Deutsche Bank: NYC Real Estate Could Fall Another 47%

See also

http://zerohedge.blogspot.com/2009/03/47-more-price-declines-for-ny-real.html

what do you mean "another" 47%? Manhattan RE has not fallen 47%.

i believe that means "another 47 percent past where it has already fallen".

well, in my book, two drops of 47% mean that prices will decline 94%. But hey, I don't have a degree in economics so what do I know?

Why don't you read is and see, alpine. It says from 4Q2008 prices. 47% from THEN. That would be 55% from peak in 2007. It does not single out Manhattan, but there is simply no way NYC prioces coudl fall THAT much and Manhattan stay immune.

the dam is about to burst?

really... then pity those who are still standing around at the base refusing to see that this will happen even with the cracks forming right in front of their eyes.

in this case, denial is actually just the river, the river that will flood suck many stubborn lemmings.

I just don't see prices falling 55%. The chances of that happening are very small. Prices in the former bubble markets like SoCal and Phoenix are not even projected to fall 55% and there is now ay NYC prices are going to fall more than SoCal prices. Personally, I don't like to listen to these bank "analysts" because they always get everything wrong. Didn't they say that mortgage backed securities tied to subprime loans were a "solid" investment?

if alpine reads, he will be a bear and not a bull

Very consistent with Goldman Sachs Jan 2009 report as well as Ivy Zelman's work. If this doesnt sideline most if not all buyers, I dont know what will. I simply cannot understand why any rational human being would buy right now in front of such overwhelming evidence the mkt is on the verge of collapse.

Been watching inventory build massively in the city and surrounding burbs. (Check Urban Diggs for data)

Plus Case-Schiller data out this morning was HORRIBLE. Price declines ACCELERATING.
http://www.nytimes.com/2009/04/01/business/economy/01econ.html?hp

April 1, 2009
Record Drop in January Index of Home Prices
By DAVID STREITFELD

It may be spring on the calendar but housing prices are locked into perpetual winter.

Standard & Poor’s Case-Shiller Home Price Index, a widely watched measure of 20 metropolitan areas, fell 19 percent in January from a year earlier. That was a record drop, slightly edging out the previous month.

The worst hit metropolitan areas have now fallen nearly in half. None of the cities showed month-to-month improvements. Thirteen showed record annual rates of decline.

“There’s no daylight that I can see in this report,” said David Blitzer, chairman of S&P’s index committee.

He cited the numbers for Phoenix, the quintessential boomtown, as “gruesome.” Prices there fell 5.5 percent from December, and are now down 48.5 percent from its June 2006 peak.

Las Vegas, Miami, San Francisco and San Diego are not far behind. All have fallen more than 40 percent. The best performing city in the index is Dallas, down a mere 10.8 percent from its peak. Unlike the rest of the Sunbelt and the coasts, Dallas never had a boom, so it did not have as far to fall.

Here is what passes for good news in the Case-Shiller world: in a handful of cities, including Charlotte, Minneapolis and New York, the rate of decline in January slowed a little from the rate of decline in December.

The 20-city index is now at 146.40, its lowest point since September 2003. The peak was 206.52 in July 2006.

Joshua Shapiro, chief United States economist for MFR Inc., said in a note to clients that “it is unlikely that we are anywhere near a bottom in nationwide home prices.” He estimated the index was perhaps two-thirds of the way through its ultimate total decline.

That would bring big city prices back to where they were in late 2001 or early 2002 and would likely encourage another round of beleaguered owners to surrender their underwater homes.

The monthly Case-Shiller numbers examine only one segment of the real estate market, which happens to be the places where the boom was most frenzied. And even in those communities, agents argue that the report does not give a full picture of a market that can vary by neighborhood.

“Sales are up dramatically,” said Jim Klinge in San Diego. “There’s a group of buyers that need housing more than they need to pay attention to the doom and gloom headlines we see every single day.”

Many of his buyers are young people who are backed financially by their parents. Mr. Klinge noted that all the sales were on the low end, which in San Diego means less than $500,000.

Still, the agent said, “We’re back off the ledge.”

The Case-Shiller report comes on the heels of a Census Bureau release that said sales of new one-family homes in February rose 4.7 percent above the revised January rate. The report was received in some quarters as a hopeful sign for a bottom in sales.

Housing prices traditionally lag sales, giving the market time to clear. Much of the activity in the Sunbelt is coming from foreclosure sales by banks, not traditional sales by homeowners. These markets will not truly recover until the foreclosures end.

Mr. Blitzer said that in any case he was not sure the market was improving. “If there were a real, absolute, no-questions-asked uptick in sales in January, we might not see clear price movement until August, September or later,” he said.

Alpine, can you imagine prices tripling in a few short years? If so, why can't you imagine a retreat to the point of mere doubling (or more, even)? That's what a 55% decline suggests. It's not so ridiculous.

prices did not triple that quickly in NYC.

according to the NY Case Shiller Index, prices are double today what they were in 2000.

exactly why theyre going to get cut in half again, alpine 292

47% drop and then another 47% drop from that second price is 72% from the initial value, not 94%

No, CS says prices are down 15% from their peak in NYC so its 15% plus 47% which is 55% from peak.

prices are not falling by 50%. Bank analysts usually exaggerate their numbers. Please see my new thread dedicated just for them.

see people can be helpful on here, polydoa just taught you how to do math alpine292

Alpine, one should always ask whether some researcher has a dog in the fight when judging the content of the research.

So yes the i-bank analysts did promote subprime-backed securities but then again, the i-banks were making a lot of money by packaging loans into bonds, so it is perhaps not surprising they would promote that product.

In this case, however, the Deustche research does not reflect any obvious interest of Deustche. Deustche does not have any clear stake in New York residential real estate, unless it has some condo construction loans out. And in that case, it would be to Deutsche's benefit to be BULLISH on New York, not bearish.

So I don't see any obvious reason to discount this report.

DB REEF has a HUGE construction loan out to the Extell latest project - Aldyn.

The analysts who wrote this note had nothing whatsoever to do with sub prime. Different division, different people. Those who were paying attention will remember that some of the economists who worked for these "terrible banks" themselves said we wee in a housing bubble, that our debt levels were unsustainable, etc. That had editorial freedom in that sense. I am thinking Stephen Roach, etc. So you might have an equity analyst covering home builders telling you to sell all of them because the bubble was about to burst at the SAME bank at the SAME time that DCM was pushing out more junk MBS.

lol if it falls that much on one hand i'm in trouble as overpaid on purchase 6 months ago.....on the otherhand sign me up for about 10 rental properties, briung on the crash i say.

Cheers,
Dean

> prices are not falling by 50%. Bank analysts usually exaggerate their numbers

Huh?

Wow, now thats a stretch if I ever heard one.... granted, not surprising coming from the guy who said (adamantly) that there was no decline...