Attendence Falls at Brooklyn Open Houses
Open houses are rarely (maybe never?) mentioned as places to seek solace within the city, but the NY Observer finds they may be approaching a Zen-like quality because, well, nobody’s at them. “It was the Sunday before the European markets began to tumble, during peak open house hours, and the buyer traffic through Brooklyn’s newer…
Open houses are rarely (maybe never?) mentioned as places to seek solace within the city, but the NY Observer finds they may be approaching a Zen-like quality because, well, nobody’s at them. “It was the Sunday before the European markets began to tumble, during peak open house hours, and the buyer traffic through Brooklyn’s newer towers was slow,” they write. “Extra special amenities played an integral role in luring buyers when neighborhood amenities were lacking, but with prices still sky high and memories of the borough’s boom fading fast, it seems the only reasonable options are to start cutting prices or to offer condos as rentals,” opines the Observer. “Both of these things are already happening. A pretty kitchen backsplash and walk-in closets just won’t cut it anymore.” Well, what should these buildings do to fill up those open houses again?
The Quietest Places To Pass a Sunday [NY Observer]
Photo by @chris.
Well, maybe no one’s reading this thread anymore today (my kids are finally in bed) in which case, I’ll pull an Obama and tack on this question to the next topic (I say this in admiration of his performance at the debate last night).
But if you are reading, Aussie and z, please explain to me, since I don’t quite understand, how many owners in NY, other than the flippers/speculators, *will* actually be hurt by a price decline. My understanding is that most buyers who buy to have a home (rather than a speculative investment) plan to stay for quite a few years, at least 5 and often longer. Since the market shot up so high, so fast, even if we went down to 2003 levels, which would be pretty dramatic, most current buyers would not be at a loss except on paper. Now, if they’ve outgrown their apartment and need to trade up, they might actually be in a better position in a down market (provided they are not relying on increased salary in this environment). That is, let’s say they come into some cash through inheritance, or decide to plumb their savings, which is what allows them to trade up – even if their current property has lost value compared to say 2006, if they bought in 2003 and they sell for same price as 2003, then their pot of extra cash has more purchasing power than it did in 2007. Of course, if they don’t have this extra cash, trading up will be hard, but that’s always been the case unless you are counting on getting big salary increases and/or you decide you are just going to really stretch financially.
And then there are people like Wasder, who seems like a saavy, financially prudent person. He (or is it she?) may have paid a bit more for his house than it will be valued in the next few years, but it also sounds like the mortgage payments are very manageable, the place is great, and he intends to stay there a very long time. So I really don’t see how this paper loss is painful in any way other than the psychological impact which I don’t discount entirely but also don’t think is truly “painful” in a dramatic way. I am optimistic enough to think that in the longer term – 10, 15 yrs+ – the NYC market will recover and eventually go back up, but I also strongly believe we are in for a long period of price declines and stagnation, since the bubble we just lived through was so huge. And who knows, maybe the recovery will be much speedier – surely, it will eventually happen. And then the Wasders of Brooklyn, who I’m sure were all doing their best to make a great home in this great borough during the bubble years, will indeed be just fine.
So that leaves the people who purposely bought properties more as investments than as homes, with an eye towards selling rather short-term, presumably in the hopes of making a profit. I’m not calling the flippers/developers/speculators miscreants, but it does seem to me that they gambled on what looked to many like an unsustainable market and now they unfortunately will pay a price. And I’m not necessarily saying they “deserve” to get punished – I’m not a sadist – but I simply think that they are principal ones in NYC who will suffer from price declines, NOT buyers who have owned for longer than a few years and/or who are not intending to sell anyway. And that’s why I don’t get the fear that many sellers seem to have now, if they have owned more than a few years.
As for the brokers, I respect some of them very much since many are hard-working, honest, good people – but others are greedy and much slimier. I don’t want them to suffer per se either, but I must confess I feel little sympathy for a broker whose commission for selling one house shrinks from $120,000 to, say $75,000. They did very well in the boom years and if they were wise, they socked a lot of that away for a rainy day.
So Aussie, when you say “To bring brownstone prices down to a level that will permit you to buy what you want, Miss M will mean additional pain has to be applied elsewhere also to people who are really feeling it already.” – what exactly do you mean? I’m not being flip or disrespectful, I just truly don’t understand and it would be helpful to hear your explanation.
As for the person who suggested I am crying “poor me” because I could not afford a brownstone in prime Bklyn, keep in mind that brownstone can mean lots of things. Sure, there are grand ones, but there are also very modest, narrow ones where living on a duplex with a garden rental is essentially like having a 2-3 bedroom apartment for the owner, and thus is not that much more living space than many family size apartments. We are not ruling out apartments but it seems like, given the advantage we have to have capital for down payment, it would be a better investment to buy a 2-family house that is subsidized by rental income. That said, I fully realize my good fortune for all kinds of reasons. But to think I’m gloating and hoping for the suffering of others is just not fair. This is an anonymous blog, so while some may speak of good luck, everyone’s life is a mixed bag of good and bad luck. It’s not as if I’ve never been unlucky or made a bad decision. And I can’t stress enough that I don’t want a total meltdown since the broader consequences of that are scary for me as well as pretty much everyone else!
At the end of the day, my posts are not about what I “wish” the market would do, but rather commentary about this topic
I like Miss Muffett (cute name) but what you wish for is almost entirely linked to your position ie being in cash, and less about a desire “to see a return to a city that is more affordable and a culture that is not consumed by excessive spending beyond one’s means”.
Like z says many people in the last 5 years would have bought simply because they felt they had to. Indeed if you were one of them you would feel differently. Some will be able to hold on others will not.
I agree with you that brownstone owners have not felt the pain of the rest of the country but that does not mean they “deserve” to feel that pain now. To bring brownstone prices down to a level that will permit you to buy what you want, Miss M will mean additional pain has to be applied elsewhere also to people who are really feeling it already. While I think you should have your nice house and I do think you are smart I think there is a sense of empathy missing. Even if brownstone owners do “deserve” to share some of the pain I bet most would rather hear that from someone who hadn’t just cashed out at the top, had the flexibility to do so, and is now looking to buy again cheaper.
I agree with others here that you are a nice person (I can tell from your posts) I have never seen you post anything nasty. I just think that you are sitting in NY kinda missing the big picture of pain out there.
“please stop pretending that “everyone” except a few miscreants will benefit from a declining housing market”
Well said Z.
“But a significant correction would be good for almost everyone except the few owners who intended to flip, or stretched beyond their means since they drank the kool-aid.”
with all due respect — because you are probably a nice person — it appears that you are deluding yourself so you can feel better about gaining personally from a market correction. why on earth would a significant correction be good for “everyone” except flippers and overspenders? let’s be perfectly clear — *all* homeowners will lose value on their investments, AND THAT IS BAD FOR THEM. sh*t happens, of course. but please stop pretending that “everyone” except a few miscreants will benefit from a declining housing market. it’s just not true.
“For years, owners/sellers have gloated about their rising prices as I was actually not able to afford a larger place for my growing family.”
oh, come on — aren’t you in the market for a brownstone? poor you, you couldn’t afford to buy an entire house in a prime brooklyn neighborhood. that puts you in the same boat as almost everyone else who lives in new york.
This is actually an interesting philosophical spat between MMuffett and Aussie, one in which I can relate to both sides to an extent. I don’t think Miss Muffett is particularly “greedy” to want to bu a nice house at a good price, nor do I think she is deluding herself about her motives. She is doing what most any rational person in her position would do–namely buy a house that they like for a price that is satisfactory to them. At the same time I very much appreciate Aussie’s overall take on the broader issues. There is so much ghoulish cackling (not from you miss muffett) and drooling over the prospect of a total collapse in housing prices on this board. Nowhere in this gleefully malicious commentary does one ever see an expression of concern about normal everyday people who are really feeling the pinch and might lose their house. As easy as it is to lump everybody together and demonize people who see things differently than you do, the price ghouls (DOW8000 I am talking to you) must understand that most people who bought houses in Brooklyn between 2004 and 2007 (say the peak bubble years) were not speculators or flippers but professional people trying to make a decent life in this very lovely, but completely insane borough we call home. I hope some day some of you ghouls will have to depend on the kindness and understanding of others.
And P.S. I hardly think a brownstone owner is “suffering” all that much if they bought their house for 1 mil 8 years ago and now sells for 2 mil or even 1.5, instead of 2.5mil per the current asking prices. Or if any other seller makes, say 10-15% over their original purchase price instead of 100-150% They are still clearing plenty! And I also totally disagree that Wall Streeters made bonuses all these years because they were “smart” – it’s clear that our system was just not working properly and a lot of people made money by taking advantage of that, but not necessarily because they were “smart” (maybe some were, some were not but I would not correlate Wall St bonuses of the last few years with intelligence)!
Aussie – please don’t lecture me about gloating about morality. For years, owners/sellers have gloated about their rising prices as I was actually not able to afford a larger place for my growing family. And you seem to automatically assume that I personally will not be hurt by what’s going on and that’s not true. I don’t want to reveal personal details but suffice to say that people close to me are feeling real pain due to the stock market declines and that does indeed affect me. And, I, like many in this climate, feel some anxiety about job security. My relating my experiences is not to gloat, but rather point out that much of what I’m saying is based on experience and I’ve also said that we were just plain lucky more than “smart”. I have also gone out of my way to point out that I precisely do not want what some might think is “best for me” (total market crash) since I strongly believe that each individual, myself included, is part of a broader community and that community needs to be healthy for an individual to be so. So no, I don’t actually want a total crash since while it may allow me personally to buy something all cash for a song, it would hurt the community in which I live. But a significant correction would be good for almost everyone except the few owners who intended to flip, or stretched beyond their means since they drank the kool-aid. I’d like to see a return to a city that is more affordable and a culture that is not consumed by excessive spending beyond one’s means.
Well I see. Jingle’s 401k is all in cash. Miss Muffett sold her house at the top and is all in cash. Very smart moves (I mean it). They have little direct risk to a falling house or share market.
I can see why you believe that because you are smart you deserve what you have made and feel clever for protecting yourself. If though you think it is ok for others to suffer more so that you can buy again lower and make more… you should frankly get off your moral high horse. Perhaps you deserve your winnings but you seem oblivious of cost to the less savvy people who lose their 401k and house, or you seem to think that they deserve the loss …when many do not.
At the moment someone has to lose for someone else to win. Far more will lose than will win. Wall St for years has made big bonuses because they are smart and have learnt the same system that you have taken advantage of… but you gloat about winnings and dish out morality.
I wonder how many of the condos in contract at buildings like Toren will never close — at least with the orginal contract holders. I wonder if a lot of them are flippers (the whole majority of buyers are Chinese thing is very suspicious). And at buildings like BellTel, the sponsor will not get the money even if he wanted to finish all the units — so no tax abatement for those already living there… The best bets (as back in the 90s) are the well-established coops.