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July 2, 2008
Corcoran Market Report: We're OK, Actually
We got our hands on Corcoran's Q2 sales data, and it shows that the state of the Brooklyn market isn't quite as precarious as the Times made it out to be. The median price per square foot sales price of condos and co-ops is up 10 percent over this time last year, to $560,000, and there was a 4 percent reduction in condo/co-op inventory. In terms of townhouses, while the median price on one-families was down 3 percent from Q2 '07 levels, to $965,000, the median price on 2-4 families was up 6 percent, to $1,240,000. In fact, all the brownstone Brooklyn neighborhoods had pretty substantial price increases in the larger townhouse category, and inventory was extremely tight. The most startling figure in the report is the 15 percent decrease in median prices for Williamsburg condos, but even that doesn't seem so horrible when you factor in that Corcoran had 47 percent more condo listings between April and June '08 compared to the same three months in '07. Another mediating factor to consider in viewing the drop in median price of Williamsburg condos: Many developers began skewing their mix of inventory towards studios and one-bedrooms since those were the units that were selling best; if there were more small apartments in the 2008 data, one would expect to see average and median prices declining. Conclusion: We don't think the party's over and done with in Brooklyn, either.
Manhattan 'Still a Party'; Hangover for Williamsburg? [Brownstoner]
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Comments
% difference in # of sales over same period?
Posted by: guest at July 2, 2008 10:43 AM
woohoo!!! party like its 2005!
Posted by: guest at July 2, 2008 10:43 AM
Why should we give credence to the statistics of a real estate brokerage, when they benefit only from a strong market perception? Isn't this like taking Bush's word that the Iraq war is going well?
Posted by: guest at July 2, 2008 10:44 AM
Maybe the party's not over just yet, but it's 4:37 AM, the champagne is long gone, the booze has run out and we're down to our last 12 pack of Stella..
Posted by: guest at July 2, 2008 10:44 AM
Gabby...The way I read that median number you quote is sales price (000), not psf which is the next set of columns???!!! Am I wrong or are the labels just incomplete???
Posted by: daveinbedstuy at July 2, 2008 10:46 AM
PS. Would you expect anything else from Corcoran? Come on..
Posted by: guest at July 2, 2008 10:46 AM
How can the 2007 psf be $482 which is lower than both the Co Op and Condo average psf?
Typo?
Posted by: guest at July 2, 2008 10:46 AM
All the naysayers are IDIOTS!!!!!!!!!!!
In the 2 years since you've said we hit the peak (2006) Brooklyn real estate has increased 23%.
Can't WAIT to hear how people talk these numbers away in the following comments...
Posted by: guest at July 2, 2008 10:53 AM
"Corcoran Market Report: We're OK, Actually"
Ok like ,my Ass hurts but "We're OK, Actually",Actually?
Or
I can't bend down but, "We're OK, Actually",Actually?
or
My head is blowed off but, We're OK, Actually, Actually?
Small Banks' Reckoning Day Is Coming
http://online.wsj.com/article/SB121494953423420859.html
According to the Federal Deposit Insurance Corp., $45.4 billion of the $631.8 billion in construction loans outstanding at the end of the first quarter were delinquent. When banks announce second-quarter results in coming weeks, they are expected to report sharp increases in loans that builders can't repay. Banks are also facing intensifying pressure from federal and state regulators to deal with the problem loans on their books.
I think the Asshats better "Lube Up"! The flagpoles will be inserted sideways!
The What
Someday this war is gonna end...
Posted by: what at July 2, 2008 10:56 AM
Gabay I am sure not even you believe this crap.It was prepared by a RE brokerage firm. What do you expect them to say?
Posted by: guest at July 2, 2008 11:01 AM
Did Gabby get it wrong. I'm terrible at statistics but I think she's completely misreading this and it loos pretty bad to me.
First, Gabster claims that:
"The median price per square foot on condos and co-ops is up 10 percent over this time last year, to $560."
Isn't she citing the median price and not the price per square foot as having gone up? Second it doesn't make sense to combine the two categories of coop and condos because they are priced differently due to higher mainteance fees for coops. In 2007, 387 coops were sold or almost 40% of the total market of coops and condos combined. In 2008, there were more condos sold than in 2007 and fewer coops. The percentage of the total sales comprising coops went down to 33%.
So yes, the median PRICE went up, (Not the median price per square foot) to 560 from 510 but the median price was down for coops 2008 compared with 2007 and for condos for 2008 compared with 2007. The median price only went up when you combine both because condos sell more than coops and a higher percentage of condos were sold in 2008 than in 2007.
No the third column is the price per square foot. That also went up a lot but again only when you mix coops with condos and not when you stay consistent and look at the median price per square foot of condos in 2007 compared with condos in 2008. By comparing apples with apples you'll see a marginal increase in the price per square foot but were there a lot more studios and 1 bedrooms sold? Those always demand a higher premium per square foot
Posted by: Brooklynnative at July 2, 2008 11:01 AM
10:44, (#1) I also would never believe jacks#*t from Corcoran, but in the end all the fussing over this crap is really bad for everyone.
Life is short - Enjoy it.
Posted by: guest at July 2, 2008 11:02 AM
Dear What,
Have you ever pondered the fact that with every passing day, you are one day closer to your own death?
I think you really need to go waterskiing or something.
Posted by: guest at July 2, 2008 11:06 AM
10:53
23% are you kidding me? And you're calling the "naysayers" idiots? First, see my post above at 11:01. Second, do you not realize the 482 figure for 2007 price per square foot is obviously a typo? Start posting under a name so I can just skip your posts when reading cause you're clearly the biggest asshat on this site.
Posted by: Brooklynnative at July 2, 2008 11:09 AM
I agree that one must take this with a grain of salt since Corcoran has vested interest, to say the least, in presenting rosiest picture. Also, even Corcoran's properties are taking price cuts. Market in prime Bklyn is not crashing, but there is plenty of evidence that it's softening and the crazy price jumps of the last few years are ending, even reversing as some places need to lower prices to move...
Posted by: guest at July 2, 2008 11:12 AM
Seems completely logical. Supply and demand. There is way too much supply for Williamsburg condos so price is down. Brownstone inventory is tight as supply is limited so price is flat or higher.
Posted by: guest at July 2, 2008 11:13 AM
And another thing, total sales were down about 5%. Don't know about everyone else, but anecdotally it would appear to me a sh#tload of new product has come on the market in 2008. But sales were down 5%. What does that portend? Hey What, what do think - more supply less demand - hmm? Not looking so good to me.
Posted by: Brooklynnative at July 2, 2008 11:17 AM
The more I think about this, the worse it looks. Total sales down 5% when a lot more product is hitting the market. Median price of condos down over 4%. Price per square foot up marginally but then you need to break that down further to see if there were a lot more studios sold in 2008. Mission Control, we've started our descent.
Posted by: Brooklynnative at July 2, 2008 11:24 AM
Brooklynnative:
As I've said many times here before, there is near infinite demand for housing in this borough of 2,300,000 people - the vast majority of whom live in antiquated housing inferior to the nation as a whole.
There is no question current product will be absorbed. The question is at what price and whether or not units will be sold at a discount or rented until market conditions improve.
If history is a guide, many developers may be unwilling to sell at a discount if it means not being able to pay off their construction loan. They will instead try to rent the units and convert the short term construction loan into a long term loan.
Anyway, the corcoran numbers are pointless. I question the usefulness of median numbers in general with anything other than population demographics.
Posted by: Polemicist at July 2, 2008 11:36 AM
"As I've said many times here before, there is near infinite demand for housing in this borough of 2,300,000 people"
“I have said it thrice: What I tell you three times is true.” Lewis Carrol
"Say something once, why say it again. When I have nothing to say, my lips are sealed." David Byrne.
Polemicist you've certainly made the argument before. However, maybe I'm a bit older than you and I can remember what happened to NYC after the last serious stock market crash in 1987. It wasn't really until about 1990 that the real estate market really stared taking the hit. A very large percentage of your "infinite demand" is comprised of people in finance and the related industries. No city in the world will be as badly hit by all the cuts in the finance industry as NYC. When those severance checks run out, when the firms stop handing out those huge bonuses, when the related industries all start to suffer, see what happens. NYC used to have an incredibly diversified economy with longshoreman unloading the docks in Brooklyn and Manhattan, factory workers in the industrialized areas like Williamsburg and LIC, the garment workers in Manhattan. All this, and countless other jobs in other industries are now gone. The percentage of tax revenues derived from Wall Street is huge and irreplaceable. Once tax revenues go down the other huge employer - the public sector - will shrink. The state and city will cut jobs and services. See how demand is then effected.
Posted by: Brooklynnative at July 2, 2008 11:51 AM
To inject actual data into this: Sales price per share in my coop increased 19% YTD from 2007. Previous annual increases in sales price/share -- 2% in 2007, 17% in 2006 and 35% in 2005. But it took until 2001 for the price to get to where it had been in 1993 -- with very few sales in 92-97. Of course you have to consider the mix of the apartments sold, but...
Posted by: guest at July 2, 2008 11:57 AM
You're on a tear today, Brooklynnative.
Calm down. Your blood pressure is skyrocking.
Kinda like Brooklyn housing prices.
Posted by: guest at July 2, 2008 12:03 PM
Comparing dirty, slimy, crime ridden NYC in the 80's and 90's to the Disney-land infused uber wealthy urban oasis that is NYC in 2008 is rather silly, even for you Brooklynnative.
Posted by: guest at July 2, 2008 12:04 PM
Ok where can I get a brownstone in the United States? UMMMMMM nowhere except, NYC. So let's see supply and demand is covered. What city has the Most Jobs in the United States? NYC Enough said.
Posted by: guest at July 2, 2008 12:16 PM
"Comparing dirty, slimy, crime ridden NYC in the 80's and 90's to the Disney-land infused uber wealthy urban oasis that is NYC in 2008 is rather silly, even for you Brooklynnative."
Not as silly as arguing that since NYC has the only brownstones in the US (which itself isn't true - try going to other east coast cities such as DC, Baltimore or even Hoboken friend) that therefore "supply and demand is covered."
Demand at what price? Who will be able to afford the $1000 per square foot brownstones which cost a fortune to maintain once the job cuts on Wall Street hit? Do you even realize that brownstone is a terrible material to apply to the exterior of a building and requires resurfacing about every 20 years because it's so porous. There's a reason why these buildings went into disrepair over time.
Posted by: Brooklynnative at July 2, 2008 12:40 PM
"Ok where can I get a brownstone in the United States? UMMMMMM nowhere except, NYC."
Boston perhaps? Get out much?
Posted by: guest at July 2, 2008 12:41 PM
Keep in mind the real recession has not hit NYC yet. First comes the credit crisis, then the real crisis, the one we actually feel.
NYC's primary employer is finance industry. And this industry famously lays people off with benefits. All those people layed off in January were receiving company benefits for 6 months or more. Now, these benefits are starting to disappear and these people will now not be able to afford 3,000 one bedrooms as they collect unemployment benefits and look for work. As more people are getting layed off now, these effects will also come later.
Estimates: Bear Stearns is losing 7,500 people (or 53% of their workforce), Wachovia is firing 1,200 (30%). Citigroup is firing 7,900 (26%) ABN/RBS is firing 7,000 or 25%. UBS is firing 4,380 or 19% of its workforce. Bof America is firing 3,650 or 18.2% of its workforce. Lehman Brothers is having trouble staying afloat and is losing 5,000 people or 16% of its people. Morgan Stanley is losing 5,400 people or 11.4%. Granted, not all of these jobs are in NYC. But you get the picture no?
These effects take a while to hit the real world. For the most part rich people don't really feel affected by this, because of all the cash they sit on, it doesn't matter if their brownstone is 4 million or 5 million. But the effects should start hittin gthe market as soon as we have less finance people clamoring for 1 bedroom apartments.
The first true sign of the real crisis is Starbucks cutting jobs and shutting stores. Who is going to pay 5 dollars for burnt coffee now?
Posted by: guest at July 2, 2008 12:46 PM
studios and 1 BR's usually sell at more per sF than larger apartments and would send the average higher.
Posted by: guest at July 2, 2008 12:51 PM
Even Denver has neighborhoods with a "brownstone" feel.
Posted by: guest at July 2, 2008 12:53 PM
"Who will be able to afford the $1000 per square foot brownstones which cost a fortune to maintain once the job cuts on Wall Street hit?"
I live in a North Slope block and know most of my neighbors. Exactly ONE of them work on Wall Street.
The myth that Wall Streeters own all of Brooklyn's Brownstones is asinine.
Posted by: guest at July 2, 2008 1:03 PM
Fox reports "Henhouse is secure."
Posted by: guest at July 2, 2008 1:04 PM
All of you suggesting other cities need to keep in mind that other cities are faring MUCH WORSE than NYC.
Move to Baltimore if you want. Good luck finding a job that pays more than 8 bucks an hour.
And try not to get shot in your "beautiful" brownstone surrounded by one of the most crime ridden cities in the United States.
Denver? Sure...lovely town. Jobs are scarce and housing prices are tanking.
All of these arguments are so silly.
Just stay put, stop thinking about all of this so much and enjoy your life.
In 5-10 years, this will all be a distant memory.
Posted by: guest at July 2, 2008 1:06 PM
11:51
I too lament the conversion of our economy into the FIRE racket, despite my employment in real estate related economics matters.
My point is simply this: Even if Wall Street collapsed tomorrow, people in other occupations would be more than willing to buy these condos at the right price.
It only makes sense in a free market economy that producers of goods will attempt to market them for the highest possible price. It is more complicated with real estate because of financing, but even in the early 1990s - banks foreclosed on condo projects and sold the units at a loss.
In short, Wall Street is not the end all be all of real estate in this city. New York City will be great regardless of what happens there. That means there will still be jobs, and people will still need housing. Prices might decline, developers and buyers might foreclose, but it's not like these new condos will have zero value or worse.
If you were really old, which you clearly aren't, you'd know this phenomenon is what allowed blacks to move to the city in droves. Harlem was built as luxury housing, but there were no white buyers. So, blacks got great housing at a cheap price. The cultural heart of black America exists because of the very phenomenon you don't seem to understand. Brownstones in Bed-Stuy still sell for way below the reproduction cost today.
These kinds of cycles are what have created the diverse city you know today.
Posted by: Polemicist at July 2, 2008 1:07 PM
The new condos are exactly like (well, poorer quality and more expensive, but equally bland) new condos being built in the center of every city in the US. Nothing distinctive and very little limited, there.
How likely is it that brownstone prices can separate from condo prices in similar neighborhoods? All you need is a few people who will switch at the right price to bring them back in balance.
Even brownstone supply should be responsive to prices. At current prices, lots of landlords must be thinking about ways to convert their rentals into owner-occupied. Why work for your money when you can have twice as much just by cashing out?
INVENTORY is down, presumably because sellers have decided to wait out the softness. SUPPLY is wildly up and continuing to rise.
Effective demand -- that is, not the "infinite" desire polemicist sees, but real market demand backed by ability to pay -- drops with each price increase, each layoff, each bank retrenchment, each European who decides that NYC (or the dollar) is too risky for whatever they have left after their own bubble poppings, each new chain store that Disneyfies NYC into a crowded clone of a hundred cheaper cities with walkable downtowns and cool pubs.
Our prices are up in the very steep part of the wealth/income distribution. There aren't a lot of people who can afford PS houses today at current selling prices. At current asking prices, there are at least 1/3 fewer.
Eventually Adam Smith will prevail over faith-based economics.
Posted by: guest at July 2, 2008 1:07 PM
citi has 350,000 employees worldwide. 7900 is not 26%. They announced a 10% reduction on the Banking and Capital markets staff (abtou 6500 to be laid off) in addition to their earlier lay offs. Only a portion of those laid off will be in NYC.
Posted by: guest at July 2, 2008 1:08 PM
How many people work in finance in NYC? does anyone have totals on that? And how many of them live in NYC, NJ, Connecticut, Westchester? the finance industry may be NYC's largest employer but what does that actually work out to in terms of all business in NYC and the total number of people employed in NYC?
I'm certainly not saying that what's happening in finance is not going to have a huge impact, but I'd like to see this put into the context of the city overall. As great as the impact is, this is a huge city with a lot of other business going on. There has to be some stabilizing factors in the City's overall economy. A lot of us have lives outside the finance and real estate industries and no doubt we'll feel the pinch but if the City is so dependent on Wall Street we're in deep trouble, whether or not Wall Street is doing badly. for all the advice we get about diversified portfolios being the smartest way to keep your money, funny we don't apply it to our economic system.Brooklynnative said it very well.
Posted by: bxgrl at July 2, 2008 1:11 PM
"INVENTORY is down, presumably because sellers have decided to wait out the softness. SUPPLY is wildly up and continuing to rise."
I don't get it. Supply and Inventory are the same thing.
Posted by: guest at July 2, 2008 1:14 PM
bxgirl, the early 90s called. they want their house appreciation back. that's like saying the govt. doesn't have much to do with US politics b/c not many Americans are employed by the govt.
you need to listen to Wutang: cash moves everything around me, c.r.e.a.m. get the money. dolla' dolla' bill yall.
despite what starship claimed, this city ain't built on rock 'n roll.
Posted by: guest at July 2, 2008 1:23 PM
So the numbers come out basically good compared to much of the rest of the country, and everyone comes on here saying the sky is falling.
Sounds like a bunch of bitter renters to me.
Some people have no memories before 2000. Brooklyn is a 100 times better place to live than it was 15-20 years ago, but all you people want to do it bitch and moan.
Go enjoy your lives and stop obsessing about something that is TOTALLY OUT OF YOUR CONTROL!
Posted by: guest at July 2, 2008 1:28 PM
"There is near infinite demand for housing in this borough of 2,300,000 people." Polemicist at 11:36.
"My point is simply this...Prices might decline, developers and buyers might foreclose, but it's not like these new condos will have zero value or worse.
Polemicist at 1:07.
Polemicist - do you even think about what you say before you post? What you say at 1:07 completely contradicts what you said earlier. If there was an "infinite demand" why would the prices decline?
Not surprsingly, as you can't seem to maintain a consistent position, you have no clue as to what I'm saying. I'm not arguing condos will "have zero value or worse." In fact, I have yet to see anyone on this site, even an idiot like the What (don't worry What just kidding (not)), make such a stupid argument. My point is that prices will go down and they will go down a lot - maybe 30 to 50%. That's a huge drop for people who bought at the top and it will cause real pain. Granted people who bought in the early 90s or before would still be sitting on a nice profit but that shows how much prices have gone up. That type of a decline, which will happen unless the Fed drops the ball and allows inflation to get completely out of control, will negatively impact the standard of living in NYC in a big way.
Posted by: Brooklynnative at July 2, 2008 1:28 PM
1:11
Per Mayor Bloomberg's budget presentation page 14. 25% of total NYC wages come from the securities industry. The City is become more dependent on the financial services industry over time...not less so.
here is the link to the presentation
http://www.nyc.gov/html/omb/pdf/sumss5_08.pdf
my 2 cents - the forecast for 2 Half 2008 and 2009 GDP growth are wildly optimistic. Stay tuned.
Posted by: guest at July 2, 2008 1:35 PM
1:03 and how many of them bought in the last 2-3 years?
Posted by: guest at July 2, 2008 1:38 PM
"Early Harlem’s economy centered on agriculture until the railroad and Manhattan street system brought industry to the area. A housing boom ensued; however over-zealous builders found their buildings empty and opened their doors to tenants of all colors. According to a 1910 Census, Harlem had a population of around 500,000; only 50,000 were African American and 75,000 were native-born whites, the rest were immigrants from Ireland, Germany, Hungary, Russia, England, Italy and Scandinavia. By 1930, the African American population grew to over 200,000." -welcometoharlem.com
In other words, cheap housing was not what allowed Blacks to move here in droves (you need to read a little history before you analyze it), Too much housing forced builders to go begging for tenants and made it easier for people of color to get housing, but was by no means what "allowed" them to move here. they came to find work, and work was in the Cities. in 1917 Harlem had a huge number of Jewish people, Italians, Irish and others. Many of the black residents were already in NYC and as some of their communities were destroyed for new building, they moved to where they could afford.and they were driven by Anti-Black riots in Manhattan as well. the idea that Blacks got a great real estate deal is to ignore the other groups who benefited as well. The whites chose to move when blacks moved in as a result of their bias and prejudice. These were all at one time or another immigrant neighborhoods, and the price range allowed poor and middle class people to afford to live there. Most were renters.
I don't know the exact figures but many of the people who lived/rented in Harlem and Bed-Stuy were able to buy there when prices went down, or as their financial status improved. No one handed them anything. they worked hard to build their neighborhoods back up- to claim cheap housing allowed them to have great houses today is to completely misrepresent the entire context.
Posted by: bxgrl at July 2, 2008 1:38 PM
Yeah, 1:23 - but don't you wish sometimes it were? :-)
Posted by: bxgrl at July 2, 2008 1:43 PM
When we're discussing Park Slope, everyone says that NO Wall Streeters would even CONSIDER living there, and now that the market is showing softness, now EVERYONE in Park Slope works on Wall Street.
Funny.
What happened to Brooklyn Heights being the only Brooklyn neighborhood attractive to Wall Street folks?
Posted by: guest at July 2, 2008 1:50 PM
1:28 guest,
"Go enjoy your lives and stop obsessing about something that is TOTALLY OUT OF YOUR CONTROL!"
What makes you think we don't enjoy this? We are not discussing whether brooklyn is a better or worse place, we can all agree it is a great place to live, that is why we live there, duh!
We are discussing prices in this market. We are talking supply and demand and market perception. Furthermore, people are talking their books (longs are the owners and shorts are the renters).
Somebody has got to buy the high.
Posted by: guest at July 2, 2008 1:53 PM
"In other words, cheap housing was not what allowed Blacks to move here in droves, Too much housing forced builders to go begging for tenants and made it easier for people of color to get housing, but was by no means what "allowed" them to move here."
Wow. Please take an econ 101 class. all your confused sociological commentary is just a second derivative observation of the economic reality. i would start by reading about supply and demand: http://en.wikipedia.org/wiki/Supply_and_demand
Posted by: guest at July 2, 2008 1:54 PM
"Disney-land infused uber wealthy urban oasis that is NYC in 2008"
Euphoria is extremely fascinating.
Posted by: guest at July 2, 2008 1:54 PM
"But the effects should start hittin gthe market as soon as we have less finance people clamoring for 1 bedroom apartments."
You just gave me an epiphany. This is so 2000 with respect to San Francisco real estate and Dot Com layoffs.
Posted by: guest at July 2, 2008 2:00 PM
huh? how did Harlem come into this?
I agree this is good news for brooklyn. And you so called brooklyn residents are belly aching.
Bitter bitter slackers please give it a rest and move foward. Let's be productive and sweep our yards, plant a flower, say hi to a neigbor or pay/collect rent! It's the 2nd of the month.
Mush ---->
Posted by: guest at July 2, 2008 2:01 PM
The median price per square foot sales price of condos and co-ops is up 10 percent over this time last year, to $560,000.
Nice spin Brownstoner, of course even according to Corcoran's data coops were down 1.6% and condos 4.6%.
Posted by: guest at July 2, 2008 2:02 PM
"This is so 2000 with respect to San Francisco real estate and Dot Com layoffs."
Yup, and 8 years later, San Francisco is still a glorious, thriving and insanely expensive city.
Posted by: guest at July 2, 2008 2:05 PM
"All of you suggesting other cities need to keep in mind that other cities are faring MUCH WORSE than NYC."
That's the crystal ball, silly. NYC lags. Prices here shot up last. All cities are on the flag pole conveyer belt. We're just one of the last ones in line.
Posted by: guest at July 2, 2008 2:07 PM
"it's not like these new condos will have zero value or worse"
Seriously! Granite has got to be worth something!
Posted by: guest at July 2, 2008 2:10 PM
http://www.youtube.com/watch?v=pALT9wxk7iM
Posted by: guest at July 2, 2008 2:11 PM
San Francisco is nice,
Brooklyn is so-so
...at best
Posted by: guest at July 2, 2008 2:11 PM
"Yup, and 8 years later, San Francisco is still a glorious, thriving and insanely expensive city."
Don't fast forward. Talk about what happened within the first year or two before it was saved by Alan Greenspan and the Housing Bubble. Prices and rents were getting murdered.
Posted by: guest at July 2, 2008 2:12 PM
I lived in San Francisco for 10 years. Now Brooklyn.
I much prefer Brooklyn.
While San Francisco is beautiful, it lacks the energy and vitality that NYC has. Some of that energy has shifted from Manhattan to Brooklyn, and I find it to be a really exciting time to be living here, housing market and all.
Posted by: guest at July 2, 2008 2:14 PM
"Brownstones in Bed-Stuy still sell for way below the reproduction cost today."
You left out the cost of life and limb.
Posted by: guest at July 2, 2008 2:16 PM
It appears from what I'm hearing that specific areas of the financial firms are being reduced or effectively eliminated, and that the layoffs will be top to bottom.
Most of the younger staffers probably live in NYC and certainly churn a certain sector of the economy.
Does anyone know to what extent the middle level management lives in CT and NJ? It seems, from my experience in the world of finance (I worked at ML) that most 30- and 40-somethings end up heading outside of NYC "because of the kids". They don't want to raise their kids in NYC. Sure, there are those in the industry who do, but reflecting back on many of my colleagues, it seems they almost all lived outside NYC if they had kids and even a large part of the younger employees did too. There were many in Hoboken or suburban NJ or Westchester.
Not to suggest that a regional downturn will not impact core Brownstone Brooklyn, but it seems much of BB has a diverse population. Even the new buyers are diverse. It is foolish to state that all the new buyers paying these high prices are so-called Wall Streeters. I know of a number of buyers in many different walks of life (and yes, some of it is trust fund money).
Possibly the loss of NYC income tax, less tax generated by real estate changing hands, less mansion tax monies coming in...I don't know if there will be a cascade effect...Thoughts on this anyone?
I don't think the doctors, lawyers, the wealthy who don't really "work", high earners in fields other than finance, the hardworking owners of successful businesses worldwide who have a pied-a-terre in Manhattan...I don't think all of these people will leave NYC...though, many lawyers do depend on Wall Street...they'll feel it, but many may not.
Again, thoughts on this?
And, to agree with someone above, yes, Brooklyn in many of the Brownstone neighborhoods has changed immensely since 1995. Maybe many of the new businesses that have opened in the last 5 years will collapse soon...I don't have a crystal ball...but in places like FG, there has been a massive, massive change. I won't describe that change but you get the drift. It is NOT Fort Greene circa 1994.
FGG
Posted by: guest at July 2, 2008 2:17 PM
If NYC housing prices drop 50%, it will be a far better place.
More attractive to start-ups, more attractive to creative types who don't make Wall St pay, more attractive to young people, more manageable for families with children, more possible for grown kids to live near where they grew up.
Drops in asset values will also have the beneficial effect of reducing inequality, which will improve quality of life for everyone, top to bottom.
The only people who are really going to hurt when prices come down are speculators/developers caught midstream and homeowners who got caught in the euphoria and spent more than they really could afford, hoping the market would bail them out. Some recent buyers will regret having overpaid, but if they could afford it when they bought it, they should be able to continue to afford it after prices come down too.
Posted by: guest at July 2, 2008 2:22 PM
2:22 is the wisest person on this blog so far today, and possibly this month.
although personally i think in brownstone brooklyn, prices will fall more in the 10-20% area.
50% would be more than in speculative towns like miami and las vegas. there is zero reason to think that would happen here. apples and oranges.
Posted by: guest at July 2, 2008 2:29 PM
2;22 I've sometimes thought the same thing. But don't forget, police, firefighters, sanitation all need to get paid. They also all have fantastic pensions and health care -including the teachers of course. We'll be hurting if we lose so much revenue. It's not all about creative people moving in, there are bills to be padi.
Posted by: Brooklynnative at July 2, 2008 2:30 PM
Change happens at the margin, not the average. Most people will be unaffected by the recession on Wall St, except to the extent that more subway work is deferred.
But prices are set at the margin too. Doesn't matter who lives in PS; prices are set by the few who can still afford to buy there.
Every Wall Streeter who doesn't buy a Manhattan apt means that 4 more people don't sell/trade up/trade down, and 5 brokers don't get commissions, and 4 or 5 contractors/architects/decorators don't get work. Just because the one who buys in Brooklyn isn't using Wall St money doesn't mean that Wall St money didn't make it possible.
Also, the arts community, which is almost as big as the financial industry (not just securities, incidentally) and more important for the overall health of the city, is heavily dependent on sales to rich people (or to people who sold to rich people). Which means, of course, Wall St and real estate, again.
And one reason PS is nicer today than 20 years ago is that the subways run more often. What happens when that changes?
Posted by: guest at July 2, 2008 2:34 PM
Or when police forces are cut and public schools neglected, because the real estate transfer tax revenues drop?
Posted by: guest at July 2, 2008 2:38 PM
"And one reason PS is nicer today than 20 years ago is that the subways run more often. What happens when that changes?"
As someone who's lived in PS for going on 40 years, I can tell you that the frequency of trains running is about # 136 on the list of the reasons why Park Slope is a nicer place today than it was 20 years ago. When the economy is in a funk and everyone is in it together, the last thing most "normal" people care about is having to wait 4 extra minutes for a train in the morning.
Posted by: guest at July 2, 2008 2:40 PM
2:34, you haven't lived in nyc very often have you?
you sound as if none of this hasn't happened before. economies are cyclical. we are entering a downward wave, as we have a million times before.
why talk about it as if you're bringing something new to the table that those of us over 30 have already seen, lived through "(and yes, still made money) 10's of times already.
the constant pessimism on this blog is really draining. some of you sound like really unhappy people and put way too much stock into real estate prices.
Posted by: guest at July 2, 2008 2:45 PM
"Also, the arts community, which is almost as big as the financial industry (not just securities, incidentally) and more important for the overall health of the city, is heavily dependent on sales to rich people (or to people who sold to rich people). Which means, of course, Wall St and real estate, again."
Ding, ding, ding. I sometimes wonder how the creatives can have such a disconnect about how their six-figure opera management salaries are subsidized.
I also hope 2:22 is right... because, frankly, when New York was a little grubbier, it was also a pretty easy place to live. Goods and services compared to salaries were cheap. Rent was affordable. Jobs weren't that hard to come by. It was in fact, easier to be a creative when one didn't also have to expect to earn $300,000K a year doing so just to buy a silly condo.
Posted by: Heather at July 2, 2008 2:53 PM
2:34 here -- That post was optimistic, not pessimistic. 2:22 is right: the pessimistic view is that prices are going to keep going up until only the Sheik of Dubai can afford to buy. I'd rather live next door to firemen or teachers or professors or lawyers or MDs than him. The depressing thought is that prices might not be coming down yet.
Posted by: guest at July 2, 2008 2:58 PM
2:34 again. But mainly it wasn't optimistic or pessimistic but an attempt to respond to 2:17's request for a crystal ball. My crystal says prices are coming down, because the important changes are marginal, not average. But it has said that before and been wrong.
Posted by: guest at July 2, 2008 3:02 PM
Hi
I am a renter. Please post only news that tells me that the market is down so someday my checking account of $431.52 will be enough to get myself a nice studio near the park. Please? Pretty please?
love ya all
Posted by: guest at July 2, 2008 3:03 PM
The arts community has been known to flourish when times were tough on Wall Street.
You'd be suprised how few Wall Streeters support the arts, or even donate much to charity. They are quite stingy as a general group.
Go to the New York Philharmonic sometime. You'll see what an amazing job they've done of attracting those 40 and under who certainly look to have nothing to do with Wall Street or the like.
Posted by: guest at July 2, 2008 3:03 PM
We sold our PS 3BR apt in Feb for close to a mil, over ask, but since then, have seen prices softening in the coop/condo market, and even houses - based on what we are seeing from brokers, and friends of ours, who are either becoming more negotiable or flat-out making price cuts. Does that mean sky is falling no? Heck, even if we'd sold our place for 900 or 950 - even 850 - we'd have made out very well (we bought in 2002). So, I think a 10% price correction would be a very mild one, and even something in the range of 15-20% would hurt very few homeowners, as long as they purchased before 2004-05. What I see happening is that, as sellers stop asking the sky, and buyers see prices calming down, the market will do just fine - even if it goes down temporarily, stagnates (for a year or two) and then resumes a more normal price appreciation that is more in keeping in with historical norms (not the bizarre run-up of the last 5-10 years).
Posted by: guest at July 2, 2008 3:06 PM
3:03 has some words of wisdom..."You'd be suprised how few Wall Streeters support the arts, or even donate much to charity. They are quite stingy as a general group"
I'm sure they give far more than you do.
Posted by: guest at July 2, 2008 3:09 PM
3:30 = quote of the day
Posted by: guest at July 2, 2008 3:10 PM
Well, the restaurants will be first to feel a Wall St slowdown. I'm sure donations are less important than purchases. I'm also sure most of the big donations come from a small number of very rich people, and based on the names on the walls at the Met or MOMA most of their money seems to come from finance or real estate.
Posted by: guest at July 2, 2008 3:11 PM
Wall streeters sucks. why must we always bring them up?
Posted by: guest at July 2, 2008 3:11 PM
right 3:03. so i guess those patron placards that say Merrill, Credit Suisse, Morgan, Lehman, Goldman, etc. are just for looks. idiot.
Posted by: guest at July 2, 2008 3:11 PM
This is hillarious. Click on the link from this streeteasy page to Corcoran's listing 124 Quincy and check out what the picture shows. Don't know how they did this but it's pretty funny.
http://www.streeteasy.com/nyc/sales/brooklyn/type%3AH
Posted by: Brooklynnative at July 2, 2008 3:15 PM
3:06 -- inflation is low. the market will have to stagnate for more than a year or two to get back to trend. at 4% inflation, it'd take at least a decade if nominal prices don't drop.
normal appreciation is less than 1% over inflation, plus perhaps another 25% one time boost for the city having gotten relatively more attractive than its competitors. see shiller for details.
Posted by: guest at July 2, 2008 3:17 PM
"I'm sure they give far more than you do."
And you would know this how?
Since I WORK in the arts and donate my time practically for nothing, I would argue that. I probably give away a good 15% of my income to arts and charities, which according to the latest information I saw was about 13% more than those who work in Finance. As someone who oversees the donor system for one of the largest arts organizations in the city, I can tell you that there are few people who work on Wall Street on that list.
It is the everyday New Yorker who gives money with more frequency to ours and other organizations. 100$ is a lot for someone making 30,000 a year. In comparison to their salaries, Wall Streeters give a fraction of that amount.
I'm just telling you from my own experience.
Perhaps YOU donate more, but those in Finance are not known to be generous, by and large.
Posted by: guest at July 2, 2008 3:20 PM
3:20, the whole city is indirectly related to finance. those people who do not work in finance who are donating $100 may be interior decorators or massage therapists who are hired by finance people.
you cannot ignore the indirect effect, including the revenues the city will not receive this coming year from Bear Stearns and other finance companies that are hurting. what will the city's budget look like after this year of little revenues collected from corporations?
Posted by: guest at July 2, 2008 3:42 PM
1:54- I've taken quite a few economic courses and if you had a well-rounded education, you would be able to comment much more sagely about history and Harlem.
Posted by: bxgrl at July 2, 2008 3:48 PM
bxgrl, your comments here are typically the most ignorant of the lot, so i wouldn't be bragging about anything.
Posted by: guest at July 2, 2008 4:01 PM
And you're right- you shouldn't.
So was that your contribution to the discussion? How intelligent. How productive.
Posted by: bxgrl at July 2, 2008 4:05 PM
bxgrl = montrose morris = NOP
Posted by: guest at July 2, 2008 4:12 PM
I've taken no economics courses whatsoever, but I am hard=pressed to understand how someone making $30K/year is living in this city, let alone donating to the arts in any quantity that makes a difference. Or why "the arts" considers itself some kind of financial juggernaut in the first place.
Posted by: Heather at July 2, 2008 4:13 PM
The proliferation of the arts in NYC...MoMa, The Whitney, BROADWAY, Lincoln Center, BAM, the MET, Indie rock's birthplace, graffiti art, headquarters for every major dance company, home base for classical and operatic music, all of the publishing houses....THESE are the things that attract residents to NYC.
Without them, we are Kansas City.
Whether you choose to support the arts, financially or as a patron, you must at least accept the fact that ART has made NYC what it is today.
It is INTEGRAL to the vitality of this and every other great city.
Posted by: guest at July 2, 2008 4:24 PM
4:12- wrong yet again. Don't you get tired of being wrong all the time?
Posted by: bxgrl at July 2, 2008 4:41 PM
In the same way that most of NY is driven by Wall St, most of it is driven by the arts. By some measures, the arts taken together are financially more important to the city than finance.
The museums, music, galleries, restaurants, theater, architecture, events attract lots of people, who in turn attract lots of people, both as residents and tourists. Advertising and media, which attract the same sort of people (often the same people) are still among the largest employers. Corporate headquarters are here largely because corporate executives want to play here -- most of them don't need to be here for business reasons. The universities and their spinoffs are also huge. Take away the arts, and NY is just overpriced, crowded, muggy, and in deep economic trouble.
Posted by: guest at July 2, 2008 4:44 PM
Brooklynative:
I would chill out a bit before you make such ridiculous statements. I really don't understand why this site attracts such easily excitable nutcases, but you are hardly in a position to make such broad personal attacks.
The proper way to analyze real estate is to segment the market. Right now, new product is marketed towards people in the top 5% (or 1% in Manhattan) of the households of New York City in terms of earnings. I apologize for not understanding your point, but what you are really trying to say is that there is going to be reduced demand for new product that is priced for people earning say over $200,000. That's fine, and you're right a number of owners will be underwater - but that doesn't mean the city at large is going to be adversley impacted. In the broad discussion of social utility, this condo construction boom is still hugely positive.
Perhaps you should work on being a bit more clear. In any event, you drew an obviously incorrect conclusion from my words - likely predicated under the false assumption that I understood you imprecise discussion of demand.
That said, your 50% price drop predictions in Brooklyn are laughable. If that happens, it will mean this country is in the midst of a depression worse than ever. Property in New York City has never declined by such an amount, even during the 1930s.
Posted by: Polemicist at July 2, 2008 4:47 PM
"personally i think in brownstone brooklyn, prices will fall more in the 10-20% area.
50% would be more than in speculative towns like miami and las vegas. there is zero reason to think that would happen here. apples and oranges."
Just make a graph of prices and draw the trend line. Even give the line a one-time bump because PS has gotten famous (although, of course, the really significant improvements happened way before the bubble). You need a 50% drop or a decade of stagnation to get back to trend. No guarantee that it'll happen, of course, but hardly "zero reason."
And we'll all be better off if it happens by the fast route, not the slow one.
Posted by: guest at July 2, 2008 4:52 PM
Polemicist, on a *real* basis, this city and others (Boston, LA) have seen huge drops as recently as the early 90's. I don't know if it was 50%, but it was well over 30%.
You are right that a 50% *nominal* decline would be unprecedented since the depression, but the bubble was also unprecedented, so it isn't out of the question at all. And it probably wouldn't trigger or require a depression, either, for all the reasons various people have listed above.
Posted by: guest at July 2, 2008 4:58 PM
Bxgirl:
Like usual, I'm not sure what your point is. While I realize you love to hold a contrarian stance towards me, your final assessment of my intentions are most baffling. I won't even bother addressing them.
Annyywaayyy.... The history of Harlem as I described it is pretty well known. Why don't you read the Wikipedia entry and check out the citations for more info on the history.
http://en.wikipedia.org/wiki/Harlem#Arrival_of_black_people
Small groups of black people lived in Harlem as early as 1880, especially in the area around 125th Street and "Negro tenements" on West 130th Street. The mass migration of blacks into the area began in 1904, thanks to another real estate crash, the worsening of conditions for blacks elsewhere in the city, and the leadership of a black real estate entrepreneur named Phillip Payton, Jr. Harlem experienced another real estate bust in 1904-1905; after the collapse of the 1890s, new speculation and construction started up again in 1903 and the resulting glut of housing led to a crash in values that eclipsed the late-19th century slowdown.[5] Landlords could not find white renters for their properties, so Philip Payton stepped in to bring blacks. His company, the Afro-American Realty Company, was almost single-handedly responsible for migration of blacks from their previous neighborhoods,[7] the Tenderloin, San Juan Hill (now the site of Lincoln Center), and Hell's Kitchen in the west 40s and 50s.[8][9] The move to northern Manhattan was driven in part by fears that anti-black riots such as those that had occurred in the Tenderloin in 1900[10] and in San Juan Hill in 1905[4] might recur. In addition, a number of tenements that had been occupied by blacks in the west 30s were destroyed at this time to make way for the construction of the original Penn Station.
In 1907, black churches began to move uptown. St. Philip's Episcopal Church, for one, purchased a block of buildings on West 135th Street to rent to members of its congregation.[11] During World War I, black laborers were actively recruited to leave the southern United States and work in northern factories, thinly staffed because of the war.[7] So many came that it "threaten[ed] the very existence of some of the leading industries of Georgia, Florida, Tennessee and Alabama."[12] Many came to Harlem. By 1920, central Harlem was predominantly black and by 1930, blacks lived as far south as Central Park, at 110th Street. The expansion was fueled primarily by an influx of blacks from the West Indies and the southern U.S. states, especially Virginia, South and North Carolina, and Georgia. As blacks moved in, white residents left; between 1920 and 1930, 118,792 white people left the neighborhood and 87,417 blacks arrived.
Between 1907 and 1915,[13] some white residents of Harlem resisted the neighborhood's change, especially once the swelling black population pressed west of Lenox Avenue, which served as an informal color line until the early 1920s.[7] Some made pacts not to sell to or rent to blacks.[14] Others tried to buy property and evict black tenants, but the Afro-American Realty Company retaliated by buying other property and evicting whites. They also attempted to convince banks to deny mortgages to black buyers, but soon gave up.[15]
Posted by: Polemicist at July 2, 2008 5:04 PM
There is near infinite demand for housing in this borough of 2,300,000 people." Polemicist at 11:36.
"My point is simply this...Prices might decline, developers and buyers might foreclose, but it's not like these new condos will have zero value or worse.
Polemicist at 1:07.
"If there was an "infinite demand" why would the prices decline?" Brooklynnative 1:28
Perhaps you should work on being a bit more clear. Polemicist 4:47
Yeah, I'll work on that, thanks for the tip.
Posted by: Brooklynnative at July 2, 2008 5:16 PM
4:58
I'm not going to get into an extensive discussion of real versus nominal dollars, but I will say that real estate has been excluded from the CPI survey since 1980. I'm not sure how you are calculating your real numbers, but if you're talking about the 1990s, you're going to have to use something other than the CPI to make such a claim.
In the end however, I can say you are wrong in general for one simple reason - people don't buy homes with "real" dollars. They finance them. There is a huge difference between debt and equity in the big wide world of real estate. Too big of a topic to discuss here, but if you're really interested in the notional concept of real dollars and how it relates to residential real estate, I'd think about it in terms of deflation. Deflation rates in the 1930s were much more mild than people think (I believe it was about 10% from 1929 to 1939) but the results were catastrophic for debtors.
Posted by: Polemicist at July 2, 2008 5:22 PM
"Property in New York City has never declined by such an amount, even during the 1930s." Polemicist.
People were literally burning down their property in the 70s and you think property values hadn't fallen 50%? Property in many neighborhoods was basically worthless because they had been redlined and the banks wouldn't lend money to buyers for those areas. Plus, with the city's rent stabalized/control laws, landlords' operating costs were higher than the income. If something goes down to 0 where you burn the sucker to the ground and risk criminal charges, I'd say you've incurred more than a 50% loss. Even Park Slope suffered through a lot of arson - all those empty lots along 4th and streets like 2nd where all those new buildings went up - they had had buildings on them until the 70s.
Just to be "clear" I'm not predicting this will happen again but just disproving your point.
Posted by: Brooklynnative at July 2, 2008 5:31 PM
If property declines 50% in Manhattan/NYC, the end of the world is near. That would create a trigger all over the world of utter chaos and mass hysteria.
And no, I'm not joking.
So people hoping for that, are real sickos.
Posted by: guest at July 2, 2008 5:42 PM
5:16
No you won't, because you still don't understand what the hell you are talking about. You still don't understand that supply and demand in regards to residential real estate is not as simple as high demand equals high prices. It is based on a myriad number of factors, most particularly interest rates and household income.
Your limited understanding of economics simply can't grasp the concept that residential real estate is not a commodity. Acquisition of residential real estate is entirely a function of income whether it is rented or mortgaged. Incomes may decline, and prices may decline, but that is only one factor in analyzing demand. During the Great Depression, well over 500,000 housing units were constructed in this city. Prices declined and incomes declined, but it was one of the city's great building booms.
In the end - the finer details of value and the real estate bubble in general is really a secondary issue. What is important is maximal utility for the most number of people. As long as people have jobs they will be able to enjoy a higher standard of living via acquisition of modern housing.
Posted by: Polemicist at July 2, 2008 5:43 PM
* * * * * * * * * * * * *
A lively conversation...
Ah...another day on Brownstoner!
* * * * * * * * * * * * *
signed, FGG
Posted by: guest at July 2, 2008 5:46 PM
"Deflation rates in the 1930s were much more mild than people think (I believe it was about 10% from 1929 to 1939) but the results were catastrophic for debtors."
Because their assets became worth less than their debt, right?
Sorry, just trying to look past the actual math to the logic of the conclusion.
Two random points:
One, when Harlem opened up to blacks weren't real estate prices there more or as expensive as the stuff further south? (I think I remember reading that somewhere.)
And two, regarding the general state of the New York real estate market... is looking at something like Tokyo in the 90's a valid comparison? Or am I talking out of my ass?
Posted by: Heather at July 2, 2008 5:50 PM
"I can say you are wrong in general for one simple reason - people don't buy homes with "real" dollars." This looks like English, but I can't make any sense out of it.
If you want to compare prices peak to trough in a meaningful way, you have to adjust for inflation. "Real" dollars mean inflation- adjusted dollars. Operationally, the folks who publish these price runs -- you can find some by googling Shiller -- usually use the CPI or a similar deflator.
Posted by: guest at July 2, 2008 5:56 PM
"People were literally burning down their property in the 70s and you think property values hadn't fallen 50%"
And again with the absurd comparisons. NYC also saw over 2000 murders a year, was dealing with a HORRIFIC crack epidemic and no one was willing to invest a dime into this city.
You comparing NYC today to NYC of the 1970's just shows that you are one of those old dudes who don't seem to be able to move on from the past.
You might want to quit while you're behind.
Posted by: guest at July 2, 2008 5:58 PM
I'm predicting big price drops at the top of the market.
The secondary market for mortgages has collapsed, except for Fannie Mae insured stuff. Unless/until it recovers, banks that make jumbo mortgages need to hold on to them. That causes two problems: 1. they need enough regulatory capital to be allowed to make the loan, and most of them are short of capital already. 2. if prices go down the bank is in danger of losing its security.
So jumbos are going to be expensive and demand large downpayments. Most of the banks that were giving super-jumbos (over $1m) even a few months ago seem to have stopped.
I think this means that anyone who would have bought on salary is now out of the market above the Fannie Mae max. That eliminates the affluent professionals.
All that's left, then, is cash buyers. Prices alone have gotten rid of most of them--there just aren't that many people with $3m cash sitting around to start with. Wall St bonuses aren't happening this year, so most of those folks are gone. The Europeans who've been paying cash are making less money at home as their own bubbles pop and have to worry about being caught in the next round of dollar depreciation. The tradeup game only works if there is someone who can buy at the beginning of the cycle, so that is going to slow.
So who is available to pay $3m for prime PS, FG and marginal CG? And even if there are some qualified buyers left, won't most of them care enough about their money to wait for the coming discounts?
Posted by: guest at July 2, 2008 6:08 PM
Manhattan Second-Quarter Apartment Sales Fall by 22% (Update2)
2008-07-02 14:14 (New York)
(Adds Miller comment in seventh paragraph, Brooklyn prices
in 20th paragraph.)
By Sharon L. Lynch
July 2 (Bloomberg) -- Manhattan apartment sales dropped the
most for a second quarter since 1998 and unsold inventory
approached an eight-year record, two signs prices may be poised
to fall in the nation's most expensive urban housing market.
The number of sales declined 22 percent from a year earlier
and inventory rose 31 percent to 6,869 units, New York-based
real estate appraiser Miller Samuel Inc. and broker Prudential
Douglas Elliman Real Estate said in a report today. The median
price of a co-operative or condominium apartment increased
almost 15 percent to a record $1.03 million, lifted by new
developments.
Transactions are declining as financial firms have
announced plans to cut almost 90,000 jobs after taking more than
$400 billion in mortgage-related losses and writedowns. Those
companies may lose as many as 175,000 employees by next June,
according to executive recruiters such as New York's Gerson
Group, casting a pall on a property market driven by Wall Street
compensation.
``People are asking: `Am I going to have a job?''' said
Pamela Liebman, chief executive officer of the Corcoran Group, a
Manhattan-based real estate brokerage that also issued a price
report today. ``There is a lot of uncertainty and uncertainty
puts people on the sidelines.''
Longer Selling Time
The U.S. housing slump started in mid-2005 when sales of
new and existing homes began to drop, bringing a five-year boom
to a close. Prices for existing homes started falling last July
and finished the year below 2006 levels, the first annual
decline since the Great Depression, according to the National
Association of Realtors in Chicago.
While prices in New York City are holding up for now,
buyers remain wary and apartments are taking longer to sell. The
average time spent on the market rose 15 percent to 135 days,
according to Miller Samuel. At the end of May, there were 7,320
housing units for sale in Manhattan, the second-highest number
for the month since Miller began keeping records in 2001.
``We're really seeing a slowdown in activity,'' Miller
Samuel President Jonathan Miller said. ``It certainly marks some
sort of change or turning point.''
All four reports issued today show price increases.
Corcoran, owned by Apollo Management LP, and the New York-based
brokers Brown Harris Stevens and Halstead Property LLC, owned by
Terra Holdings LLC, produced reports in addition to Miller's.
The figures vary in part because the brokers include some of
their own sales that have yet to show up in the city's public
records database.
Condominiums Jump
Manhattan apartment prices rose 3.6 percent in 2007, the
smallest increase in 11 years, according to Miller Samuel.
About a third of second-quarter closings were new
condominiums, some of which went into contract before turmoil
hit the credit markets last August and September, said Gregory
Heym, chief economist for Terra Holdings.
Many of the units closing now are multimillion dollar
condominiums at the recently converted Plaza and at architect
Robert A.M. Stern's 15 Central Park West.
Those properties helped drive the median condominium price
up almost 22 percent to $1.3 million in the three months ended
in June and contributed more than three percentage points to the
city's overall increase in median price, according to Miller.
Without them, the median rose 11.2 percent, Miller said.
Future Bonuses
Goldman Sachs Group Inc. Chairman Lloyd Blankfein, former
Citigroup Inc. Chairman Sanford Weill and rock star Sting have
bought units at 15 Central Park West, where the apartments have
heated bathroom floors, Vermont marble countertops and six-
burner Thermador ranges.
Other buyers there include Nascar Inc. Chairman Brian
France, who paid $10.7 million, and Mitchell Julis, co-founder
of the asset management firm Canyon Partners LLC, who paid $10.2
million, according to city records.
Once the remaining units in Stern's building and the Plaza
close, average prices may drop as much as $200,000, Heym said.
``I don't expect to see any dramatic price change before
the end of the year,'' Heym said. ``The real telling thing will
be Wall Street bonuses and how the city looks going into 2009.''
Prices of two-bedroom apartments rose 18 percent to $1.65
million, the biggest increase for any size category. Studios
rose almost 12 percent to $480,000, one bedrooms increased 11
percent to $778,961, three bedrooms by 3 percent to $3.7 million
and apartments with four or more bedrooms climbed 11 percent to
a median of $7.35 million, Miller's data show.
Neighborhood Sales
On Manhattan's Upper East Side, home to exclusive co-op
buildings such as the one that inspired Michael Gross's book
``740 Park: The Story of the World's Richest Apartment
Building,'' the median price climbed 22 percent to $1.07
million, according to Corcoran's survey, compiled in partnership
with PropertyShark.com
West Side prices, boosted by sales at 15 Central Park West,
jumped 36 percent to $1.2 million. Downtown, the increase was 8
percent to a median of $1.05 million, Corcoran said.
In Brooklyn, the city's most populous borough, the median
price rose 10 percent to $560,000 from a year earlier.
The top end of the Manhattan residential market remained
the strongest as wealthy buyers bought condominiums with
amenities such as gym and spa services, hotel-style room service
and swimming pools.
The median price of a luxury apartment rose almost 38
percent to $4.95 million in the Miller Samuel survey and 35
percent to $4.88 million, according to Corcoran. Both companies
consider apartments of more than $3.1 million as luxury.
``Real estate markets go up and down, and when it comes to
New York City, it's an island. There's not a lot of land, and
it'll survive,'' said Dottie Herman, chief executive officer of
Prudential Douglas Elliman. ``I think we need to kiss the ground
because we live in New York.''
Posted by: guest at July 2, 2008 6:11 PM
"If property declines 50% in Manhattan/NYC, the end of the world is near."
Now *THAT'S* comedy gold!
Posted by: guest at July 2, 2008 6:15 PM
No Heather, you're actually you're one of the few intelligent posters here.
"Deflation rates in the 1930s were catastrophic for debtors. Because their assets became worth less than their debt, right?"
Not exactly, it's because they had to pay back the loans with dollars that were much more valuable than the dollars they had borrowed. A buck could buy you more in 1935 than it could in 1929.
"Regarding the general state of the New York real estate market... is looking at something like Tokyo in the 90's a valid comparison?"
A lot of respected economists are saying this and remember, everyone said the same things about Tokyo as they do about NY - "infinite demand" "limited supply" etc. In fact, both of those factors are much stronger in Tokyo than NY. Still didn't stop a huge >50% decades long slump.
Posted by: Brooklynnative at July 2, 2008 6:19 PM
Tokyo in the '90s would be a fine comparison. Great city, loose lending, bubble, insane prices, collapse.
Way more than 50%, incidentally, and the world didn't end. Any more than it ended when the dot.com bubble collapsed.
But over-leveraged people who thought they were rich discovered they weren't, and the economy suffered low growth for a decade or two (partly due to mismanagement, but who is immune from that?).
In the end, lower prices are much better for the city, justice, and the economy. But getting there will be painful to anyone who has bought, or extracted equity, recently.
Posted by: guest at July 2, 2008 6:20 PM
"Or am I talking out of my ass?"
hey everyone I found the statement of the day!
Posted by: guest at July 2, 2008 6:20 PM
5:58 get off the spliff and check your logic before calling people names.
Posted by: guest at July 2, 2008 6:22 PM
Crack didn't exist in the 1970s, young man.
Posted by: guest at July 2, 2008 6:24 PM
Polemicist -frankly I'm surprised you seem to think I have something against you since you are the one who attacked me on some thread a few weeks ago completely out of the blue and without any provocation. We weren't even posting back and forth and yet you decided to insult me. I was rather surprised. As for my post today- I certainly didn't attack you or say anything other than that by not putting your statements in context it misrepresented the issue of Black homeowners in Harlem and Bed-Stuy. However I did not say anything about your intentions, nor did I assess them in anyway. I was simply dealing with your statements.
I did read the Wiki explanation and quite a few others before I posted. If expanding an explanation, or not agreeing with yours automatically means I am personally opposing you in some online crusade, I would have to say its your issue, not mine. Why you seem to have so much trouble understanding any of my points (your premise, not mine) I can't say- most people think I'm pretty clear.
Posted by: bxgrl at July 2, 2008 6:49 PM
Tokyo isn't an island, nor was it the capital of the world, much less capital of really anything in the 1990's. It was and is a great city.
NYC is the capital of world in finance, the visual and performing arts, advertising, fashion, architecture and it's becoming a major hub for television and motion pictures.
It also attracts more tourists in one year than Tokyo does in 10.
So while there are some similarities, there are some pretty huge differences as well.
You don't hear people all over Europe saying they wish they could move to Tokyo because they saw a Japanese animated cartoon drink one too many cosmos and buy one too many pairs of Manolo Blahniks.
Posted by: guest at July 2, 2008 7:44 PM
5:58... what decade are you on?
Posted by: guest at July 2, 2008 8:36 PM
We're in the market for a townhouse and, given how overpriced everything seems, have been putting in low offers - about 15% below ask, sometimes more. Contrary to the way things used to be a few years ago, brokers/sellers are NOT turning up their noses, but trying to counteroffer, and definitely willing to meet us at a significantly lower price. This, to me, is a sign that the market is softening. The houses we're looking at are not the triple-prime variety (3mil mansions on the park), but they are pretty high end - asks approaching 2mil in good areas of PS, CG, etc.
Posted by: guest at July 2, 2008 10:36 PM
Only butt crack, 6:24
Posted by: guest at July 2, 2008 11:08 PM
Never, before, in the entire history of the world, have there been lenders willing to lend you more than 100% of the value of what you want to buy. Never. It was insane. My biggest regret, was that although I knew it was going on my reaction was this is crazy and not, the hell with it, I'll take out such a loan and buy real estate. You literally had nothing to lose because you didn't have to put down a dime to buy a brownstone.
Not only were the banks willing to give negative amortization loans, they did so knowing that borrowers were lying to them regarding their income and assets, the so called "liar loans." Better yet were the NINJA loans - no jobs, no assets, no nuthin. Granted, primo NYC coops did not accept buyers with such loans, but you can bet your bottom dollar, brownstone brooklyn sellers couldn't give a crap. Considering how insane the lending got, it would not be surprising to see NYC real estate absolutely tank. Especially considering that the people who personally profitted from the making of these loans, ie., the people working on Wall Street, were also driving up the value of NYC real estate. In other words, NYC real estate was driven up by the people borrowing the money AND the people lending the money, or at least securitizing he loans. It's gonna be a double whammy and when's the last time you heard that argument?
Posted by: Brooklynnative at July 2, 2008 11:31 PM
People, think of how dumb some of your arguments are;
You are predicting that the housing market will "crash" in nyc and somehow housing will be worthless.
Follow the logic: why would someone who bought a brownstone for say 1 million, decide to sell it for 500K and have no place to live and be 500K in debt? Doesn't make sense, does it. Most people don't buy a million dollar home entirely on credit, by the way. No, people in a housing downturn will either sit it out and take their home off the market altogether or rent out a portion of it to one of the 5 million or so people in this city who don't own.
Second: do we really think that we are headed for an "Escape From New York" type future where bands of ex-hipsters and baristas roam the apocalyptic landscape of downtown Brooklyn looking like Sid Vicious?
No, this too shall pass, whatever "this" is. Since it is becoming more and more obfuscated by the political posturing of dispicable individuals who would put political gain ahead of truth. In other words, no matter what happens to make the economy seem stable, no matter what information or numbers show that we are not headed to a depression, there are 50 million angry liberal whiners out there who will always say that we are doing badly. why? because they are not in charge.Many of these habitual whiners are news editors, publishers and media figures.
If Obama is elected, watch how rosy the economic outlook becomes. Exactly analagous to the remarkable lack of "voting fraud" issues in the 2006 election cycle when the democrats and liberals won decidedly. Funny, the conservatives and republicans didn't howl and moan about voter fraud despite widespread evidence of it in democratic chicago and parts of Ohio. No, voter fraud is only an issue when a Republican wins. Go figure. Conservatives, not being the whining and crying type by nature, will simply continue to work hard and produce, regardless. Now this may be a brownstone site, but the economic discussion simply cannot be disassociated from the political underpinnings. Surely no one here would doubt that economic reality is based largely on economic perception, in fact there is an entire index for this phenomenon; consumer confidence reports.
The American economy will continue to move along and Americans will continue to work and the city will continue to inspire. Look at the bright side, if the city does devolve into a dump, at least we'll get great music and art from the experience.
Legion
Posted by: guest at July 2, 2008 11:52 PM
Lesion, just go away, would you? Whatever good points you may have, and you had a couple there, are totally obliterated by your Anne Coulter-ish, neo-con desire to blame everything from the fall of Adam to yesterday's Yankees loss on liberals and Democrats. It's so tiresome, and blatently untrue, and not backed up by any kind of fact, whatsoever.
You are right, we will survive and inspire, no matter what the economy does in the short term. But you better be careful, a lot of those great musicians, artists, and other creative inspiring Americans will likely be liberals and/or Democrats. We are America too.
Montrose Morris
Posted by: guest at July 3, 2008 1:24 AM
We have now gone to the new extreme. First, everyone said prices will only go up. Now chicken littles are claiming the world is coming to an end. The reality is somewhere in the middle. Get a grip people.
Posted by: guest at July 3, 2008 1:42 AM
Okay, wait. It's like 430 in the morning and I am still trying to wrap my head around the liberal baristas. Wouldn't "The Warriors" be a better movie analogy?
But, okay. Back to deflation...
It's 1929. I have five apples that I bought for a dollar.
And then the stock market crashes, etc.
Now it's 1935. I would have bought 10 apples for a dollar, but instead I had to pay my mortgage.
And this is bad... because... because why? Maybe sleep will provide the answer. Right now I'm not sure, and my fast googling of the topic leads me to believe that some experts are not either, since there seems to be lively debate on "good" and "bad" deflation.
Posted by: Heather at July 3, 2008 4:55 AM
Only the boosters & Legion are claiming the world is coming to an end.
A 50% price drop would still leave NYC the most expensive place to live in the US, it would still leave existing house prices ABOVE replacement cost (which is pretty unusual), it would still leave virtually all homeowners in brownstone brooklyn -- very few of whom bought in the last few years -- solvent and sitting on unrealized capital gains.
Some people will be in trouble -- flippers caught in the middle, and borrowers who overloaded on debt they couldn't service assuming that capital gains would rescue them.
But for the other 90% of NY homeowners and all aspiring homeowners, the news will be overwhelmingly good.
Posted by: guest at July 3, 2008 9:41 AM
Legion asks how prices can drop when most homeowners don't have to sell.
The simple answer is marginal economics. Prices aren't set by "most" homeowners. Very few New Yorkers could afford to buy the houses they currently own at current prices. Prices are set by the people who do sell and the people who do buy.
Virtually all current homeowners bought before the last rapid run-up in prices. How hard is it to give up bubble gains that on some level you knew were phony even when they made you feel good? Are you really going to indefinitely delay retiring/changing jobs/downsizing/upgrading/divorcing/marrying/moving near your kids or parents because the brownstone/apt you bought for $x is going to sell for five times x instead of 10 times x (and the house you are planning to buy elsewhere has dropped by a similar proportion)? Once people decide the bubble is over, enough will decide to go on with their lives to make the bubble over.
Even among those who stand to lose real money, some will have to sell. Job change, illness, divorce, death don't necessarily respect your desire to keep your losses unrealized.
Posted by: guest at July 3, 2008 9:53 AM
Legion:
Actually, voting fraud is a Republican obsession. It is the trope the Republicans have used in many states to make it harder to register to vote, although there is virtually no evidence of actual voting by ineligible voters anywhere. There is, however, quite a bit of evidence that the excluded voters were highly likely to have voted strongly Democratic.
The real problem is disenfranchisement, as it has been for a long time.
Democrats whined when they should have rioted in the streets when the Supreme Court appointed Bush president despite the fact that he LOST the popular vote. No "fraud" there, just a purely partisan vote by justices who often seem to have trouble distinguishing the Constitution from the Republican party platform.
Democrats also complained, again without pushing hard enough, when Republican operatives in Florida and elsewhere simply took long lists of African Americans off the voting rolls based on completely fabricated claims that they were felons. That's not voter fraud, that's criminal lawlessness and anti-American behavior by governmental officials who are seeking to destroy the American Constitution.
Posted by: guest at July 3, 2008 10:09 AM
"Virtually all current homeowners bought before the last rapid run-up in prices."
Judges, we already have a winner of the much-coveted Idiot Comment of the Day award.
Posted by: guest at July 3, 2008 10:22 AM
Heather: Borrow $500k to buy your apt. Then, your apt loses half its value, so if you sell, you still owe money. Then, get laid off and discover that the best job you can find pays 30% less than what you were making. Deflation is very hard on debtors.
Quite good for creditors, though, if they get paid back at all: the $500k they get back buys more than the $500k they lost.
Reverse this and you'll see why usually the way out of collective overborrowing binges like the one the US has been on is inflation. It makes the borrowers' loans go away. This time, though, we owe too much to foreigners for that solution to be attractive.
Posted by: guest at July 3, 2008 10:22 AM
A 50% price drop would mean I could make money buying rental properties and renting them! Satisfied renters keep your checks coming!
Posted by: guest at July 3, 2008 10:24 AM
10"09- You're right. We never parleyed our sense of outrage into real action. I think because we were so unable to believe things could have come to this. Or maybe we were feeling so powerless to make even out elected officials understand that they work for us.
And with the 2004 election we all fell prey to Republican fear mongering.Everyone has to take responsibility for that- we knew we were being manipulated by the basest partisans and despite all the strength and unity we saw after 9-11 we were reduced to cowering- Republican and Democrat alike- under our tables.
I'm hoping we learned our lesson. when 80% of the country thinks we're on the wrong track, there seems to be a glimmer of light. If McCain wins at the very least he'll be facing a Democratic congress and a country sick and tired of what the Republicans have made us.
Posted by: bxgrl at July 3, 2008 10:29 AM
10:22, okay. Now that makes sense. Thanks.
Of course the issue is, the creditors DO need to be paid back. And if the house is only worth $250K and the debtor walks away from the mortgage, how to they win?
Posted by: Heather at July 3, 2008 11:19 AM
Heather, when the debtors walk away and the creditors don't get paid, then they can't pay their own creditors. Especially if they are banks, which normally have lots of creditors (depositors) who are entitled to their money back right away, but relatively few readily saleable assets (loans usually can't be called). Since they aren't getting paid, or they've lost the savings they had in failed banks, lots of companies fail, and then their ex-employees can't pay their debts, and then... Meanwhile, credit closes down completely, because who is going to loan money if they think they might not get paid back, which means that asset prices have to drop, because without credit no one can afford them.
That is the "systemic failure" that the Fed worries about when, for example, they bail out Bear Stearns. In the 1930s, the cycle spiraled downwards for a decade. Modern FDIC insurance is meant to prevent at least one stage in the spiral by guaranteeing depositors that they'll be paid even if the bank fails (so they don't panic and cause unnecessary bank failures).
Posted by: guest at July 3, 2008 12:11 PM
"Virtually all current homeowners bought before the last rapid run-up in prices."
"Judges, we already have a winner of the much-coveted Idiot Comment of the Day award."
Data??? Given the low volume of sales in the last few years, seems like the OP is right, but does anyone actually know?
Posted by: guest at July 3, 2008 12:14 PM
June 20, 2008
Layoffs Show on New York Unemployment Rolls
By PATRICK McGEEHAN
Week after week, Wall Street banks and other big employers have announced layoffs by the thousands, but month after month, the official gauges of the job market in the New York metropolitan area registered few signs of a downturn.
Until now.
By several measures released this week, unemployment is on the rise in and around New York City, and the increase is beginning to worry government officials and economists.
The most concrete count, the number of people collecting unemployment benefits, rose by more than 10 percent in May in the city and the surrounding states, up sharply from the previous months. The unemployment rates for the city, New York State and New Jersey all jumped by half a percentage point to more than 5 percent in May, after adjustments for seasonal fluctuations.
The rate of joblessness in both the city and the state is now 5.2 percent, up from 4.7 percent in April, the State Labor Department said on Thursday. A day earlier, New Jersey officials said their state’s unemployment rate had risen to 5.4 percent from 4.9 percent. The national rate rose to 5.5 percent, from 5 percent in April.
Analysts attributed the sudden rise to a combination of a weakening economy and the end of severance payments for people whose layoffs were announced months ago. Layoffs on Wall Street tend to have less of an immediate effect on unemployment statistics because financial companies often hand out severance that tides people over for weeks or months, delaying their need to seek unemployment benefits, analysts said.
Marcia J. Van Wagner, the city’s deputy comptroller for budget, said that although there have been layoffs on the order of 20,000 to 40,000 workers in recent months, the full impact is just now being felt. “It’s like the tsunami is still making its way across the ocean,” she said.
In the city, the total number of jobs is still higher than it was a year ago, fueled by growth in the transportation, education and health industries. But total employment in the city is up just 1 percent in the past year, compared with a growth rate that was nearly three times as large before the financial markets started to swoon last summer.
James Brown, an analyst with the State Labor Department, noted that employment nationally has been falling, and therefore New York City’s 1 percent growth looked relatively good. But, he added, “It is important to realize how much the city’s economy has slowed recently.”
Mr. Brown said he expected the jobs picture to dim further in coming months as the city absorbed the loss of several thousand jobs at Bear Stearns, the big investment bank that collapsed in March.
And Wall Street, the bellwether of the city’s economy, is clearly shrinking. The local securities industry lost about 1,400 jobs in the last year, according to the state.
“What we’re starting to see now is the hit to the financial sector that didn’t show up as soon as construction declined nationally,” said James Parrott, chief economist in Manhattan for the Fiscal Policy Institute, a liberal-leaning research group that examines tax, budget and economic public policy in New York State. “Now the decline has spread to the broader securities industry that’s centered in New York City and feeds a lot of activity in the region.”
Many economists, including Mr. Parrott, track the actual counts of people collecting benefits because they view them as a more accurate measure of economic hardship than the unemployment rate, which is often revised later. In the last several weeks, those rolls have been growing at a fast clip.
In New York City, the number of people receiving unemployment checks rose almost 15 percent in May, to 58,500, Mr. Brown said. In April, that number had increased just 6 percent.
Statewide, the number of people collecting unemployment rose 13 percent in May. In New Jersey, the increase in May was more than 10 percent. In Connecticut in the last two weeks of May, the increase was 16 percent.
Gladys Bright, who lives in the Clinton Hill section of Brooklyn, could be joining that group soon. Ms. Bright, 50, said she was laid off in late May from her custodial job at a post office in Lower Manhattan, where she was classified as a “casual worker” and had been laid off from time to time.
On Wednesday, she was still waiting to hear if she would receive unemployment benefits. The last time she collected unemployment, she received $323 a week after taxes, she said, adding that she expected to receive about the same amount this time.
In the meantime, she said she would limit her spending and try to find a permanent job, despite the state of the economy.
“It’s very bad because they’re laying off a lot of people from different companies,” Ms. Bright said. “The economy is bad. Everything is on the rise, like food,” she said, adding, “You have to cut back on stuff.”
Marvin Finkelstein is closer to the other end of the financial bridge between jobs. Mr. Finkelstein, 57, has been collecting unemployment for four months since he was dismissed after six years as a substitute teacher in the city’s public schools.
“It’s tough. I have a lot less than what I did,” he said, as tears welled in his eyes. “I cut back on luxuries. And I live on whatever savings I have.”
Mr. Finkelstein, who was searching for a job at the Workforce1 Career Center in Brooklyn on Wednesday, said he had been receiving $278 a week in benefits, barely enough to cover the $897 monthly rent on his one-bedroom apartment in Flushing, Queens.
He was uncertain what he would do if he did not find work before his checks ran out. The standard limit to unemployment benefits is 26 weeks, though Democrats in Congress have been pushing for a 13-week extension.
On Thursday, the House approved a bipartisan war-financing bill that included the 13-week extension of benefits.
Gov. David A. Paterson of New York and Gov. Jon S. Corzine of New Jersey sent letters to Congress in April urging passage of the extension. In New Jersey, David J. Socolow, the state’s commissioner of labor and work force development, said the need is becoming dire as a rapidly growing number of people exhaust their benefits.
In the last three months, benefits have run out for more than 45 percent of the people collecting unemployment in New Jersey, Mr. Socolow said. That is a higher rate than in any of the previous 24 months. At the same time, the average period during which people stayed on unemployment benefits has risen to more than 18.3 weeks from fewer than 18 weeks last year.
“People are taking longer to find a job,” Mr. Socolow said. “When you see that it’s creeping up for a few extra weeks, that’s not out of laziness on the part of the worker.”
Posted by: guest at July 3, 2008 12:24 PM
"Quite good for creditors, though, if they get paid back at all: the $500k they get back buys more than the $500k they lost."
uh, no. not good for creditors at all. have you been reading about what is going on with banks and housing lately?
www.youwalkaway.com:
Are you stressed out about your mortgage payments?
Do you have little or no equity in your home?
Have you had trouble trying to sell your house?
Is your home sinking under the waves of the real estate crash?
What if you could live payment free for up to 8 months or more and walk away without owing a penny?
Posted by: guest at July 3, 2008 12:24 PM
Latest Restaurant Additions
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La Mancha
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