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Re: NY Times - When Does a Housing Slump Become a Bust?
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okay folks, hold on tight, its gonna be a bumpy ride.

anyone in still in denial, will most likely be shaken out of it by the end of the day.

Posted on: 2008/1/22 11:56
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Re: NY Times - When Does a Housing Slump Become a Bust?
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1) groovejet, you are in self denial if you think the JC RE market is not down.

All i am saying is now is not the best time to buy. As you said JC is closely tied to manhattan which is heavily dependent on wallstreet. The bonus was actually pretty good last year largely due to the first 3Q. 2008 bonus will be much worse, i will let you connect the rest of the dots.

Also the subprime mess is still unfolding, with potential to get worse with all the excess inventory on the market and many other problems.

If i am buyer, tell me why on earth would i buy right now? just to save a few k on tax returns for the year?


2) Taz, stop being a sensationalist. Yes it's bad right now and may push us into a recession. But the US economy will recover probably by end of year if not sooner and things will be normal again.

Also if we ever reach a doomsday scenario like you said where the us DOLLAR is no longer credible as a currency, that means the entire social and economic infrastructure has collapsed.

If that's the case, a colt 45 and a few cases of ammo will be much more valuable than your gold coins or "swiss bonds"

Posted on: 2008/1/22 8:05
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Re: NY Times - When Does a Housing Slump Become a Bust?
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They actually have a factor for the discounting on the property, basing it on sales value, it's currently 28%. The reason for this is the distortionary effect of reval cycle. Since people with long owned property would be paying peanuts based on old sales prices, they raise the tax rate, while at the same time discounting the assessments on newer structures because if they taxed them at full price and rate it would be astronomical. In a reval they eliminate the discounts and lower the actual tax rate.

Yeah, it's a f**ked up system, but your tax estimate was off by 72%, $4457/yr sounds more like it, huh?

TAZ: EDIT YOUR POST!!! YOU POOCHED THE FORMATTING WITH YOUR CUT AND PASTE!!

Posted on: 2008/1/22 5:34
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Re: NY Times - When Does a Housing Slump Become a Bust?
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OK, here's a link for a 1 BD condo that probably should be listed in the $300-350K range (Foxton has it listed for $399K) and the property taxes/maintenance is $655 a month, which comes-out to $22.465 per $1,000 on property taxes.

Figuring it out with 0% appreciation (which is beyond fair in the current market) I get this on the Rent vs. Buy calculator:


Quote:
Your home purchase breaks even after 28.1 years.

This is based on your home's equity minus a 7.00% sales commission paid to brokers or real estate agents when you sell your home. It also assumes your home will appreciate at 0.00% per year and you have an income tax rate of 31.00%. If you cannot remain in your home for at least 28.1 years you should consider continuing to rent.

We calculated your breakeven point by examining how long it would take to create enough equity in your home to exceed the value of investing your cash on hand. We also accounted for differences in your monthly rent and house payments. If your rent payment is less than your net house payment, we add that monthly savings to your investment. If your house payment is less than your rent payment we subtract that amount from your investment. You may notice that on the schedule at the bottom of this report the investment value can be reported as negative. This happens if your house payment is significantly lower than your rent payment. It illustrates that if you continue to rent the extra cost of renting would, in effect, use up your cash on hand.

Loan Information


Your total monthly payment was calculated as $2,684.52. Your down payment was calculated as $63,469 and you had a home price of $350,000. This is for a 30 year mortgage at 6.250% in the amount of $286,531. Total closing costs for this loan are estimated at $6,530.61.

Your current monthly rent is $1,600. The expected inflation rate of 3.10% annually was used to estimate future rent and property taxes. The rate of return use for investments was 7.00% per year after taxes.


Your $2,684.52 monthly payment consists of:
Principal and interest $1,764.22
PMI $119.39
Taxes $655.08
Insurance $145.83
Association dues & maintenance $0.00


Closing costs of $6,530.61 consists of:
Amount paid of points $2,865.31
Origination fee $2,865
Other closing costs $800


I guess if you're staying for 28 years you're set!

Posted on: 2008/1/22 5:20

Edited by Webmaster on 2008/1/22 8:57:19
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Re: NY Times - When Does a Housing Slump Become a Bust?
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Look, I mostly agree with you about the rent/buy thing, but as far as taxes are concerned, none of the property owners I know are paying anywhere near your numbers. You can argue until you're blue in the face though.

Posted on: 2008/1/22 5:12
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Re: NY Times - When Does a Housing Slump Become a Bust?
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Quote:

JSalt wrote:
Oh come on Taz, I hardly have an asset to my name and even I know that the "assessed value" of your property is not the same thing as the most recent sale price.

You really showed your ignorance with that one.


So sorry, I sold my property in Cali a few years ago and when I came here to pursue my business I did the numbers and figured-out I'd be FAR ahead renting.

In most of the country they access the value of your home according to market worth, do you have any linkage to prove otherwise in JC?

Not that I care, I'll be out of here and heading to Colorado by 2009-2010, but let's get the figures straight - I'm just using NJ State published info...

Then again, even if I'm not doing the math incorrectly (some sort of "special" deduction not on the public websites) if I was buying a money-pit I'd be VERY afraid someday the sleazy NJ politcos might actually enforce those numbers!

I can tell you this, on some homes I looked at in Edgewater (bored last summer & looking for a laugh) the property tax rates quoted to me by realtors matched pretty closely to the rates on that NJ state link

Posted on: 2008/1/22 4:57
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Re: NY Times - When Does a Housing Slump Become a Bust?
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Oh come on Taz, I hardly have an asset to my name and even I know that the "assessed value" of your property is not the same thing as the most recent sale price.

You really showed your ignorance with that one.

Posted on: 2008/1/22 4:49
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Re: NY Times - When Does a Housing Slump Become a Bust?
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Quote:

groovejet wrote:
Taz...you're full of shit.

How the hell do you calculate paying $1,312.50 tax a month on a $350K apartment? (I have several in downtown JC that costs less than that per year!)

You wouldn't need to pay for points to qualify for a mortgage at that rate.

Realtors charge 4-5% not the 7% stated too - and you can avoid using realtors entirely if you like.

Finally - If you think that a $1600 a month rental apartment is even in the same league as a $350K condo, you're mistaken.

Empty barrels make the most noise. This guy owns nothing.


Pfffff....I wouldn't call making $250K last year nuthin' Jack

BTW, unless you're in a tax abatement special (which in the future downturn will probably end-up being re-calculated) you're paying $45.48 for each $1000 of assessed value (JC Property Tax Rate as published by da Gubermint).

Let's do da math:

$45.48 X 350 = $15,918/12 = 1326.50

And the 7%? That's the NAR std. 6% commish + 1% for the mortgage crew.

So, good luck lining-up some more knife-catchers Mr./Ms. Realtor - Maybe if you keep shaking those hips it'll keep working for ya!



P.S. I've seen some REAL nice 1 BD apartments in downtown JC for $1600...

EDIT: Oops...it looks like per this JC Property Taxes can be as high as 19,421.5 a year!

Woohoo, where do I sign-up!!!

Posted on: 2008/1/22 4:22
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Re: NY Times - When Does a Housing Slump Become a Bust?
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Taz...you're full of shit.

How the hell do you calculate paying $1,312.50 tax a month on a $350K apartment? (I have several in downtown JC that costs less than that per year!)

You wouldn't need to pay for points to qualify for a mortgage at that rate.

Realtors charge 4-5% not the 7% stated too - and you can avoid using realtors entirely if you like.

Finally - If you think that a $1600 a month rental apartment is even in the same league as a $350K condo, you're mistaken.

Empty barrels make the most noise. This guy owns nothing.

Posted on: 2008/1/22 3:15
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Re: NY Times - When Does a Housing Slump Become a Bust?
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In further fairness; although some people predicted a RE bubble bursting, many others derided and mocked any such thing coming to pass. My point at the time was that a huge disparity between rents and ownership costs shows that the market is out of whack and there will be a correction at some point. I don't think the correction based on these fundamentals has fully come to JC or NYC yet but a year like the second half of 2007 on Wall St. would bring that and more.

The problem with Taz is his/her obnoxious rhetorical style.

Nevertheless, when I read this http://www.nysun.com/article/68830 I was shocked - not about the info (the dollar has collapsed against foreign currencies as well as gold) but that it was a headline article in a NYC paper. Perhaps Taz or a Ron Paul supporter has taken over the NY Sun?

Quote:

JSalt wrote:
Quote:

injcsince81 wrote:
I'd give Taz a break.

He/she correctly predicted the RE bubble burst and the severity of the RE crisis (to-date)

Citigroup or Countrywide anyone?

I certainly hope his/her predictions going forward do not come true - he/she pretty much predicted a new Depression. Given the falling dollar, the powerful Euro, the rise of China and India, the clueless and leader-less US - who knows what is going to happen?


With all due respect, by the time Taz showed up here there were about a dozen posters that had already "predicted the RE bubble burst" -- the reason being that anyone with common sense not clouded by his own property pipe dreams could see it coming.

Meanwhile Taz shows the same manner of irrational exuberance for gold that he chided others for in housing. To be sure, gold could continue to rise for some time if there are enough other people like him buying into the hype. But the current frenzy has the makings of a bubble like any other.

Posted on: 2008/1/22 1:45
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Re: NY Times - When Does a Housing Slump Become a Bust?
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To TaZMaNiO:

Hey Big Boy - don't you have anything better to do with your time than to bleat about "sheeple"?

Just craving for attention you ain't getting elsewhere, huh?

Do us a favor, please just play with your Ag/Au/Pu and Swiss bank accounts in silence.

Instead of posting on JCList, why don't you equip your bedroom with wall-to-wall mirrors (ceiling included)?

That way you can bask in your glory and enjoy your inflated sense of superiority without the need for the rest of us.

Oh wait a minute, you do need us.

'Cause otherwise it wouldn't be any fun bleating, would it?

Posted on: 2008/1/21 23:37
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Re: NY Times - When Does a Housing Slump Become a Bust?
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Quote:

groovejet wrote:
I'm selling several 1 bed condos at the moment for $300-$350 each.

I see no sign of any downturn in this price range. Lots of first time buyers willing to put 20% down. Getting 3-4 hits a day.

"In contract" deals were up by 28% in the last quarter of 2007.

Its a simple decision - get most of your money back at tax filing time - or continue paying stupid money in rent, with no deductible.

We're in a micro climate here, next to Manhattan - so waiting for prices in JC to drop is kinda futile. However, for those people interested in moving to the burbs - the prices will get a little lower.


HAHAHahaha...what a bunch of malarkey

You'd have to be the next "bigger sucker" to buy in this environment, of course they're are always suckers available, aren't there

Here's the fact Jack:

Your home purchase does not breakeven after 30 years.

This is based on your home's equity minus a 7.00% sales commission paid to brokers or real estate agents when you sell your home. It also assumes your home will appreciate at 0.00% per year and you have an income tax rate of 30.00%. Your home purchase does not breakeven after 30 years. You should consider continuing to rent.

We calculated your breakeven point by examining how long it would take to create enough equity in your home to exceed the value of investing your cash on hand. We also accounted for differences in your monthly rent and house payments. If your rent payment is less than your net house payment, we add that monthly savings to your investment. If your house payment is less than your rent payment we subtract that amount from your investment. You may notice that on the schedule at the bottom of this report the investment value can be reported as negative. This happens if your house payment is significantly lower than your rent payment. It illustrates that if you continue to rent the extra cost of renting would, in effect, use up your cash on hand.

Loan Information


Your total monthly payment was calculated as $3,591.94. Your down payment was calculated as $63,469 and you had a home price of $350,000. This is for a 30 year mortgage at 6.250% in the amount of $286,531. Total closing costs for this loan are estimated at $6,530.61.

Your current monthly rent is $1,600. The expected inflation rate of 3.10% annually was used to estimate future rent and property taxes. The rate of return use for investments was 7.00% per year after taxes.


Your $3,591.94 monthly payment consists of:
Principal and interest $1,764.22
PMI $119.39
Taxes $1,312.50
Insurance $145.83
Association dues & maintenance $150.00


Closing costs of $6,530.61 consists of:
Amount paid of points $2,865.31
Origination fee $2,865
Other closing costs $800


Anyone with $70K for the downpayment could stand to double that in the time he's waiting for the RE market to return to mean prices, not that there are too many people out there with $70K that would qualify for a mortgage anyways...

BTW, most professional investement strategist refer to people still buying homes in this downturn as knife-catchers...


Posted on: 2008/1/21 22:22
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Re: NY Times - When Does a Housing Slump Become a Bust?
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Quote:

groovejet wrote:
I'm selling several 1 bed condos at the moment for $300-$350 each.

I see no sign of any downturn in this price range. Lots of first time buyers willing to put 20% down. Getting 3-4 hits a day.

"In contract" deals were up by 28% in the last quarter of 2007.

Its a simple decision - get most of your money back at tax filing time - or continue paying stupid money in rent, with no deductible.

We're in a micro climate here, next to Manhattan - so waiting for prices in JC to drop is kinda futile. However, for those people interested in moving to the burbs - the prices will get a little lower.


Agreed. There is so much more this area has to offer than it did in the past. All of these new restaurants, bars, and retail stores are worth something no matter how sensationalistic you want to get. There's no denying that the economy sucks right now, but some areas are always going to do better than others. This area is one of those b/c it is improving every day. You can't walk around and not notice that. Like groovejet said, the rent vs. buy equation is still pretty close in that $300-$350 range.

Posted on: 2008/1/21 21:25
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Re: NY Times - When Does a Housing Slump Become a Bust?
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I'm selling several 1 bed condos at the moment for $300-$350 each.

I see no sign of any downturn in this price range. Lots of first time buyers willing to put 20% down. Getting 3-4 hits a day.

"In contract" deals were up by 28% in the last quarter of 2007.

Its a simple decision - get most of your money back at tax filing time - or continue paying stupid money in rent, with no deductible.

We're in a micro climate here, next to Manhattan - so waiting for prices in JC to drop is kinda futile. However, for those people interested in moving to the burbs - the prices will get a little lower.

Posted on: 2008/1/21 21:17
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Re: NY Times - When Does a Housing Slump Become a Bust?
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Quote:
Personally if i am buying, will wait. Dont think the worst is over yet, in JC.


RE futures traders are projecting the bust won't flatten-out until mid-2010...personally I think due to a multitude of factors that may be correct, but I don't see housing increasing in value YOY until 2014+

Too many greedy morons that flipped houses or entered into multiple MEW contracts and now are upside-down in debt - Option ARMs peaking in May 2008 mean at LEAST 2 years of *CRASH* and another 2-5 years before recovery.

Returning to mean housing values, coupled with global wage arbitrage, will be the most *PAINFUL* event this country has endured in 70-100 years...

Good luck all!

Posted on: 2008/1/21 19:11
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Re: NY Times - When Does a Housing Slump Become a Bust?
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Quote:
With all due respect, by the time Taz showed up here there were about a dozen posters that had already "predicted the RE bubble burst" -- the reason being that anyone with common sense not clouded by his own property pipe dreams could see it coming.

Meanwhile Taz shows the same manner of irrational exuberance for gold that he chided others for in housing. To be sure, gold could continue to rise for some time if there are enough other people like him buying into the hype. But the current frenzy has the makings of a bubble like any other.


Gold & Silver are real money, anyone that doesn't believe that should take a look at Central Bank holdings and take a look at Ag/Au values when inflation adjusted...

With that said, I look at Ag/Au as a temporary store of value for my liquid assets, which I poured most of my portfolio into from 2002-2003 when it became apparent that the US Gov't./FED were losing control of themselves, which led to the 'MeriKan Sheeple losing control of their future and volunteering to be debt slaves.

I have since 2005 poured 100$ of my portfolio and income into CDs, which now due to financial conditions rapidly deteriorating (monoline bond insurer illiquidity crisis), I am now looking to remove ALL of my assets to Swiss Bonds for safekeeping...and before some yahoo decries the false theory that the "FDIC will save us in the event of a bank run", let me assure you my holdings far exceed what the FDIC could help me with even if they're still liquid after bailing-out the *BIG* boyz first.

Kids be careful out there, something VERY bad comes this way...

Posted on: 2008/1/21 18:45
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Re: NY Times - When Does a Housing Slump Become a Bust?
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I'm not sure what it is with realtors, every time I talk to one they keep dissing reports about the housing slump on the "sensationalist media" and "reporters who don't know what they're talking about" and blah blah blah. No matter how units sit on the market they just shove their heads deeper into the sand.

Guys... I am a BUYER. I'm looking for bargains. If you tell me there are no bargains, then I'm not buying! I'm in no rush. Let me know if the media is overblowing things in six months. Maybe by then you will be seeing reality.

And this isn't my experience with one real estate agent, I've spoken to at least three in the last six months, two in JC and one in the burbs, all have the same "blame the media" attitude. The market is tanking? It's not true, it can't be happening!

I can only imagine what they are telling the sellers.

Posted on: 2008/1/21 5:29
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Re: NY Times - When Does a Housing Slump Become a Bust?
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Thanks for keeping it real wibbit. I see ads on craigslist and laugh. i have seen some of the same condos on the site for 6 months with the same asking price. The supply side is very stubborn right now. Like you said, you just have to wait it out. Prices are only going to fall.

Posted on: 2008/1/21 0:29
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Re: NY Times - When Does a Housing Slump Become a Bust?
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Quote:

wibbit wrote:

Personally if i am buying, will wait. Dont think the worst is over yet, in JC.


Most likely not, especially with big finance industry layoffs being announced.

Posted on: 2008/1/20 21:56
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Re: NY Times - When Does a Housing Slump Become a Bust?
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The problem with JC real estate market is the developers, and to some extent the owners (advised by their agent) refuse to lower the price normally. Instead they come up with gimmicks to reduce the sell price behind the scene.

For example, a condo cost $350k, instead of reducing it to $330k, they will pay for 2 years of maintainence, throwing a plasma tv etc... So the condo still sells for 350k on record even though the seller is paying 330k.

They do that to maintain the current price level and avoid the appearance of a RE drop, even though as EVERYONE knows it's already happened in JC.

Also for those looking to buy, realize you can negotiate the price much further now. If asking is 350k, in normal times you would offer 320-30k, but nowday dont be shy to offer lower along the $280-90 range. Most of the asking price in JC are WAY overpriced for the true current market price, they expect you to haggle it down significantly.

Personally if i am buying, will wait. Dont think the worst is over yet, in JC.

Posted on: 2008/1/20 21:08
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Re: NY Times - When Does a Housing Slump Become a Bust?
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Quote:

injcsince81 wrote:
I'd give Taz a break.

He/she correctly predicted the RE bubble burst and the severity of the RE crisis (to-date)

Citigroup or Countrywide anyone?

I certainly hope his/her predictions going forward do not come true - he/she pretty much predicted a new Depression. Given the falling dollar, the powerful Euro, the rise of China and India, the clueless and leader-less US - who knows what is going to happen?


With all due respect, by the time Taz showed up here there were about a dozen posters that had already "predicted the RE bubble burst" -- the reason being that anyone with common sense not clouded by his own property pipe dreams could see it coming.

Meanwhile Taz shows the same manner of irrational exuberance for gold that he chided others for in housing. To be sure, gold could continue to rise for some time if there are enough other people like him buying into the hype. But the current frenzy has the makings of a bubble like any other.

Posted on: 2008/1/20 18:55
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Re: NY Times - When Does a Housing Slump Become a Bust?
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Dude, you've gotta live somewhere but the rent vs own debate ? Decide, cuz its getting tired. PS I wanna BUY CHEAP!! Can we still be friends?

Posted on: 2008/1/20 1:07
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Re: NY Times - When Does a Housing Slump Become a Bust?
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I'd give Taz a break.

He/she correctly predicted the RE bubble burst and the severity of the RE crisis (to-date)

Citigroup or Countrywide anyone?

I certainly hope his/her predictions going forward do not come true - he/she pretty much predicted a new Depression. Given the falling dollar, the powerful Euro, the rise of China and India, the clueless and leader-less US - who knows what is going to happen?

Posted on: 2008/1/14 21:27
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New York Times: What’s Next for New York City Real Estate?
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What?s Next for New York City Real Estate?

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New York City may not follow the rest of the country into a slump, but there are signs that the market could become more tempting to buyers.


New York Times
By CHRISTINE HAUGHNEY
Published: January 13, 2008

LOOKING back, 2007 was supposed to be the year that the Manhattan residential real estate market slowed down and began to look a bit more like the slumping national market.

But that didn?t happen. While there were periods when condominiums and co-ops sat unsold because buyers and sellers couldn?t agree on prices, the year ended with the average price of a Manhattan apartment rising to a record $1.4 million, though the number ballooned in part because so many wealthy buyers purchased extraordinarily expensive condos.

No one is predicting that 2008 will be a repeat of 2007. The sprawling pieds-?-terre may still sell for millions at the Plaza and 15 Central Park West, but in general, economists are predicting that prices will drop in some segments of the market and in some neighborhoods around the city.

?New York has had a very good run, and there are still a lot of people sitting around with cash,? said Christopher Mayer, the Paul Milstein professor of real estate at Columbia Business School. ?But that doesn?t last forever.?

There are already signs of a more sober market ahead: Wall Street workers may face leaner bonuses this year and in years to come, borrowers may have a harder time getting mortgages and foreign buyers may reconsider the potential returns of investing in New York.

Mr. Mayer said that a national recession could weaken Manhattan prices even further because fewer workers could afford to buy in the borough.

Diane M. Ramirez, president of Halstead Property, is less concerned about a recession because the inventory of property on the market is currently low. She said that in the recession of the late ?80s, Manhattan dropped sharply because the city had an oversupply of apartments. ?We had a deeper, longer recession than most cities,? she said. ?We lost 20 to 50 percent value.?

When trying to gauge the real estate market ? or, for that matter, the city?s economic outlook ? the first stop is always Wall Street.

Wall Street jobs make up 5 percent of the total jobs in New York City but 23 percent of the city?s total wages, according to data tracked by the New York State DepartmenticesLabor. Annual bonuses are also tracked by real estate brokers with a fanatical devotion.

History shows that a great deal of the bonus money is used to buy real estate. Financial workers are typically the first buyers to show up with the cash in the spring buying market, and this helps shape demand for apartments.

?That energy of the bonus money really does get the spring market percolating,? Ms. Ramirez said. ?The bonus tends to be the starting gate for them.?

While it may seem counterintuitive, considering how much havoc the subprime crisis has brought to the financial industry, one analyst is predicting that 2007 bonuses, which workers will receive over the next couple of months, will be about the same as last year?s record bonus year for some bankers.

These workers are compensated based on their performance for the whole year, and most banks did well leading up to the credit crisis last summer. So, while workers may not earn more than they did in 2006, they could still have plenty of money to put toward real estate.

Alan Johnson, the managing director of Johnson Associates, a firm that tracks compensation data, said that over all, bonuses should remain flat for a broad spectrum of the financial industry. ?This year was a pretty good year for bonuses, roughly on par with 2006, some of them less, some of them more,? he said.

But, he said, that won?t necessarily be true a year from now, and this knowledge could keep traders and investment bankers from splurging on real estate this year as they have in past years.

?Everybody sees the storm clouds on the horizon,? because Wall Street firms have already had write-downs of more than $100 billion from their mortgage-backed securities businesses, Mr. Johnson said. ?If you?re going to commit to some big purchase, it makes you pause. Your pay may go down.?

He predicts that by the end of 2008 employees at the top will be hurt the most: those whose total compensation of salaries and bonuses is more than $1 million could see cuts by 40 to 50 percent; those in the $500,000 to $1 million range could see cuts of about 20 percent; and those with pay of less than $500,000 could see 10 percent cuts.

Shai Shustik, the president of the brokerage firm Manhattan Residential Inc., which has many clients who work on Wall Street, says they are proceeding with more caution. ?I don?t think people are as gung-ho and anxious to get out there and spend everything they made, like they did in 2007,? he said. ?People aren?t going to stretch as much.? In the past, ?the guys who tell you they?re spending $2 million spend $2.4 million or $2.6 million,? he said. ?Now, they want to stick to $2 million.?
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What a Difference a Market Makes (January 13, 2008)

Many of these Wall Street employees might also find that their bonuses are being paid less in cash and more in stock.

Melissa Cohn, the president of the Manhattan Mortgage Company, said that one banker who had negotiated the contract on a $9 million town house had to pull out of the deal because he found out he would receive only $750,000 in cash from his total bonus. The remainder would take other forms, like stock, meaning that he would have less to spend in the near term on real estate. ?He?s gone from the $9 million to $10 million range to the $5 million to $6 million range,? she said. ?Everyone in general is being more conservative.?

Moving beyond bonuses, the fallout from the mortgage crisis is likely to touch a broad swath of the real estate market. Qualifying for mortgages, for instance, may be more problematic this year for buyers in all price ranges. The mortgage crisis, which was set off by defaulting subprime loans last summer, has forced lenders to tighten their standards across the board in both Manhattan and the boroughs.

Richard Barenblatt, a mortgage broker with the Apple Mortgage Corporation, advises his clients to prepare themselves for far stricter mortgage requirements than they would have faced six months ago.

For starters, lenders expect borrowers to make higher down payments for co-ops and condos. He said that before the broad defaults on subprime mortgages forced banks this past summer to tighten standards, buyers with good credit applying for full-income verification loans could qualify for mortgages worth 95 percent of the purchase price up to $1 million. Now these same buyers qualify for mortgages valued at only 90 percent of the price up to $1 million.

Some lenders are also requiring borrowers to have more money in reserve; for example, borrowers applying for jumbo mortgages ? those surpassing $417,000 ? may need to show that they have the equivalent of up to 12 months of mortgage payments in cash after closing.

Mr. Barenblatt encourages buyers to pay down credit card balances below 40 percent of their total combined credit card limits; for buyers with debt levels above that, he said, banks are less likely to approve mortgages.

He also thinks buyers should talk to their lawyers about getting mortgage and appraisal contingencies written into their contracts. A contingency is a clause that allows a buyer to back out of a deal if he or she can?t find a mortgage, if the lender changes the terms of the mortgage before closing or if an appraisal comes in unexpectedly low. In the past, sellers in Manhattan have often balked at contingencies, because there was usually another buyer waiting in the wings willing to buy without one. Mr. Barenblatt also encourages buyers to try to get preapproved for mortgages.

Condo buyers might find extra scrutiny when visiting the mortgage broker because lenders have seen too many cities around the country where new condos are sitting vacant or unfinished.

Some major lenders in New York have stopped giving mortgages at condo projects where the developer has not sold 90 percent of the units. These banks are imposing even stricter standards than those Fannie Mae and Freddie Mac are putting into effect on March 1 for mortgages below $417,000, according to Brad German, a spokesman for Freddie Mac. The threshold for the two government lenders: 51 percent of units must be sold.

?We changed our guidelines in response to shifts in the real estate market, including oversupplies in Florida, Las Vegas, Arizona and other condo markets outside of New York City,? he wrote in an e-mail message. ?Our mortgage purchase guidelines are national in scope.?

These national guidelines are making it more difficult for condo buyers in Manhattan. Foreign buyers and financial industry employees have paid top dollar for these new apartments in the last year precisely because they required less money down and had more flexible requirements than co-ops.
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What a Difference a Market Makes (January 13, 2008)

Ms. Cohn of Manhattan Mortgage tells of clients who have had mortgage applications rejected by some banks because the building where they wanted to buy was not 90 percent sold out. ?There has been an apocalyptic change in the lending market,? she said. ?Banks that were market leaders have eliminated numbers of programs and products and have made sweeping changes.?

Foreign buyers, who have made about a third of the condo purchases in the last 18 months, have done so because they see it as a wise investment considering the weakness of the dollar, said Mr. Mayer of Columbia Business School. But, he added, even foreign buyers will walk away from deals if they don?t think Manhattan prices will remain strong or if they cannot expect high returns on their investments.

?They don?t need to buy real estate to make a bet on the dollar,? he said.

All of these situations could create a window of opportunity for buyers. In fact, certain market segments have already started to show signs of slowing.

Sofia Kim, who is the head of research for StreetEasy.com, said that out of the 24,000 apartments listed by the site at some point in 2007, about 20 percent, or 4,800, had cut prices, by an average of 8 percent.

Most sellers who cut their prices were offering one- and two-bedroom co-ops, Ms. Kim said. These price cuts were concentrated on the Upper East Side and in Chelsea, Greenwich Village and Midtown. In the coming year, she expects that sellers may continue to cut their prices if sales are slow.

Prices in Inwood and Hudson Heights, in the northern reaches of Manhattan, had dropped about 5 percent by the end of last year, according to fourth-quarter data released by Halstead Property.

Data from the Corcoran Group, tracking sales in Brooklyn in the fourth quarter of 2007, show that prices on certain types of apartments in coveted neighborhoods like Park Slope and Fort Greene had dropped slightly.

Some neighborhoods like Williamsburg and Greenpoint have had 15 percent price drops from their peak in the summer of 2005, and sellers are negotiating deals, said David Maundrell, the president of Aptsandlofts.com, a Williamsburg brokerage.

Brooklyn buyers, he said, have been especially fortunate in negotiating deals on new condos. Developers of new condos with fewer than 10 units have agreed to pay closing costs for buyers, while developers of larger projects have been willing to negotiate on price. ?Most of my guys in the larger buildings will consider any offer,? Mr. Maundrell said.

Prices in New York City are not expected to be significantly affected by foreclosures this year, as the number of foreclosures in the city?s outlying neighborhoods is rising, but still low. Fourth-quarter data tracked by PropertyShark.com show that there were 605 foreclosures throughout New York City in the fourth quarter of 2007, a 71 percent increase over the 354 foreclosures in the same period in 2006.

But that is in a city of three million households and represents only 0.02 percent of New York City inventory. That?s far less than in Miami, which has a 0.25 percent foreclosure rate, and Los Angeles, which has a 0.21 percent foreclosure rate.

Ryan Slack, the chief executive of PropertyShark, said that the New York numbers may rise steadily through 2008, but they will still represent only a tiny share of the overall market. ?They?re not that high a percentage of the inventory,? he said. ?If you?re selling into the market, you?re going to be more affected by the dynamics of buyers and sellers than foreclosures.?

The rental market, which has been exceptionally tight for the last few years, is also showing some signs of loosening up. Marc Lewis, the chief operating officer of rentals and investment sales at Century 21 Fine Homes and Estates, says that the rental market slowed in the middle of September and has not picked up since.

The December survey of 10,000 apartments tracked by the Real Estate Group New York shows that the rental market fell from the previous month, especially on the Upper West and East Sides, and in Midtown East, Gramercy Park and SoHo. Some declines were striking; rent in studios in doorman buildings in the financial district, for example, dropped by $503, to $2,559 a month.

Mr. Lewis said there were fewer new hires relocating to Manhattan for jobs and paying high rents. He said that landlords were much more willing to pay commissions, offer a free month?s rent or both. And, he said, they?re much more willing to negotiate on apartments that rent for more than $2,000.

?If they have an apartment that?s empty for a week or two or a month, they?ll entertain an offer,? Mr. Lewis said. ?It?s definitely going to continue for the next three, four or five months.?

In the end, economists and real estate brokers say they don?t expect Manhattan to suffer as severe a housing slump as the rest of the nation because there hasn?t been as much overbuilding.

That?s because banks stopped lending to developers to build more condos and developers turned nearly a third of the sites into other uses like hotels, offices and rental buildings, said Robert Knakal, the chairman of the commercial real estate brokerage Massey Knakal Realty Services Inc., based on what he saw from the projects that his company had marketed.

In addition, more of the condos that were built were snapped up by more Wall Street bankers and foreign buyers than some real estate industry experts had originally expected.

?What this means for the consumer is that there will be product available for them to look at, but not a significant oversupply,? Mr. Knakal wrote in an e-mail message. He added, ?Buyers who are on the sidelines waiting for prices to drop significantly before buying may be there for a long time.?

http://www.nytimes.com/2008/01/13/rea ... ov.html?pagewanted=1&_r=1

Posted on: 2008/1/14 21:27
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Re: NY Times - When Does a Housing Slump Become a Bust?
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Quote:

Tankstelle wrote:
Quote:

TaZMaNiO wrote:
Not to worry, this bottom won't come in anytime before 2012 and by then the foreign buyers will be running for their lives!


I sold my condo at a little more than 10% profit after only holding it for 2 years last month. You are an idiot - the market here is a little slow, but people are still making money. I am living, breathing proof of that.


Fear! Panic! Freakout!

I'm with you Tank-- I too sold for a little over 12% more in about 2 years time. People always need a place to live, especially in the "middle of the market". (I did not own a hyperluxury "Glass Tower" unit). My friend got a little over 17% more. Stay calm and everyone will be fine (Simplistic, but I believe it).

Posted on: 2008/1/14 20:41
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Re: NY Times - When Does a Housing Slump Become a Bust?
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I'm an idiot? LOL

Having opted-out of the bigger fool pyramid scheme in 2002-2003 I sank ALL of my cash at hand into gold & silver.

Do you have any idea how much that has increased since then?

P.S. Good luck with your U$D too!

Posted on: 2008/1/14 20:35
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Re: NY Times - When Does a Housing Slump Become a Bust?
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TaZMaNiO wrote:
Not to worry, this bottom won't come in anytime before 2012 and by then the foreign buyers will be running for their lives!


I sold my condo at a little more than 10% profit after only holding it for 2 years last month. You are an idiot - the market here is a little slow, but people are still making money. I am living, breathing proof of that.

Posted on: 2008/1/14 19:58
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Re: NY Times - When Does a Housing Slump Become a Bust?
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Not to worry, this bottom won't come in anytime before 2012 and by then the foreign buyers will be so spooked they won't be back until 2030!!!

Posted on: 2008/1/14 19:55
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Re: NY Times - When Does a Housing Slump Become a Bust?
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Well, well...everyone ready for the fun & games in 2008?


Yup - I am. Got cash, too. Love the smell of blood in the streets...

The only thing is that NYC RE has not declined. Apparently foreign buyers have been snapping up properties.

Me?

I am looking at South Florida RE, which has recently suffered declines up to 30%.

I'd like to see 50% declines before I pull the trigger.

Posted on: 2008/1/14 19:45
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Re: NY Times - When Does a Housing Slump Become a Bust?
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Well, well...everyone ready for the fun & games in 2008?

Posted on: 2008/1/14 19:21
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