NYC Condo vs Co-Op

2-2-25

Feb 02, 2025

Opening Comments

My last note was about the deterioration of my short-term memory while playing padel. I received a lot of messages from readers that could relate to my issue. The most opened links were the Tom Brady scouting report video and the story about the Goldman Sachs bonuses.

I have written extensively about the prices of vacations and my mounting frustration of the cost of a getaway (skiing, vacation cost). A reader went to Disney World last week for 2 nights and 3 days. A total of 8 people in 3 rooms at the Four Seasons. They had the VIP Tour. He told me the lines at Tron, Avatar, and Guardians of the Galaxy rides were 2.5 hours or more. The VIP Tour eliminates the lines. How much was the trip? $23k. Sure, they did it nicely with the private tour and hotel, but that is insane. A standard room is $2,630/night but they paid $1,900 for one of the rooms. The private tour was $700/hour +tip. No flights. They drove. I know a typical family does not travel in this manner but come on. We are talking about Mickey Mouse.

Interesting chart of most popular Super Bowl Food by state.

I had nine showings on Friday in country club communities in Boca and Delray. Inventory is quite low, and quality continues to be in high demand. If you want to do a gut renovation or knockdown, there is value. If you want to move-in condition, things are fully priced. In the never-ending debacle of my life, I walked into a sliding glass door thinking it was open and nearly killed myself while at a showing. My hand is swollen and my head hurts.

Pictures of the Day-Palm House Restaurant Palm Beach
NYC Condo vs Co-Op
Quick Bites
- Markets
- Ray Dalio on Deficits
- Cost of Regulation
- School Choice/Nationwide Test Results
- AA/Helicopter Crash
Politics
Middle East
Other Headlines
Real Estate
- Manhattan Office to Apartment Conversion
- Treasure Coast of Florida-Hot R/E Market
- LA Price Gouging on Rents

Pictures of the Day-Palm House Restaurant Palm Beach

I have been critical of Palm Beach from a food perspective for good reason. I feel the food on the Island is weak and overpriced as a general rule. Sure, there are some edible places, but you pay a lot for marginal food. My friend, Beau, took me to the new Palm House Hotel for lunch last week. I thought the lobby and dining room were well-decorated and inviting. However, there were only two tables taken during the lunch “rush hour.” The sushi and sashimi were as good as I have had in the Palm Beach area, which is a low bar. It is akin to being the tallest Lilliputian. Was Palm House close to NYC good? No chance. The prices are not inexpensive with individual sushi pieces at $9-22 and rolls were $8-23. The sushi was fresh, and I preferred the salmon and tuna to the white fish. The spicy tuna roll was underwhelming, but the shrimp tempura was solid. The beef tenderloin was surprisingly tender and full of flavor. The service was shockingly slow for a restaurant with a total of eight guests. However, the food was good enough that I want to return for dinner. The menu link is here.

Food-7.5
Room-9.0
Service 5.5
Price-Full

NYC Condo vs Co-Ops (Italics are from the WSJ article)

I have been clear on my views on the condo vs co-op argument. I hope to never buy in a co-op again. I lived in the PH at 791 Park Avenue and felt the apartment was amazing and had a 3,000-square-foot wrap-around terrace. However, the challenges of getting into a co-op, the illiquid nature of the asset, lack of amenities, no parking, tiny gym, no pool, no restaurant… made the co-op purchase a one-time thing for me. I am sure there is a price for re-entry, but it would need to be a 70% discount relative to the comparable condo for me to consider it. This is a link to some amenities of a newer NYC condo.

There is a WSJ article, “Owning a New York City Co-op Isn’t the Status Symbol It Used to Be.” Prices for prestigious addresses have fallen even further behind condos, as younger buyers seek out newer, flashier buildings downtown. While condos have historically fetched higher prices than co-ops, the spread between the two has “gotten unnaturally large” in recent years, said luxury real-estate agent Leighton Candler of the Corcoran Group. “The premium that you’re paying to have condominium ownership is enormous.”

The article outlined a co-op (730 Park Avenue) that sold for $7.4mm after being listed for almost $18mm. The place was stunning and owned by a billionaire real estate investor. It took nearly two years to sell and at a massive discount for an amazing unit. Younger people today want amenities and flexibility. Many of these co-ops have summer work rules. If you need to renovate the apartment, it could take over three years to complete the construction. Many co-ops charge you a high daily fee to do work on top of exorbitant construction costs. You can spend $5k a day to do work after you run out of your allotted time. I know my hero, Stan Druckenmiller, took years to complete construction in his 5th Avenue co-op recently.

While these factors are also impacting co-ops on Central Park West and elsewhere, the change is particularly noticeable in the Upper East Side’s most prestigious buildings. For Fifth and Park Avenues condos over $10 million, the median price in 2024 was $19.25 million, a leap of roughly 45% from $13.24 million in 2014, according to data from real-estate analytics firm UrbanDigs. For co-ops in the same area, by contrast, the median price grew around 16% to $15.49 million from $13.4 million in 2014.

Living in one of the Upper East Side’s grand, doorman-guarded co-ops was once a social marker, a sign of belonging to an exclusive club. In recent years, however, this cachet has eroded as younger buyers’ choose condo buildings with fewer rules, or in apartments in hipper neighborhoods downtown.

When you go into the new condo buildings at the high end, they have valet parking, concierges, amazing restaurants, impressive gyms, lap pools, golf simulators, children’s playrooms, soundproof music rooms, wine storage, and more. Yes, you pay a premium, but I believe it is worth it. And, when you go to sell it to a crypto king or tattoo-ridden individual, no one can block the sale. Also, living downtown is where the best restaurants are located and my preference (Flatiron, Gramercy Park, Village, West Village).

There have been amazingly scary stories of people who bought into these restrictive co-ops and could not sell them as the board declined buyers. In one famous story, a Wall Street executive listed his Upper East Side co-op and agreed to sell it for approximately $13mm. The board did not approve the buyer, and the apartment ultimately sold for around $7mm. Countless stories of people being turned down from co-ops for the smallest reason. One man was turned down from an Upper East Side co-op because they were single, and the building feared he would throw parties.

Co-op boards can reject prospective residents for almost any reason, and they don’t have to disclose what the reason is. Even celebrities have been turned down. Madonna was once rejected by the board of the San Remo on the Upper West Side, while Diane Keaton was turned down by River House. Richard Nixon was famously twice rejected by Manhattan co-op boards after leaving the White House.

With a few exceptions for the best of the best co-ops, I would opt for a condo. The rules are too onerous and when you apply you need to go through something worse than a Senate confirmation hearing.

Quick Bites

Stocks were largely lower on the week with a rough start due to the DeepSeek news that hit tech and energy stocks. Markets rallied on Friday until Trump tariff news came out derailing the rally. Trump will be leveling 25% tariffs on Canada and Mexico, alongside a 10% duty on China which begin on Saturday. Larry Kudlow admits these tariffs are likely to lead to price increases. I am fine with threatening these tariffs but hope they do not stay in place for an extended period of time, given Americans are already grappling with inflation. On the week, the S&P was -1% and Nasdaq -1.6%. Interestingly, more articles are coming on the heels of a Goldman Sachs report regarding a surge in short bets against US stocks. In January, investors have placed 10 times more bets on US stocks falling than equivalent bets that shares in leading American companies would rise, the investment bank said. Separately, Elliott Management, which controls more than $70bn worth of investments, this week warned that Mr Trump’s presidency was fueling speculative bubbles in markets that threaten to “wreak havoc” if markets crash, according to the Financial Times. Gold hit a record high of $2,860 on tariff worries. Oil declined on the week, as fears of the impact of new Trump tariffs on global growth. In 2023, the last full year of data, Canada exported 3.9 million barrels per day (bpd) of crude to the U.S. Although the 10-year Treasury was -3bps month, it was volatile, hitting 4.8% before settling at 4.54%.
Check out this one-hour video interview with Ray Dalio, where he dives into a variety of topics. However, I want to focus on his concern about debt levels/spending. As I have stated adamantly, Dalio wants to see deficits cut to 3% of GDP (currently 7%). Remember, we are running these massive deficits with all-time high stock prices, all-time high real estate, no wars… If we are running $2 trillion deficits with strong economic conditions, what happens during a recession? Dalio wants to see spending cuts and smaller deficits NOW, while the economy is good. He discussed being “thrown out of office” if you cannot get deficits down. This was Warren Buffett’s idea, and I support it. I am of the opinion that we need massive entitlement reform (raising the retirement age, means testing, and increasing the annual contribution) in addition to other spending cuts and less pork in bills. Dalio’s point is if we cut spending and reduce deficits, interest rates will fall, further reducing deficits – and I agree. Remember, the population is aging, and the younger generation is not having kids at the same rate. What could possibly go wrong? Please listen to Dalio. Worth your time. Even Bill Gates supports DOGE and said, “The deficit needs to be brought down.”

Regulations can add a great deal to the cost of goods and services. Obviously, some regulation is needed, but I have done some research on the Biden Administration’s regulatory track record, and it is not great. Although there are ranges depending on which source you consider, the Biden regulations cost at least $1.4 trillion, with $870bn from the EPA alone. Another source has the Biden regulatory cost at $1.8 trillion. Trump has vowed to reduce regulations and wipe out many of the Biden regulatory changes. Trump issued a “regulatory freeze that in effect pauses all the federal rulemaking to give the incoming administration an opportunity to review and potentially modify rulemaking efforts to align with its policy priorities.

Trump to Sign Major School Choice Executive Order That Could Upend the Public School System. US public education is not amazing, especially when you factor in the per capita spend. Surely, the USA can do better. Nationwide test results just came in and they are awful, with reading down to the lowest level in 32 years of the test. Only 1/3rd of NYC 4th graders are proficient in math, despite an average spend of $21k/student. At 30 Illinois schools, not a single child can read at grade level and some schools there are spending $50k/student. This article outlines that the private Catholic schools did not see the significant decline in learning loss of public schools, as they reopened faster. This link goes into details of the new test results; In short, they are disappointing.

The most recent exam was administered in early 2024 in every state, testing fourth- and eighth-grade students on math and reading.

No survivors after plane and helicopter crash over Washington DC river, officials say. The air traffic controller alerted the helicopter 30 seconds prior to the crash regarding the American Airlines plane. Apparently, military helicopters don’t have traffic advisory systems as do commercial aircraft. 67 confirmed dead. A report from the FAA suggests staffing in the air traffic control tower was “not normal” at the time of the crash. The controller who was handling helicopters Wednesday night was also instructing planes that were landing and departing from the airport runways, the Times reported. Those assignments are typically assigned to two controllers. I am in shock that a job so important would not have a better staffing requirement. The AA flight was asked to change runways shortly before the accident. There is a lot of talk about FAA’s diversity practice and Trump mentioned it as a possible cause of the crash. This article suggests the FAA turned down 1,000 applicants based on race that contributed to hiring woes and has led to a class-action lawsuit. As late as last year, the FAA was recruiting those with targeted disabilities, including “hearing, vision, missing extremities, partial paralysis, complete paralysis, epilepsy, severe intellectual disability, psychiatric disability and dwarfism.” This article outlines understaffed and overworked crews at Reagan Airport. Sorry folks, the FAA is not the place to cut on costs.

Real Estate

Office to residential conversions has proven to be challenging. However, a former JPM check processing center has been converted to apartments near Battery Park. The nation’s biggest office-to-residential conversion is hitting the market with 1,300 apartments carved from a million-square-foot brick fortress originally built to house computers — and not much else. Rents will range from more than $3,000-a-month for a studio to about $10,000 for three-bedroom apartments, not including an undisclosed amenity fee. Monthly rent for the higher-floor apartments, which will be ready to rent in a few months, will near $12,000. A quarter of the apartments are planned to be offered at reduced rates through an affordable housing program approved by the state last year in exchange for tax abatements. I do not like that location, but given the housing shortage, I am happy to see the conversion. Here are listings with photos.
Port St. Lucie ranked No. 3 out of 122 mid-sized U.S. cities in the largest increase in home prices over the last decade, according to a Construction Coverage study. The city saw a 175.9% increase in home prices from 2014-24, substantially out-growing national averages and standing out against other Florida cities in the real estate market, according to the construction and real estate consulting business. The median home price increased by $251,491, from $143,013 in 2014 to $394,504 in 2024, while the median household income was $74,928. Port St. Lucie was one of eight Florida cities that saw over 190% price increases — about double the national average. That put Florida No. 2 among 15 states, with a 132.2% increase.
It’s official. Landlords in the Los Angeles market have illegally gouged renters scrambling to find homes after historic wildfires this month torched entire neighborhoods. Overall, rents jumped by 20% across Los Angeles County after the wildfires that began Jan. 7 burned an estimated 10,000 homes, killing at least 28 people, according to the Washington Post, citing figures from RentCast.

© 2025 The Rosen Report LLC. All rights reserved. Does not constitute investment, financial, legal, or tax advice. Consult with your lawyers and professional financial advisers. Rosen Report™ #758 ©Copyright 2025 Written By Eric Rosen.