NY Case Shiller Index Did NOT Fall

Well this means that Wayne, NJ was most likely flat, so 24 months from now steve would say that Manhattan will be flat. Cool!

Oh JuiceMan, that is your most pathetic post in a long time, which is a hard thing for you to do.

Case-Shiller doesn't include Manhattan, and despite your lame claim, I have repeatedly said that correlations alone are not predictive. What a lame-ass post.

Poor steve, so confused he doesn't know what he believes anymore.

For all the owners looking for crumbs, this one isn't even a crumb...it's more like a poppy seed. If you analyze the data, you'll quickly find that the 20 city index was skewed by several outliers.

However, if you believe that the market is stabilizing - despite the fact that the largest wave of ARM resets still have NOT occurred (that will happen mid-2010) - and Manhattan is in line with the rest of the country, and will follow the trends, then you would have to conclude that Manhattan still has 15%-20% declines yet to come before it stabilizes.

It's easy to post a headline, but a bit more painful to post the facts behind it. I can appreciate that owners/ sellers are looking for any glimmer of hope, but with:

- Underemployment at 20%
- The latest Consumer Confidence level falling from the previous month
- Banks and mortgage lenders back to the same old tricks
- A health care tax that will hit Manhattan residents particularly hard
- 11,000 new Condo units coming on line in the next 12-18 months
- Declining rents
- Tighter credit

I can go on, but I think it's pretty clear that the only fools out there would be those buying now as opposed to waiting.

"However, if you believe that the market is stabilizing - despite the fact that the largest wave of ARM resets still have NOT occurred (that will happen mid-2010) - and Manhattan is in line with the rest of the country, and will follow the trends, then you would have to conclude that Manhattan still has 15%-20% declines yet to come before it stabilizes."

What a powerful statement johngalt1945. Could you enlighten us to how you linked ARM resets with a further 15-20% decline? The math must be fascinating.

Are you kidding me? If I have to explain that, then you have no business commenting on this thread.

If you went to college, where did you go, and what did you study? If it was any reputable institution with even a mediocre finance department, you should request a refund.

"despite the fact that the largest wave of ARM resets still have NOT occurred (that will happen mid-2010) -"

I hear about this argument all the effing time. At the current rate environment, most of the reset will happen at a LOWER RATE! It's actually Bullish.

johngalt1945,

"you should request a refund"

You're barking up the wrong tree...seriously, you sound like an idiot.

It was only a question johngalt1945, why so defensive? Curious how you linked future ARM resets in Manhattan with a 15-20% decline. Was there a method to that statement or was it more "pull out of the air math"?

johngalt, when you have to resort to massaging and manipulating the statistics to fit your view, its your view that needs changing. the numbers are absolutely clear, and in line with the trend that has been present for 3 months now - on a nationwide basis, we saw a bottom in housing prices in the springtime, and are now headed up. of course there are regional differences among that, and no doubt differences among various neighborhoods within any area, but the overall trend is clear. might it reverse itself in the future (the famed W)? maybe, but you just look like a fool pretending that it isn't the case right now.

Who is John Galt?

"Well this means that Wayne, NJ was most likely flat, so 24 months from now steve would say that Manhattan will be flat. Cool!"

Exactly what I've been saying! Two more years of declines!

Oh, printer. Please save this thread, and let's revisit in 12 months.

JuiceMan - ARM resets = higher interest rates for owners = higher mortgage payments = foreclosures = increased supply = lower prices.

InFamous - Even with rates at 0%, the vast majority or resets will result in higher mortgage payments. Unless the owners are sophisticated, which may be the case in Manhattan, but probably not for the vast majority of owners who have ARMs, payments will rise to AT LEAST the current 30-yr fixed rate of about 5.5% (and that's only for those with exceptional credit).

Here's an example of why you hear about it "all the effing time" - because it's reality:

In the case of an ARM that has a discounted initial rate -- a rate that’s lower than it’s fully indexed rate, let’s assume you take out a $200,000 mortgage with a 30-year term, an initial one-year discounted rate of 4 percent and a fully indexed rate of 6 percent. According to the Federal Reserve Board’s Consumer Handbook on Adjustable Rate Mortgages, your first year monthly payments would be $954.83. But in the second year, when the discount period ends and the rate jumps to the fully indexed 6 percent, your payments would rise to $1,192.63. And if the index rate had also risen 1 percent during that period increasing the rate to 7 percent, your monthly payments would increase to $1,320.59. That’s an increase of $365.76 a month!

You could have a different kind of reset problem if you’ve been making the lowest allowable payment on an option ARM. These payments typically don’t cover all of the interest due on the loan, so your mortgage principal may actually be increasing. When the option ARM is recalculated, or recast -- usually after five years -- the higher balance is calculated in. Your payments can increase sharply, especially if interest rates have also risen. And the rate cap will not apply to this calculation.

"For all the owners looking for crumbs, this one isn't even a crumb...it's more like a poppy seed. If you analyze the data, you'll quickly find that the 20 city index was skewed by several outliers."

My post specifically and ONLY refers to the NY Index. I am not concerned about the 20 city index.

"JuiceMan - ARM resets = higher interest rates for owners = higher mortgage payments = foreclosures = increased supply = lower prices."

Not too worried about foreclosures, Manhattan saw very little of those in the first wave (even though everyone on this board predicted it would happen) and there is nothing that has shown a second wave will be much different. As for higher mortgage payments, I'm not sure I agree with you there either. 5.5 - 6.5% is a reasonable range to expect for a refinance or, to InFamous' point, you can ride out the reset which should be close to / better than the ARM levels of old. Yes, there will be some fall out, but predicting an apocalypse is over dramatic. I think the largest risk is if/when rates increase but the Fed will let most of this shake out before making major moves. One of the biggest bull indicators could be when the Fed finally raises rates. Could signal that this mess is mostly behind us and they are now worried about some other looming crisis.

All that said, there may be further reason for a 15-20% decline but I'm not sure how you get there based on ARM resets.

I never stated that 15%-20% declines were based on ARM resets alone. They are one of many factors including:

- Underemployment at 20%
- The latest Consumer Confidence level falling from the previous month
- Banks and mortgage lenders back to the same old tricks
- A health care tax that will hit Manhattan residents particularly hard
- 11,000 new Condo units coming on line in the next 12-18 months
- Declining rents
- Tighter credit

PLEASE, PLEASE save this thread so we can revisit in 12 months (or even less). I may eat my "words", but given the above, it's unlikely.

yep, i wouldn't be surprised that the 15% (at high end) - 20% (lower end) decline happens. in your list the first and the last item are the key ones imho.

- Underemployment at 20%, high persistent unemployment will hit high earners like no other recession did.
- Tighter credit, FNM guidelines are key to the industry and they are becoming increasingly no-more-nonsense. the issue with unpaid maintenance in the buildings might be a problem (FNM doesn't want more than 15% of them to be late more than 30 days). also probable is the end of mtg interest for second homes being deductible.

- A health care tax that will hit Manhattan residents particularly hard

i don't think that might be a big issue, as many could opt for a cheaper insurance to avoid the tax. the reform will probably hurt doctor's incomes though, which i doubt will have a whole lot of an impact. how many doctors are around anyway? 1% of the population?

There is heavy seasonality to home prices and it fairly common to have short-term increases in late Spring and early Summer, even when the yearly trend remains downward.

If you look at the NY Case-Shiller Index, in April, May and June of 2008, the Index "stabilized" at
194.5 (+/- 0.3). After that two month period of "stabilization" the index dropped to 170.5 by April 2009. The Case Shiller Index number for NY that is being discussed in this thread is for May 2009. It wouldn't even surprise me if there was a small uptick in the Index number when the June 2009 data is released in a month. After that, I'm sad to say, I would expect the downward trend to resume, and I would bet the index is below 170 by September 2009 after hovering around the current 170.5.

Let's agree to check back in two or three months.

For a better discussion of this see:

Case-Shiller House Price Seasonal Adjustment and Comparison to Stress Tests
http://www.calculatedriskblog.com/

> My post specifically and ONLY refers to the NY Index. I am not concerned about the 20 city index.

Remember, this is the same alpo who complained that Case Shiller wasn't Manhattan for 2 years...

Alpo, you ignorant slut. To think that a poster recently thought I was you! I told him I was, btw, and then apologized for every stupid thing you ever did! It was a very long thread...