Is New York's Housing Market Undervalued?

Hey monkeys,

Just read up on an article from Forbes stating that New York's housing market is undervalued by 10.4%, which is second on the list of the most undervalued housing markets of 2017. Fitch Ratings, a credit rating agency, used five economic metrics (nominal income growth, population growth, unemployment, change in rental prices, and change in home prices) to determine the values.

1) Detriot - Undervalued by 11.7%
2) New York - Undervalued by 10.4%
3) Philadelphia - Undervalued by 4.4%
4) Chicago - Undervalued by 4.1%
5) Cincinnati - Undervalued by 3.6%

Thoughts on this?

Comments (24)

Aug 2, 2017

They're missing something in the analysis. Perhaps tax rates/city tax considerations/ maintenance costs, etc. CRE and MultiFamily are fully (over) valued in NY.

Aug 2, 2017

NYC cap rates are already nothing

heister:

Look at all these wannabe richies hating on an expensive salad.

https://arthuxtable.com/

Best Response
Aug 2, 2017

Since when did Forbes not make you scroll through 20 slides to read an article?

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Aug 2, 2017

For me, only when I view Forbes on my phone.

Aug 3, 2017

Forbes and Bloomberg (to some extent) are turning into the BuzzFeed of Wall Street.

And then there's Business Insider.

GoldenCinderblock: "I keep spending all my money on exotic fish so my armor sucks. Is it possible to romance multiple females? I got with the blue chick so far but I am also interested in the electronic chick and the face mask chick."

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Aug 3, 2017

I've blocked Business Insider from showing on my news tabs, can't have that kind of BS in your life.

Aug 5, 2017
MonopolyMoney:

Since when did Forbes not make you scroll through 20 slides to read an article?

Do you know what's weird about Forbes? I read some of the most left-wing stuff on this site and yet Steve Forbes, the chairman and editor-in-chief, is a hardcore conservative. I mean, I actually think it's good that the magazine presents two sides, but that's so out of the ordinary in this day and age.

Aug 6, 2017

Steve is old, and Forbes is a loss-making entity.

Ok thx, bye

GoldenCinderblock: "I keep spending all my money on exotic fish so my armor sucks. Is it possible to romance multiple females? I got with the blue chick so far but I am also interested in the electronic chick and the face mask chick."

Aug 3, 2017

I'll tell you why. Because Forbes needed a clickbait title.

Which other cities did they use for comparison? Hong Kong? Vancouver?

GoldenCinderblock: "I keep spending all my money on exotic fish so my armor sucks. Is it possible to romance multiple females? I got with the blue chick so far but I am also interested in the electronic chick and the face mask chick."

Aug 3, 2017

Cap rates are below interest rates in at least one of those markets. Calling a market that can't even be positively leveraged "undervalued" is one very aggressive take.

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Aug 3, 2017

Seems like desperate realtors paid for this article. There's so much supply coming online in NYC, it's going to great for those sitting on the sidelines.

Shorted hotels with NYC exposure the past 2-3 years on the same thesis, i.e. 8%+ supply growth and it's worked out great.

Aug 3, 2017

Yeah I don't trust Forbes to do real estate analysis.

In Boston they just keep building. One of my favorite places to poke fun of is Lovejoy Warf. Who would pay top dollar for a place with no parking, okay amenities and right next to the TD garden and not in a central location at all. Also I don't think the finishes are anything to write home about.

They already did a price drop at Pierce just not a public one. Also rents are going down for once.

Aug 3, 2017

Anecdotal evidence but I recently took a look at apartments in New York compared to see what they are like compared to London (I am in the process of buying in London). I was amazed...amazed at what I could get in New York for the same in London.

Either London is ludicrously overvalued bubble territory (extremely likely) or New York is seriously undervalued. Feels like a bit of both.

Aug 3, 2017

To answer you, NY is overvalued, but London is especially overvalued. To understand, look at occupancy rates of the upscale apartments in both cities. London, at the end of the day, is just a dumping ground for Chinese, Arab and Russian businessmen. I don't see how the prices can be justifiable, especially in the current scenario, Brexit et al.

I chose to buy some underpriced farmland (and a house) near Cardiff instead. At a bargain price at that. As a bonus, I also got what seems to be a sex dungeon. @Angel Molester" will be pleased

GoldenCinderblock: "I keep spending all my money on exotic fish so my armor sucks. Is it possible to romance multiple females? I got with the blue chick so far but I am also interested in the electronic chick and the face mask chick."

    • 2
Aug 3, 2017

Welsh SEX DUNGEONS? I like your style!

Aug 4, 2017

Bubbly

Aug 3, 2017

Of course NYC is undervalued. The true fair value for any apartment in the city is infinity dollars, so compared to that you're getting a yuge discount

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Aug 4, 2017

Quick access to many different venues serving avocado toast is priceless.

Aug 3, 2017

I've actually witnessed a bit of a correction in NYC the last 6 months. I'm seeing Class C MF in the outer boroughs at 6-7% cap rates. Probably more like 5-6% when you plug in real numbers but still a bit better than it was in 2016.

Aug 3, 2017

Lol. I saw a multi family deal just trade at over $2 million a unit at under a 4 cap

Aug 4, 2017

Forbes isn't really a reliable source of information IMO. This kind of article illustrates why. Is it possible for prices in NYC to go a bit higher before they're essentially forced to go down......probably. Are peaks like this reasonable? Not in the least.

Real estate is overpriced, buyers are leveraged to the hilt, and one minor disturbance will knock everyone on their ass...prompting a selloff. Pretty much just waiting for some news event to kick off the party.

I suppose the one group of crooks that didn't get spanked by the gov't after 2007's fiasco are the legion of crooked real estate brokers aka salesmen who don't care that prices are too high. Just this week I looked at commercial, residential, and mixed use properties, and all the brokers rehearsed the same lines: prices can only go up, there's not enough supply, THIS TIME IT'S DIFFERENT.

Which of course, is the leading indicator for a blowout.

I'm out of the market completely lately, and if anyone has any guess on when the shit will hit the fan, I'd love to hear your theory.

    • 2
Aug 4, 2017

All the Chinese pension and insurance funds must be using Forbes as their primary research...

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Aug 5, 2017
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