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New York Luxury Housing Bubble On Steroids: 15 CPW Flipping Returns 192% In 5 Years

Tyler Durden's picture




 

"It's defining a new category in real estate" is how the ultra-luxury apartment business is seen in New York. Goldman's Lloyd Blankfein and his buddies (including Sting) at 15 Central Park West are set to double their money as Bloomberg reports four condos in the Richie-Rich style extravaganza of a building have hit the market at asking prices at an average 192% over what owners paid in 2007 and 2008. The most expensive (a five-bedroom 35th floor pied-a-terre), topping Oaktree's Howard Mark's previous $52.5mm record purchase at 740 Park, is priced at a stunning $95mm. Testing the glass ceiling of a $100mm apartment is nothing though - as just like the rest of the nation's apparent house price recovery 'tight supply is supporting the current spate of eye-popping asking prices' which obviously will mean an influx of 'very expensive' inventory hitting the market in the coming years. For $95mm we wondered exactly what the apartment comes with? Perhaps $90mm of gold bars on the coffee-table? Perhaps Hugh Verrier and his wife Celia sum up the largesse perfectly: "we just thought of it as a living space". Indeed, Hugh, indeed.

 

As JPM noted today - with regard the broad 'housing recovery':-

The recent rise in home prices are a result of record low housing inventory and improved distressed sales, not an increase in demand;

 

Net demand (3.2m in June) driven by 3.2% decline in inventory, which has fallen 24% YoY

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Fri, 08/17/2012 - 10:19 | 2714006 Precious
Precious's picture

Stimulus.  See.  It's working.

Fri, 08/17/2012 - 10:20 | 2714007 greased up deaf guy
greased up deaf guy's picture

damn, it pays to be a bankster.

Fri, 08/17/2012 - 10:24 | 2714022 Papasmurf
Papasmurf's picture

A deal made with the devil.

Fri, 08/17/2012 - 10:39 | 2714071 MillionDollarBonus_
MillionDollarBonus_'s picture

The short sellers are hammering Facebook again this morning ... where is the SEC when this kind of manipulation is going on!??

Fri, 08/17/2012 - 10:43 | 2714086 Precious
Precious's picture

My thesis is shot.   Trolls don't lay in bed all morning.

Fri, 08/17/2012 - 10:44 | 2714096 Stackers
Stackers's picture

And at one time the Japanese Imperial Palace was worth more than the entire state of California. What goes up - comes down.

Fri, 08/17/2012 - 10:56 | 2714118 CIABS
CIABS's picture

MDB:  Aren't they mainly in Washington and New York?

Fri, 08/17/2012 - 11:18 | 2714179 FEDbuster
FEDbuster's picture

Just think someday in the near future they won't be able to trade their pied-a-terre for forty acres of productive farm land with a stream running through it.  Just think of the self-sufficient set-up one could buy and build with a few million FRNs right now....

Fri, 08/17/2012 - 11:34 | 2714218 zaphod
zaphod's picture

My understanding is Japan's bubble popped when real estate reached $100B per acre. 

With these prices in apartments NYC seems to be around there now. Good luck with that. You could have bought 100,000 acres of working land in the west for the price of that 1 apartment.

Fri, 08/17/2012 - 12:04 | 2714253 jowenchrist
jowenchrist's picture

doubt that "They" would know what to do with 10 acres of good land let alone 100,000. it is to laugh.

Fri, 08/17/2012 - 12:06 | 2714313 FEDbuster
FEDbuster's picture

Agreed, but with that kind of money, one can always hire some good help.  Reminded me of the story someone else told here of the hedge fund manager who had a plantation in Barbados.  He has a staff that runs it, and they ship fresh food from there every couple of weeks for him and a his family.  All organic meat, vegetables, fruit, etc....

Fri, 08/17/2012 - 13:40 | 2714709 vato poco
vato poco's picture

Yeppers, I'd say that article right there will (later) be seen as the absolute high-water mark of the (soon to burst) NYC high-end bubble. Anytine R.E. folks use that phrase "Defining a new category in real estate", look out below. They said it in Houston in 1979. Tokyo in 1989. Vegas in 2006. ZH (and experience) teaches us again & again: ain't no such thing as a long-term parabolic curve.

Fri, 08/17/2012 - 10:44 | 2714099 Popo
Popo's picture

MDB --

It was funny for a while.  But it's getting long in the tooth, bro.   Seriously.   Give it a rest. 

Sat, 08/18/2012 - 05:21 | 2716254 jeff montanye
jeff montanye's picture

i for one welcome his take.  especially the "frustration" at the "lax" regulation out of washington.

imo he will have some more short sellers at whom to "rage" before winter. 

Fri, 08/17/2012 - 10:45 | 2714101 tocointhephrase
tocointhephrase's picture

You poor thing, are all you friends selling, never mind!

Fri, 08/17/2012 - 11:04 | 2714146 Robot Traders Mom
Robot Traders Mom's picture

MDB, come back to bed and lay down with me.

 

You wore me out last night.

Fri, 08/17/2012 - 11:10 | 2714164 Dr. Engali
Dr. Engali's picture

Okay that put a rather disturbing image in my head. Even more disturbing than your avatar.

Fri, 08/17/2012 - 11:45 | 2714245 jowenchrist
jowenchrist's picture

at least MDB has a sense of humor... i mean really that's funny shat!

Fri, 08/17/2012 - 16:50 | 2715338 smiler03
smiler03's picture

I think you mean "droll", it rhymes with "troll". Funny it isn't, it's just a waste of space.

Fri, 08/17/2012 - 17:25 | 2715431 redd_green
redd_green's picture

Hey Million,  SEC, you kidding?   Facebook stock is junk.    Worth a solid ten cents a share, long term.  And that's after a few dozen reverse splits.    And Zuckerb dumps a few more billion.    Talk about junk.

Fri, 08/17/2012 - 10:48 | 2714109 Jason T
Jason T's picture

See someone else has read Faust

Fri, 08/17/2012 - 12:06 | 2714311 palmereldritch
palmereldritch's picture

Richie Rich ain't lookin so good these days....

http://earsucker.com/wp-content/uploads/2012/08/macaulay-culkin-drugs.jpg

Fri, 08/17/2012 - 10:29 | 2714040 smlbizman
smlbizman's picture

what are the odds their real estate taxes are subsidized......

Fri, 08/17/2012 - 10:44 | 2714090 Tippoo Sultan
Tippoo Sultan's picture

Only an arrogant fool would pay $95 million to live in that crowded, filthy city.

Fri, 08/17/2012 - 10:53 | 2714110 Popo
Popo's picture

Actually, stories like this don't bug me at all.   What makes me angry is when guys like Ted Turner buy up a couple hundred thousand acres of farmland with amazing water rights.   Or when billionaire assholes bid up the price of the things that I consume.

But if some jackass wants to blow $95 million on a cheesy McMansion in the sky because his wife wants to be in "the" building, then that's fucking great.  Seriously, have fun with it.   It has zero bearing on the world economy.  I wish him and his stepford wife many happy catered evenings.  

...  A fool and his money and all that.    

It goes to show that it sure wasn't intelligence that made him rich...

Fri, 08/17/2012 - 10:56 | 2714129 redpill
redpill's picture

Anything over two stories should do the trick so that when they decide they can't possibly go on living when their false world starts to tear apart, the fall will be sufficient ensure that there won't be any pathetic whining or requirements for tending.

Fri, 08/17/2012 - 13:08 | 2714591 poor fella
poor fella's picture

It's hard not to have empathy though.

I would take the shirt off my back, fold it up, and lay it on the sidewalk to break their fall.

Fri, 08/17/2012 - 14:14 | 2714797 Umh
Umh's picture

I've heard that it takes seven stories and landing on an unyielding surface to be reasonably sure.

Fri, 08/17/2012 - 10:58 | 2714133 diogeneslaertius
diogeneslaertius's picture

you sir, are excellent

Fri, 08/17/2012 - 11:18 | 2714181 Neethgie
Neethgie's picture

If i was a billionaire id buy fuckloads of farmland, because then i could look accross my domain, like some kinda pimp ass medieval lord.

In nyc your paying for a few sqft what a waste of money, the thing thats ironic really is your not buying it for yourself you are buying it for the image that it supposedly suggests about you (emporors new clothes sorta shit really)

Fri, 08/17/2012 - 14:23 | 2714823 monad
monad's picture

Apparently, any fool will do. Its just that there are so many, the rich ones get fleeced first.

Fri, 08/17/2012 - 10:41 | 2714081 Hippocratic Oaf
Hippocratic Oaf's picture

Not only does it pay to be a bankster, but the .00001% are making these types of trades. Don't think the rest of the city is this way, it's not. The seperation of class is stretching to the point of breaking. Many in my field (finance) are leaving the city and have been for years. Low income housing next door to $9000 a month rent is not what I'd call 'making it' in New York. Giuliani cleaned it up, F-Bloomy put a nipple on it. 

Big $$$ from Russia, China, Europe etc. is gobbling up all the prime, hi-end real estate, pushing the prices to new levels: this was certainly not the case years ago. Rich moms and pops in Flyoverlandia, USA are sending their spoiled man childs to new hippster Brooklyn, fucking that area up completely. They don't work, that is an ongoing trend everywhere else around the city. BUT.......they sit in coffe shops and 'hip' restaurants all fuckin' day on their $500 phones and $1000 IPads, sippin $6 coffee and wearing $300 jeans. When they're done, they'll get on their bikes and ride against traffic, running red lights in the bike lanes that Bloomberg provided.

I don't like the NYC now that has changed so much in 15 years. Overpriced and out of touch.

Fri, 08/17/2012 - 12:20 | 2714371 walküre
walküre's picture

You're not David Letterman, are you?

Fri, 08/17/2012 - 11:02 | 2714143 Dr. Engali
Dr. Engali's picture

It only pays if you are willing to sell your soul. Otherwise moral values of any sort are an impediment to being a successful banker.

Fri, 08/17/2012 - 11:52 | 2714259 FeralSerf
FeralSerf's picture

Zionists don't have moral values to get in the way of them being a "successful" banker.  Real the Talmud if you have any doubt.

Fri, 08/17/2012 - 20:58 | 2715868 monoloco
monoloco's picture

When open season is declared on bankers, Manhattan real estate values will plummet. Now's the time to start investing in secure walled compounds. 

Fri, 08/17/2012 - 10:24 | 2714020 Divided States ...
Divided States of America's picture

Yeah these greedy bastards' home sales definitely pulls up the average home sale price by a ton.

Fri, 08/17/2012 - 10:22 | 2714010 Abraxas
Abraxas's picture

I don't know. There's lots of $$$ coming to NY from all over the world. I don't think it's a bubble, but then again, what do I know.

Fri, 08/17/2012 - 10:28 | 2714037 Stock Tips Inve...
Stock Tips Investment's picture

Not appear to be a bubble. The market bubbles are widespread processes that are formed over several years. These examples seem specific cases that may have a different explanation.

Fri, 08/17/2012 - 10:24 | 2714021 ArrestBobRubin
ArrestBobRubin's picture

Ahh, the bountiful fruits of Gods Work, displayed in all their glory.

Fri, 08/17/2012 - 10:32 | 2714025 Mercury
Mercury's picture

Not necessarily a bubble: like London, NYC is rapidly becoming a quasi-independent city-state.

Complete with the personal, dictatorial whimsies of its sovereign head of course.

Fri, 08/17/2012 - 10:57 | 2714130 Popo
Popo's picture

Don't kid yourself.  Most of NYC does not work on Wall Street.   And remember just 30 years ago when NYC was dangerous because crime was out of control?   Yeah, well those poor people haven't gone anywhere either.  

And with unemployment ticking up... the "city state" isn't going to be a place with lots of neighborly love.   The crime explosion is coming...  Tick...tick...tick....

 

 

Fri, 08/17/2012 - 11:28 | 2714215 LarryDavis
LarryDavis's picture

I live 20 mins outside the city (roughly 15-20 miles from midtown) and there have been a record number of homicides in my town so far this year. 

Fri, 08/17/2012 - 12:07 | 2714316 Hippocratic Oaf
Hippocratic Oaf's picture

You're right Popo, it is only getting started. There's a lot of stressed out motherfuckers in New York right now.

I see more break-ins, more violence, more dependance on govt.

I can only assume other major cities will be subject to the same. The true middle class and taxpayers are leaving, TPTB know this. The super -rich (that buy these way overpriced apts.) don't live here, for the most part, and spend money and the poor obviously don't have it to spend.

The tax-base is deteriorating

Fri, 08/17/2012 - 12:34 | 2714432 Fred Hayek
Fred Hayek's picture

Oh please.  New York is the most DEpendent city in the U.S.

Does New York city produce its own food?

Does New York city have its own water supply within its boundaries?

Does New York city have its power supply generation within its boundaries?

Fri, 08/17/2012 - 16:55 | 2715353 smiler03
smiler03's picture

What a stupid comment. Did you think about it all?

Sat, 08/18/2012 - 10:49 | 2716463 HungrySeagull
HungrySeagull's picture

Hundreds of semi trucks deliver food, meat, grocery and produce each night and into the early hours prior to sunrise.

Look up or visit Hunt's Point Market as a example of how things get done up there.

Fri, 08/17/2012 - 12:49 | 2714519 walküre
walküre's picture

"quasi-independent city-state"

Not independent. Very much dependent on the rest of the country to supply the citizens of the city with food.

Easily cut-off and even easier besieged. Ghetto comes to mind.

Fri, 08/17/2012 - 10:25 | 2714026 Spider
Spider's picture

I cant wait until that trickles down to me - I wonder how much of that $95mm i'll get...

Fri, 08/17/2012 - 10:26 | 2714032 the not so migh...
the not so mighty maximiza's picture

95 pennies and a kick in the ass

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