From StreetEasy:
10 Years After the Financial Crisis, False Optimism Pervades NYC Housing Market
Aspiring investors may be tempted to view the city’s recovery and the gains reaped by a handful of buyers as evidence that only a major bounty comes from owning a home in the city. However, for homebuyers with speculative aims — including foreigners seeking a place to park their money, wealthy shoppers looking for a trophy apartment, and the substantial portion of condo buyers who immediately list their purchases for rent on StreetEasy — the financial wisdom of buying up New York City real estate is much less evident.
Substantial gains in the years after the financial crisis have largely been limited to those who managed to catch the upturn in the market. Those who bought at the top of the last market and have resold in the intervening years have fared less well. Only half of those who bought in the two-year period leading up to the collapse of Lehman Brothers and have since resold earned the 10 percent necessary to offset the costs of buying and selling. Among those buying between September 2006 and September 2008, the median annual return was just 1.7 percent — a dramatic 5.8 percentage points less than those who managed to buy just after the crisis.
Homes bought shortly before the crisis and resold since the crisis were priced similarly to those bought post-crisis: the median resale price for these units was a modest $635,000. Unlike homes bought during the recovery, however, their gains were much lower: roughly $60,000 on the median home resold. This Midtown South studio co-op is typical of homes bought pre-crisis and sold during the recovery. It was purchased for $575,000 in June 2007, and it sold for $635,000 in 2015, a gain of just $60,000, or a 1.3 percent annual return.
Even for those who did manage to time the market well, the numbers are less attractive when compared with other investments. While the 28.5 percent increase in city home prices since November 2011 outpaced the cost of other goods and services, NYC real estate dramatically underperformed the stock market. The S&P 500 more than doubled over the same period, increasing by 125 percent since the housing market bottomed out — an annual return of 13 percent relative to the 3.8 percent offered by NYC real estate. This number also excludes some of the most dramatic gains following the crisis: from its true nadir in early 2009, the market has since returned a whopping 283 percent.
…
With prices now beginning to fall in both Manhattan and Brooklyn, a cycle of swift growth in New York home prices seems to be coming to an end. A large number of those who bought after the crisis appear eager to cash out: the number of homes for sale on StreetEasy hit its highest level since the recovery in the second quarter of 2018. Of the more than 13,000 homes listed for sale on StreetEasy in that period, more than 35 percent were bought since the September 2008 collapse of Lehman Brothers.The perception of gains from the recovery seems to have pushed the expectations of current sellers beyond reason. Though overall sales of units bought since the financial crisis have returned a median 33 percent over their previous purchase price — or 7.5 percent per year — sellers listing their homes in the second quarter of 2018 are asking for a 41 percent premium over their previous asking price, making for an average return of 7.6 percent per year. Only 11 percent of the units listed in this period appear to have sold as of late August. Those that did went for returns roughly in line with historical precedent: a 29 percent median total gain, or roughly 5 percent median gain per year. Of those sold, more than half went for below their initial asking price. Only a quarter of those homes sold so far went for 40 percent or more above their purchase price.
These asking prices reflect a belief among sellers that the pace of price appreciation since the crisis is sustainable. However, it appears that price growth in most parts of the city is rapidly running out of steam. According to our July 2018 Market Reports, sale prices in both Manhattan and Brooklyn have begun to tick downward. At the same time, new inventory continues to sit on the market, with another surge in inventory likely to hit the market this fall. Academic research indicates that homeowners are reluctant to set realistic prices when selling in a weakening sales market, a phenomenon that fits well with these market dynamics.
http://tax1.co.monmouth.nj.us/cgi-bin/m4.cgi?district=0905&l02=090500017____00045____C62-BM
Most recent Hoboken resale illustrates home value direction. Any burbs seeing trends like this?
Pretty crazy, is Jersey hotter than NYC at this point?
Union is now the best place to live in NJ, who cares about Hoboken.
2 N.J. towns are among the best places to live in U.S., new ranking says
…what could go wrong?
NJ versus New York City trends according to SamZell’s $25 billion market cap apartment company on July earnings call:
: So no concessions. I mean, if there is concessions because they’re nominal, they’re targeted, they’re strategic from a marketing standpoint. I mean, just to put into perspective the kind of that Hudson waterfront area, it’s doing the best out of all of the sub-markets that we have in New York on a year-to-date basis
Looks like Indian power couple who bought that resold their 2010 3BD on 700 First for around $850k. Paid $490k in 2010. No bubble, right?
Jersey waterfront is insane. May not be a bubble, just an elongated step up to market rates. It was unused (residentially) until the last two decades. When it finally converted it was scorned for an extended period. Finally it is priced to reflect the short rail ride and extraordinary position next to a major city, with that being not just any city but NYC.
I remember Manhattan coworkers – even NJ citizens – used to turn up their noses when I told them I lived in Hoboken in the 90s. You were not a second class citizen, you were below even the B&T crowd.
Still, some things die hard. One steadfast rule back then was don’t live on the ‘Presidents’. Seeing a 2000 ft sq sale at $1.4m on Jefferson is jarring to say the least.
Grim, re: P-TH and Union, spreadsheet jockeys lol. Crazy, never set foot in a locale yet have a strong opinion on that area’s real estate and lifestyle. Unfathomable.
Hoboken friend of mine recently traded up, they waited it out over a decade in Maxwell Place. Good for them, they are happy in Hoboken but then again staring out the window of a high rise is not quite the same for me, for you you see here I sit in my beautiful back yard drinking my coffee working remotely sitting by my pool. F-Hudson County…..
Based on this information, who would you bet on next decade? Stock market going to double the pace of nyc real estate again? No f’en way.
“While the 28.5 percent increase in city home prices since November 2011 outpaced the cost of other goods and services, NYC real estate dramatically underperformed the stock market. The S&P 500 more than doubled over the same period, increasing by 125 percent since the housing market bottomed out — an annual return of 13 percent relative to the 3.8 percent offered by NYC real estate. This number also excludes some of the most dramatic gains following the crisis: from its true nadir in early 2009, the market has since returned a whopping 283 percent.”
To determine the ranking, Money examined municipalities that have over 50,000 residents and then eliminated places that had double the national crime risk, had less than 85 percent of its state’s median household income or a lack of ethnic diversity. That left them with 583 places.
I guess having too many white people excludes your town from being a good place to live.
Ahh, first step is to hit the market when no one wants it or when herd mentality thinks the investment is a bad one with low expectations of growth. This is starting to look like an easy play. Just have to have patience and hit up a seller with fear in their eyes.
“With prices now beginning to fall in both Manhattan and Brooklyn, a cycle of swift growth in New York home prices seems to be coming to an end. A large number of those who bought after the crisis appear eager to cash out: the number of homes for sale on StreetEasy hit its highest level since the recovery in the second quarter of 2018. Of the more than 13,000 homes listed for sale on StreetEasy in that period, more than 35 percent were bought since the September 2008 collapse of Lehman Brothers.”
Growing up on the JC/Hoboken border makes me chuckle every time I read about the prices people are willing to pay to live here. You really need to be mentally deficient to purchase anything in this area. Financially speaking, you’re a midget if you buy anything in Hoboken or up the hill unless you intend to collect rent. And for the renters, do yourself a favor and look along the Main, Bergen or Pascack lines and find a place within walking distance to the train.
Grim 7:13 – Toll Brothers CEO reporting NJ (specifically Hudson County) doing better than New York City.
Q – Jade Rahmani
: Inclusive of joint ventures, can you tell us what City Living did y-over-y in terms of order growth? And can you just give an overall comment on the New York City condo markets, state of it? We’ve seen some market-level reports of declines spreading beyond just the ultra-luxury segment.
A – Douglas C. Yearley, Jr.
: Yeah. So, guys are looking up to the specific numbers. I’ll give the commentary. There has really been no change in the City Living business since the update we gave on the last call. We continue to perform very well, beyond expectations in New Jersey, which for us is one major new building in Hoboken and another building in Jersey City. That market is now about $1,000 per square foot off the water and as high as $1,200 or $1,400 even a square foot on the water. In Jersey City, at 10 Provost, we’ve had 164 contracts since July of 2017, so call that 13 months. We opened a new building in Hoboken, 1425 Hudson Street, and have taken 18 contracts since June, in just three months, and so, that market is very strong. On the Manhattan side, it’s the same story we’ve given before. At $2,000 a foot, which is where our new buildings are generally being marketed, the market is good. 91 Leonard, which is down in Tribeca, we have 67 contracts since November of 2017, so call that eight or nine months. And the inventory we have in our older buildings that are built and occupied where in limited cases, our pricing gets higher, that’s been slower.
How Puerto Rico Became the Newest Tax Haven for the Super Rich – GQ
https://apple.news/AmcB_-5svSAKKawG_B8UGBA
“The average compensation for employees of Wall Street firms climbed more than 10% last year, according to a report released Monday.
The average salary and bonus for employees at broker-dealer firms in New York City increased to $422,500 in 2017 and to $389,000 for securities-industry employees on Long Island, according to New York State Comptroller Tom DiNapoli’s annual survey.
The average wage for all industries in New York State is $61,460, according to the New York State Department of Labor. Mr. DiNapoli said the statewide average salary in the securities industry grew 12% to $403,100 in 2017.”
https://www.wsj.com/articles/wall-street-salaries-continue-to-soar-1537215032?mod=djem_WealthJournal
10:33 so in essence you compete with Wall St money whenever you buy in the area.
“Compare the August 2018 eco-nomic forecast from the Congres-sional Budget Office with the one from June 2017, before the tax cuts passed, and we discover some very good news. The much higher than expected economic growth in the wake of the Trump tax cut means that U.S. gross domestic product will be higher than expected every year over the next decade.
Even if we assume a reversion to the pre-Trump 1.9% growth path, the ratchet up in GDP this year translates into $179 billion in unexpected output this year, $465 billion next year, $654 billion in 2020, and so on. This magic of compounding yields more than $6 trillion additional GDP over the decade thanks to the faster growth already achieved.”
https://www.wsj.com/articles/the-corporate-tax-cut-is-paying-for-itself-1537310846?emailToken=0e3cb9f6b3a9a6e7910d586b99b7b013cf5zvDlMckFGYkb3Y2OXUxRhkZyIdDcH21vMKcZ409dXcmHd/rZeZUCvQL2ka5gzt1FLdnyEz2BMLJIOEU5yrZS2QFO3B1mwyPuAn3KuGm4%3D&reflink=article_copyURL_share
What is your major malfunction Private Pyle?
“However, for homebuyers with speculative aims — including foreigners seeking a place to park their money, wealthy shoppers looking for a trophy apartment, and the substantial portion of condo buyers who immediately list their purchases for rent on StreetEasy — the financial wisdom of buying up New York City real estate is much less evident.”
Yo! says:
September 19, 2018 at 7:08 am
http://tax1.co.monmouth.nj.us/cgi-bin/m4.cgi?district=0905&l02=090500017____00045____C62-BM
Most recent Hoboken resale illustrates home value direction. Any burbs seeing trends like this?
Yo!
I just want to be clear….
https://www.bloomberg.com/news/videos/2018-09-18/wall-street-pay-recovers-to-highest-level-in-a-decade-video
The typical late-20-something / 30-something wants certain amenities. Hob/JC have the benefit of being developed in the last 10 years, which fits right into the mindset of the millennial buyer…….. the same thing driving these homes is also going to make them very dated…..
I have a client who is gung-ho real estate and sold out hit classic UES pre-war con-op which started as a 2BR, and he bought the 1BR and studio on both side creating a mega-unit within one block of a new subway stop…… he saw the writing on the wall and GTF out of dodge……. I don’t disagree with your point, but you incessant need to pound the table is going to make you look like an idiot in about 2-3 years.
Brooklyn and Manhattan are cooling……. Hudson is a cheaper substitute…. it is only a matter of time….
Right now, Blumpkin is touring Union.
Just checked out some of the records from the Tea Building where I used to live.
Tons of LLC’s, South Asians, Asians and out of town/state ownership titling…….
Doesn’t look like a place to live……. it looks like a glorified hotel…..
For those people not making Wall St Momey the area is tough to buy into especially the nicely appointed places where people to live. Being in a lot of the suburbs of NJ is boring. Nobody in their right mind without a family or ambitions to start would find much to do in all but a few places. No.. not Wayne.
Stunning such biased crap gets to be headline of Bloomberg web page….. seriously?
Kavanaugh Is Already Hopelessly Tainted
Brett Kavanaugh’s chances of joining the Supreme Court rose today as Republicans rallied around him and trashed the woman who accused him of sexually assaulting her 36 years ago – a charge he unequivocally denies. But senators voting on his nomination should make sure they’re asking the right questions before deciding whether to put him on the highest court in the land.
Must they believe Kavanaugh is guilty beyond a shadow of a doubt before they vote against him? That’s not the right standard, writes Cass Sunstein. Instead, if they think there’s any chance he assaulted this woman (back when she was 15 and he was 17), then they have to ask themselves: Is a man who is, say, 30 percent likely to have tried to rape a girl a suitable choice for this lifetime appointment? And aren’t there, like, 20 other people on the list endorsed by the Federalist Society who could do the job just as well and who aren’t under such a cloud? Read the whole thing.
Of course, almost anybody President Donald Trump picks to replace Kavanaugh will automatically be tainted, merely by dint of their association with a thuggish president, writes Frank Wilkinson. Interestingly, Trump has been on his best behavior in this case, saying today he wanted to hear from Kavanaugh’s accuser before making up his mind. But increasingly everything and everyone Trump touches turns the opposite of gold – even if they’re not accused of sexual assault.
https://www.nj.com/hudson/index.ssf/2018/09/ex-cop_sentenced_to_23_months_for_role_in_off-duty.html
https://www.nj.com/essex/index.ssf/2018/09/city_worker_sentenced_to_3_years_for_taking_bribe.html
First, ridiculous these two sentences … even more ridiculous all the previous ones where they stole a lot more and got probation or merely had to pay it back.
left:
Men’s Ice Hockey vs Cornell
Friday, January 04, 2019 7:00 PM
Hobey Baker Memorial Rink
On sale
October 08 2018 10:00 AM
Here’s the Democrat long con (btw, I’m surprised nobody’s called Kavanaugh a ped0phile yet). Prepare yourself for “Dr. Ford” to be hospitalized over the next couple days due to the traumatic stress of the death threats, etc.
1. This whole new circus is a Hail Mary to upend the nomination. If the Dems get the R’s to bend and delay, they’ll easily get to the mid-terms with no vote. Some more sensational and unsubstantiated stories will drop during the “investigation”, that gets them to the mid-terms with no red state Democrats having to cast a no vote prior to the polls opening.
1a. Budget votes are held up, government shut down, blah, blah, blah.
2. If the Hail Mary works, the Hail Mary of all Hail Marys comes into play, the Dems will then want to delay the vote until the new congress is seated, so “The American people can have the Senators they voted for to have their proper say on the matter…”
That’s why the vote will not be delayed, or not delayed by much. Justice Kavanaugh will be seated…and stained.
Here’s what happens next:
Dems run on the outrage and drive their voters to the polls with ads urging real Americans to stand up and do their patriotic duty…Vote Democrat before Trump stacks the entire SCOTUS with ped0philes. Worse yet, N@zi ped0philes.
Ex,
Forunately, that is only about 90% of the NYC metro area. ;>)
Dummies like Blumpkin post articles about finance fols making 400k on average yet that is referencing pay for a small slice of front office traders, not the entire firm. It excludes IT, back and middle office. You see that time and time again in articles trying to paint a picture that all people are rich who work for ibs and broker dealers. Just not true. Average compensation is probably under 100k.