Housing prices start to plummet

That article focuses on new homes sales, which is not as relevant in New York for obvious reasons. Does anybody have a Manahattan-specific article that is instructive on the current state of city real estate? I see lots of people on this site proclaiming that the market is either tanking or that it is stable and would like to see some unbiased data (if that even exists).

Interesting the Money CNN story also contains the following link: http://money.cnn.com/popups/2006/biz2/newrules_bubbleproof/5.html

All I know is I bought a loft in Madison Park North area less then six months ago and just got an offer from our broker from an 'investor' for $300K more. If its plummeting I don't see it.

for nyc i think the issue is more about a slowing in the rate of appreciation.for example, i had a friend who bought a condo in central harlem 2 yrs ago and the value more than doubled to 1.9million...i think that type of return will be hard to come by. nevertheless, homes in nyc will NOT be any cheaper.

#2 - new home sales are very relevant in NYC as there are 20,000 new condos coming on the market this year

prices are falling in NYC - will fall at least 50% before this is all over. May happen over a number of years so in real terms this is more than 50%

#7= renter
thanks for your check last month; please look out for my 20% increase for next months rent ;)

#7 who is definitely a Renter----I have heard the same forcast in 2004.

Baseless assertions with no supporting data or arguments, such as put forward by #7, are a waste of everybody's time. In truth, I think it is difficult to extrapolate too much from national trends to the NYC property market.
1. The subprime story is less of an issue for NYC, where the cost of housing itself precludes subprime borrowers from having a meaningful presence in the market. That is not to say, however, that many prime borrowers will not face difficulties once their ARM teaser rates expire. But most of these people should be able to refinance at reasonable rates, limiting the rate-reset shock.
2. NYC has not seen the kind of speculative activity that areas like Miami or Las Vegas have experienced. Yes, there are a large number of new condo buildings being completed, so new supply will have an impact in some parts of Manhattan. But the scale of building does not cmpare to what you would see in Miami for example. the key distinction, is that in NYC, there are actually people looking to move into these condos - they are not just being built for flippers. In other words - the demand seems to be there to absorb the supply.
3. The US is a collection of regional housing markets, driven by local as well as national factors. Wall Street money, and the attraction to ricj foreigners of owning a place in The Big Apple (who also benefit from a weak dollar), are two big influences. Last year's bonus season was a record-breaker on Wall Street, and this year's is likely to be decent too. Still, if equity markets falter and the M&A boom slows, those bonuses could get much leaner.

My conclusion is that NYC property is unlikely to face a collapse, but prices could (at best) fall slightly, or (more probably) go up at a much slower pace. Certainly, the economy is slowing, and national prices have already fallen considerably. It would be remarkable if NYC were to escape entirely unscathed. But don't expect the doomsday scenario that many uninformed and under-educated people on this website so often espouse.

Full disclosure: I currently rent in Manhattan, and am hoping to be able to buy n the next couple of years. I am not a broker!

good analysis, #10. It is great to see an evidence supported opinion about the current state of the market.

In my exp best buying time was august-nov. No bounus/summer effect. Did that in 06 and got a nice break. Nationwide stats do not reflect Manhattan at all.

#12 you are right on -- unfortunately that is when I did my selling! seasonality is definitely a real factor in the NYC market

agree with 12 and 13. To add to that, over the course of the summer we were all innundated with endless media about an imminent real estate collapse. Many people were holding their breaths and were reluctant to come forward and buy. This contributed heavily to the temporary slowdown we saw in the autumn. Many of these buyers who had felt uncertain then kind of bit the bullet and decided to buy after the holidays. People who bought in the autumn definately ot a break.

Agree with #14 et al. I noticed a huge difference btw right after labor day - empty open houses, price reductions and places on the market for months - and early October, after all the press about 'the market crashing' people came out from the woodwork and good places were being snapped up.

I've been considering raising our rents for the last year..... #7's post
finally made me do it. Next month, 3 rentals are going to increase. Thanks Seven ..:)
(Best to get the most money now if prices are falling 50%)

my landlord increased my rent from $2000 to $2400!!! They own the entire building and raised everyone's rent once their lease expires. And guess what! you either sign another year and pay or move. once again, the resentment towards idiots on here who continuously predict a housing crash cuz the only thing they could predict is a lovely stick up their behind. i could have spent the last few months looking for a place to buy. Most of the places for sale are at least 25% higher than in November/December/January. The studio apartment on 555w 23rd was going for $540K in June 2006, now it's $630K!!! poster #7 needs to get a life and stop giving false advice

Prices have not gone up 25% since Nov / Dec / Jan - don't exaggerate. And don't blame the idiots on this website for your lack of foresight.

One thing everyone subtly forgets is that a lot of people in finance are extremely restricted in what stocks they can buy and a lot of them choose real estate for their investments. That is why NYC Real Estate is directly correlated to Wall street bonuses.

#6, there are not 20,000 new units in Manhattan this year. That would equal about 100 brand new, very large buildings. There may have been permits filed for nearly that many, but many will never be built. If you ahve hard data, please provide it.

you probably still believe in santa claus...news flash...it's over...over...

I figurw that after all of the new developments come to market this year and next that Manhattan prices will drop by, say, 60% to 70%. I am, therfore, going to wait until next year, when there is a flood of stuff on market, and I can pick up things at firesale prices. Hell, I may even buy two apartments!!!

so much foolishness, so much time wasted . . . its no wonder that all of you people cant afford to buy an apartment . . . if you would spend a bit more time working and investing and less time carping about prices and how the market is going to collapse maybe you could get out of civil service / non-profit / education and actually own a piece of NYC instead of bitching all day

you either are the man or get taken by the man -- there is no middle ground

keep wishing and whining . . . I will continue to collect your rent checks!

Ever notice that whatever you see on TV and the news is exactly the opposite of what you should be doing? I remember them saying "RUN RUN RUN from the stock market in 2001-2002"... except you should have been buying...

I have been looking for an apartment for 4 months now, and we are starting to see apartments where the asking price would be considered an outlier based on comps for the area. I am concerned that on a $ / sq ft the market might be heating up. Can anyone comment on this?

This thread is full of broker babble. Prices in manhattan are FALLING - they are in real terms probably already 10% less than they were at this time last year. They will continue to fall - you can't see a 200% increase in housing prices in 10 years and expect things to continue this way or not fall. Prices will fall and they will continue to fall for a long time. And to the poster who pays a whopping 2400/month you are getting a great deal considering what your carrying costs on that apartment probably would be. RENTS DO NOT SUPPORT PRICES RIGHT NOW - yes they may seem high, but they don't justify the current property prices. If rents increase 100% then you might be justified in at least starting to look.

Yes - Maint/taxes alone are often more than 2400 and this is just like throwing away $$ like rent.

Broker babble my ass. Prices are not falling.

Prove it.

Just a casual observer who bought in September...it really looks like prices have gone down 5-10% in a certain swath of apartemts - those btw 600-1MM. Again, this is not scientific - just looking at how many reductions there are.

for those that aren't buying, i hope you're doing well with your other investments then, or you're going to have deja vu again.

This is poster 22: I did not realize that prices have already fallen 10%. That being the case and coupled with previously noted flood of new develpoment apratments on the market, then by late next year, prices will be down around 75% to 80%!!! I am definitely going to buy more than one aprtment after that!! DO NOT BUY until late next year, when the firesale will be on!

Right, just like you bought the firesale in stocks 4-5 years ago....

... and if you had, you wouldn't be here trolling.

to refute all the of the negs . . . ALL of the data that has been released lately for NYC has prices going up. Here are only a few examples:
http://www.millersamuel.com/charts/gallery-view.php?ViewNode=1174270558fRROq&Record=7
http://www.millersamuel.com/reports/pdf-reports/MMR06.pdf

There are dozens more. Market is slowing but still increasing.

Keep waiting. It will go down someday and then and only then STRIKE. Seriously if you time the market right you may just beable to score that 2% discount that you are waiting for . . . all of that rent in the meantime is meaningless!

prices are up nearly 300% from 1997 according to the report - can you say "BUBBLE"?

Also because of #7's post, we are also going to raise our business rates.
If prices are dropping 50%, then we need more cash flow to buy more rentals.
#7, just increased inflation.

while abrasive, 36 does have a point. If all you renters believe so strongly in renting, (IE demand is high), that cannot be good for supply and prices.

I think prices will fall BUT NOT 70% ...that is obviously a joker trying to get people mad.....If prices can go up 400% in 10 years, they can certainly go down...especially since the average increase over the years has only been 3% ...it has to equal out at some point....but again, it will be a decrease but more reasonable amounts...ie 20%...

I love how people think a 400% increase in 10 years is totally normal, but say oh a 50% decline is impossible? Prices would still be up 200% - this is still bubble territory even after a 50% drop.

Where would the people selling go? Unlike stocks, people have to live somewhere...

As a a person who bought in 6-7 months ago, I'm trying to stay on-top of what's going on so I can sleep better at night. Yes, I need to get a life...having said this, yes I wish the market were going up, but it really looks like it is either going down about 10% or that overpricing is starting to diminish. Aren't they the same thing?

I'm not so sure about that. I think it depends on where and what you're looking at.

Markets are interconnected. That's why a 10% drop of stocks in China can send stock markets into a downward spiral in NY. If China is connected to NY, why is it such a stretch to think that other areas of the country in close proximity i.e. New Jersey, Connecticut, PA are connected to NYC? There comes a point when housing could become cheap enough in other places to draw people out of competing area. Imagine if condos became 50% cheaper in Newark. You don't think some people would buy? If you believe that yes, some people would buy, then you're acknowledging that markets are CONNECTED - that goes for real estate, commodoties, stocks, everything. Of course not everyone would buy and there will always be people who want to live in NYC, but that doesn't mean real estate won't go down here in the short term.

Also, the subprime debacle doesn't just affect subprime borrowers (read markets are connected above) Many pension funds, including that of NYC and state teachers invested in the market - and Teachers Retirement System of NY invested in New Century (subprime lender going poof). Older teachers about to retire make close to 6 figures and if their retirement is hurt, it would hurt their ability to make housing payments, even if they themselves are not subprime borrowers. This is just one direct example of the widespread implications of a subprime meltdown.

On NY State Teachers pension investment in New Century:
http://www.nypost.com/seven/03152007/business/mortgage_disaster_in_the_classroom_business_roddy_boyd.htm

S&Ps report on January prices in real estate. Shows NY metro area prices dropped 0.9% in Jan year over year. Click on New Year Begins with Negative returns article and go to 2nd page where it shows change in prices by metro area:
http://www2.standardandpoors.com/portal/site/sp/en/us/page.topic/indices_csmahp/0,0,0,0,0,0,0,0,0,2,1,0,0,0,0,0.html

And YES, there are subprime NYC borrowers. Subprime means you have a low credit score, not a low salary, although there are plenty of both in NYC. Read: 91k NYers set to lose homes - more than 1/2 live in and around NYC. Don't take it from me, take it from the Senator Schumer
http://www.nydailynews.com/money/2007/03/26/2007-03-26_subprime_is_bigtime_bind.html

http://www2.standardandpoors.com/portal/site/sp/en/us/page.topic/indices_csmahp/
0,0,0,0,0,0,0,0,0,2,1,0,0,0,0,0.html

This is the full link for the S&P article above. Guess it didn't fit on one line, so you'll have to copy and paste twice.

great research #43! Brokers rule this cite and spout off nonsense that prices are going up. Everyone knows they going down and this is a bad time to buy.

yes i know i misspelled site.

#43 and #45 -- no one cares about NY Metro. This is a Manhattan/ Brookyln centric board. These are the charts that matter:
http://www.millersamuel.com/charts/gallery-view.php?ViewNode=1174270558fRROq&Record=7
http://www.millersamuel.com/reports/pdf-reports/MMR06.pdf

Market is still good. Not broker babble -- real stuff.

The TV news just said that the housing prices were down in January by 0.7%. Not great news but it doesn't sound like a tragedy, either. I don't think anybody is speculating in this market.

This is #45. People who don't believe that prices are plummeting should also check out: http://nymag.com/realestate/realestatecolumn/29698/

#45--Clearly it is inaccurate to say that "everyone knows that prices are going down and it's a bad time to buy". If that were the case there would not be these endless debates here and on every other real estate related message boards.

49, your article could also support the fact that prices will go higher. The reason you get more bids when u raise the price is there are so many ppl sitting and waiting for prices to come down that a couple buyers will bite if you dangle a carrot down and try to take it away.

REALITY CHECK...how can prices rise in New York and they are falling, falling in the entire country. It's just taking a while longer but it's coming...and soon!!!

Reality check: Co-ops routinely prevent sales if they think the price is too low. That will prevent a lot of sellers from unloading their apartments, but will keep prices high.

Reality check: Inflation means rents are gonna rise, rise, rise!

Not every stock fell in the last crash... also if you margined yourself on companies with no earnings, you got killed. Location location location in real estate, follow the jobs and money.

Reality check - look at all the down little black arrows on streeteasy and price cuts on natefind. How can anyone argue that there isn't a price correction going on in manhattan right now?

I have been seriously looking on the UES for 3 months and have seen at least 25-30 apts. - all priced over $2mil. No matter how much hype the brokers pile on, I can say one thing for sure - apts. are NOT moving quickly. Even the ones that are priced extremely well and are in xxx mint condition can sit for 30 days. In a hot market this is usually not the case - sellers are anxious and the brokers are nervous - they keep saying "move quick, this one won't last" and its still sitting there. So my read is that the market is slowing down and we will see a moderate price adjsutment to get some of this inventory moving.

you are def right #57 inventory is definately staying on the market longer and things are not selling at such a torrid pace. the reality is that all real estate is local and nyc is no exception. just be prudent and wait for "your price". good luck

broker = used car salesman

Funny! When I run a search on this website for a four bedroom apartment in the upper west side selling for 5 million or less...I see mostly apartments that are "in contract".

Family sized apartments are in vry high demand. More and more people are raising their families in the city. The soft spot for NYC real estate has always been studios and one bedrooms.

then why are studios the 1st to go and higher prices $ per sq ft wise? for flipping purposes??

Studios are going higher because so many people have been priced out of one-bedrooms. And the market is still very strong in NYC. When the NY RE market does crash (as in the early 90's, the mid 70's, etc), smaller apartments are hardest hit.

I bought my first apartment in the early 90's. I could easily afford two one bedoom apartments. But a two bedroom was well beyond my means.

#63 - your last sentence was the most insightful in the entire thread - can anyone else think of any other times in the last 30 yrs where you could easily buy 2 one bedrooms but not be able to afford a 2 bedroom?

since when is 30 days a long time for a property to be on the market??!????????

Over 30 days is a long time in a "hot" market for a well priced apt. in xxx mint condition. It would barely have photos up before it was hit with multiple bids. Brokers have an inventory of clients for these properties.I also believe that the listing brokers get their clients in first. My point is that most of what I have seen since January in the over $2mil.market on UES is still sitting - the two apts. that sold were priced really well and were in mint condition - and they still sat for well over a month. If the market wasn't cooling down I don't think that scenario would exist.

perhaps... but maybe buyers are timing their purchase around the school year... wait a month or two and see if they get snatched up quickly.

I would be very careful pulling stats from miller samuel. their numbers and reports are pretty much based on elliman's sales ONLY.

http://www.nydailynews.com/news/2007/03/28/2007-03-28_set_up_for_a_fall-3.html

Interesting article. People will now post saying the article talks about Jamaica not Manhattan where things are different. I believe there has to be a ripple effect eventually. If apartments those neighborhoods get cheaper people who would have bought in a place one in a slightly better neighborhood will be drawn to the cheaper one. This will result in a price drop in the slightly better neighborhood and so on until it hits Manhattan. Having few defaults in Manhattan and coops requiring 20% down isn't the only factor.

Does anyone have statistics on how real estate performed in % terms during the pullback in the early 90's?

note the map has ONE dot below 96th street in Manhattan. Speaks for itself.

dhosang, thank you for pointing this out! there is a reason that miller samuel reports are a part of the elliman website....
The S&P article quoted above and accessible from the link below uses 18 years of sales data for its analysis on the NYC real estate market:

http://www2.standardandpoors.com/spf/pdf/index/032707_homeprice.pdf

The S&P/Case-Shiller® Home Price Indices are published on the last Tuesday of each month at 9:00 am ET. They are constructed to accurately track the price path of typical single-family homes located in each metropolitan area provided. Each monthly index combines matched price pairs for thousands of individual houses from the available universe of arms-length sales data.

Little black arrows, pointing downward.

I think right now there's evidence/data to back up whatever point of view that you have on the market. People tend to site the data that supports their beliefs/wishes about the market. Those who bought recently will find reassurance in positive data. Those who are waiting to buy are searching for data that will show them they were right in waiting. Here's some more data that backs up my point of view.

Newark Mortgage Troubles: As much as 50% of mortgages in some areas are subprime:
http://www.nytimes.com/2007/03/28/nyregion/28debt.html?_r=1&ref=nyregion&oref=slogin

I think areas like this easily accessible to NYC by efficient mass transit will have an impact on NYC.

Bernake is now being questioned by the joint economic committee on CNBC. Everything sounds a little bit sour, to put it mildly.

It appears as if a storm is looming and everyone in NYC is ignoring this. Time will tell but since 95% of the people posting beleive that a crash is a coming I tend to differ. In fact I beleive NYC will expeirence an appreciaton in prices for 2007. And no I am not a real estate broker.

Little black arrows, pointing upward.

i agree with 76, i think the opposite of what is on tv is what will happen. Real estate is also very location specific.

1) When the stock market crashed in 2000-2001, there was little or no bubble talk... it was "buy high, sell higher". The bubble talk happened after the fact and in fact you should have been buying stocks while they were screaming "the sky is falling".

2) How overblown was the Y2K "problem"? People were saying you should hide in bunkers and buy water and supplies... x% of businesses were not ready and would fall apart. What happened? nothing.

Nothing happened in y2k because people spent billions preparing for it. Think none of your banks had systems with dates listed as YY/MM/DD that would think 00 means 1900? think again.

Some cold hard facts:

Rent on a large 1BR in a good location is at $37/sqft/year

Condo purchase on same is over $1000/sqft + $8/sqft/year, which translates to an annual payment of about $82/sqft/year under current interest rates (and we're not talking new luxury construction here, that's much more expensive)

If you've ever seen any market sustain that ratio for more than a few years, let me know.

So people are not preparing for a real estate downturn now? Point MADE thanks 79. Most of the speculators are gone, its real buyers now.

So for a one bedroom 600 square foot apt in Tribeca, Greenwich Village, West Villag or Soho it will cost 37 times 600 =22,200 per year or $1,800 per month.

good luck finding a decent 1BR in a good downtown DM building for that much. Try and double that and maybe you are close. Then you are lookimng at $74/sft which is pretty close to the "buy" equation, no?

In most parts of the world housing is a very utlitarion concept. Most of the rest of the world would have a tough time understanding why a family of four needs a home with 3 1/2 or 4 bathrooms or why there is a need for a "guest" bedroom or a maid's room.

Think about this:

The U.S. Government has subsidized housing since the 1930's starting with the Savings and Loan industry and continuing with the creation of Fannie Mae, Freddie Mac and Ginnie Mae. The are no mortgage GSE's in other countries outside of the U.S. Furthermore, the subsidy extends to today with the deductible of mortgage interest on your tax return. As a result, an inordinate amount of U.S. savings and capital investment is in residential housing. This may or may not be a good thing. In fact it is probabaly not a good thing. But that is the way it is. And as we know, the American public is very good at responding to incentives and there is tremendous demand for subsidized goods.

I rent a 4BR 3BA apartment on the upper east side for $40 per sf. per year. A 3BR 3BA apartment of similar s.f. and located 5 blocks away just sold for $1600 per square foot. Monthly maintinence is more than 60% of the amount I pay in rent. The price of the apartment would pay for 45 years worth of renting not including the additional charge of monthly maintinence on the purchased apartment. This is an over simplification of course and says nothing about inflation or price appreciation. But one must agree that this is out of balance.

But it is has been out of balance for a long time. And there is no reason to think that it cannot stay out of balance for a very long time. Or to think that it cannot get even more out of balance.

Most buyers do not buy homes for purely financial reasons. On the contrary, it is emotional factors and fuzzy feelings about schools, safety, convenience, commute, aesthetics, prestige, ego that all weigh in on the home buying decision . No where is this more true than in New York City and in the surrounding metro area. No where are people more willing to spend money for convenience. And there is virtually no where else where people have the income to pay for that convenience. I accept that the rent/buy relationship is out of balance. And I have no doubt that it can remain so for a very long time.

There are a lot of ppl doing rent vs buy comparisons with apples vs oranges. If you are in a rent stabilized apt that hasn't been moving with inflation, then clearly you should stay as long as you can/want. You also cannot compare rent in a small, crappy walkup, no doorman to a luxury doorman just because it is 2 blocks away.

... in fact if you think the whole concept of "rent stabilized" is a crazy great thing, then maybe you should look at buying with a 30 yr fixed... maybe you pay more now, but over time, you lock your costs and you get appreciation. hmmm?!

#84 - I am not sure if you are referring to my post at #83 but to clarify we are in a luxury building with a doorman and an elevator and no it is not rent controlled or stabilized.

#86 not specifically regarding you... but somewhat. For example, I hear there's a BIG premium for BIG apartments in your size/price/family range, so your situation is very different from a single renter of a studio/1BR renter. You have to do your own math correctly and think ahead. It is also not a crazy concept that rents can rise to meet prices. It has been happening and there's something called inflation.

For yet further proof that prices are going down, down, down take a look at: http://www.wirednewyork.com/forum/showthread.php?t=3208

good work 88, you linked us a post from 2002. tick tick tick tick...

Hilarious! I am sooo glad I didn't buy in 2002! Oh, wait . . .I did and made 50% on my apartment which I am closing on in April, when the next bubble will burst, according to all of the other posters on this site!

Post # 88 Great link a forcast made by a 70's throwback hippie blogger who's os predicting a bubble. Gee if I can get a penny from all the people who are predicting a housing bubble burst in Manhattan I would be a multi billionaire.

arrow point down

the arrows by nature will always be pointing down because ppl list, they either get snatched (no arrow), going into bidding war (potentially no arrow) or reduce price (down arrow). Rarely will they go through the process of upping it in the system.

are all of you idiots. Haven't you been reading the news about subprimes,forclosures and inventories at all times high. This is not the time to buy. Sell when you can because it's coming to NYC and all of you idiots are going to lose your shirts

# 94 you are so right> It is so obvious the NYC housing market is and will continue to crash. Anyone who buys now is a jackass

arrow point up

MARCH 28, 2007 - "Bernanke: Housing woes not spreading"

NBC REPORTS TODAY: http://www.msnbc.msn.com/id/17831069/

WASHINGTON – Federal Reserve Chairman Ben Bernanke told Congress on Wednesday he doesn’t believe the economy will slip into a recession and rejected the notion raised by his predecessor, Alan Greenspan, that the economic expansion, which started in late 2001, could be running out of steam.

“I would make a point, there seems to be a sense that expansions die of old age. ... I don’t think the evidence supports that,” Bernanke said in testimony to Congress’ Joint Economic Committee.

Bernanke also explained that last week’s change in the Federal Reserve’s policy statement, which hints of future rate moves, was done to achieve more leeway. “We are looking for a bit more flexibility,” he explained.

“The risks had increased on both sides,” Bernanke said, referring to both the increased threat of higher inflation on the one hand and weaker-than-expected economic growth, on the other.

Last week the Fed again held a key interest rate steady at 5.25 percent, which hasn’t budged since August. But the Fed also said there was a possibility that rates could go down or up. Previous policy statements had spoken only of the possibility of rate increases. Wall Street rallied last week on the new language, interpreting it as suggesting the possibility of a rate cut.

The direction of rates, the Fed said at the time, hinges on what incoming barometers say about the economy and inflation. Bernanke repeated that point on Wednesday.

“I do want to emphasize we have not shifted away from an inflation bias, “ Bernanke said.

Stocks dropped sharply Wednesday in response to Bernanke’s comments.

On another topic, Bernanke said the growing troubles in the market for risky mortgages thus far doesn’t appear to be spreading to the overall economy. “At this juncture … the impact on the broader economy and financial markets of the problems in the subprime markets seems likely to be contained,” he said.

It marked Bernanke’s most extensive discussion yet of the mounting problems in the risky mortgage market. Those troubles raise “some additional questions about the housing sector,” which has been mired in a deep slump for more than a year, Bernanke said.

Fallout in the risky mortgage market is clobbering some lenders and homeowners and has stoked concerns on Wall Street, Capitol Hill and elsewhere.

So-called “subprime” lenders who make home loans to people with blemished credit histories or low incomes have been battered. Weak home prices and rising interest rates have made it increasingly difficult for borrowers to keep up with their payments. Delinquencies and foreclosures in the subprime mortgage market are soaring.

Although the turmoil in the subprime mortgage market has created financial problems for many individuals and families, the implications of these developments for the housing market as a whole are less clear,” Bernanke said.

The crumbling housing market has been a major factor behind the slowdown in the U.S. economy. Bernanke said the “near-term prospects for the housing market remain uncertain.”

Even so, Bernanke stuck with the Federal Reserve’s assessment that the economy is likely to grow at a moderate pace over the coming quarters. He also repeated the Fed’s belief that inflation also should ease in the months ahead, but he warned that underlying inflation remains “uncomfortably high.”

To be sure, Bernanke was careful to hedge the Fed’s economic bets. The housing slump could turn out to be worse than expected, perhaps exacerbated by problems in the market for risky mortgages, he said. Recent weakness in business investment also could persist, he added. Those forces could further dampen economic growth.

On the other hand, consumers, who proved “quite resilient” despite the housing slump and increases in energy prices, could continue to keep spending at a pace that would make the economy grow faster than currently expected, he said. And, there are other forces, including a still-good jobs market that is producing fatter paychecks, that could push up inflation.

The Fed chief’s testimony comes amid fresh questions about the country’s economic health, given problems with subprime mortgages, stock market turbulence and worries about the severity of the housing slump.

Against this backdrop, Sen. Charles Schumer, D-N.Y., chairman of the Joint Economic Committee, and some other lawmakers said the Fed should be open to cutting interest rates.

“Another reason to be open to an easing of monetary policy is the concern that the housing market adjustment is far from over,” Schumer said. “Recent housing data has offered little encouragement that the market might be stabilizing. So it is still too early to tell if the worst is over for the housing market,” he added.

There are some fears that consumers — whose confidence is sagging — and businesses could clamp down on spending and investing, thus short-circuiting overall economic growth. Rising prices for gasoline and other items also are raising concerns about inflation. These economic crosscurrents can complicate the Fed’s job of trying to keep the economy and inflation on an even keel.

Just hours before Bernanke testified, the government reported that new orders for costly manufactured goods staged a modest rebound in February after a sharp slide the month before that jarred investors.

Copyright 2007 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Hey #94/#95:

The mortgage issues we currently see in the general US market have nothing to do with Mahattan. First off, foreclosures are currently 1% of all mortgages in the US (about $14 trillion total USD). Of that one per cent, about half (or more) are insured. This means that the reality is that LESS than 1/2 of 1% of all mortgages are defaulting, and that is a trivial amount, both in terms of percentages and actual dollars as compared to the total market. Furthermore, smart investment firms like Goldman (and others) are aggressively buying, not selling distressed mortgages right now – BUYING. That’s the general overview.

In terms of Manhattan, you have to remember that the broad majority of residential real estate (over 80%) are co-ops. And co-ops have rules about who they let in their buildings, and in most cases are reasonably finicky about financials. You can be sure that there are very few subprime loans in Manhattan – that’s for sure! And as far as other types of mortgages, co-ops are still careful about net worth, cash flow, the type of mortgage one holds, and credit history. Because of the big majority co-ops and the additional hurdles to entry of ownership, Manhattan is a VERY DIFFERENT MARKET compared to the rest of the country.

For further info, I direct you to today's NY Daily News article - http://nydailynews.com/news/2007/03/28/2007-03-28_set_up_for_a_fall-3.html. You'll see that in Manhattan in 2006 there was a grand total of ONE (1) forclosure on the ENTIRE ISLAND (!) south of Harlem, and a grand total of about 34 (!) forclosures on ALL OF MANHATTAN IN TOTAL LAST YEAR! THIRTY FOUR!! WOW - YOU STUPID GENIUSES REALLY KNOW HOW TO FORECAST A MARKET CRASH, HUH? MAYBE IN 2007 TOTAL MANHATTAN FORECLOSURES WILL DOUBLE TO (*GULP*) 64 ON THE ENTIRE ISLAND - WOW - THE SKY WILL REALLY BE FALLING THEN!!!!

Gee, and could you two bitter renters still be standing around waiting to 'time' the market while you're still holding your little, limp, dangling two bits in your rosy palms? Methinks so.....

You are an idot, the housing market is NYC is going to go down. Try reading the paper and see what's happening around the country.

http://www.investmenttools.com/futures/bdi_baltic_dry_index.htm

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