NYC real estate crash...the future is here... (apartment, renters)

[Henna]

Originally Posted by bluedog2

Median price is not the best measure of anything in this market.It means that numerically 1/2 the sales were below and 1/2 were above. It is not the average and gets skewed by any irregularities.

For me, the median is preferable to seeing the mean. The data would be less skewed by an irregularly low or high number in a median rather than in a mean.

Think about it - if you have a classroom with 5 people in it - 4 adults and someone brings a baby. All of the adults are between 40 and 43 years old and the baby is 1.

If you look at the median age of people in the classroom, you would see a median age of 41, the middle number in this set: (1, 40, 41, 42, 43)

If you look at the mean (average) number you would get a mean age of 33.
So the low number in the median calculation skews the result much less than a low number in a mean calculation.

Same thing with condo sales. Say you have 5 sales of condos in one neighborhood. One is an insider sale to a relative and goes for 100K. The others reflect market value and sell for 400K, 410K, 420K and 430K.

The median sales price will be 410K (that's the number I would like to know).

The mean sales price will be around 350K, which doesn't accurately reflect what condos are selling for in that neighborhood. It doesn't really indicate much of anything.

[bmwguydc]

New York is "healthy" as is Washington, DC, #1 & #2 on the Case-Schiller index, but that's a relative descriptor in a downward market. It indicates that the rate of decline is not as steep, owing to demand factors that keep some areas stong in the two top regions.

In NYC, Manhattan is stong as are traditionally valued suburbs, but they are selling for lower prices. In DC, it's certain parts of the city and close-in Northern Virginia and Montgomery County suburbs that are "healthy."

Sales are slower, buyers are much more picky, and prices are down, but in some areas there is limited inventory. Parts of NYC and DC have a finite inventory, no matter the market conditions. Many of these desired locations generally have few residences on the market, even in the best of times. And, many such areas have remained largely unaffected by the foreclosure mess; thus, this inventory is going to come on the market due to some outside condition in a down market (death, divorce, etc.).

The difficulty in obtaining a residence in such valued locales creates a plateau in a market with downward pressure, cushioning some surrounding areas that are similar and in immediate proximity, emphasis on immediate as there are clear delineators to traditional value that exist in many areas, no matter how real estate agents try to claim that the areas are adjacent. There are only so many apartments n Park Avenue or CPW, for example, and there are buyers for whom such an address is coveted. However, since the inventory is not on the market or not on the market at a low enough price, surrounding areas that have similar neighborhood characteristics and demographics are not going to slip as much as those that are outlying. There's a real difference to being a block or two off CPW and being in a stretched definition of the core UWS into a gentrifying zone in which the prevailing negihborhood characteristics are vastly different.

Harder hit areas (or to be hard hit) are going to be outlying areas. Bed-Stuy is one such area, as are areas in DC, that did not fully gentrify and have a host of social/crime problems, and/or are further from desired destinations, and/or have had much in the way of a speculative increase in price with no sustained demand factors being present. Without transportation infrastructure improvements or curing social problems that plague some areas, there was no basis for a price increase aside from the fact that Manhattan and desired closer-in communities with limited supplies had a run up in price, making them less affordable.

In the case of Bed-Stuy, it was the closer-in Brownstone communities, such as Park Slope, that helped to drive the market. There was an allusion to Bed-Stuy being the "next" area, establishing a connection with the core of sustained value in Brownstowne Brooklyn that did not exist. Bed-Stuy is not as convenient, does not have as low a crime rate, does not have many of the amenities of Park Slope, and does not have a similar school district. Thus, it was purely a psychological move in price during the bubble, and when the market returns to a rational basis for determining value, such areas tend to lose value at a much higher rate.

NYC, like many cities, is a complex real estate market, made up of smaller markets that drive the region. Currently, traditionally valued markets are what are being considered by many as where to secure a residence to stand the best chance of a more shallow decrease in price and the first area where there will be an uptick in price when the market regains strength. However, people are buying with a long-term focus, as there's no profit to be made in the casual flipping every few months for hundreds of thousads more each time.

Look at the behavior of some real estate agencies in recent months who have left transitional zones for established office locations. This mirrors the market, since the closed offices were either forecast not to be, or were not, bringing in the sales volume (and profit) as they did during peak movements in the market, no matter what public relations spin the company puts on the move so as not to seem to be retreating. If there's not a sufficient demand, why have an office? It's a redundant expense that it jettisoned in a bad market to survive. And, some closed in a matter of days, with little to no warning, which does tend to indicate the level of perceived decline to be wrought in those areas.

[Fred314X]

Isn't the OP the same guy who started a thread suggesting that we give Staten Island to New Jersey? Wherefore this unwarranted (and, I must say, silly) bias in favor of Manhattan at the expense of the rest of the city?

Hey, Unemployed Finance Guy...while you're preparing to land yourself a job, do a little studying about this town. I don't want to reveal the surprise ending, so let's just say that there are actually five boroughs here. Not one.

[bluedog2]

Couldn't have said it better myself !

[halfoffpeak]

Originally Posted by bmwguydc

The difficulty in obtaining a residence in such valued locales creates a plateau in a market with downward pressure, cushioning some surrounding areas that are similar and in immediate proximity, emphasis on immediate as there are clear delineators to traditional value that exist in many areas, no matter how real estate agents try to claim that the areas are adjacent. There are only so many apartments n Park Avenue or CPW, for example, and there are buyers for whom such an address is coveted.

Whether some neighborhoods are exclusive or of limited inventory is irrelevant. The correction will bring those back to historical trends because pre-bubble prices already included this premium of exclusivity. So one should expect 50% for those (CPW, Park slope) or whatever it takes bring those prices at prebubble. Keep in mind that some of those areas had international interest (for example russians) which is now lacking.

As for outlying areas such as bed-stuy, etc, those will be hit harder I agree just because they were overvalued for multiples of their bubble prices sometimes 4x as much, ie $250K brownstones in bedstuy selling for $1mil at the peak.

[Henna]

I prefer to hear from people who are not blinded by their own agendas.

[bluedog2]

I think I would have to agree with you,Henna. A lot of posts in a very short period of time on one topic and all with the same slant indicates some kind of agenda,IMO

[halfoffpeak]

Originally Posted by Henna

I prefer to hear from people who are not blinded by their own agendas.

Originally Posted by bluedog2

A lot of posts in a very short period of time on one topic and all with the same slant indicates some kind of agenda,IMO

I do have an agenda. I try to warn buyers, especially first-time and responsible ones, not to fall prey of the usually mantra of realtors and sellers that if they don't buy now they will be priced out. Greedy realtors, brokers, banks and others caused the current economic situation.

It's actually the opposite: there's a correction going on now that will render housing affordable for several years. Such corrections take several years and one should make sure that does not buy with the current inflated prices despite what re agents say.

I am not blinded at all. I just present current and historical data and I am open to discussion.

What's your agenda? And where is your data?

[mathjak107]

Originally Posted by Henna

For me, the median is preferable to seeing the mean. The data would be less skewed by an irregularly low or high number in a median rather than in a mean.

Think about it - if you have a classroom with 5 people in it - 4 adults and someone brings a baby. All of the adults are between 40 and 43 years old and the baby is 1.

If you look at the median age of people in the classroom, you would see a median age of 41, the middle number in this set: (1, 40, 41, 42, 43)

If you look at the mean (average) number you would get a mean age of 33.
So the low number in the median calculation skews the result much less than a low number in a mean calculation.

Same thing with condo sales. Say you have 5 sales of condos in one neighborhood. One is an insider sale to a relative and goes for 100K. The others reflect market value and sell for 400K, 410K, 420K and 430K.

The median sales price will be 410K (that's the number I would like to know).

The mean sales price will be around 350K, which doesn't accurately reflect what condos are selling for in that neighborhood. It doesn't really indicate much of anything.

good point henna,,, numbers can show whatever someone wants them to.... i saw an ad on tv the other night....they said 40% of all accidents involve drunk drivers, i said to my wife see its actually safer to drive drunk.. the other 60% are not drunk

[bluedog2]

Originally Posted by mathjak107

good point henna,,,

I agree as well.