20%-25% price decline

Are you new here? Certainly you know the answer your going to get on SE. Just remember that if prices fall 5%, but interest rates rise by 1%, then that is the equivalent of prices INCREASING by 5%.

Alpine's argument that lower interest rates justify a purchase is fraught with problems:

1. Your interest payments can change over time (you can pay down the mortgage, you can refinance), but the purchase price is what it is. You can potentially reduce your interest payments, but you can never reduce what you paid for your property.
2. Suppose you buy now simply because interest rates are low. If you need to sell in the future, and interest rates are higher/property values lower, you're stuck.

I'd much rather buy a place at a 10-15% lower purchase price in a higher interest rate environment than overpay in an artificially low interest rate environment, simply use more cash to finance the purchase, and then refinance opportunistically.

dwell... come on ?

What Alpine is saying is crazy and its what got so many people in trouble. Many folks were indifferent to buying an apartment for $300,000 at 6% interest or $600,000 at 3% interest. All they paid attention to was carry. Price is key.

Dont know where prices are going to go, but we're in a heap of trouble and it could take a while to get out of it. That said, unlike alot of SE folks, I don't think prices are going to zero.

dwell: To some extent, the answer depends on what kind of property you're looking at. Some segments of the market appear to be in free fall, with ongoing price cuts and sellers jumping on offers that are far below deeply-reduced asks. Other segments show some hazy signs of stabilizing.

If history is any guide, it's rather hard to miss a real estate bottom by waiting too long; you're much more likely to catch a falling knife by jumping in too soon. Of course, everything happens faster in the 21st century, so who knows?

JuiceMan says prices are down only 2.3%. Stop lying.

gotta ask yourself what you think will cause prices to continue to decline or stay steady. forget all the debate, its your money & your future -- try two lists: reasons for each outcome. i would carefully question any reasons based on past behaviors -- think we are in uncharted territory.

would also urge getting input abut economy from people not in the northeast and not in financial services.

Thanks everybody. For me, interest rates are almost secondary, I'm looking at the asking prices.

"dwell... come on ?"

W67, I know, man, but I'm jonzin' here. This board is like an AA meeting to prevent overpaying for RE. That's why I posted. Keep me on the straight n' narrow with a little help from my friends.

"but we're in a heap of trouble and it could take a while to get out of it. " Agree, flatiron.

"it's rather hard to miss a real estate bottom by waiting too long; you're much more likely to catch a falling knife by jumping in too soon."

Thank you, W81. Thing is that I'm drawn to swanky addresses & that's where I'm seeing the prices I like. I'd love to pick up something nice for a song, but don't want to catch the falling knife.

Thanks, guys.

yournamehere, think a bit harder about your logic, and remember that the majority of your payments on a mortgage during the first years are interest expense.
A $100K mortgage at 5.5% (approx current rate), in the first 5 years you'll be paying $26.5K in interest expense, and at the end of that period your loan balance will only have been reduced to $92.5K.
At 7.5% mortgage, your interest in the first 5 years will be $36.5K and your principal will only have been reduced to $94.6K.
Assuming you refinance your 7.5% mortgage after 5 years at 5.5%, the difference between the two will be $10K in interest, plus $2K in principal, or 12K. This is on a $100K mortgage, assume 80% financing, or $125K property. So a whole 10% difference out of pocket because of the higher rates.
So, would you rather buy a property for $125K with a 5.5% $100K mortgage, or ...

dwell... stop jonzin... here is a thread just for friends like yourself.
http://www.streeteasy.com/nyc/talk/discussion/11808-premature-equity-injection

RE is very illiquid... .wait till a comp comes on after your listed fav has gone into contract and closed... and see if the seller has any pricing power... take one pill every three months and if you feel the fever coming back on, just come back to the ER.

Hey Tourette's boy, is it possible for you to just make your point once, rather than stutter it so many times?

hey Tklack, you don't need to apostrophe... it should state "hey tourette boy"... where'd you go to school?

Dwell, I've been feeling similar. West81st has a good point: things move faster now. I think it is possible that we will simply miss the bottom. If you have a long time horizon, I don't think it's unreasonable to be looking seriously right now. I wish I were in more of a position to do just that.

Relax,
What exactly is going to start RE pricing to climb?
A robust economy, job and wage growth and a general feeling of a prosperous future. Add in a splash of 'out of control' lending and that apartment your eye balling is going sky rocket in price.
Any chance of that happening soon?

No, I agree, probably not, but falco: I'm not someone you want on your side. I consistently support the losing argument. However much I think the fundamentals are complete crap, I don't think you can underestimate the ability of the US economy to operate on wishful thinking. Until there's another country powerful enough to knock us off our pedestal as world superpower, who's to say we won't get away with it? If that's the only criteria, I grudgingly have to consider the "buy now" crowd's argument. I try to be thoughtful and analytic, but I gotta say: it hasn't paid off.

Just a little reminder people: Nobody will know that housing has bottomed until the bottom has passed since, unlike stocks, housing data lags by months. But if you buy and prices only fall another 5% before bottoming and you have a long time horizon, it's not really going to affect you. Plus, after the bottom is long gone and it becomes obvivous to everyone that housing has bottomed, there will be less quality inventory and more buyers to compete with.

Alpine, for the first time ever you have posted a sensible comment. I like this side of you; please keep it up.

sure thing evnyc. There is no more need for me to go into my racist tirades anymore since stevejhx has taken over that department.

Gotcha. Thanks, those are never necessary, but a piece of the board. Maybe I'll even take you off ignore. ;)

"However much I think the fundamentals are complete crap, I don't think you can underestimate the ability of the US economy to operate on wishful thinking. Until there's another country powerful enough to knock us off our pedestal as world superpower, who's to say we won't get away with it?"

We got away with it for close to 10 years. We're broke. As I said above, i think that any analysis that is based on past behavior and patterns is now irrelevant. I am not suggesting in any way that its the end of the world. Just the end of spending without any money.

> But if you buy and prices only fall another 5% before bottoming and you have a long time horizon,
> it's not really going to affect you.

Yeah, tons of other morons used that logic to tell you to buy last year. Of course, they forgot to tell you what happens when it goes down TWENTY percent (which alpine denied).

On 20% down, you lose ALL YOUR EQUITY.

Whoops.

> Plus, after the bottom is long gone and it becomes obvivous to everyone that housing has bottomed, > there will be less quality inventory

Thats a load of crap. At the bottom, there is PLENTY if inventory. Because you just went through months and months (and years) of depressed buying. Inventory is still growing!

Seriously, alpine, stop posting already. You're just spewing nonsense that will only hurt people (and probably already has)

"Just remember that if prices fall 5%, but interest rates rise by 1%, then that is the equivalent of prices INCREASING by 5%."

Yes, but of course... if interest rates rise, prices will FALL EVEN MORE!

whoops.