New York City, After the Boom

After an extraordinary era of construction and renovation, demolition and replacement, there will almost certainly come a long period in which little to nothing gets built…We have inherited, from the good years, a glut of housing, almost all of it of the unaffordable kind—condos galore—and an increase in office space amid a sudden, steep decrease in the need for it. Throw in the high cost, or total unavailability, of capital, owing to the credit freeze, and you have a New York that may be frozen in time. - The New Yorker

0 Comment

  • daveinbedstuy

    Once it hits the New Yorker, everone else already has recognized the problem and there may already be some light at the end of the tunnel. In this case, lower interest rates.

    Was there a funny WASPy cartoon to go with it??

  • haha that’s funny DIBS, yeah some dude in a shrink’s office!

  • daveinbedstuy

    Hey derwood. Where you been lately?

  • just remember, the caption “christ, what an asshole” works for every single new yorker cartoon. try it out!

    http://www.modernarthur.com/blog/christwhatanasshole.html

  • This has hardly been an era of extraordinary construction. Where do these people come up with this stuff? A few dozen larger buildings are built and they make it seem like it’s the roaring 20′s again.

    Further on, there is hardly a glut of housing. The citywide vacancy rate is still well below 5%, indicating the housing crisis is still very real and that the “extraordinary era of construction and renovation, demolition and replacement” has hardly scratched the surface of a a now decades long shortage of housing.

  • It’s kind of wacky I was an ATR in the Board of Ed for the last couple of months, meaning I was excessed at my school because of budgetary constraints, but still getting paid.Then the school “found” some money to start teaching again so I have been crazy busy getting my but back in gear! Thanks for asking!

  • glad to see even the New Yorker doesnt understand economics (or facts). The ‘glut’ of condos makes all housing more affordable – and if immigration to NYC slows or reverses even more so – thereby helping address a problem I am sure the New Yorker was upset about 18mo ago. And there was actually very little office construction during this boom

  • daveinbedstuy

    z…I added that one to my favorites!!! Thanks

  • yo Z you could also say “what a pretentious d**bag” that also seems to work!! Hahaha

  • Should I feel bad that I not only subscribe to the New Yorker but read every issue nearly cover to cover?

    I’m white, anglo-saxon … but not a protestant, so I guess that makes me a WASA? :P

  • 4.5% fixed rate. Plenty of buyers will be coming out of the woodwork. It will become cheaper to buy then to rent.

  • I can’t believe I’m about to say this, but I agree with Polemicist.

    There is absolutely not a glut of housing in NYC…if there were, prices would not be through the roof.

    Inventory, while higher than it’s been in the last few years is still INCREDIBLY low.

    Manhattan has about 10,000 properties on the market.

    Miami has about 75,000.

    There are areas that have a glut…Williamsburg, Greenpoint, etc, but overall, I don’t believe there is a glut.

  • I think the glut is building up. Give it time.

  • I’ve asked this before on Brownstoner to no avail:

    Is there a site which lists how many construction projects are in each borough, how many units, how many sold, how many in contract, etc etc?

    I see a fire sale coming around the bend.

  • daveinbedstuy

    If there were no oversupply then these buildings that we see going rental would otherwise be selling. I believe however, that just like NYC is somewhat different from the rest of the country, so too is there a neighborhood-by-neighborhood and even street-by-street difference in the market here. Such is the nature of gentrification for lack of a better term. Gentrification, that is, in its broadest definition where these developments are occurring in what have to date been largely low rise housing.

  • This article out today supports a bit of what Pole was saying…

    http://www.nypost.com/seven/12042008/realestate/bright_spots_142528.htm

    With construction coming to a halt, if/when the current inventory gets sold or rented, we might be in for housing crisis of another sort in a few years…which is to say…not enough housing…

  • well rents are cheaper in manhattan.

    I dont know what that says about brooklyn.

  • I think it says that for some, Brooklyn is more desirable.

    It is for me.

  • daveinbedstuy

    Santa…lay off the hallucinogens this close to Christmas.

  • daveinbedstuy

    Dec. 4 (Bloomberg) — Manhattan apartment rents fell for a
    fourth consecutive month in November and vacancy rates reached 2 percent for the first time since at least January 2007.
    The city’s most expensive neighborhood remained the
    Soho/TriBeCa area, with studios renting for an average of
    $2,395, one bedrooms for $3,637, two bedrooms going for $5,300 and three bedrooms for $7,045, according to a report today from New York-based real estate broker Citi Habitats.

    2%….ghastly

    And show me where there’s a studio anywhere in brooklyn renting for anything close to $2,395.

    Crazy talk santa.

  • Best time of the year for them, IMHO.

  • “I think the glut is building up. Give it time.”

    What is that based on? It’s not logical.

    Increasing population not decreasing population in NYC + slowdown in building = LESS oversupply coming not more.

  • Dave,

    You just listed the most expensive neighborhood in Manhattan.

    There ARE neighborhoods in Manhattan which are cheaper to rent in than parts of Brooklyn. Murray Hill has some cheaper places than in Brooklyn Heights, as does the far Upper East Side over near York Avenue. Same goes with parts of the Lower East Side.

    As a whole, no…Manhattan is more expensive. But Brooklyn Heights, Park Slope, Cobble Hill do in fact have some more expensive listings than part of Manhattan. Now you might get more space in Brooklyn for that price, but still…

  • Yep rents are definitely droping in Manhattan. I have a two bedroom apt in a prime part of UWS that over the last 5 years has rented within 2 days of going on the market (and with a rent increases). This time no takers in two months.Dropped the rent by 10% one month ago it still has not moved.
    I have however in that time rented a Clinton Hill apartment and gotten a rent increase. I wouldn’t have believed it if I didn’t experience it myself.

  • i actually agree with 11217. new construction stops, some condos go rental, then tada, supply constricts to the point that it forces prices up. not today mind you.

  • I have some friends in the process of moving from other parts of the country to New York and they didn’t even want to look in Manhattan and have narrowed their search directly to Brooklyn. One of them is a family who used to live in Inwood years ago, and they said it’s not on their list now, because they’ve heard that Brooklyn is so family friendly these days and they found upper Manhattan too dirty and run down.

    Just to let you know what a couple outsiders seem to think about the city…

  • Hey Derwood! Hiya doing Buddy!

    Well well December is the GTFOOH month! Terminations rule the day as companies throw Asshats overboard to save their sinking ships!

    AT&T, DuPont, Viacom Fire 15,000 Workers as U.S. Slump Worsens

    http://www.bloomberg.com/apps/news?pid=20601087&sid=aVEAHBE2QEXU&refer=home

    “Dec. 4 (Bloomberg) — AT&T Inc., DuPont Co. and Viacom Inc. are firing more than 15,000 people, buckling under the strain of a recession that may already have pushed the U.S. jobless rate to the highest level in 15 years.”

    Yeah those 4.5% interest rates will save us, NOT!

    Oh please read this: The is the FED Beige Book and it’s NOT GOOD…

    http://www.federalreserve.gov/fomc/beigebook/2008/20081203/default.htm

    Overall economic activity weakened across all Federal Reserve Districts since the last report. Districts generally reported decreases in retail sales, and vehicle sales were down significantly in most Districts. Tourism spending was subdued in a number of Districts. Reports on the service sector were generally negative. Manufacturing activity declined in most Districts, and new orders were soft. Nearly all Districts reported weak housing markets characterized by reduced selling prices and low, but stable, sales activity. Commercial real estate markets declined in most Districts. Lending contracted, with many Districts reporting reductions in residential, commercial and industrial lending and tightening lending standards. Agricultural conditions were mixed with a relatively good harvest but concerns about profitability. Mining and energy production and exploration started to soften due to lower output prices.

    2009 is going to be a horror show and I can’t wait for the carnage..

    The What (But… But… I’m a VP, you can’t fire me…)

    Someday this war is gonna end…

  • zzzzzzzzzzzzzzzzzzzzzzzz

    Yep, What, most of us read The Times about 4-6 hours ago.

    Late to the game, per usual.

  • I believe however, that just like NYC is somewhat different from the rest of the country, so too is there a neighborhood-by-neighborhood and even street-by-street difference in the market here. Such is the nature of gentrification for lack of a better term. Gentrification, that is, in its broadest definition where these developments are occurring in what have to date been largely low rise housing.

    SPOT ON DAVE

  • dittoburg

    wait a minute – 11217 agrees with polemicist and winelover agrees with 11217?

  • No answers? Anybody? DIBS? Pole?

    “Is there a site which lists how many construction projects are in each borough, how many units, how many sold, how many in contract, etc etc?”

    Pleas don’t tell me to google. There are some similar sites but nothing quite like what I’ve described.

  • Prodigal_Son:

    The closest thing you would find is data published on The Real Deal. They haven’t updated the website data however since 2006. They still publish it however in their data book.

    Street Easy is close, but it is hardly a definitive list and as I said yesterday – I don’t trust their contract data. Wirenewyork.com has a great site where lots of posters discuss projects pretty much as soon as a knockdown occurs. REIS, a non-free service, does have national data regarding stuff under construction – but their NYC data isn’t very useful. Elsewhere it is very good.

    Unfortunately, data on new construction is really only of interest to people like me who write economic reports for interested parties. Even sites like Propertyshark seem more oriented towards small investors, and not people looking to put together future supply projections.

    You just have to take a survey of the neighborhood that interests you, not what’s happening, and pound the pavement to find out what if anything is planned for the sites in question. It can take a while for DOB filings or condo declarations to tell you what is going on.

    It ain’t easy, but that’s why analyzing real estate is far more interesting than other financial assets – it actually takes work to find out the real truth. That’s also why it just doesn’t work well for a website. You can’t just pull data from other public sources like Propertyshark does. You’d need to hire people to do the work for you.

    On a side note, there is a lot of data for non-residential product. As an example, Smith Travel publishes a lot of reports on hotel related stuff. Their pipeline report is great – they tell you all about hotel projects, the projected construction schedule, how many rooms, and other fun stuff. It’s about $500 a report.

    The real issue I’ve found in New York City regarding residential development is there is little need to prove supply and demand – everyone knows the supply doesn’t at all meet the demand. The issue is never if a residential property will find renters or buyers, only what price. The same can’t be said for other asset classes however, so the data is a bit more valuable – so people do it.

  • Yup, construction stopping dead on its tracks because reality has set in and you idiots argue this will drive prices back up. Lol morons.

  • daveinbedstuy

    It will eventually cornerbodega…that’s why they call it a cycle.

  • I don’t think cornerbodega has ever heard of a little thing called supply and demand.

  • Supply and demand goes up and it comes down. The great-paying jobs in the financial sector that new graduates could slip into have dried up. If those graduates can’t land those jobs, they won’t come to NY. Last year’s grads are languishing. Soon even folks who graduated several years ago will find themselves unemployed and facing fierce competition for any new position. The jobs will re-emerge but probably not until 2011, until then who is going to fill up those expensive sexy condos? Nobody.
    Without the big bucks from the investment, insurance, re-insurance, and law offices, you’re left with a big gap in demand. In addition, professionals in architecture, engineering. real estate, and construction are getting laid-off like crazy. Even hospitals are tanking. We are looking at a period of dimished earnings. if you think that will not have any consequences on the real estate market, you’re dreaming.

  • nyc boom/bust was demand driven. Prices backed by artificial credit. There will be no demand until $$$/income come back in line. Open your eyes, we’ve got a way to go…

  • There maybe a demand but no supply of money Dumbasses! Just clap you asscheack and chant “These is no place like 2005″ ROTMFFLMMFAO!!!!!

    RIP Mutant Asset Bubble, GAME OVER!!

    Oh BTW I’m loving it!!!

    The What

    Someday this war is gonna end…

  • i personally love the image of new york as a city of half finished luxury condos full of the homeless squatters surronding bins of burning construction debris to keep warm

  • I was on the subway the other day, and I overheard a conversation about a couple who were leaving the city for Austin, TX. I would have thought nothing of it, but then 10 minutes later, I learned a friend of a friend (in finance) was leaving because his company restructured to New Jersey to save costs.

    Are we a growing or shrinking city? A few years ago, it seemed like everyone was moving into the city. But I don’t hear so much chatter any more. Only anecdotal of course, I bet soon the NYT will have some article that investigates whether people are leaving or moving to NYC.