The stock market is up for 2009 ... implications on NYC real estate

It is a fine line at this point. Where do you want to put your money?

a. In a stock market that is down 40%-50% from the peak and shows signs of improvement?

b. In NY real estate that is down 20-25% from the peak, and get the low mortgage interest rates and leverage to work for you?

Honestly, I have no idea, as I am struggling with the exact same question.

"Whereas potential buyers on the sidelines have the expectation that they should be getting a great deal, might even be hostile to the fact that prices didn't decline as much as expected."

Many potential "buyers" (emphasis on the quotes) have unrealistic expectations and need to understand that prices are not going to fall 50% in NYC.

Pirot: I choose A. You omit one problem with B: RE is down 20-25% but it is still viewed as overvalued hence attracts few buyers. Now brokers will tell you the rising stock market means we are out of the woods. That alone should tell anyone this is no time to buy. I start looking at 40% off peak.

c. junk bonds.

I heard something today I agree with....

In bull markets, no one thinks downward shifts are anything to worry about. Anything negative is dismissed. In bear markets, the reverse is true. Everyone doubts the light at the end of the tunnel, thinking it is another train.

but is this bear or bull?

Still Bear.

Still bear, both stocks and real estate. The stock market is due for a correction after the 35% runup from the bottom. Stocks are likely to be the better medium 3-5 year investment.

i think it's bear too. i think the bulls are hoping that the market can remain elevated until fundamentals get better. while i understand the position, i can't agree with it in the slightest. the financials are getting shorted, massively.

NYC Real Estate will not respond. Today's news states areas of the country stabilizing are the ones that went down first and off 50%. NYC went down last and is only off a fraction. Until Jobs and the local economy stabilize prices won't come back. The stock market bouncing up like a dead cat, is just noise.

The shorts could get caught further fueling the rally, so the next leg down could be even more dramatic. Companies reporting losses that are not as bad as worst case senerio means that when reality sinks in we will see the true bottom. Same pattern for nyc re. Same people same mentality.

I think this is a bear market rally-a ferocious one though. We have lots of room to the upside, fundamentals be damned. Yes the market is always right-eventually. The bear market in RE is just beginning here as River said it best above.

Just wait what happens when this bear market rally has run it's course.
A lot of blood will be spilled again - I expect this to happen end of May.

The fake rally should last a little longer then everyone expects and that will pull in enough people to creat a beautiful bust.
I think this is a great opportunity to stratle yourself with a nice mortgage. Go to it my friends.

"Many potential "buyers" (emphasis on the quotes) have unrealistic expectations and need to understand that prices are not going to fall 50% in NYC."

Funny... alpine said pretty much the exact same thing word for word about 20% down...