Praying for a 50% Drop

Yes, and you will get hit by a car and killed when it comes true. Life is full of irony..

Disagree. The US economy needs - at the minimum - a 50% drop in the price of housing.

IT will happen. The real question is: will you want to live here when it does. The plunge in prices will come with big increases in crime, taxes and interest rates. Everything comes with a price..

bfgross, but what's so sad is that it didn't have to. we could have continued with moderate growth. i saw elizabeth warren on the daily show. her comments regarding the return to the pre-depression era of 10-15 year boom and bust cycles really resonated with me. with proper regulation we won't have the booms, but they largely empower the wealthy. and we won't have the busts as well, which largely destroy the average person.

don't wish for bad things it comes back at you....let's wish for prices that are realistic...sellers make a small profit and buyers can live in manhattan without going deeply in debt...

50 percent drop would bring us to 2002 to 2001 prices.. Those were truely scary times and crime was rife.. Oh wait...

julia, nice thought but if anyone who bought in 2004 forward makes a small profit the buyer is getting hosed.

bugelrex, exactly. and the 1994-2000 period was simply awful as well.

Some people are going to lose if prices drop. You can't have a "nice" drop. The outrageous rise in prices wasn't exactly "nice" for most people either. I know of almost no one in their late twenties/early thirties who own a home. No one. Our parents could and did own homes by that time in their lives. The run-up crushed new buyers, and it is with no malice whatsoever that I still hope that prices will fall drastically.

Why would anyone want anyone else to loose their shirts? Jealousy? Just because someone else gains doesn't mean someone else looses, and visa versa. That is a poverty consciousness talking. How about an infinitely abundant and generous universe where there is enough to go around for everyone? It's a dream, but at least it's a positive dream. Why don't we imagine good things happening to everyone. Who knows....

eh, your taxes will rise to pay for all the baby boomers that aren't rich anymore and can't work. people that wish ill on others usually have bad things happen to them.

bfgross: An 80% drop would probably require a massive deterioration in quality of life. IMO, a 50% drop only requires deflation of the bubble and an adjustment to reduced income/wealth levels, economic realities/expectations, and the reversed demand/supply equation.

craberry, i'm wishing lovely, happy thoughts for the people who may be able to afford to buy a place to live for the first time in over 10 years.

i have plenty of thoughts left over for the victims of this carnage, as well. i don't have much sympathy for the people who caused the bubble, and although i realize that this adjustment is painful for many people, the fact that their property values are tanking disturbs me far less than the homeless people, the people with medical conditions who no longer have health care, the "luckier" households who now consist of large extended families in two or three bedrooms.

50% drop might also force NYC off property tax crak - one hopes they would reign in spending and tax their whole population base - since they just slayed the golden goose.

The people who bought into an overly hyped market over the last few years, did so with the belief that the rise in prices was sustainable, and many did so with the expectation that at some point they would be able to realize a substantial profit over a short period of time. Just look to the new condo speculators for obvious examples of this. Many thought if they didn't jump in, the train would leave the station without them. It reminds me of the poor sobs who bought into NT and JDSU in 2000. History tells us time and again that the point of maximum hype is exactly the point where you should be selling, not buying. Those who don't heed the warnings, or look to history for guidance, suffer the unfortunate consequences. In the end, you only lose when you choose to lock in the loss by selling. Many won't have a choice though. Whether its 20, 30, 40 or 50% its still hugely painful, and ruinous for many.

All crystal clear, sanctimonious, observations of the painfully obvious, right? But had I been in the city then, I would be in the same boat as those now watching in horror as the market crashes around them. There is something about real estate that causes you to ignore or gloss over sensible logic. I'm not smart, I'm just lucky. And I'm praying for both sellers and buyers..

spinnaker, i have a tremendous amount of sympathy for many of the people who overpaid. i avoided it, but just barely. i knew with my head that buying would be disastrous, but my heart really really wanted a home. for those who can't afford the loss, or who unwisely stretched and find themselves in a true nightmare, i feel truly sorry.

unfortunately, i don't see any way both can win. although maybe w81st is correct, if we split the correction between disastrous crash and the peak, with 50% off, the pain will be minimized. even so, some will be destroyed.

interesting to think of 50% off as avoiding the disastrous crash but, of course, i think you are exactly right. part of the reason why i have limited sympathy for the new dev buyers crying about losing their deposits. they need to start thanking their lucky stars about what they avoided!

"IMO, a 50% drop only requires deflation of the bubble and an adjustment to reduced income/wealth levels, economic realities/expectations, and the reversed demand/supply equation."
West81, I agree, and that's all I'm hoping for. And I do have a ton of sympathy for people who merely bought at the wrong time, and hope that everything will somehow turn out okay for them. But we can't have both, and some drop does need to happen.

West 81st, I rarely post, but I do regularly read and truly value your contributions. Thank you. Clearly you have much accumulated knowledge which you wield with sharp insight.

Here's my view from the sidelines: I'm a lifelong New Yorker, and lived in Manhattan for 14 yrs. IMO, by the mid 90s the city was pretty livable, but not yet a total mall/Disney attraction.

In 1995 we seriously considered buying a fairly cookie cutter 1000 (advertised as 1100) sq. ft. 2B/2BA w/ large balcony condo unit for $395K. As I recall the CC + Tax was under 1K/mo and interest rates were at 8%. I have seen apartments in the same line and similar units in the neighborhood trade for around $1.2MM.

Interest rates are lower now, but those monthlies are closer to 2K. We rent a 2100 sq. ft. house in an outer borough for about that. Compared to 1995, a much larger percent of our income goes toward health insurance. We may have more savings, but like most everyone else, we can't take future income for granted. So I have to wonder whether a 50% drop ($600K for a small, unremarkable apartment, more for something we really love) would get me packing the boxes I store in the basement. Maybe we're not typical, but "reduced income/wealth levels, economic realities/expectations" for us means we'll continue to appreciate our wonderful neighbors, the great ethic foods and lower cost of living here.

It's not about wishing pain on sellers. It's about what makes sense. To me, with incomes flat or decreasing, monthlies and other expenses like healthcare climbing, 50% off peak still doesn't make sense.

wow, you people are jerks. If prices fall 50%, you'll need a bullet proof vest because the city won't have any money to pay cops to protect you. 1975 here we come! Do you know what happens when prices fall 50%? The answer is one word: DETROIT.

alpine292 - The average home price in Detroit is $13,600, down 43% from last years smoking hot $23,700. Maybe you could cash in, buy a big gun, and move there.

wow, my Honda minivan costs nearly twice as much as a house in Detroit!

East St. Lous is also a great example of what happens when house prices fall 50%. See my other thread for the slideshow I linked to.

Huge swaths of California have also fallen 50%. At risk of underestimating the problems that exist there, it's not like armageddon has broken out. People are actually starting to buy homes. My wish is that something similar would happen here.

The world is going to end in 2012 anyway right? So who cares :)

http://abcnews.go.com/international/Story?id=5301284&page=1

Did someone mention California???

STOCKTON - A retired truck driver and Vietnam War veteran said Monday that he is forming an armed militia - mostly men with rifles and armbands, four to a car - to patrol Stockton this summer, when at least 43 police officers are to be laid off.

Alan Pettet, 66, said he has recruited 18 men, most of whom are ex-military. He said the militia will train at a firing range and "activate" if the city lays off any officer, as it intends by July 1.

The likelihood of an armed militia materializing is uncertain - there are legal concerns, and posturing to influence City Hall is not uncommon - but for a neighborhood activist even to advance such a proposal was indicative of frustration about Stockton's awful budget forecast. The City Council is expected by July 1, the start of fiscal 2009-10, to order police layoffs and spending reductions citywide to balance a general fund budget that is otherwise expected to be $31million in deficit by June 2010.

Pettet, a midtown neighborhood activist who has a Desert Eagle pistol, said militiamen will detain suspected criminals and call police to arrest them. They will wear armbands and will patrol in a car marked by a magnetic sign, he said.

"It's going to be 'Stockton Armed Militia,'" Pettet said. "'SAM' for short."

oh, and a little FYI: Stockton, CA has the highest foreclosure rate in the country.

oops, forgot to include this paragraph:

Stockton's violent crime rate is among the highest in the state. Stein and Pettet are critical of a budget proposal by City Manager Gordon Palmer that would require laying off at least 43 of the city's 403 police officers.

alpine, if the ftards hadn't created this bubble, the correction wouldn't be necessary.

nobody wants violent crime. nobody (in their right mind) wishes for increased poverty, hunger, medical conditions not being treated. this is not just about Manhattan real estate, this is about our entire country, and we are not immune.

having said that, this is a Manhattan real estate site, and the truth is that jobs here are disappearing, and just as importantly, wages are declining. affordability was a joke here before the peak, now prices are correcting but net wealth is falling even faster. i was at lunch today and the woman at the table next to me was telling her dining companion that the employees of the magazine at which she works were told they would, across the board, receive a 6% cut in pay. i guess better for the economy in some ways than a 6% cut in employees, but i'm fairly certain they've probably already cut employees, decided to let empty positions die, not hire in the future. our unemployment rate (u3) is still around 8%. when we get to 10%, what do you think will happen?

we're not all jerks. some of us are realistic. i'm not sure i'm even going to buy here again ever.

katie_eh above says its all. finally, not about the drop but about a new level that makes sense for people.

cc, banks changed the rules on affordability, stretching them beyond belief. now they won't allow that. makes a hell of a big difference, 10% down and 4-5 times income vs. at least 20% and 3 times income (at the most). but it's kind of like your opinion regarding the new development owners. borrowers should be grateful they're not being allowed to hang themselves any longer.

hadn't thought of it quite like that but you're right. can't say it enough---the best thing right now is for honesty all around so we know where we stand. its generally always better than our worst, (secret) fears.

aboutready..did you see that stuytown is now renting two bedroom, one bath in stuy town for $2999...how things have changed in such a short time..

who cares? Stuy Town is a housing project in disguise. Horrible location. Horrible exterior. Old.

julia, and how quickly they went up. you'll recall i started in a 2/2 in peter cooper at $2750 in 2004. but you're so right. it may not even matter in the short term if my apartment reverts to rent stablization.

alpine, it beats Jersey.

Stuy Town is absolutely disgusting. Check out this site:

http://stuytownluxliving.com/2009/01/

And I would not agree that Stuy Town beats Jersey. NJ has some really nice buidings, believe it or not. HEere are 2 of my favorites:

www.77hudson.com

www.auroraoverthehudson.com

i live in Peter Cooper. and i like it more than the condo loft i owned in chelsea. the location sucks, but now that our daughter is older and we can leave her at home when we go out to dinner the East Village is our backyard so to speak. (as well as Union Square, the Flatiron, etc.) to each his/her own, i guess, but my husband is a partner at a large law firm, and we don't live here because we have to. it works for us, keeps us downtown with nice neighbors (the upstairs guys from NYU could leave without being missed, but no place is perfect), yet is an easy commute for our daughter to her school on the UES. stuytownluxliving is hysterical, however. they have a fabulous piece of the "ovum" earlier.

it kicks ass over Jersey. i don't care what the buildings look like, they're still in Jersey.

50% drop....are you kidding? I live in Battery Park City and prices didn't drop 50% even after 9/11!!!

50% drop in NYC - wishful thinking fellas.
Instead of dreaming of NYC dropping 50% so that you can get in, I suggest you go buy in Newark and move on.

Peace

hell, i don't even want to buy in NYC. renting is fine, i want to buy in my targeted retirement city, either San Francisco or Seattle, but i'm in no hurry there as well.

prada, after 9/11, the Greenspan fun machine really kicked into overdrive, and the government either had no resources or didn't care to monitor underwriting standards for loans. plus Rudy gave developers huge incentives to build/convert units, the early abatements, starting NYC's particular joy ride.

i posted this chart on another thread, but i think it shows you why the government was so eager to unleash the lending machines. this chart only reflects the effect of mortgage equity withdrawals, not increased credit card or other loan debt, not even the increased spending on mortgages themselves.

the chart is fairly far down, but well worth looking for:

http://www.ritholtz.com/blog/2009/04/the-trend-may-not-be-your-friend

Let's see
Dow at 1,000, Gold at 4000

how much will NYC RE dropped by then??

http://watch.bnn.ca/the-close/april-2009/the-close-april-7-2009/#clip158804

SF is your retirement city? That's a VERY expensive place to retire to.

Yes it is (although significantly less expensive on a psf basis than NYC has been). But it's where I'd like to live, and luckily my money is not tied up in depreciating assets right now. Seattle is less expensive.

Wishing the destruction of property values of the city one lives in! This is insane.
a) 50% fall means domino effect, so the evilwishers won't be able to buy because they'll have no money because they'll have lost their income because the entity that pays their salary will have gone under because the catastrophic plunge in prices of ANYTHING has catastrophic effect on the whole.
b) some places (and goods) will always be unaffordable by majority. Or you can have Soviet-style setup where nobody can afford anything and owns nothing, so you can all be equally miserable.
Think, citizens!

no one is wishing it. like it matters, what we wish. we're trying to sort out what's going to happen and do the best we can.

"wow, you people are jerks. If prices fall 50%, you'll need a bullet proof vest because the city won't have any money to pay cops to protect you. 1975 here we come! Do you know what happens when prices fall 50%? The answer is one word: DETROIT."

So, Alpine denies that there was ANY decline... for MONTHS. Almost a YEAR.

And now, all of a sudden, he says there will be a drop, but the drop will be so bad that it won't matter and...

Well, its all crap.

Talk about SOUR GRAPES.

what he's missing is that it's incomes that pay taxes not property values...a little confusion about the chicken and the egg.

nyc10022 - My condolences that you're an owner, but a 50% drop puts us at 2001/02 levels, and I'm guessing that you lived here then. I did as well, and I don't remember the city being any worse or better than it is now. 1975, perhaps, but that would mean about an 80% drop in prices, and I don't think that's possible.

$700/ sq ft for a 2BR/ 2BA is about 2001 levels according to Miller Samuels data, which is still VERY expensive for any space. Can you really disagree? Objectively, that is. Try to put aside what you paid, or what your apartment was appraised at two years ago.

"we're trying to sort out what's going to happen and do the best we can." Nothing!
OK, take aboutready by the hand and yell, no, keep yelling "fire" in the subway when there's no real fire. Then see what happens.
In fairness, if I had to live in Peter Cooper, I'd be just as bitter. Hopefully not as stupid, though.

give it up buddy. what's your point?

peter cooper has some of the biggest living rooms i have ever seen in a rental.

alpine - in my time on streeteasy i have seen you admit that you were one of the first to buy a PT Cruiser and now that you own a minivan. ugh!

"he says there will be a drop, but the drop will be so bad that it won't matter and..."

I never said that. I said IF there si a major drop.

And no sniper, I have never owned a PT Cruiser.

Wishing to keep house prices totally unaffordable in the city you live in? That is insane!!! Where will your children live?

I don't have children. And besides, what good is affordbale housing if it's in a crime infested hell hole?

youcannot, piss off.

My children will live in the apartment(s) I own.

aboutready, why should I? Why not you? I just checked you on streeteasy, you've been here for a looooong while churning out the same bitter drivel.

actually my bitter drivel has changed significantly. i now like renting.

why should you piss off? because of a gratuitous personal insult, perhaps?

and where have you been the last couple of years? here, under a different name, perhaps?

once again, piss off.

absoluteready:

the chart is fairly far down, but well worth looking for:

http://www.ritholtz.com/blog/2009/04/the-trend-may-not-be-your-friend

sobering indeed - our economic growth based on smoke and mirrors for the last few years.....

Also - I am not sure why affordable shelter is so threatening to people. Do you know how much disposable income would be created if people spent A LOT less on shelter in this city? Why it might be enough to keep people consuming in 2007 amounts if not MORE! Think of that taxable revenue generated by those sales taxes! Enough to offset the lost property taxes? who knows - you would have to ask an economist for that one....

lecker, that's a great and fascinating point. in the medium-term i think you may have something. at this moment i believe that income and credit destruction are still outpacing reduced costs in housing. also, we have an historically high ownership rate (i believe 67 or 68% instead of the trend 64%), and the illiquid nature of housing ownership, particularly now, makes it difficult for many to take advantage of lower-priced housing opportunities (although the re-fi boom obviously is giving more discretionary cash back to the credit-worthy). in non-recourse loan states, it definitely makes sense for many people to walk away and reduce their costs, not because they want to, but because they need to.

affordable shelter is devastating to the banks. they already have mbs on their books that depend on unemployment assumptions of around 5% and prices that will increase. this is all about the banks.

alpine...what's this about?

alpine292
about 8 weeks ago
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just a little fyi: You have to pay list price if the car you want is a hot seller. I had to pay list when I bought. And so did everyone who bought the PT Cruiser when it first came out. There was a waiting list for that car.

I didn't say I bought a PT Cruiser. I was just using it as ane xample since I know someone who bought it when it first came out. Now please, enough with the gotcha posts. Again, I bought a minivan, NOT a PT Cruiser.

it is not a gotcha post. i just remembered reading it a few weeks ago...although "Again, I bought a minivan, NOT a PT Cruiser" is a pretty good line.

The idea that NYC will suffer because of a 50% drop is insane. If anything, it's incredibly beneficial. Yes, people will have lost equity from their homes or even their homes entirely, but the market needs a correction. It was simply pie in the sky thinking to suggest that prices could keep escalating in the manner that they had been doing without a correction because eventually people would have been priced out of the market altogether.

What'll happen now is that those who bought from 2004-2009 will suffer huge declines in their net worth. However, they'll hold on for the most part. For those who will loose their home due to foreclosure, its going to suck to be temporarily homeless, yet assuming their income holds steady they will be able to buy something comparable to what they lost for considerably less. My parents sold their apartment in what I believe was 1991 for somewhere a tad over a million dollars. It was a four-bedroom apartment which faced Central Park. That same apartment was sold for almost fifteen times more two years ago. That's a classic bubble price and it happens on average every fifty years in New York. It's not the end of the world, New York will never be Detroit, there are not going to be armed militias patrolling the streets in some sort of bizzare cross between Eloise and Mad Max, and a fifty percent drop puts us at 2000/2001 prices - not wholly insane in my mind.

The NYC economy has suffered greatly recently and prices are only down 20%. Just imagine what 50% will look like: Lots of foreclosures, plummeting tax revenue, layoffs, etc.

Prices they may go down further.

But if you observe curves detailing how the lowering of prices has caused a small but noticeable uptick in purchases, and consider that there is some fear of inflation, I say that the final "bottom" may be reached in 1-2 years and be 30% lower than peak.

BIg deal

What is NEWS is that owning RE will not be a decent source of income nor significantly better then renting, maybe for the long (5-10 years) run

Totally wrong. I don't think anything further needs to change in the NYC economy for prices to get close to -50% from peak. Prices are "only" down 20% (you'd get some takers for 25% and 30% as well, but the exact number at a moment in time isn't the point) because six months isn't long enough for the new reality to sink in and prices to adjust broadly to a level where there is a reasonably functioning market. It won't take more layoffs, etc., etc. to drive further declines. The only missing ingredient is time.

i am so tired of people parroting each other about fears of inflation. we are in an increasingly dire situation of deflation. lets work on what that means, and what means if any there are to cure it. if you're actually interested, read about the situation in germany post wwi where the means of production had been decimated---that was the beginning of runaway inflation for them. we have a situation with demand dying by the minute and increasingly idle capacity. people have to want something (desperately) for inflation to take hold.

to clarify, response was to alpine, not Euro. But while I'm on the Euro topic, I do think -30% from peak is around the corner. Some would say it's already here. Regardless, it's within shouting distance of that -30% and it will take a lot more than a "small but noticeable" uptick to stop the slide. I don't think buyers come out of the woodwork in those kinds of numbers at the current price level. Whether it gets all the way to -50%, I don't know. It really seems like a lot, but my perception of reality might be anchored on pricing level that just wasn't reality in the first place.

i think you're right---its all about time which depending on one's circumstances can be quite painful. saw larry summers on tv this morning---it was clear to me that they're trying but they (nor anyone else---not bashing) have no path other than one foot in front of the other and trying to react to each development. i really don't understand the plan for these toxic assets--larry was mumbling about calling on private capital if public funds run out but I thought the plan was 20 to 1 leverage i.e. for each $5 of private capital, the government would back stop $95 so i really don't get how private capital will help in any way if public funding stops.

alpine292 said it best. The lower the pull back continues, expect the city services to reflect the reduced tax base and god forbid a NYC operating on a 50% pull back on operating income. I have prepared for a lost decade until 2015. Expect pre Regan regulations for the next 10 yrs to calm the markets and the cycle will begin again. The echo boom generation will begin to spend the consumer cycle again.

DePhillips suffers from the same confusion about correlation and causation as alpine292. And don't even get me started on hyperbole like "50% pullback on operating income." One of the downsides of a public board is too many people who either lack critical reasoning skills or lack the inclination to think before they post.

Oh, and how have you prepared for that lost decade? Stack the guest room with canned and freeze-dried food? Buy gold? Stock up on automatic weapons and ammo? Give us a break.

"One of the downsides of a public board is too many people who either lack critical reasoning skills or lack the inclination to think before they post." LOL...exactly. It's frustrating. I don't mind if people disagree about something, but so many can't seem to follow an argument.

aboutready:

affordable shelter is devastating to the banks. they already have mbs on their books that depend on unemployment assumptions of around 5% and prices that will increase. this is all about the banks.

Sigh. A drop in shelter prices and an increase in affordability has so many real benefits that go unrecognized by so many on these boards. To say that a drop in housing prices would somehow destroy, decimate or "other extreme negative verb" the city is uninformed at best and fearmongering at the worst. There will be casualties for sure - some people will lose a significant amount of wealth in the short term - no one can argue that. And services in the city will need to be cut since taxes based on property values and the investment bank business models and associated salaries of the largesse of the finance "growth engine" look in retrospect like they were just smoke and mirrors and never were really a sustainable source of "excess tax revenues".

Still, there is a plus side to affordability. A reversion to mean ratios of shelter cost / incomes is long overdue! Lower monthly rent expenses will provide a large number of renters a raise of sorts and create a mini wealth effect with all of the wonderful spending (and consequent taxing) that goes along with it. The caveat of course is that stock holdings may have lost value which may dilute a wealth effect from lower monthly rent costs if renters as a class have large "underwater" stock holdings and this overshadows the increase in disposable income from having a lower rent expense. I am not an economist and can't say how big or small each of these effects are relative to each other, but lower shelter costs are not all bad!

So don't be hating the correction people! It will be a little rough on the edges, and NYC will probably have to forgo the bubbling boomtown, instant-wealth-gratification feel to instead assume a more mundane slow and steady approach, but it is hard to see a drop in shelter prices as an END to the city...

"Lower monthly rent expenses will provide a large number of renters a raise of sorts and create a mini wealth effect with all of the wonderful spending (and consequent taxing) that goes along with it."

No, you are wrong. There will not be any lower monthly expenses. In case you have not noticed, incomes have gone down along with property values so no matter how low values go, people will still be paying the same percentage of their income in rent/mortgage payments. Plus, when people see the value of ther RE go down, they reduce their spending since they feel less "rich." And since 70% of our economy is based on consumer spending, you have the recipe for a disaster.

Lecker: Finally, a voice of reason.

Wow, DeP - a lost decade until 2015? All I know is that we have already experienced a lost decade. Stocks are basically back where they were a decade ago, and anyone who purchased a property in the last 4-5 years is at best breaking even. Throw in the continued evaporation of jobs, I cringe to think of retirement. I don't know how many more lost decades I can handle...

"anyone who purchased a property in the last 4-5 years is at best breaking even. Throw in the continued evaporation of jobs, I cringe to think of retirement."

a crashing RE mkt is not a big deal unless those that bought took for granted they were funding retirement that way. that's a big mistake but most are young enough to be able to save like there's no tomorrow and compensate for their bad gamble on RE. cheap prices and cheap rents are great for sustainable economic growth, the one that's desirable, not the other one (the one that makes people feel and behave richer than they really are).

PRAY FOR THE 50% DROP EVERYONE.
We need it. The city will be a better place.

How about landlord abandoning the rental buildings when the rents don't cover the upkeep any longer? Like East Harlem in the 90's? So all those "affordable" apartments will be turned into the city-owned PROJECTS with all the consequences.
Be careful of what you wish for.
anonimouss, keep being a fool.

Anonymous is right! New York was a better city when Hairdressers, Chefs, and truck drivers could buy properties.
It's gonna get ugly for some developers and landlord, but so be it! It's a necessary cleaning! Let'em file for bankruptcy, there is always someone waiting in your shadow to buy you out for cheap.

"How about landlord abandoning the rental buildings when the rents don't cover the upkeep any longer? "
It is not a foregone conclusion that things have to go that way. The city could sell those properties to community and artist groups for back taxes; isn't that how the city eventually handled a lot of abandoned buildings last time around?

sledge, hairdressers and chefs and truck drivers will still need a mortgage. So you little revolution cry dies right there.
What's more, if they get a mortgage, they'll have to pay it, and the monthlies which will be 700% higher than now. And the You can see the vicious circle, can you?
And the hairdressers and chefs and truck drivers are among the first ones to lose their jobs/enterprises/livelihoods.

Hey Beholder, what's your logic by wishing Real estate prices to stay overinflated? I'm sorry for the minority who have to take a hit, but the majority (aka the middle Class) is really suffering in NY, and without these people's confidence, the machine will not start again.

sledge, middle class are the ones who own the majority of RE in New York. What do you call middle class?

I call middle class couples who make +$100K/year. I know that to be considered middle Class in NY now, people must be making $123K/year but that shouldn't be. There was a time not too long ago when $100k/year was allowing you to enjoy a comfortable living.

beholder, even if middle class people own most of NYC real estate that dates back to when the city RE was traded at reasonable prices. They cannot have purchased after 2003 unless they resorted to some crazy and risky credit gimmick, which they're going to swiftly pay for now.

Good point Trompi!

I'd like to add an example to my logic: Imagine that couple who bought a 2 Bedroom in Park Slope for $250K in the late 90's and didn't borrow massively on his equity. May be they refinanced a couple of time. Now chances are that they paid all the mortgage off or are left with monthly mortgage payment of $800/$1000/month.
Now take this new middle class couple who purchase a similar apt in Park Slope for 1/2 a million and have to pay monthly mortgage payment of $2500/$2700. Assuming both couple make the same 100K annual salary, the last couple lose over $1500/month in purchasing power every month againstthe other couple. That money could be used for leisure, investing on the stock market, or taking more classes to get a better salary eventually.... Do you understand where i'm heading?

of course. the cheapest housing possible is not that much to ask for if you are GenX/GenY, have students loans, need to pay FICA but will not receive much from it so need to save for own retirement too as if SS/Medicare wasn't there. need to save for education for kids like 10 times what older people needed to save back in their day. adding to the mix expensive housing, is like asking the young to leave the country. young people need to realize cheap housing is a need for their financial sanity.

admin, exactly. except I'd add the late boomers as well. there are plenty of middle-aged people, even high earners, who never really gained traction and often lost it, in this decade. real income has only increased for a tiny sliver of the population. alot of them bought at or near the top of Manhattan's market as well.

"real income has only increased for a tiny sliver of the population."

and discretionary income is a third of what people had a generation ago. so paying for high home values feels a whole lot like paying for a party we weren't invited to. i have 0 sympathy for those that realized they needed to save for retirement when they were 55 and tried to make up for it by bidding up home prices for all of us.

Exactly Admin, that's why I won't purchase anything before i see a severe adjustment. And i invite all sideliners to do the same!

"Stuy Town is absolutely disgusting."

This coming from the guy who praised Lincoln Towers.... hypocrisy, hypocrisy.

"And I would not agree that Stuy Town beats Jersey. NJ has some really nice buidings, believe it or not. HEere are 2 of my favorites:"

Problem is, they are IN NEW JERSEY. Just goes to show you that folks will take the worst stuff in Manhattan over the best stuff in Jersey in a sec... because its IN NEW JERSEY.

Btw, that guy who said alpine was rufus... well, I'm starting to believe him.

"It is not a foregone conclusion that things have to go that way. The city could sell those properties to community and artist groups for back taxes; isn't that how the city eventually handled a lot of abandoned buildings last time around?"

Now come on, you and I both know that will NEVER happen. Why? Because that would be the logical thing to do and the city does not know what logic is. So what will happen to the banadoned properties? This is what will hapepn:

1. owners will abandon them
2. thieves will break in and strip everything of value
3. drug addicts and derelicts will take up residence, turning the place into a crack house
4. The windows will be baorded up, making it an eyesore
5. The drug addicts and derelicts will start an INDORR fire to keep warm in the winter, burning the abandoned house and everyting within a 100 foot radius to the ground.

Is that is what you guys want???

indorr = indoor

"Just goes to show you that folks will take the worst stuff in Manhattan over the best stuff in Jersey in a sec... because its IN NEW JERSEY."

Really? Is that why Stuy Town is 20% vacant?

alpine, no vacancies in Hoboken or Jersey City from what I hear.

Stuy Town is 20% vacant because TS jacked up the rents and the market couldn't support it. And now there's no new market to replace those tenants.

Once again, you're going against yourself. Is everything in decline, or not? Stuy Town has historically had very high occupancy rates, even with destabilized apartments. It's the economy, stupid.

Stuy Town also has other negatives going for it, such as the HORRIBLE location. Seriously, I would not live in Stuy Town even if the rent got cut in half. The only way I could see living there is if your a doctor or nurse at Beth Israel. Plus, according to what I have heard, the place is full of NYU and New School students who hold late night parties that make a ton of noise and smoke crack.

alpine, you're so droll.