I think the biggest reason the bubble got out of control is that people just simply stopped doing the math. What's the cost of owning vs. renting? What is the price per square foot? Just simple stuff.
But not to worry, life will end up doing the math for the simpletons who did not.
666 the Mark of the Housing Bubble
Remember that building that sold for $1.8 billion in New York recently? It was the most expensive single building ever sold in the city. Well, we looked it up…
Its number is 666 5th Avenue. Already, we sense there is the Devil’s hand in this thing. ‘666′ is the ‘mark of the beast’ in the Old Testament. It prefigures the coming of the Antichrist, if we remember right. But what it marks in the property market is probably the very peak of the biggest property bubble in American history…and perhaps the peak of the whole worldwide property bubble. Which is to say, it might herald the coming of something big and bad.
666 was purchased by the Kushner family. It appears that Mr. Charles Kushner, convicted of various financial crimes arising from his activities as a political fundraiser, decided to splash out when his time in the pokey was over.
By our calculation, he paid $1,200 per square foot for the place. But if you paid $1,200 to buy a square foot…how much would you have to rent it out for in order to make a profit?
Well, if you apply the old rule - you need to get 10% on your money just to cover your cost. That would imply a rental rate of $120 per foot squared. Then, in order to get a 5% return…the rent would have to be $180 per square foot. We don’t know… can you get that sort of rent in New York?
Let’s see…1,000 square feet for $180,000 per year..? Imagine a one-bedroom apartment renting for $15,000 per month.
No…it is not very likely. Not even in Manhattan. Not even in a bubble.
January 01, 2007
Doing the math on the insanity of the most expensive building ever purchased in NYC - 666 5th Ave.
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49 comments:
The bubble may be the great leveler of wealth.
Stupid middle class, and stupid rich will lose money.
It's a stupidity tax.
I can live with that.
but the foreigners will buy it!!;-)
I wish I had a camera phone for the first time this week, I was down near the beach and there were several buzzards sitting on the contstruction cranes for the Trump building... too good.
Actually, this is most likely a bribery scheme.
One way to "pay" a politician a bribe is to buy his property at a price much higher than the nearby comparables. Then the politician pockets the difference and doles out the political promises in return.
It worked for Duke Cunningham here in S.D.
$100 a square foot is pretty typical for midtown manhattan class A office space.
This is hardly the only big commercial deal. Two more last week, here and here.
Commercial real estate will be huge in 2007.
commerical was huge in '06...not that you'd know it by reading this blog
Funny, the little fish get gutted from the residential real estate bubble then the big fish come out and get filleted on the commercial side. LOL!
commercial will collapse in '07....haven't you heard we're in the middle of a depression....nobody will need office buildings or warehouses anymore...
commerical is dead. residential is dead. both will see 45%+ declnes in 2007. Anyone who thinks otherwise is either an idiot or a troll or both.
Commercial is going to get killed. Driving around my town, I can hardly believe how much available space there is - retail, office, warehouse, you name it. It's a glut. It will take a decade to fill it all.
Do you think they care with borrowed money or money from pension plans? Maybe they recognize that inflation will be higher and don't care?
Also so what, $1200 a sq ft in NY City? The Economist last month showed properties selling in London for $8,000 a sq ft and low end for $2500 a sq ft. Comparatively I gues $1200 sounds like a bargain. And in 1989 in Japan property in downtown Tokyo was swelling for the almost $300,000 a sq ft in todays dollars.
Not Patch, Check Profiles Please.
Ignore Trolls
I am surprised it took this long for you to recognize this. It reminds me of the Rock' Ctr. purchase in NYC in the late 80's.
that guy kushner has been in the news for years in Nueva Jersey. he after banging cheerleaders with Mo Green and finishing law school, his dad handed him the company..they cuntrol thousands of rental units on the east coast. they are very into spending cash on politicians. they always get projects approved that others can't even get sniffed by planning boards.
the mark of the beast appeared in the New Testament.
+++++++++++
The significance of 666 is derived from the last book of the Christian Bible known as Revelations and it has been used as the basis of fiction for ages in film and print.
Former U.S. president Ronald Wilson Reagan had six letters in his first, middle, and last name. He also lived in Bel-Air California, in house number 666 on his block, until wife Nancy Reagan had it changed to 668.
Mike Keith in his web page on math and the number 666 tells us, among many other things, that in the language of Alphametic (in which a number value is given to letters and words) that SIX SIX SIX BEAST gives us the word SATAN
The sum of all numbers on a roulette wheel is 666!
he computer game Doom uses port 666 for peer to peer players.
In the Unix operating system (used by most internet servers and many businesses as servers) the value 666 gives the user read and write access to files.
It is all funny money. That is why it is so out of wack. Maybe someone will fly some planes into it and then we will be fighting in Iran.
Do you think they care with borrowed money or money from pension plans? Maybe they recognize that inflation will be higher and don't care?
Also so what, $1200 a sq ft in NY City? The Economist last month showed properties selling in London for $8,000 a sq ft and low end for $2500 a sq ft. Comparatively I gues $1200 sounds like a bargain. And in 1989 in Japan property in downtown Tokyo was swelling for the almost $300,000 a sq ft in todays dollars.
Actually Keith this is a great building in PRIME midtown location. I worked in this building for years. BUT, with those rents Kushner won't be pocketing much...
$1200/ft isn't that high for Manhattan RE at the moment. Residential property has been going for around a K-buck a foot recently. Granted, that might be high, but $1200 isn't that far off the current market (insane as it may be).
Interestingly, there may be a condo glut approaching the Manhattan market:
http://tinyurl.com/v4ds8
as reported by the NYTimes. It's reasonably apparent when walking around (something that most Americans don't do---but it's quite common in New York, walking.) There are buildings going up all over the place.
And, couldn't resist:
Flying Monkey Warrior wrote:
In the Unix operating system (used by most internet servers and many businesses as servers) the value 666 gives the user read and write access to files.
Uh, that's actually octal (base eight for the non-mathematically inclined in the audience). In decimal you get 438 for readwrite access for all users on the system. Although 438 sounds relatively beastly, number of the beast it ain't.
re : absolute permissions.
Sorry can't resist either. Looking up my UNIX unleashed manual, I see that to give read write to owner group and Other to a file called fmw I would type in:
$chmod 666 fmw
I reckon fmw was right. You try typing in chmod 438 fmv. It ain't gonna work.
Not that I use such techniques any more. We even have GUIs for UNIX -with radio buttons 'n' all. And actually, most people used
$chmod guo+rw
And that's my last foray into ancient ways of using operating systems.
-K
the housing bubble hid the fact that jobs are being sucked abroad! if people thought about that, they might have kept their money in the bank!
Oh man, Peter Schiff really tells it like it is:
http://www.forsakencraft.com/Schiff122796.mp3
Everyone keeps on guessing why people are continuing to buy, why economists refuse to see the iceberg up ahead. It seems so insane that we keep thinking, "There must be some reason. I'm missing something. Someone is going to save us".
But I think the real answer is, "No one ever went broke underestimating the stupidity of the American public".
Americans finally took care-free too far. Wasn't there some story about a guy named Icarus?
chmod has "modern" parameters now just so you all know.
chmod a+rwx filename
means "add read, write and execute access to all users to filename"
GUIs are training wheels for beginners. Except for graphical (pictures etc) applications, GUIs only hold you back.
It's virtually impossible to "script" GUI applications, that is, make them do things without human attendance. The entire purpose of computers is to alleviate human beings from tedious tasks.
For example, creating web sites which display pictures, I use a linux command line program called ImageMagick to create thumbnails on the fly. I don't have to manually load the image up in PaintShop Pro to make make a thumbnail. I can tell the computer to make 10,000 thumbnails every hour and I never have to do that EVER AGAIN if I scripted it right. It will just run day after day, week after week, year after year unattended. You can't do that with a GUI.
I have web sites running that just generate money that I don't even look at for weeks! All I see is the paypal receipts coming into my email.
It's all about the rent. You cannot have a healthy purchase market when, as in most of West Palm Beach, FL, you can rent new houses or condos in gated developments for way less that 0.5% asking price. e.g. owner asking 900K for house you can rent for 3000K/month. Only the last final greatest fool would buy at close to those prices. With the rent what it is, the house should go for no more than 600K and more historically in-line with the rent would put it at 500K (that's what I pay now in New York ... $3000/month house is worth approx $500). Either the rent that can be had for those properties must rise substantially (highly unlikely, especially given the number of available rentals in that market), or we are looking at 50% haircuts from not just todays asking prices (already down from sale prices last year by 10% or more), but from what people paid for the same-type properties at the height. Seems to me, the simple ROR math requires one of those two things for prices to come in line on either the rental side or the purchase side. Till they do, I'll be renting (just don't tell my wife because although she's on board for now, she prefers to be able to buy.) She sees a difference in the home settlement part of living that exists b/w renting and owning. Too me, you just rent when the numbers work out so well that your only financial downside risk is properties begin appreciating again(highly unlikely, because again, the rents would have to rise enough to not only be in line with the current asking prices, but any future gains on the property thereafter.)
"You'll be priced out forever" Was the big them in much of Florida in 2005. What it should have beeh was "Wait till next year" when prices go down 10%, or better yet,
"wait till all the yet-to-be built houses don't sell", then rent them at a huge discount to asking price
OMG! I have 666 in my phone number. No wonder nobody calls.
Trojan horse in commercial real estate described at
http://tinyurl.com/ynfra8
My car license plate is 666. The lady before me at DMV rejected it.
Its more effective than having a bumper sticker that says "back off".
G'day Mates! Happy ne year t'boot!
Ozzie Tim here.
Down here in Oz, 999 is the symbol of the beast. That's good oil!
figjam!
Hooroo. Ozzie Tim
I worked in the 666 5th Av property for over 5 years.The structure is old, built maybe in the late 50s or early 60s...lots of columns and low ceilings with old HVAC and plumbing, but refurbished,at least lobby and elevators.What is outstanding is the location and the fact that a major subway line stops directly underneath it. IMO, there are many more better properties in the vicinity.
messier11 said:
"...rent what it is, the house should go for no more than 600K and more historically in-line with the rent would put it at 500K (that's what I pay now in New York ... $3000/month house is worth approx $500)."
Are you saying that you'repaying rent of 3Kpermonth for a single family house worth appx 500K and is it NY Long Island area?
Curious as I'm moving back this summer and plan to rent.
Do you think they care with borrowed money or money from pension plans? Maybe they recognize that inflation will be higher and don't care?
Also so what, $1200 a sq ft in NY City? The Economist last month showed properties selling in London for $8,000 a sq ft and low end for $2500 a sq ft. Comparatively I gues $1200 sounds like a bargain. And in 1989 in Japan property in downtown Tokyo was swelling for the almost $300,000 a sq ft in todays dollars.
The building has a range of addresses from 656-670 5th ave
And 1-15 W 52 st & 2-16 w 53 st. It is an office building. Playing up the satanic 666 angle is lame.
FYI: I'm pretty certain the Devil's number is now 616 -
I like HP. I like to keep tabs on what the extremists are thinking/doing. If blogs were around back then, who knows, the OKC bombing may have been prevented.
All I can hope for is that the FBI is watching, taking notes and recording IP addresses.
Folks, Kushner is a satanikike living in JEW YORK! Hell, he probably resides at the 666 adress.
honica is there anyone who isn't a jew in your world
Uh, yeah. About 97.5% of the worlds population.
2.5% have that much power huh
See the significance of 666 in adverising
http://video.google.com/videoplay?docid=-7953120016941996867&q=subliminal&hl=en
Well it's hard to paste a link here.
Trying again, I had to break the link into three parts because it would not fit in the window. You'll have to reassemble into one continuous link in your browser address bar to see the link to the significance of 666 in advertising...
http://video.google.com/
videoplay?docid=-7953120016941996867
&q=subliminal&hl=en
The housing bubble is evil, and this proves it.
Uh, no..... Jews are evil, they prove it on a daily basis.
Honica, if I convert from Orthodox Christianity to Judaism, will that improve my financial standing?
Man, people just keep getting dumber don't they. Anon, let me try to dumb it down to a level that you're avarage chimp can understand. When I, or anyone else refers to "the jews", we are speaking of either racial ashkanazie jews, or racial sephardic jews. Obviously, religion has nothing to do with the jews genetic predispositions, and in fact, most are athiestic.
why would anybody with loads of money want to live in a hole like New York, dirty air, nasty people, gentile traffic, a target for terrorists. I would live in Switzerland if I had that kind of money.
Anon said:
"why would anybody with loads of money want to live in a hole like New York, dirty air, nasty people, gentile traffic, a target for terrorists. I would live in Switzerland if I had that kind of money."
The richest and most talented people of the USA flock to and live in NYC.
You obviously can't figure out why,(not being talented or smart), so nobody cares what you think.
Phoenix might be a place for you.
I have lived in Switzerland. I have been to 5th and Park Avenue, and I aasure you New York is a dump. Even Paris is nicer than New York.
anon 6:41:35
use tinyurl to convert long links to short ones...
http://tinyurl.com/
Here's my link of
http://news.yahoo.com/s/ap/20070103/
ap_on_bi_ge/manhattan_apartments
tinyurl turns it into...
http://preview.tinyurl.com/y8uryh
Here's what caught my eye in today's article...
One of the biggest price surges in Manhattan took place on the Upper West Side, where four-bedroom and larger apartments cost an average of $5.7 million, or a 48 percent increase over the fourth quarter of 2005.
The average price of an apartment with three or more bedrooms on the Upper East Side was about $3.8 million, up 22 percent.
The average price per square foot in Manhattan rose to a new high of $1,050 in the fourth quarter, up 7 percent from $979 a year earlier.
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