Why Alpine (AKA "The President") is right...

Alpine and the other brokers are right; real estate in NYC will not fall another dime and in fact will turn around shortly. We'll not see the reversion to decades-old means relative to incomes, in fact, the 20% we're already done will soon come back. The reason I can make this statement is that, as all these realt-whores keep telling us, this situation is DIFFERENT and analogizing to all the prior... [more]

Alpine and the other brokers are right; real estate in NYC will not fall another dime and in fact will turn around shortly. We'll not see the reversion to decades-old means relative to incomes, in fact, the 20% we're already done will soon come back. The reason I can make this statement is that, as all these realt-whores keep telling us, this situation is DIFFERENT and analogizing to all the prior recessions & depressions where real estate corrected in NYC is pointless. None of the old rules about mean reversion, income multiples etc apply because THIS TIME IS COMPLETELY DIFFERENT. For example, consider the following paragraph, written about the recent economic slump. It has no parallels in history and could not be applicable to any other time but our own: "The year reached its third quarter under the promise and appearance of increasing prosperity, particularly in the United States. Extraordinary optimism sustained an orgy of speculation.... But in October a sudden and violent tempest swept over Wall Street. The intervention of the most powerful agencies failed to stem the tide. A group of leading banks constituted a pool to maintain and stabilize the markets. All was in vain. The whole wealth so swiftly gathered in the paper values of previous years vanished. The prosperity of millions of American homes had grown upon a gigantic structure of inflated credit now suddenly proved phantom. Apart from nation-wide speculation which even the most famous had encouraged by easy loans, a vast system of purchase by credit of houses, furniture, cars, and numberless kinds of household conveniences and indulgences had grown up. All now fell together.The grievous pangs of falling wages and rising unemployment afflicted the whole community, engaged till this moment in the most active creation of all kinds of desirable articles for the enjoyment of millions.The means of exchange of goods and services between man and man was smitten to the ground, and the crash on Wall Street reverberated in modest and rich households alike." - Winston Churchill, Memoirs. [less]