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February 10, 2009

Price Cuts Working at Northside Piers, Others to Follow

The price cuts at Northside Piers that we first reported here and then again here have been picked up by Bloomberg. And, according to the news service, the reductions (two-bedrooms in the waterfront development are now as low as $691,000) are working: Contracts have gone out on five of the remaining 60 units in the last week. “There is a stirring going on in the market," said CBHK CEO David Michonski said, "but only at a lower price point.” GMAP

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I wonder how long the rest of the williamsburg unsold condo mountain can hold out now. They've got to follow soon.

Posted by: dittoburg at February 10, 2009 9:55 AM

" “There is a stirring going on in the market," said CBHK CEO David Michonski said, "but only at a lower price point.” "

Duh. It's called a crash. DOWN GOES BROOKLYN!!!

***Bid half off peak comps***

Posted by: Brownstones Half Off at February 10, 2009 10:05 AM

From house of cards to dominoes... The same thing is starting in LIC.

Posted by: SnarkSlope at February 10, 2009 10:06 AM

Snark - I know LIC is jam-packed with new and empty condos now, but has anyone there actaully started reducing asking prices?

Posted by: dittoburg at February 10, 2009 10:11 AM

Not officially yet, no. But they are going through all of the same steps. For example:

- http://curbed.com/archives/2009/02/09/door_prizes_lics_l_haus_makes_triple_play_for_buyers.php

Posted by: SnarkSlope at February 10, 2009 10:14 AM

Well, if a new condo in the middle of the Pulaksi bridge, the LIE midtown tunnel toll plaza, the LIRR tracks and the Newtown Creek and acroos from Greenpoint Sewage Works has to reduce its prices I'm sure less well located places will follow suit.

Posted by: dittoburg at February 10, 2009 10:18 AM

anyone know where to get data on how many new units there are and how many are under construction, as well as how many have sold in the last few years? it would be fun to put some numbers on the real unsold inventory.

Posted by: joe_the_bummer at February 10, 2009 10:22 AM

Point take, ditto. But like drowning rats, they will all drag each other down.

Posted by: SnarkSlope at February 10, 2009 10:23 AM

The discussion thread on the big price cuts in Williamsburg was one of my very favorites on this site. For many months, I have seen commenters argue that various factors (Wall Street bonuses, foreign buyers, population growth, etc., etc.) make the New York City real estate market entirely different from markets anywhere else in the country, and thus protected from the dramatic losses in value. With prices in these waterfront condo towers falling like a stone, posters are now arguing that the real estate market in one Brooklyn neighborhood is simply an entirely different creature from the market in another Brooklyn neighborhood a 10 or 15 minute bicycle ride away. Brownstones may no longer be priceless but Brownstoner comments are!

Posted by: southbrooklyn at February 10, 2009 10:25 AM

Toll Bros is doing the entire Brooklyn market an enormous favor: slash prices, create a bottom, and flush inventory. Once that happens, prices will stabilize and even start climbing. If only other developers would follow this example (and the gov't would set mortgage rates at 4%), we'd be on our way.

Posted by: Ringo at February 10, 2009 10:26 AM

Maybe it needs to be shaken, not stirred.

Posted by: daveinbedstuy at February 10, 2009 10:26 AM

I'm sure you're right, i'm expecting williamsburg and LIC condo prices to drop heavier than a Steinway piano off the Queensboro bridge.

Posted by: dittoburg at February 10, 2009 10:27 AM

The thing is, if you can buy a shiny new 2br on the river for $691,000, how much is a shiny new 2br across from the sewer? or a cramped 2br carved out a 1br pre-war? or even a small 2br in a Scarano "boutique" building?
I think it will readjust all the prices & expectations, because it creates a new floor.

Posted by: Maly at February 10, 2009 10:29 AM

Did toll slash prices in tower 2 also?

Posted by: dittoburg at February 10, 2009 10:35 AM

Ringo is right. We were addressing aspects of this issue yesterday in talking about shoddy construction in new developments. Toll Brothers has been around for decades and are known to be pretty high quality. People know this and that's why they may be selling units in an environment where other lesser quality developers are languishing.

Posted by: daveinbedstuy at February 10, 2009 10:37 AM

Ringo is right about the favor (the sooner the capitulation, the better) but wrong about the implied quick turnaround. The crash will be "L"-shaped for quite some time.

***Bid half off peak comps***

Posted by: Brownstones Half Off at February 10, 2009 10:50 AM

How long exactly, BHO. Tell us.

Posted by: daveinbedstuy at February 10, 2009 10:54 AM

Condos that are at a sell price of 500-550,000 are not going to find sustainable buyers unless they reach 190-220,000 dollars. How long do you think we are going to home rates at 4 percent? If you bought a condo in Brooklyn before the bubble burst and payed more than half a million dollars you might be having particular thoughts if you were trying to flip it. Shame on you flippers. You have ruined our country.

Posted by: hannible at February 10, 2009 11:08 AM

A long time Dibs, sorry you're stuck in the ghetto

Posted by: cornerbodega at February 10, 2009 11:10 AM

Oh he will tell you Dave, don't you worry. If there is anyone who loves the sound of their own cyber voice its BHO.

Posted by: wasder at February 10, 2009 11:10 AM

maybe look at japan's recovery for a loose comp -- 10yrs?

Posted by: joe_the_bummer at February 10, 2009 11:12 AM

Thanks, cornerbodega, you're input, as usual, was very insightful.

Get back to stocking those detergent bottles in the window.

Posted by: daveinbedstuy at February 10, 2009 11:13 AM

maybe look at japan's politics, BOJ minutes, consumption tax and "TARP-like" responses, joe and make a useful comparison.

Your statement is about as useful as saying the dot com bubble was similar to the tulip bulb bubble.

Posted by: daveinbedstuy at February 10, 2009 11:16 AM

"maybe look at japan's politics, BOJ minutes, consumption tax and "TARP-like" responses, joe and make a useful comparison.

Your statement is about as useful as saying the dot com bubble was similar to the tulip bulb bubble." ~dibs

More words of wisdom from a bubble ghetto speculator. Dibs, you should change your name as it screams "I thought I was smart, but instead I'm just an idiot"...

Posted by: cornerbodega at February 10, 2009 11:22 AM

I always look forward to your input, cornerbodega. It always reinforces my belief in the bell curve since I don't really run into a lot of people out on the left tail.

I'm sure this has confused you to the point of a headache.

Posted by: daveinbedstuy at February 10, 2009 11:26 AM

dibs -- I'm just throwing something out that could lead to a more meaningful discussion. I don't see a lot of people really supporting their strong opinions here.

there aren't that many examples of bursting bubbles, so you have to take the history that's available, tulips included. so make a case...it sounds like you would say our government is moving faster than japan's did, so our recovery would be faster. you want to try for something constructive?

Posted by: joe_the_bummer at February 10, 2009 11:28 AM

joe....that's exactly what I'm saying. But you can't just throw out the whole "Japan comaparison" and expect anyone to respond to it when you don't actually state why it will be similar and why it won't.

The broad sweeping generalizations are not really a grounds for discussion. If you'd like to outline the responses from the Japanese government and the current responses from the US you're welcome to do so to start a discussion

It's preet assinine to say it'll be like japan, just because I say it will.

Posted by: daveinbedstuy at February 10, 2009 11:32 AM

I think I'm turning Japanese
I really think so...

Posted by: SnarkSlope at February 10, 2009 11:43 AM

ok dibs, point taken -- but it's not assinine, come on. it's the most recent example of a developed country that had a real estate bubble pop, and they lost a decade.

BHO said this thing's going to be an L and not a V. You challenged it and neither one of you supported the argument.

I'm saying that the last one the world saw was an L. It's a starting point. Tell you what, Krugman's got some support for this on his blog...I'll see if I can find it.

Posted by: joe_the_bummer at February 10, 2009 11:44 AM

I tried to give you folks some real history -- trying again. Acutual prices fell in one building by 60% (avg. over three years -- few sales in that period, all distress) from 1993 through 1997 and did not returen to 1993 level (peak) until 2001.

No reason not to expect similar this time.

Posted by: BH76 at February 10, 2009 11:44 AM

Snark...you should meet more guys.

Posted by: daveinbedstuy at February 10, 2009 11:45 AM

Japanese guys?

Posted by: SnarkSlope at February 10, 2009 11:47 AM

"BHO said this thing's going to be an L and not a V. You challenged it and neither one of you supported the argument."

I simply asked him how long as a basis for a discussion. I can support my arguments if I know what the logic is on the other side. Pretty basic stuff I might add.

BH76 comes to a conclusion above with a well thought out line of reasoning!!!!!! It will happen because I think it will. This is the kind of stuff that's not worth discussing because the posters can't actually formulate any good reasons based on anything.

Posted by: daveinbedstuy at February 10, 2009 11:49 AM

I can hook you up with some Japanese guys with weird hats.

Posted by: daveinbedstuy at February 10, 2009 11:52 AM

The Japanese government initiated their response to the crisis in 2003 by buying convertible preferreds in the banks. 2003!!!!! That was 13 YEARS after the market crashed in 1990.

Posted by: daveinbedstuy at February 10, 2009 12:00 PM

dibs, here are a few similarities: japan had a speculative bubble in the 80s. credit was easily obtainable. banks granted increasingly risky loans. the banking system was non-transparent. In the face of an economic crisis, the central bank lowered interest rates to zero, which left it no way to respond with monetary policy. Instead Japan responded by spending huge amounts of government money, which they borrowed, on public works projects. It took a decade for the economy and asset prices to recover.

good? now you go.

Posted by: joe_the_bummer at February 10, 2009 12:02 PM

For the reason I mentioned above, the credit markets were frozen there until 2003. Most economists will tell you that spending on public works isn't going to a have a strong multiplier effect.

The marklet became much stronger as of April, 2003.

Posted by: daveinbedstuy at February 10, 2009 12:06 PM

thanks. for the non-wonks, buying convertable preferreds basically means restoring bank capital in exchange for some ownership, which our government seems to be on top of. however I don't agree that it was japan's first response. they lowered IR and increased spending in the 90s, which text-book econ says you are supposed to do. I agree the US gets a second-mover advantage & we are ahead in that respect.

But even with our TARP program I think we still have the problem that we're expecting banks to lend money when borrowers AND collateral have never looked worse. Plus, banks need the money just to stay solvent. the govt probably wouldn't advise an individual bank to lend in these circumstances if the problem were actually limited to one bank. it's a paradox and kind of an unworkable situation

Posted by: joe_the_bummer at February 10, 2009 12:20 PM

There are also a few major cultural issues. Once Japanese fail at a business it is much harder for them to reinvent themselves. There isn't a lot of innovation over there unless its in the form of perfecting manufacturing processes. Also, the population pyramid had a lot to do with this as the country was top heavy with old people who are by definition savers not spenders.

I'm saying it's not going to take as long and all these people leaving Merrill, Lehman & Bear will be back in business soon reinventing themselves.

Posted by: daveinbedstuy at February 10, 2009 12:27 PM

the cultural point is totally true -- japan had trouble letting failing companies fail. but on the population point -- I think their retirement wave is a decade or two ahead of ours, right? so we are just entering a period of related stress.

how about an L argument based on our own history: Robert Shiller dug up real (infl adjusted) home prices from 1890 to 2005, and found an average 2% annual return. then starting in 2000, prices doubled in about 5 years. I realize this is not NY specific, but it points to a correction and some kind of revised expectations about returns.

Posted by: joe_the_bummer at February 10, 2009 12:42 PM

> "all these people leaving Merrill, Lehman & Bear will be back in business soon reinventing themselves."

Creating another bubble, siphoning off billions for themselves, and leaving the taxpayers holding the bag when it all blows up?

Woohoo, can't wait.

Posted by: SnarkSlope at February 10, 2009 12:49 PM

on the prospects for bankers reinventing themselves -- I think a lot of them really think it's over. head hunters are telling some candidates not to even bother looking. Investment banks are literally gone for good, a third of hedge funds are gone, comp won't be back for a few years...people might just reinvent themselves as teachers, rock climbers, or san francisco dot-commers. A lot of people have just enough dough left to go start over doing something less hateful and more fun.

Posted by: joe_the_bummer at February 10, 2009 12:52 PM

income/price ratio

too difficult for dibs to comprehend.

Posted by: cornerbodega at February 10, 2009 12:58 PM

I totally have to get in at the beginning of the next bubble. I missed real estate, the internets and tulips.

Posted by: dittoburg at February 10, 2009 1:10 PM

joe...the people i'm talking about don't use headhunters. Investment banks are not gone for good. Someone has to arrange the financings and do the CYA work on M&A, etc, etc, etc.

There are hedge funds bringing in new money as we speak. Ask cornerbodeaga. He apparently knows everything.

Posted by: daveinbedstuy at February 10, 2009 1:12 PM

Recession-Plagued Nation Demands New Bubble To Invest In

- http://www.theonion.com/content/news/recession_plagued_nation_demands

July 14, 2008 | Issue 44•2

WASHINGTON—A panel of top business leaders testified before Congress about the worsening recession Monday, demanding the government provide Americans with a new irresponsible and largely illusory economic bubble in which to invest.

"What America needs right now is not more talk and long-term strategy, but a concrete way to create more imaginary wealth in the very immediate future," said Thomas Jenkins, CFO of the Boston-area Jenkins Financial Group, a bubble-based investment firm. "We are in a crisis, and that crisis demands an unviable short-term solution."

...

Posted by: SnarkSlope at February 10, 2009 1:18 PM

dibs -- the i-bank is actually dead. commercial banks will run those businesses. MS and GS were forced to become actual banks. The "i-banks" were not banks at all -- they were "securities companies" -- they weren't regulated by the fed, they couldn't lend, and they didn't have to meet capital standards. The new landscape will have no LEH, GS etc. with 50:1 financial leverage. Real banks can only be about 15:1. That financial leverage is what allows the huge profits. The merger between BoA and Merrill is a good example of the ugly confluence of the two pay grades. Merrill guys lose bigtime in this.

Posted by: joe_the_bummer at February 10, 2009 1:34 PM

Trust me joe, there is still M&A going on with boutique investment banks. They will frow larger. The financila leverage has absolutely nothing to do with a firm securing an M&A deal, nor does a banking relationship. BofA may pitch to their clients that they have the banking and the M&A experience but in fact all they will have in the near futere are the dregs of Merrill. M&A and stock offerings are really done on a "personal relationship" basis that the investment banker has had with the company for ages.

If you believe in capitalism and greed you have to believe that this industry will reinvent itself, whether you like it or not.

Posted by: daveinbedstuy at February 10, 2009 1:40 PM

dibs, financial people aren't getting paid for a while. trust me, I'm one of them. it sucks. Leverage does impact profits and pay, and it's going to be regulated. eventually I agree it will bubble back, but, keeping with the L vs V debate, it will be a while.

By the way, where did BHO go anyway?

Posted by: joe_the_bummer at February 10, 2009 1:52 PM

The guys I'm talking about that will start these firms are the ones who have hundreds of million salted away from the past couple of eras.

I'm not talking about any low level or middle management finacial types. The guys with money (GWMs) will start the firms and hire the foot soldiers.

I bet you we will se a new IB firm startup in the next month or so. We've actually seen it in the form of Nomura reenterring the market and paying for people.

Jeffries & Co. have hired a lot of Merrill people.

Posted by: daveinbedstuy at February 10, 2009 1:57 PM

BHO and cornholedinthebodega leave whenever you ask them a specific question.

Posted by: daveinbedstuy at February 10, 2009 2:00 PM

I hope you're right. there are actually some small broker dealers springing up to trade the asset-backed securities that the banks are drowning in. hope it works out. new ventures need a lot of wheat, though, and I don't see where it's supposed to come from in the next couple of years. nothing I'd like more than to get a fat job and watch your house price double.

Posted by: joe_the_bummer at February 10, 2009 2:08 PM

Well, that comment will bring back BHO and the bodega!

Posted by: daveinbedstuy at February 10, 2009 2:15 PM

I'll say this about the good old US. we are one of the only countries that can borrow all we need in our own currency, and our borrowing cost actually goes down when the sh!t hits the fan. and our guys in washington actually have the stones to take advantage of it and double down. pretty good. go US.

Posted by: joe_the_bummer at February 10, 2009 2:39 PM

So, all you finance guys/gals out there.... Why is the market tanking today (25 words or less, please)?

Posted by: SnarkSlope at February 10, 2009 2:44 PM

Because there are no details to the package. "We're still working on it."

Posted by: daveinbedstuy at February 10, 2009 2:46 PM

snark, i really believe after 11 yrs in the biz that short term moves are 90% white noise. the press always comes up with a reason, but I just ignore it. maybe some saudi prince sold a billion, maybe some hedge fund is trying to push it around, maybe people suddenly get what they were supposed to get last year. but then tomorrow they might un-get it.

Posted by: joe_the_bummer at February 10, 2009 2:52 PM

dibs answer makes sense too. sorry for the day-long geek-out. tomorrow I will stick to hating on new development.

Posted by: joe_the_bummer at February 10, 2009 2:55 PM

Alrighty then, that's pretty much what I was thinking, thanks.

Posted by: SnarkSlope at February 10, 2009 3:19 PM

The silence from sebb and wine lover is once again deafening!

Posted by: sixyearsandcounting at February 10, 2009 3:44 PM

Good day for a three martini lunch. And then another three for dinner.

Posted by: SnarkSlope at February 10, 2009 3:51 PM

Market is running its course. You can't overdose a sick patient so he heals in less time. They can pump as much money as they like but that is not going to fix anything until home prices reach 1995 prices. Homeowners don't want to hear that but tough.

Posted by: hannible at February 10, 2009 4:17 PM

Very astute assessment of the market hannible. Not sure that I've seen any leading economists correlate the market bottom with home prices at 1995 levels.

You can't make this stuff up!!!!

Posted by: daveinbedstuy at February 10, 2009 4:20 PM

"The silence from sebb and wine lover is once again deafening!"

I'm sure wine lover is out somewhere hating on some Hispanic people for no reason.

Posted by: East New York at February 10, 2009 4:40 PM

anything over $700 psf in williamsburg is very good. i bought in 2006 @ $485 psf for new construction.

i see these sales as a good thing.

in general, i am guessing that many condo units will go rental thereby creating a demand still for more services in the area which helps local retailers, restaurants, etc..

Also, people who rent in the area may stay and buy later. A number of owners in my condo building have been in williamsburg for many years.

Posted by: wine lover at February 10, 2009 4:40 PM

In general, I am guessing that nobody on this blog gives a sh*t what you think, wine lover.

Posted by: SnarkSlope at February 10, 2009 5:17 PM

Why 1995, hannible? That's no fun, I still won't be able to afford anything.

Posted by: mopar at February 10, 2009 5:39 PM

How about 1895 prices? That'll be cash on the barrelhead, son!

Posted by: SnarkSlope at February 10, 2009 5:42 PM

"I think I'm turning Japanese
I really think so..."

Damn! That shit really made me laugh.

(Stay tuned for responses later tonight.)

***Bid half off peak comps***

Posted by: Brownstones Half Off at February 10, 2009 6:23 PM

Wow reading the comments from the Assheads gave me a headache. Team Bear leave the Retards alone, please... Let then go ahead with that "Bubble Mentality ". This crash is going to be fun!

The What

Someday this war is gonna end...

Posted by: Return of The What at February 10, 2009 6:54 PM

Yeah, Sebb disappeared. Next up is Dibs, stubborn ignorant little ghetto speculator...

Posted by: cornerbodega at February 10, 2009 7:38 PM

You're right, What. I'm a chill. joe the bummer already got off in dave's ass. USA's Lost Decade: 2008 thru 2018 (damn that shit is scary!). Zombie banks.

Sianara!

***Bid half off peak comps***

Posted by: Brownstones Half Off at February 10, 2009 10:01 PM

"Not sure that I've seen any leading economists correlate the market bottom with home prices at 1995 levels." You forget it is those same leading economists that created NINJA loans-If Countrywide can you can- and believe in the American dream home for free. These leading economists are the same ones going to Washington begging for TARP money. Ah homes will be affordable for families again. Speculaturs can go speculate in California and let Arnold take care of you

Posted by: hannible at February 11, 2009 8:56 AM

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February 10, 2009

Price Cuts Working at Northside Piers, Others to Follow

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