Wednesday, November 22, 2006

Bonus Season BS

The NY Observer takes a look at the myth that big Wall Street bonus seasons leads to increased home purchases.

Is Bonus Bump Bogus?
Wall Street’s $36 B. Test


"In 2005, Wall Street investment houses handed out a record $21.5 billion in year-end bonuses, according to the State Comptroller. This year may be even bigger, with I-bankers and other staid dice-rollers expecting at least $36 billion total in bonuses to be doled out this winter.
Real-estate brokers must be popping champagne bottles. A very healthy bonus season means a very healthy Manhattan home-sales season in the spring, right?
Not really. While bonuses can pump up springtime prices, the effect on the volume of sales is more Wizard of Oz than Master of the Universe."

Full article...

14 Comments:

Blogger AnalysisGuy said...

Today's report is out on Atlanta and it's first for AnalysisGuy. No big bubble.
Daily Home Price Analysis

Wednesday, November 22, 2006 4:37:00 PM  
Anonymous Anonymous said...

Dollar Falls Sharply Against Euro and Pound
Sign In to E-Mail This Print Reprints Save

By JEREMY W. PETERS and CARTER DOUGHERTY
Published: November 25, 2006

Friday, November 24, 2006 11:35:00 PM  
Anonymous Anonymous said...

Okay. let's say I AM a Wall St. whiz. I make my money by spotting good investment opportunities and selling investors on putting their money into them.

I am quite good at my job, so I get a large bonus...which I then tie up by purchasing an asset that will likely decline in value for the next few years, and which will cost me tens of thousands of dollars each year in maintenence and taxes.

I dunno, sounds kinda dubious.

-Jamey

Saturday, November 25, 2006 1:23:00 PM  
Anonymous Anonymous said...

Jamey - Wall Street bonuses are big...The average for a trader is 300k. That doesnt include salary of 100-150k /yr. 10k decline is a rounding error for most. Its a lot for you because you probably make 65k a year with little or no bonus. As long as wall street makes money, the jersey shore will thrive. only a recession or dirty bomb will change that.

Saturday, November 25, 2006 2:40:00 PM  
Anonymous Anonymous said...

As the seller of a Manhattan co-op, I didn't notice any bonus effect when I put my place on the market end of Jan. 05. Most of my offers came from out-of-towners or people who had nothing to do with Wall Street, and the eventual buyer said he'd been looking for a year.

ps: I don't think bonuses help sell property at the shore. Might prime people to rent, but nobody buys a shore house in the winter.

Saturday, November 25, 2006 6:33:00 PM  
Anonymous Anonymous said...

Let's not forget that there's hundreds of thousand young wall street kids all with sacks of money fanning out across the region like so many jungle ants. None of them own homes already.

They and they alone will save the RE market at the shore. And also north jersey, hoboken, jersey ciy, manhattan, brooklyn, queens, westchester, long island, etc, etc.....

Or maybe this bonus thing is exagerated a little bit.

Saturday, November 25, 2006 9:53:00 PM  
Anonymous Anonymous said...

This comment has been removed by a blog administrator.

Sunday, November 26, 2006 2:52:00 AM  
Anonymous Anonymous said...

To Anon Saturday, November 25, 2006 2:40:08 PM

Are you being facetious? Not to engage in pointless salary pissing match, but I do know from large salaries. (More to the point, my family's surname is one people most often associate with public monuments or an annual humanities prize. So I understand first-hand the psychology of the large-ticket impulse purchaser.)

That said, your claim that a few hundred or a few thousand people getting a couple hundred thousand extra in their pay envelopes is going to "save" the declining real estate markets is asinine. Moreover, even if the bonus-babies were in sufficient number to absorb RE inventories, most are disinclined to put their money into an asset category that is expected to lose upwards to 1/3 of its value over the next couple of years, all the while exposing the owners to costs and risks. These are, after all, people who earn their keep buying low and selling high. I know a few Wall Streeters who have been watching the shore RE markets. Most would rather spend $25k to rent a place for July and August, than overpay hundreds of thousands of dollars today for an asset they can buy after the present owners have absorbed any depreciation.

Sorry, you're just wrong. What remains to be determined is whether you're misguided or just plain lying.

-Jamey

Sunday, November 26, 2006 10:42:00 AM  
Anonymous Anonymous said...

LOL...lose 1/3 the value that's the best one I've heard in the last 5 years ....you bubbleheads have been calling for the sky to fall for 4 years now ...we do get a laugh out of it though ...latest news out was shore prices are still headed upward or don't you read any REAL news

Sunday, November 26, 2006 2:56:00 PM  
Anonymous Anonymous said...

Jamey -

as a wall streeter, i can tell you, I will still own at the shore. And the new fortunes of the many will drive buy interest. There is more to buying real estate than worrying about the short term oscillation in price. The utility value for one, the prestige for another. Most folks, like me, buy 1mm+ homes outright with no mortgage. Variations in pricing dont matter. Long term, all values increase.

So, save your nickels and with any luck you too can own at the shore. Well atleast in Jackson, NJ.

(and as for your 'my surname is so and so...' comment, if i had a nickel for every frustrated blogger looking to flex their socioeconomic muscle, well i would be able to afford an ocean view!)

Sunday, November 26, 2006 3:19:00 PM  
Anonymous Anonymous said...

Sorry to disappoint, Anon Sunday, November 26, 2006 3:19:17 PM, but I already HAVE an ocean view. But thanks for the advice. And to think, you have clients who pay for that sort of counsel?

This is not a short-term oscillation in price. This is the inevitable downside of a cycle, driven by market pressures that flout fundamental economics. But it was smart for you to hedge your bet, rhetorically speaking: "Long term, all values increase." Wow, another Wall Streeter who cannot distinguish between "values" and "prices." If I had a nickle for every one of you, I would be able to buy the adjacent houses and keep rabble like you out of the neighborhood. ;)

"The new fortunes of the many." Priceless. Funny for so many reasons--just not the ones intended.

Sunday, November 26, 2006 6:26:00 PM  
Anonymous Anonymous said...

Will the two of you give it a rest. I suspect neither one of you comes from a wealthy family or works on Wall St. Please spare the rest of us your bullshit. Besides, I thought the Wall St. types preferred the Hamptons to the Jersey shore.....

Monday, November 27, 2006 12:12:00 AM  
Anonymous mr. rant said...

I worked on Wall Street for years. The real answer is, people buy shore real estate under two scenarios, speculation and for personal use. No one sober who works on WS makes a million dollar impluse buy. Having said that, what we are seeing is the natural softening of prices as buyers wait for a price drop, sellers hold out for the drunken bonus boy and what happens in between those two camps is a dull market at moderatly lower prices.

A friend of mine is looing to dump ocean front he bought two years ago in a good community, he doesn't have to sell but has decided to stop the weekend commute, he will have a hard time at the level I think he wants to get out for. Knowing him, he will not OLP 1.5 million Sell 860K whoever that was desperate at the sale and pollyanna at the offer.

So what will this fellow do? He doesn't need the money, enjoys the house, knows the end is not comming tomorrow and will wait. Hence those looking to scoop cheap real estate will not get it from him. Most of the people I know, are in his camp.

Sorry to disappoint those who are calling for 100K ocean front lots in LBI, ain't gonna happen.

Disclaimer: I own real estate down the shore and when I speak of the shore, I speak of good communities on or near the beach. Not of Kara developments two miles from 72 in the pine barrens.

Monday, November 27, 2006 10:07:00 AM  
Blogger njcoast said...

Hey Mr. Rant- remember the house in Interlaken that I said was priced way too high at $3,200,000 last summer that caused you to go on an, err, rant? The price has been lowered to $2,699,000 and still not a bite. Softening indeed.

Monday, November 27, 2006 10:25:00 AM  

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