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Stuff white people like: #73 Gentrification
“… White people like to live in these neighborhoods because they get credibility and respect from other white people for living in a more ‘authentic’ neighborhood…”
http://stuffwhitepeoplelike.wordpress.com/2008/02/22/73-gentrification/
Not a good sign at all! Brokers trying to stuff ya with raw fish and free booze, before trying to brainwash you with “guest speakers” who will no doubt preach the RISK FREE investment of real estate in LIC. I suspect Powerhouse, Casa Vizcaya, Foundry, and 5SL will be offering plenty of free buffets soon. Sales clearly aren’t going very well. So you can can let them get you boozy, but careful what you sign. Wait 6 months – 1yr and you’ll get that condo for 30-40% cheaper. And maybe a free spicy tuna roll.
#4 we just purchased and you are making us nervous, why the bleak prediction?
#4 – keep telling yourself that if it makes you feel better for missing out.
#7 is #4. Sneaky sneaky.
Agree with #4. I believe that in ten years LIC will be a great neighborhood (think Williamsburg 5 years ago), but currently there’s nothing there but a glut of new developments. The more mature NYC market will take a 15-20% hit, especially in the wake of this recent round of bad news/layoffs on Wall Street, but expect LIC to fare far worse…somewhere in the neighborhood of 30% or upwards. There are a number of reasons. First, it’s a second choice market for renting, childless Manhattanites, who won’t even consider it until they’re convinced that that studio in the West Vil they’ve been eyeing is not going to drop more than 10-15% max. Those folks are not simultaneously looking at properties in LIC, though they may be looking at certain things in Brooklyn, so there’s a built in lag between when they start looking at properties and actually start making offers even if they perceive value at the outset of their search. The younger buyers that these LIC properties are marketed at are also not so turned on by the much touted one-stop proximity to Manhattan because that translates into one stop to MIDTOWN (as opposed to some of the Brooklyn properties). Granted, that may be a plus if they happen to work in Midtown, but it doesn’t exactly enhance the bohemian yuppy image these buildings are going for if it’s going to take 45 minutes to get to Nolita. Finally, congestion pricing is in everyone’s head, so one of the benefits of having a car (the ability to drive back and forth from the city at one’s whim) has been severely psychologically devalued.
I love seeing posts by geniuses who think that waterfront properties with Manhattan skyline views at 50-60% of Manhattan prices are bad investments. None of the LIC developments are having any problems selling at $700-900 psf, even in this slow market. As the area continues to transform and Duane Reade, Amish Market, more restaurants, etc. open, it becomes even more desirable. As long as the Fed keeps rates low for the next year and keeps liquidity in the market, which it is doing, the NYC housing market will stay strong.
#10 You’re a fool. People aren’t going to pay $700-$900 a square foot, and they aren’t anymore. And I live here. Every day I get to look across at the nice Rock Rose buildings and see how empty they are. Or go browse Street Easy and see just how many units at places like 5SL have yet to close, or get yet another email from Prudential Elliman about yet another open house on Purves Street.
I bought in HPC and prices there are somewhere between $600 – $800 per sq/ft. Majority of 5SL remaining stock is north of $700 sq/ft., with most $800-$900. I am surprised how much of HPC has sold of the upper floor ( higher priced ) apartments. Last I heard the project is %50 sold, which isn’t bad considering the market and the fact that they are only advertising on local websites and publications like this one. Certainly, prices will slide some because that’s what happens in a down market. But %30 in a reasonably priced unit is extreme. 5SL, pwerhouse, and the foundry are not reasonably priced unit in my opinion. They are nice places to live, but not quite at the prices they are asking.
I agree with #13, however, based on Streeteasy, 5SL is around 80% sold at over $800 psf, Powerhouse looks to have sold over 70 units in the high $700s/sq. ft, Foundry opened sales right in the middle of the bad market news and they have sold 20 units in the high $700s/sq. ft, 10-50 Jackson and Caza Viscaya look almost sold out (mid $700s/sq. ft), Ten-63 has sold 33 units in the mid $700s/sq. ft, HPC are more than 50% sold in two different buildings. The Rockrose buildings you are looking at probably haven’t finished yet. #12 is the last person from whom I would take real estate advice. Prices will probably stay in a holding pattern for 6 months to a year until the market and economy comes back, then they will shoot up again, especially in LIC.
How many of these buyers will actually end up closing and moving in? I’ve seen this happen before, commitments to purchase and money down don’t mean shit when it comes time to fully close. The Rockrose building I directly look at has dozens of finished units, I get to see people walking through them all the time. This doesn’t even account for the unfinished building. As for other units in the area, how many were bought on spec with the intent to flip? Given some of the brokers I see skulking about “finished” developments I’d say there are some problems.
And sure, right, six months to a year… the economy will come back and we’ll be roaring along.
Bullshit. You might ultimately be right, in five, most likely ten years, values may recover in areas like Long Island City, but in six months, a year? Forget it.
Look at inventory levels, last year prices in New York fell 5% and its only now just starting to hit us. The financial services layoffs have barely begun to take effect, and bear in mind, that while they only factor as like 10% of the employment in the city, they account for like 30% of the money. Never mind all the other financial issues that remain with the city and other softening sectors ranging from services to government jobs themselves. Meanwhile factor in rising taxes, a dollar that is further devalued, and inflation. People are tapped out, the great ride is over. Now its time to deal with reality.
Take a closer look. Most of these properties are not moving. The only one that have of recent are the studios and 1 bedrooms around $400-550,000. Most people seeking 2 bedrooms are not willing to pay $800-1m for this area. After the great views are taken the rest of the building just sits. This market is tought to move units that are not ideal. People will be much more selective. These prices will correct at least 20%. If you don’t want the big view these condos will be on sale in the next 6 months. The credit is getting tougher and tougher to get.
#11 How many blogs are you going to post that on?
#15/16, the more you post, the more people can see how uninformed and foolish you are. It’s all on streeteasy – Powerhouse started sales in September and has sold over 30 2- or 3-bedroom units, 21 of which for over $900k (12 for over $1million); 5SL has sold around 40 2- or 3-bedroom units with about half going for over $900k (and 18 for over $1 million); Foundry has already sold 6 2- or 3-bedroom units in three months of sales, the cheapest was $899k; Caza Vizcaya – 19 2-bedrooms sold, 5 for over $1million; on and on. But don’t let facts get in the way of your silly comments.
And you think that people are going to put $80-100k down on contract and just walk away from it to not close?? Because they change their mind and decide that they really don’t like LIC? You have “seen this happen before”?? Ha, you gave me a good laugh on that one.
Keep waiting 5 or 10 years to buy, I’m sure that is a great strategy for you (another laugh!)
#15 this was an issue in Arizona and FL where you could sign a contract with no deposit down. In NY each of the developments is collecting a 10% deposit. Most nowaday are lining up financing for prospective buyers and not providing a financing contingency. Anyone walking away from these contracts is going to lose their deposits, so they will close.
Done properly most devlopers don’t need to see out to make their money. 5SL at is probabaly in the black already. they will hold on to the unsold units rent them out and wait for interest and sell them when the time is right. (see Arris lofts) I really don’t see a firesale coming anytime soon.
Also where are people getting 30% 40%corrections from?? Nationally home values are down 20%. Is the NY market inheriently worse than elsewhere in the nation?
The NY market has done much better than the national averages. In NYC, demand is still greater than supply, and the weak dollar has kept overseas buyers active in Manhattan, which spills over into LIC, Williamsburg, DUMBO, etc.
First, #15 and #16 are not the same posters.
Second, when did I ever say I would wait five to ten years to buy? I conceded that property values would probably recover enough to begin heading north again in five to ten years. This is opposed to the pollyanish notion that in six months to a year all will be well here in New York City real estate and that the storm will have blown over by then. There’s a posting just this morning on Curbed referencing an article where some folks are already getting jittery about developments that aren’t supposed to come online until 2010. I suppose by then all those nice shiny new high rises being built in downtown Brooklyn will be all on their way to being built then too.
Third, people don’t walk away from money down? Who the hell are you fooling? The whole point of money down is the option to walk away if need be. If you put 10% down on a place that is worth only 75% of your purchase price, what, you just go forth and eat the other 15% and smile? Especially when you still have monthly fees, a down market, and you’re wondering who gets axed next, you or the guy next to you? Sure.
This is not going to be a mild recession, and anyone who thinks last week’s rally was indicative of hitting bottom is fooling themselves. We’re just warming up. To reuse a phrase, the Fed is almost out of bullets. Meanwhile, Bear Sterns was half the size of many of the investment banks. You think Lehman is aok? Think again. Those great earnings were in large part due to accounting tricks. All of this is limited to residential mortgages and real estate? Think again, the commercial side is starting to soften, and they have even bigger subprime messes and ARM based financing. Issues are now finally starting to crop up in the consumer credit areas, everywhere from bank credit cards to auto financing.
While all of this implodes, and the dollar falls, sure, why not, New York City real estate will defy all odds and be fine. Yes, the foreigners will save us, they’ll buy all that property with their Euro’s and other currencies, yes, real estate prices in dollars will rise. The only problem is, for poor sack of sud worker bees like most of us here in the city, our salaries won’t, and the value of our dollar will decrease, and even if you haven’t wiped out your credit rating, chances will be slim you’ll find credit at nominal terms.
Yep, all’s well.
“Despite these quick-hit rallies, the financial industry, and all of New York City for that matter, are bracing for more job losses. Firings this week at Citi, Lehman Bros. and Morgan Stanley bring the number of heads facing the guillotine to 34,000 since the subprime revelation began nine months ago.
To put that into perspective, in the nine months following the tech bust in 2000, 40,000 heads rolled. The subprime mess is officially approaching the tech bust in breadth and scope. Goldman Sachs and Citi have pledged at least 6,000 more each. And who knows how many of the 14,000 remaining Bear Stearns employees will remain after the deal with J.P. Morgan finally goes through.
A recent report from UBS suggested that the firing on Wall Street has only half begun, meaning we could see upward of 70,000 job losses before the crisis ends. Again, for perspective, two years after the tech bust, the financial industry had shed over 90,000 jobs.
As with the tech bust, losses this time around are likely to spur significant economic hardship in the city. In 2007, the finance industry accounted for over 30% of all wages earned in New York City, says today’s New York Times. According to the paper, each Wall Street job supports around three workers in other sectors. Mercedes salespeople, real estate agents and coke dealers, take note.”
Well I guess we will see soon enough. I personally think that you are overstating the impact, however I am happy to see you acknowledge the importance of us yuppies since we are supporting 3 other workers in other sectors.
From today’s NY Times:
LONDON, March 25 (Reuters) – Signs of life in the U.S. housing market combined with JPMorgan’s vastly improved bid for Bear Stearns to lift prices sharply higher across global equity markets on Tuesday, although the dollar remained weak.
. . .
Markets were being driven by Monday’s report of a surprising rise in sales of U.S. pre-owned homes last month.
It was taken by some investors as a sign that the worst may be over for the U.S. housing sector, which has been behind much of the economic and credit worries of recent months.
In addition, JPMorgan lifted its offer five-fold for Bear Stearns to $10 a share, alleviating some concern about other banking shares.
“It gives people hope that maybe the darkest period is over,” said Hans Kunnen, head of investment markets research at Colonial First State in Sydney.
#22 & #24 thanks for illustrating that there is no point in trying to time the market. For every person that you can produce there is another saying that the worst is over. Who is right? Time will tell, but it pointless to throw up statistics and quotes to prove your point. At the end of the day people need a place to live. I bought in one of the new condos, and perhaps I’ve lost some value since singing the contract, but overall I am happy with my choice as I am buying it as a home – not as an investment. I would do it Again as I would much rather be out of my current place where I am cramped and miserable. After 5 years the markets will have long worked themsleves out and I stand to still make a profit on my purchase.
25 excellent points. really there is nothing more to say.
ditto for 25
Well said 25.
Stop looking at the performance of the market on a daily basis. It seem to me that most people are missing the point. It’s the credit on all levels that is no longer available to many buyers. The day of 5% down are way over. Even with the “big wallstreet” job. Most banks will not even look at a deal without 20% down. The other problem is with many of these units going to closing in the next 12 months some buyers might not get the loans needed.IE 1m with 20% leave you with trying to get a $800,000 loan. That will be very hard to get in this climate. If you lost your job it’s impossible. If you work on wallstreet the banks will consider it a high risk for the next 12 months. So those people that put down payments might not have the option of bailing out. The decision will be made for them. FYI some banks have begun to close peoples lines of credit even with equity and great credit ratings. Reducing the credit risks everywhere is the business model of today. The credit cards will be the next indicator of the credit crisis. Just imagine all the people who are using there credit cards to stay alive. Eventually that leaves the credit card companies with Billions of lose. Every CEO will until it can’t anymore and the fact is that the fed is almost out of bullets is a very awaking reality. Do yourself a favor and don’t be the one owning the next bear.
Chicken Little #29 likes to regurgitate some news article he read. In reality, the Fed has taken strong measures to keep liquidity in the market, and buyers with good credit will still be able to get a loan. The days of subprime, no-doc, high loan-to-value ratios are over, but most of the buyers in LIC are putting a minimum of 10% down. Generally the people buying in new condos in LIC are not subprime-type buyers. If they have good credit histories, they will get their loans.
Chicken Little is already assuming mass layoffs and a Great Depression, which is no more likely than a quick market turn-around. As noted above, none of us can predict with certainty what will happen in the short-term, but history shows that the pessimists who sit on the sidelines during uncertain times are the ones who come up short in the long run.
I have to wholeheartedly agree with the notion that buyers like #25 are right, they bought as a home, not an investment, and the numbers work for them. That however is far different than many of the investment oriented purchases and flips that have gone on be it from Miami to Chicago and yes, even New York.
Chicken Little #29 gets it right. And #30 is misinformed, probably yet again. Yes, folks with good credit can still get loans, but again, on what terms? Most buyers in LIC only putting 10% down? Sure, last year, no doubt. But now?
Don’t fool yourself into thinking that everything relates to subprime, although it should not be understated that nearly 20% of the mortgages written out there relate to subprime. Over half with adjustable rate mortgages of some form, many which are beginning to reset. I read in one article that there are more ARMs resetting per month through June of this year, than all of last year combined.
One of this mornings headlines in Bloomberg pertained to Goldman’s estimate that they now are forecasting subprime losses in excess of $460 BILLION. Four times previous estimates. Municipal bond auctions are failing more than 70% of the time, and US treasuries given the recent Fed rate cuts, are now dipping into negative yields.
But again, sure, all is well, New York will be totally isolated.
Keep sticking your head in the sand. You’re like the folks who live on the beach when a hurricane is coming and who refuse to leave because the view is so pretty. Yes, the view is pretty, and sure the location is great *most* of the time. But every so often a storm comes through and wipes everything out.
Anyone that signed a contract with a morgage commitment is an idiot. Again I could be wrong, but I have to thing that almost 100% of the signed contracts have commitment letters in place.
The days of flipping real estate were over in NYC in 2006. Besides I looked at most of the new condos in the LIC market and the expressly forbid flippers since the do not allow purchasers to sell while they are selling. Again most developers were not stupid and say this coming a mile away. Most have arrangements in place with lenders who will underwrite the purchaser loans. Again I looked at almost all the new condos and every single on that I went to had this.
I looked at many condos as investment property, and I couldn’t get the numbers to work. Unless you have cash lying around to put down a 50-60% equity, the numbers don’t work. The carrying costs far exceed any rental income you would get. Doubt there are are a lot of those type of buyers out there right now.
I grant you that if you lost your job, you may think twice about closing, but other than that…
Hey 30 – Did you even read my post. I was saying that even people with great credit are seeing it tough to get loans. That’s my point. Even people who will look to buy in this area which is not cheap will find it more difficult getting a loan. And that will result in people that were getting loans 6 months ago not able to qualify today. That means less buyers = more inventory. This is not hard. Also I think that if you plan on staying in this area you will have a safe investment in the long run. However as people with life experience know the future somtimes doesn’t always workout the way you plan.
home = home
not
home = investment
real estate markets go up and they go down. people survive even when the value of their home goes down in the short run. Values have not fallen 30-40% and most likely will not. If they did, the economy would be bad for owners and non-owners alike. Such doom and gloom. Does anyone here have any long-term vision?
I think most people do have long term views. However when people are spending $100’s of thousands of dollars the short term always matters. If I was seriously looking I would not want to buy at these priceses knowing that I may save 10-15 in a few months. That’s alot of money.
A timely article in the New York Times today:
http://www.nytimes.com/2008/03/26/business/26leonhardt.html
“Three years ago, when the real estate bubble was still inflating, this sort of standoff was the exception. It’s the norm today. Overall home sales have fallen a remarkable 33 percent since the summer of 2005. Home prices, on the other hand, continued to rise until 2006 and are now only 5 to 10 percent below where they were in mid-2005, according to various measures.
“In most other areas of the economy, this combination of plummeting sales and stable prices would not happen. When demand for airline tickets drop, the airlines cut their prices until they have sold their seats. When stocks become less appealing, share prices fall, sometimes sharply.
“Just try to imagine stock prices staying roughly flat over a three-year period while sales volumes sank because investors considered the market overvalued. Bear Stearns is still worth $150 a share, and I’m not selling until someone pays me $150!
“Real estate, though, is different. For both economic and psychological reasons, there is no asset more conducive to hopeful overvaluation.
“That means real estate slumps tend to grind on for years, until sellers submit to reality and reduce their prices. This week’s batch of economic reports suggest that the adjustment is finally starting to happen. The decline in house prices is accelerating, especially in some of the big metropolitan areas covered by the Case-Shiller index released Tuesday, while the number of home sales has recently risen a bit.
“But prices still have a ways to fall. Relative to the economic fundamentals — like incomes and housing supply — the average price nationwide seems to be about 10 percent too high. (This, of course, hides a lot of variation. In Texas, prices look sensible, while in much of Florida and Arizona, they are probably about 25 percent too high.)”
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