I think we have reached the point where it would be helpful to state the hypothesis for what the widget is supposed to be doing and how it is supposed to be doing it. That way the inputs can be better coordinated and the results more critically understood as systemic flaws or meaningful output.

Posted by: Ledbury at November 2, 2009 12:27 PM in response to Widget Falls Way Short on South Oxford

The right number to compare to rent is the lost costs associated with the buy, your monthlies and tax effected interest payments. That is not a new concept. As of right now, in many cirucmstances (though surely not all) the costs for renting in NY are less than buying a comparable property. You want to argue that pride in ownership and ability to renovate overwhlems that, all good. You want to say that you prefer having your savings invested in an individual property rather than other investment opportunities (including REITs and such), understood. But just making an argument that if you are going to spend that much you would rather own misses the point.

Posted by: Ledbury at October 13, 2009 12:02 PM in response to To Own or to Rent?

Is Henry Street a typo or are they out of order? In other words is it $3.2 and the second biggest sale or $2.2 and the fourth?

Posted by: Ledbury at September 30, 2009 10:54 AM in response to Last Week's Biggest Sales

It seems to me that all the pro biking arguments center around it being a "beneficial for society". If thats the case, then the logical conclusion is that that bike lane should be where that status is best preserved which would be in a protected lane by the cars.
If you say that pedestrians just need to watch out or whatever, you are essentially arguing that enjoyment of transit is an important public issue(which we never do for cars) or that without the inducement of a pleasent trip across the bridge we stand to lose significant numbers of bikers and their positive externalities. I don't think that is true either.

Posted by: Ledbury at September 29, 2009 10:42 AM in response to Bikes and Bodies on the Brooklyn Bridge

This building has always interested me in terms of being a bellweather for the ultra high end condo market. There have been a number of times that frothy sales in this building have been held up as evidence of a continuing bullish market, mostly because they continue to show up in the last weeks biggest sales section. Then there was some major price cuts which wasn't clear if it was alte in the sales cycle deals or real trouble. Interesting to get a fuller picture of the building.

Posted by: Ledbury at September 28, 2009 11:12 AM in response to The Darkness at Richard Meier's Brooklyn Tower

Anti and Slope - The answer would be to not include the asking price. If I am selling a sweater and ask how much you think I might get for it, Anti might guess its worth $20 and Slope might guess $40. The "wisdom" would put the price at $30. The minute I tell you I will sell to the first guy who gives me $25 for it, is Slope still going to guess $40? No. His opinion of its worth hasn't changed, but he has be cued into the fact that his guess is too high and he naturally adjusts. There is no other side to that right now. So saying that the widget means that people who are bearish are more incorrectly bearish than the bulls are bullish is not a fair conclusion.

Posted by: Ledbury at September 15, 2009 2:41 PM in response to Last Week's Biggest Sales

Anti - The ask matters becuase once you hit the ask, you are generally done. So if a house is asking $2.5 and three people think the house will sell for $2.4, $2.3, and $2.2, they will guess $2.4, $2.3, and $2.2. If three other people think the house will sell for $2.6, $2.7, and $2.8, they will all guess $2.5 because they know that aren't a lot of bidding wars nowadays. Now instead of a $2.5 million result (which is the actual average of sentiment) your widget returns $2.4.
As for the otehr direction in the bubble, I agree that might be the case. Which is just more evidence that the widget doesn't do what you are suggesting it should.

Posted by: Ledbury at September 15, 2009 1:54 PM in response to Last Week's Biggest Sales

Anti -
Can't have a wisdom of crowds style predictor with a one sided boundry. The asking price, in this market, is essentialy that one sided boundry. Even taking the idea that every guess is in good faith for granted, you need to be able to balance those who honestly think the house will sell for $1.5 with those who honestly think it will sell for $2.5. If they are only asking $2.35, the $2.5 guess will never be made and the resulting "prediction" artificially low.
Now if we are in a market where 50% of sales are above ask then fine, we may have something. But it not working now isn't a matter of sentiment, but reality of the marketplace.

Posted by: Ledbury at September 15, 2009 1:21 PM in response to Last Week's Biggest Sales

The widget will not get any smarter because the widget is not properly designed to guess how much a property will sell for. Doesn't make it a bad thing, it will just never do what some people seem to want it to do.

Posted by: Ledbury at September 15, 2009 12:36 PM in response to Last Week's Biggest Sales

Antidope -

I don't really disagree with you, but I think we can also agree that someone who stands to lose 10% of a contract price isn't in the best position to renegotiate. And if that buyer still managed to get a 16% reduction in the price of the contract, then concluding that "they believe that the market value of the building is not severely below their contracted price and/or that prices will rebound" just seems like a leap made for the sake of being bullish.
Anyway, the sale was healthy and I am certainly not sure that what I think happened actually happened so there isn't much to discuss I guess.

Posted by: Ledbury at September 8, 2009 1:49 PM in response to Last Week's Biggest Sales

Antidope -

There is a third possibility. By combining the info above (contract date 12/17/07) and the Street Easy info of only one listing price of $2,725,000, it is possible that the building did knock off $425,000 in order to get the deal closed.
Maybe its bullish, maybe its bearish, but if that is what happened, it certainly is different.

Posted by: Ledbury at September 8, 2009 12:57 PM in response to Last Week's Biggest Sales

The article and its subjects come off just fine. Dad's got some cash and wants to use it to help his daughters live a little better. Don't know why anyone would have a problem.

The whole "persevere" the rental market makes me a bit sick though. I really hope it was somewhat tongue in cheek, but I fear that it wasn't. I don't care who it is or how much they are spending, renting is a perfectly acceptable way to live. The more we perpetuate this stupidity that renting is to be "perservered" and owning the ultimate goal of all Americans the more we distort real estate prices which gives rise to the bubble econmics that hurt so many.

Posted by: Ledbury at September 8, 2009 10:59 AM in response to Renters Become Their Own Landlords

If that Meier building sale is correct, then that sale is pretty interesting. If I remember correctly, the building has had a pretty good record of getting their ask so the whole "seller was nuts for asking that price" thing doesn't really apply. Maybe they are at the end and are more willing to deal to close out the project? Or maybe this is hard evidence of serious price deflation in the upscale condo space.

Posted by: Ledbury at September 1, 2009 11:47 AM in response to Last Week's Biggest Sales

you've magically transformed yourself into a real estate bull.

This is what I find so confusing. You just laid out why these condos would close at $700 even if that isn't market. So how are these transactions bullish and why do you think the person who just closed to avoid losing their life savings would be bullish at $700 a foot today?

Posted by: Ledbury at September 1, 2009 11:08 AM in response to First Closings Recorded at the Satori

The headline stats in Streeteasy are actually quite amazing for this one. Average previous listings (311 of them) was $965 per square foot and the average of the 30 current listings is all the way down to $657. Now I am sure that those on offer aren't the most desirable and there are probably some one off buys (the Stribling Penthouse) which distorted the previous numbers, but that is a significant change. And from guys who seemed pretty obstinate in their public statements earlier in this cycle.

Posted by: Ledbury at August 18, 2009 11:40 AM in response to Price Cuts at One Brooklyn Bridge Park

In fact one could argue that more expensive properties will have a more dramatic reduction.

I hear what you are saying, but I think this expectation only works if you believe that the driving factor in price reductions is the reduction in overall wealth. I actually think the bubble was more driven by a complete bastardization of the proportion of wealth people spent on housing. And my gut tells me that the proportion distoriton (hey, that rhymes) was actually worse in the $0 - $1.5 million market than it was in the $1.5 and above market.

Posted by: Ledbury at August 14, 2009 2:36 PM in response to Open House Picks: Six Months Later

The best argument for price preservation in brownstone brooklyn always revolved around the supply side. Certainly many owners are going to pull back and hope to wait it out for market improvement. It may work. The alternative is that the supply side slowly builds (with new forced sellers and old sellers who can wait no longer) until you have sort of a race to the bottom. I don't think anyone can really know which outcome we are going to get, but for someone with either belief to not recognize the other as a possibility begs for some bad decisions.

Posted by: Ledbury at August 14, 2009 2:21 PM in response to Open House Picks: Six Months Later

Slopefarm - to put it another way, if there ia house that the bullest of the bulls think is worth $2 million and the bearest of the bears think is worth $1 million, the real average of the their guesses is $1.5. Once we say the ask is $1.75, then the widget will report $1.375. When the house then sells for $1.5, the crowd will look like it undervalued, but what really happened is that structure of the game prevented accurate measuring of peoples sentiments.

Posted by: Ledbury at July 28, 2009 12:49 PM in response to Last Week's Biggest Sales

Slopefarm, I don't think I agree with your point. Lets say a house has an ask of $1.5 million. People guessing how much it is going to go for are basically bounded by $1.5 million on the upside (not a lot of bidding wars today.) So every guess is going to fall somewhere between $0 and $1.5. If a house is going to sell for ask or 5% or even 10% off ask, there really isn't any room to balance out the 20% off guesses. And as you say, we are now 7 for 7 showing that it is nearly impossible for the widget to produce an accurate guess.

Posted by: Ledbury at July 28, 2009 12:41 PM in response to Last Week's Biggest Sales

The widget is kind of a fun little game, but it will virtually never be right and pointing out it is wrong isn't really meaningful. The theory behind a widget type game is that you get the wisdom of crowds. But in order for that to work you need the people in the crowd to be as likely to overestimate than underestimate (like jellybeans in a jar.) A house in this environment with a set asking price does not meet that criteria.

Posted by: Ledbury at July 28, 2009 11:49 AM in response to Last Week's Biggest Sales

I think the whole renter not treating the place as well is an ancillary issue. If you bought in the building rented apartments are built in supply overhang. It is better than being vacant, but still pretty bad news for owners.

Posted by: Ledbury at July 27, 2009 11:39 AM in response to Renting 1 BBP: 'We Would Like Things to be Different'

Not sure if this has been mentioned already or not, but anyone who was expecting the widget to accurately reflect the final sales prices was not really thinking this through. It is a completely one sided metric. The whole wisdom of crowds thing requires people to miss on both sides. In todays market nobody is guessing that things are going to go for over the asking price so you have a fundemental problem in that every incorrect guess is going to pull the widget down more than a correct guess pulls it up.
If there was a house asking $4 million that was going to really go for $2, then you might have soemthing, but for anything that is asking within 20% of reality, the widget will never be close really.

Posted by: Ledbury at July 23, 2009 11:50 AM in response to Bearish Brownstoners Miss Mark on 2nd Street Sale

If you can afford to build during a down cycle you get a lot of advantages out of it. Lower construction costs, job creation tax breaks, better margin of safety on a buildings financial plans are all things developers can take advantage of during a time like this. Its actually somewhat of a bullish view of NY real estate if you think that the only way for developers to make money is in an upswing. There is a whole lot of room for developers to make money at price points lower than then peaks.

Posted by: Ledbury at July 14, 2009 10:43 AM in response to Avalon to Top Clarett in Downtown Brooklyn

I haven't actually seen these places, so I could be way off, but I would imagine they would be comepeting against the Brothel and Vermeil type places. Given that the Vermeil has been around $920 a foot and the brothel is at $840, I am not sure how selling at around $680 (with lower monthlies to boot) is particularly bullish. That being said, good on them for apparently pricing an attractive product properly.

Posted by: Ledbury at July 7, 2009 11:58 AM in response to 90 First Place Knocking Cover Off Ball

"There are people out there with money who want "very nice" and at a price point of $2MM - $3MM, another hundred thousand or two hundred thousand makes no difference if you really like"

I think this is dead on (and I don't often find myself agreeing with DIBS's market view.) But I would have thought that this is exactly why reading anything into the general market from this feature is a bad idea. On the margins price becomes less of an issue. As an anology, just because a few people still drop 400k on a Ferrari doesn't mean that 80k BMws won't need a price adjustment. Much less the 25k Mazda's. Doesn't mean they will, just that one thing really doesn't tell you much about the other.

Posted by: Ledbury at June 16, 2009 12:01 PM in response to Last Week's Biggest Sales

Joe -
Don't know if you saw it, but a week or two after the Meier discussion there were sales in a condo conversion which one of the buyers had been blogging about. The "contract" dates came across as '09 despite the clear blogging evidence that the deal was struck long ago.
Obviously this doesn't say anything about the Meier building specifically, just that the practice that was suspected does seem to go on.

Posted by: Ledbury at June 2, 2009 1:15 PM in response to Last Week's Biggest Sales

It will be interesting to see how many do walk away. Theoretically I agree that this place should be in trouble. But how many 800k apartment buyers can afford to just give up 80k? This would seem to be something of a sweetspot where the dollar deposits are pretty serious money, but not so much that people putting it down can likely afford to lose it without it affecting their lifestyle.

Posted by: Ledbury at May 26, 2009 12:24 PM in response to DOB OK's the Argyle

We have had some conjecture before about contract dates and their accuracy. Interesting to see hard evidence of date shifting on President Street

Posted by: Ledbury at May 19, 2009 12:30 PM in response to Last Week's Biggest Sales

Yes It does help. Thanks Kensingtonian.

Posted by: Ledbury at May 12, 2009 3:12 PM in response to 53 Lincoln Condos Hit the Market

Maybe someone can help me as I don't often actually get into the nitty gritty of a listing. They say that common charges are at like $300 a month. Is that for real? If it is, that might explain how they hope to get such a hefty price and would significantly distance itself from the brothel for instance. If its not for real, how do you tell what the real costs are likely to be?

Posted by: Ledbury at May 12, 2009 12:12 PM in response to 53 Lincoln Condos Hit the Market

I continue to be horrified by the brokerage business tactics. Haven't we learned that real estate and home purchases are not the same as buying sweaters or sofas? The very core of these promotions would seem to be that given enough impetus, they can convince people to borrow hundreds of thousands of dollars and commit their life savings at least partially on impulse. Brokers need to look themselves in the mirror and realize that crap like this is a big part of the problem.

Posted by: Ledbury at May 6, 2009 11:24 AM in response to Corcoran Serving Value Meals in Brooklyn in May

I think the Lincoln Place brothel, while an excellent product, suffers a bit from the very nature of what makes them cool. The layouts seem to have a tremendous amount of lost space because of the angles and features of the overall structure. Lots of "storage areas" and cutouts in the rooms make the places not feel quite their full square footage. Possibly that is also why the maintenance charges "feel" high.

Posted by: Ledbury at April 28, 2009 12:22 PM in response to Last Week's Biggest Sales

Isn't it much more likely that there is simply some date shifting going on here? How difficult is it to claim a 2009 contract date when it was really agreed to in 2007 or 2008?

Posted by: Ledbury at April 23, 2009 12:26 PM in response to OPP Floats Some 'Limited Availability Pricing'

The seller offered a price of 10% off asking price and got it.

This is pretty much semantics. Then that house yesterday that sold for 50% under ask didn't get a price chop either becuase they never relisted it for the lower price? (and yes the house probably went for peak comps so I'm not arguing it for a bearish sale, just using it to illustrate the semantics point.)

Posted by: Ledbury at April 14, 2009 1:02 PM in response to Last Week's Biggest Sales

Only poor Mis Muffett could be accused of "not living in reality" by predicting a price cut and having the property sell at a 10% price cut.

Posted by: Ledbury at April 14, 2009 12:46 PM in response to Last Week's Biggest Sales

1929, as many are quick to mention, % off ask is a dangerous metric. But if St. Marks is to be a bellweather, I wonder if 12% off is really so bullish. You and others seem to be extolling the virtues of this property which makes me think it is a top 5% property of its type. If a top tier property such as this is still a 12% off ask, then I would think the less desirable housing stock (which is virtually everything) is likely to be more discounted. I'm not sure we can assume consistent pricing strategies so I'm not sure the whole compare works anyway, but if % off ask is the interesting metric to you, that is one way to think about it.

Posted by: Ledbury at April 7, 2009 7:22 PM in response to Last Week's Biggest Sales

If we are brainstorming, then how about everyone who signs up to comment gets posted as "New Commenter" for a few weeks. They can sign a handle like Rob does if they want, but this would let new people dip their toe in the water more anonymously while still maintaining a bit of the oversight of registered users.

Posted by: Ledbury at March 27, 2009 11:32 AM in response to Let's Talk About Commenting

Given the very reasonable definition of "Team Reasonable", isn't pretty much everyone on "Team Reasonable." Does this mean we can put the whole "team" business aside?

Posted by: Ledbury at March 24, 2009 2:20 PM in response to Last Week's Biggest Sales

Bull = modest drops followed by some kind of recovery. Bear = "half off peak comps" and implosion of all relevant markets

I think these definitions are where much of the tension comes from. What is modest? 5%, 10%? If you are talking 20% (which I have heard mentioned before), then there really isn't a huge difference between these two. Rational people expecting a 50% drop would think themselves pretty on target with a 40% final tally and those expecting 20% would be pretty satisifed with their guess if the final number is 25%.

Posted by: Ledbury at March 24, 2009 1:14 PM in response to Last Week's Biggest Sales

"So, a small sample of unsold houses is meaningful but a small sample of sold houses is not?? The logic is mindboggling."

You do realize that there is a big difference between these two small samples. One can go either way and one can, by defintiion, only give you one result. Probably too much energy expended either of these, but one clearly has a better chance of accurately measuring the market than the other.

Posted by: Ledbury at March 20, 2009 4:38 PM in response to Open House Picks: Six Months Later

I don't know much about the areas in question, so I will assume from the comments that they represent healthy prices for these houses. One thing did strike me though counterbalancing that a bit. I don't remember too many times that we had at least the last three spots on this list being as inexpensive as this. Despite my bearish beliefs my guess is that it is a random anamoly, but it is something interesting to watch.

Posted by: Ledbury at March 10, 2009 12:27 PM in response to Last Week's Biggest Sales

Does anyone know how they calculate "disposable income"? It seems that it is a pretty amorphous concept to begin with, but I can't even imagine how they caclculate it in real time. And using this stat with real time home prices (or close to) and historical disposable income wouldn't really be an accurate reflection of affordability. That's not even to mention the raise in average downpayment requirements.

Posted by: Ledbury at March 9, 2009 1:01 PM in response to Houses Looking Cheap Everywhere Else

Benson -

I don't know much about Houston inthe 80's, but I would guess the floor of the drop being around 25% had more to do with the assymetric nature of housing prices than anything else. We are probably much further along the hockey stick today in NY than Houston was in that time. As many often point out, you have to live soemwhere so a certain base of wealth is always going to be spent on housing. I'm guessing that both Houston and NY in the depression had big cut in the amount of wealth, but little change to the % of wealth spent on housing (Again, I admit this my impressions and I have no real hard facts backing this up.) Today in NY we have the double barrel of people realizing they spent way too much of their wealth on housing and having that collective wealth cut significantly.

Posted by: Ledbury at March 9, 2009 12:17 PM in response to Where and When Will The Market Bottom?

LOL. Well DIBS you are, at least, consistent...But it is funny how people can look at the same data differently. The original Lorimer ask appears to have been $1,320,000 which puts the sale 20% off of original ask (and nearly 4 months ago too.) Now if the Brookyn Heights gets sold at 10% of this now 10% reduced price is it again going to be "10% off ask so business as usual?"

Posted by: Ledbury at February 27, 2009 1:05 PM in response to Open House Picks: Six Months Later

As with most everything, the poor are gonna get screwed worse than the rich which is a shame. And I agree that there will be some suffering because of this.
But I think (hope) we might be surprised at the realtive lack of devastation a few years from now. Part of the reason that foreclosures/bankruptcy are so disruptive is that since they have been relativley rare, the market was able to punish that behavior without affecting their overall customer base too much.
What we have now is so many more people getting into these kinds of scenarios that the market is simply going to have to adjust. They can't not do business with such a broad swath of the population which will open up more opportunties for peole who have found themselves int hese situations. Sadly what might prevent that from happening is the government intervention with the "preventing forclosures at all costs" mentality which will artifically pick winners and losers based on timing rather than actions.

Posted by: Ledbury at February 24, 2009 3:41 PM in response to Quote of the Day

there's a thread every few days or week or so with recently sold houses. i guess that's a good indication of pricing these days

I think this, perhaps, is where we go astray...

Posted by: Ledbury at February 23, 2009 5:57 PM in response to House of the Day: 356 1st Street

This is an interesting article with a lot of validity, but I can't help but think that we are making a causal link that is somewhat faulty.
The NYC real estate bubble was very much driven not by overdemand for units (ie people who needed housing),but by overdemand in terms of % of wealth being spent on housing. The last 10 years didn't see a massive jump in the ratio of new yorkers to housing stock. So while yes, NY would figure to continue to be one of, if not the preferred, urban center in America, that doesn't actually have that much to do with where ultimately housing prices bottom out at (Ok, obviously it has something to do with it, but I am pretty sure that southern California isn't becoming a ghost town anytime soon either.)
As a fairly absurd illustration, think not of cross occupational workforce, but of a massive group of homeless people with free range to move anywhere they want. Many would probably congregate in a year round temperate climate with good public services. Just because the assets of that city are very in demand doesn't mean that the people demanding it can pay higher prices. Ultimately NY prices will be driven by the change in wealth being spent on housing during the bubble and that being spent in the future which still figures to be a fairly hefty amount.

Posted by: Ledbury at February 19, 2009 11:29 AM in response to How the Financial Crisis May Not Be So Bad for New York

The whole first half of this article was pretty straightforward story. Condo owner stops paying maintenance and there is little the building can do about it because even if they evict, at current prices, they won't get any of that money back. This leaves the current tenants footing the defaulters share of the monthly bill for the entire time from first monthly default all the way through realsale which is likely to be a few years. In a condo, once the unit is resold, the condo gets the money back and thus the other tenants are not out of pocket forever. Given the size of some of these monthly maintenance charges, this would seem like a real issue, albeit a soemwhat rare one. Is there something not true about the article?

Posted by: Ledbury at February 9, 2009 10:43 AM in response to Most Post-2006 Condo Buyers Are Underwater?

I know you weren't asking me Montrose, but I think there are a lot more people fairly agnostic between a brownstone and a condo than you might think. Many people who aren't "into" real estate simply want nice space in a desirable location. Someone's taste might run in one direction or another, but not enough to overwhelm the fact that in the scheme of their life, that affinity just isn't that important.

To the degree that cerain parts of Brooklyn only have brownstones and certain parts have mostly condo's, then there may be a point because location is absolutely key for many. But most areas have enough overlap or are similar enough that I think the two markets do definitely intersect.

Posted by: Ledbury at February 6, 2009 12:00 PM in response to Toll Even More Serious Than We Thought About Price Cuts

I am generally quite bearish, but just as sales of $3 million homes in closed religious neighborhoods isn't really evidence that everything is OK, I am not sure that price cuts in Williamsburg means all that much to the larger market. Williamsburg was obviusly going to be in severe trouble with that huge ratio of new development to existing high end homes. Most of "brownstone" Brooklyn's hopes to avoid the downturn rests in the idea that there just won't be that much supply up for grabs before we hit the turnaround in a few years. I think that those who believe this to be the case underestimate the ordinary need for turnover due to life forces. But any area with big built in supply from new developments is going to feel the pinch quicker and deeper.

Posted by: Ledbury at February 6, 2009 11:29 AM in response to Toll Even More Serious Than We Thought About Price Cuts