone here should take the time to go to some open houses in Brooklyn. For the last 2 months I have, and for what my experince is worth, I can tell you that I usually constitute 70%-90% of the attendees, if not 100% in many cases. There is so much more granularity involved in understanding the dynamic or making predictions, even down to on a unit-to-unit basis. Perhaps even more so now and in this market. So much attention is paid to economic generalizations that the conditions on the ground get completely ignored.

I can only speak to Williamsburg, Greenpoint, Bushwick and Prospect Heights, and my experience was viewing places in the low-middle tier of prices. What I see is that, specifically in Williamsburg/Greenpoint where I currently live, very few people who also currently live there can afford these condos. Manhattanites don't seem all that interested. The marketing is embarrassing. The units that appear to be selling are primarily in the top end of the price range, or in neighborhoods that are considered to be more residential and where the average age is likely higher. Units with characteristics that make them at least SEEM to be safer investments. The rest have been languishing on Craigslist or broker sites, being periodically spruced up with "creative" language and a minor price reduction that isn't mentioned. Most of these buildings are poorly constructed, minimalist eyesores. Many are two blocks or less from a housing project. The brokers are beginning to blatantly lie. Out of interest I've been creating a Google map with new developments in Wburg/Grnpnt/Bshwk. So far I have 78, which is - probably - conservatively 2/3 of the total. 80% of those are within a 30-or-so block radius of Wburg. Perhaps an area of a few square miles or less. Maybe 10% of them are truly "sold out" with many, many, many more on the way, some of which will contain 500-1000 units.

It seems to me to be the Bush economy manifested fully in real estate. Based on what I've seen, and the fact that in and around October apparently " target="_blank">$50 Billion in adjustable rate loans are slated to be reset, buying anywhere right now is to tempt fate. Especially with a surplus of crap to choose from in Brooklyn, and even more crap on the way.

61.

oops, looks like post processing hosed that link in #60. Here it is, it's worth reading:

http://www.nytimes.com/2007/08/01/business/01leonhardt.html

62.

The level of stupidity on this board is astounding. #54 and 55 I would take the time to educate you, but I suspect it is beyond your high school education.

63.

45 & 52:

"the fundamentals are strong and appear to stay that way for the forseeable future"

"the 'eventualities' may be offset by other positive trends"

This is the danger. This is the irrational exuberance. Like I said, it's not just a case of some fundamentals being strong - just about every single fundamental condition relating to the RE market is as strong as its ever been. It seems unlikely that there will be other positive trends to offset any downturn, because there are no other trends! Every trend is already positive. To assume that things will stay that way for the foreseeable future is, I think, kind of a stupid assumption.