Friday, February 6, 2015

Running Commentary Is Back

As many of you have probably noticed, the blog is, more or less, back in full swing. There are many reasons that it slowed down in the first place. First and foremost is that I transitioned from running my own business to working for a large (and very desirable) company. The internet and the relationship of large corporations to it has been constantly evolving. At first, large corporations, particularly in real estate, were very weary of associated individual contractors, posting to the internet and social media without direct oversight. Now, it is clear, that such oversight, with social media so ubiquitous, is virtually impossible. You have to be self policing, and if you do something that is non-compliant or unforgivable, they show you the door. So, we have made the adjustment, and moved on to the next phase, one in which I feel far more comfortable posting freely.

One of the best things about a blog is that for better or for worse, it is a record of your perceptions and predictions. My proudest moments as a blogger were during the financial crisis and the slow but ensuing recovery of the New York City real estate market. With my financial market background and intense interest in the Fed and its inner workings, I think I did my best work during the financial crisis. You can find my running commentary of events under the label of "Economy" of the right side of my blog, or on this link. So, in order to provide A Fine Blog viewers with the best insight I can, the running commentary is back! From here on, when the thought comes to me, or a crisis arises, you will always find my thoughts on the blog, and I hope you find them helpful.

As for the current market, it is hard to find one in some time when the near term and immediate outlook for the New York City market has been this good. Inventory is low. New inventory is coming on line, but not nearly as quickly as demand. The economy, both in NYC and nationally is on solid footing. New York City is creating jobs. Wall Street bonuses are back on the rise, and let us not forget that the vesting stock that the street has been doling out since 2010 has begun to mature. Finally, despite the strong economic news of late, mortgage interest rates are still near record lows, sitting around 4%.

I'm always looking for risk factors, and they are out there. European economies continue to struggle. Greece may be the first chip to fall in what could eventually be an abandonment of the Euro. The Ruble has collapsed, giving buyers from Russia less buying power. The adversarial political relationship with Russia has also put a dent in that demand. China's economy is slowing, yet demand from that market for US properties seems unrelenting.

So, there are risk factors, but in general, we have a whole lot of reasons to believe that the NYC market should continue to appreciate in the near and intermediate term. Of course, you always have to buy wisely. You also have to consider your tolerance for risk and the amount of time you are willing to hold a property. The closer to the core of Manhattan you get, the more conservative the investment, and likely the lower return in a good market, and less risk of loss in a bad market. The further you go from the core, far out Brooklyn, untapped areas of Queens, for instance, the greater opportunity for big appreciation, and bigger losses in a down market.

My favorite market right now is the Upper East Side focusing on the areas that benefit from the building of the Second Avenue Subway, due to open in two years. The area benefits from a convenient location, plenty of retained culture, and attractive pricing relative to the rest of Manhattan south of 96th Street. In case you missed it, I posted a handy map to deduce the specific areas that should benefit the most from new subway stations. It is these areas that have also suffered the most during the years-long construction that frankly has been both a headache and a nuisance. There is still plenty of opportunity to capitalize on, but as we draw nearer to the subway actually happening, the interest in the area is increasing by the day.

That's it for now, come back for more running commentary as time rolls on.


No comments:

Post a Comment