Deutsche Bank says New York area will see a further 39% reduction

Was this the same model that valued their residential CDO position?

I think we'll probably end up around 2003 price in the next year or so.

i think it will rain next tuesday

Deutschebank is just trying to talk the market down so it can buy an apartment for cheap. Deutschebank is a bitter renter. And he/she is angry that he's paying 50% of salary to a landlord.

hahahaahahhahhahahahhahhahahahahaaa alan....

About to fall 39%??? I think/hope we already slipped on the icy patch on the sidewalk... I'd imagine we'll see further declines for some time now, but I can't imagine it to be as precipitous as what we witnessed last September-November. I hope that kind of rapid depreciation is over... reminds me of that old Maxell hi-fi advertisement, where the guy in wayfarers is in the easy chair with his tie streaming out behind him.

Isn't this old news? Didn't Deutsche Bank announce this "39% further" like 3 months ago?

i think new construction will really be applying some hurt the next 6-12 months. october numbers will show large increases in sales, less discount from final asking, etc., but probably lower median prices (honesty forces me to admit i'm seeing more close on the higher end now, although from what i can see it's still USUALLY heavily discounted for the market, often i can't tell as that's not the market i follow and the comps are thin).

but there is no way that having new construction one bedrooms trade for 25% less than january prices won't affect mentality. and up the chain, although higher up may take longer to show. it's this progression, as it unwinds, that will continue the peaks and valleys, with each valley likely being lower. how much lower, well what can the government do for the market? so far it has been inclined to help the lower end (with some results in NYC). we'll see what if anything it does for the higher end markets, here and elsewhere. not many move up buyers.

We go lower until investors make up more than 50% of total purchases. Nothing else will bring the demand necessary to stop the slide.
It will take 3 years before we bottom.

ah, you're confused. that was citibank. deutsche is assiduously studying the croatian coast, looking for opportunity and pounding some fists. jealousy is an ugly burden.

39% peak to trough or from here?

jazzman, interesting. for the last three years i've been off-the-cuff prognosticating 2012. now i actually think 2014 in real dollars, but the difference won't matter for buyers, really.

the one thing i can't account for is demographics. and they've been changing, slowly (my best opponent in this notion, and a very smart one at that, evnyc thinks this theory is bunk, i'm not so sure in these times). may you live in interesting times.

"Was this the same model that valued their residential CDO position?"

what is it with ur dislike for derivatives?? did you date a girl who worked with them or something?

DB is a bitter renter....thats classic

it cleary states 39 percent from here. I have seen some even more bearish reports from GS and CS.

http://z.about.com/d/politicalhumor/1/0/-/U/2/derivative-traders-tmdho081.jpg

JUST KIDDING....

cds=bucket shop

"cds=bucket shop"

too funny.I think ur actually a closet derivative lover

11% from here - 40% peak to trough -- this is National according to the article. The question becomes if Manhattan is down 25% -- are we going down 15% moreoff peak levels, or are wegoing to over/undershoot those levels...

Too bad Deutche Bank doesn't publish their model on Easy Street. We could play with the parameters.

Consider this:

Look at DB's report, page 20- take their very own affordability formula. Plug in $1MM for the price and calculate the income required to qualify. The answer (unless I've made an error), is $145,000. Again, this is their formula, not mine.

Now, think about all the people in Manhattan and the surrounding areas who make $145,000/year. Loads. Not just senior-level professionals, but younger people too. Junior level lawyers, junior investment bankers etc. If presented with the opportunity, these types of people might like to own a nice apartment, call me crazy.

So what if prices for nicely renovated, 1,250 sft apartments in prime locations start approaching $1mm ($800/sft)? Are people not going to jump all over this?

There has got to be some support at some level. -39% might make sense in some areas, but it seems very odd for NYC at this point.

it actually says 2nd Q 09 to the trough will be 39 percent so lets call it 34 percent from here

aboutready - I think the leading indicator for housing to go up or at least stabilize is a significant improvement in the office vacancy rate.
This is how I think this mess will unwind.

NYC has unlimited demand at low enough prices. That is, lots of people want to be here they just can't afford it or at least they chose to stay where they are because dollar for dollar it makes more sense to stay. Once office space in NYC gets closer in price to Anywhere USA then companies will relocate here. A company in Long Island, Pittsburgh, or Scranton may desire a Manhattan address (not only for marketing purposes but because they can get better educated/trained employees in Manhattan) but with $70/ft rents it makes no sense for them to be here. But at $30 net effect rents for decent space more companies will choose to take the space (or companies here will take more space because if they only have to pay $30/ft then they can afford more employees. As the office space fills this means more employees. People from all over will be applying for these jobs as jobs are so difficult to find anywhere. But first we'll need the office owners to bleed a little and then they'll eventually lower their prices.

These new employees will be renters and the low rent neighborhoods will see their rents firm first. Labor is cheap right now and the new hires won't be able to afford rentals in prime neighborhoods. Then 2nd tier neighborhoods firm and finally rents in prime neighborhoods will firm - then rents will go up. With higher rental rates buying condos (that will have fallen much further than they already have) to rent out as investment properties will finally pencil. This new demand for condos (and co-ops with generous sublet rules) will firm prices for co-ops and condos and then we start to go back up. The issue is that it will take a few years before the vintage 2011, 2012, 2013 new hires make enough money and have the 20% down to qualify to buy, but when they do we'll see strong price appreciation again and people will be pissed that we didn't building more new product from 2010 to 2015.

At least, this is was my fortune cookie told me last night.

i like your fortune cookie, truly. it seems to speak to my fortune cookies.

my husband makes decisions regarding commercial leasing. i get the reports. i agree, we will be down for awhile.

but in terms of your predictions for outward growth, i'd be wary of demographics. with increased tech you can send a hell of a lot of people to india, or if it gets cheaper or more correct, iowa. and you have a moment of hell when prices converge with expenses and many just decide, if their lease allows it, to go off.

jazzman, sadly i think that most if not all of your arguments support deflation.

No fucking way.

"NYC has unlimited demand at low enough prices. That is, lots of people want to be here they just can't afford it or at least they chose to stay where they are because dollar for dollar it makes more sense to stay. Once office space in NYC gets closer in price to Anywhere USA then companies will relocate here. A company in Long Island, Pittsburgh, or Scranton may desire a Manhattan address (not only for marketing purposes but because they can get better educated/trained employees in Manhattan) but with $70/ft rents it makes no sense for them to be here."

nice idea but it doesn't play. no one is sitting around in corporate america or small biz and thinking that the problem is not having a manhattan address. it's more about how can we make any money selling to walmart or how can we roll over our debt and on and on. no one is thinking the answer is a move or outpost in manhattan.

39%?!? Come on. No fucking way.

right. have you seen the recent changes in the money supply. f'ng idiots. tying themselves to the chinese in their mutual assured desruction pact, might have seemed practical in the follow8ng

"39%?!? Come on. No fucking way."

Way - come back in 3 years.

Whatever you say ... mark my words, things are flattening as I write.

columbiacounty - I think in 12 months, once office rates have fallen, that you'll start to see plenty of 100 employee businesses moving to the city. The entrepreneurs who have 100 employees are thinking about things like Manhattan addresses and employees.

rent is $35 - $45 psf. Still WAY cheaper to rent right now.

AVM - thier affordability calculation is pretty optimistic for the NY market. They are basing it on a 5% loan and having principal, interest, taxes and insurance being no more than 40% of gross income. They then state that they discount all maintentance and taxes as being negligable and include only principal and interest to get to 40% of gross income.
There are several big problems with all of this. 40% of gross income is extremely high. Historical guidlines were under 30% and even the lax standards of the last few years suggested a maximum of 35%. Discounting any maintenance or taxes and assuming a 5% loan on a million dollar apartment are equally unrealistic.

why? someone who runs a business in Tennessee is just dying to move to manhattan? why?

cc - time will tell. My guess is most will come from within 75 miles of the City.

That's not the point. A lot of people WANT to live in NYC. Not necessarily for business reasons, but because it is an amazing city. Sorry, not easy to quantify this but it's the truth. Also, there are many, many, many companies that already exist here who will hire when the economy picks up, my company already is ... so it's not really a matter of entrepreneurs opening new businesses.

please try to be realistic. so you're talking about businesses in danbury, ct moving to ny? new haven, ct? poughkeepsie? trenton? what do these hypothetical businesses actually do? do you think that families living in these areas with kids really see manhattan as a place they want to live?

Not taking about businesses moving to Manhattan. I'm talking about existing businesses growing. Or new businesses being opened. Oh, and if NYC doesn't attract people why does the population keep growing?

People can't get loans anymore if it's above the conforming limit. That's the only thing that matters.

I just did.

so...tell us about the growth in existing businesses. which sectors are currently growing?

Over and out suckers.

brilliant.

"We go lower until investors make up more than 50% of total purchases. Nothing else will bring the demand necessary to stop the slide.
It will take 3 years before we bottom."

Isn't that what caused a lot of the problems to begin with? That 40% of all purchases were being made by investors which was considerably higher than any historical average?

Is NYC shrinking? Blow me.

"Consider this:

Look at DB's report, page 20- take their very own affordability formula. Plug in $1MM for the price and calculate the income required to qualify. The answer (unless I've made an error), is $145,000. Again, this is their formula, not mine.

Now, think about all the people in Manhattan and the surrounding areas who make $145,000/year. Loads. Not just senior-level professionals, but younger people too. Junior level lawyers, junior investment bankers etc. If presented with the opportunity, these types of people might like to own a nice apartment, call me crazy.

So what if prices for nicely renovated, 1,250 sft apartments in prime locations start approaching $1mm ($800/sft)? Are people not going to jump all over this?

There has got to be some support at some level. -39% might make sense in some areas, but it seems very odd for NYC at this point."

let's say you are exactly right: I think in general this represents a 39% down !!!!

Manhattan RE prices will continue on a steady path LOWER for the next 2-3 years, as one by one the sellers will either give up hope (of selling) or simply give up (capitulate). Credit will remain super tight during the entire period.

I will pick up some dirt cheap condos as investment properties in prime NYC areas in 2012 - at under $500/sq ft. SIMPLE AS THAT.

so...now its ok to buy a place for 7 times annual income? and by the way, once we get past lawyers and ibankers, who's left?

One more time

http://www.globalpropertyguide.com/real-estate-school/How-to-avoid-buying-into-a-bubble#what_ought_a_house_to_be_worth

lawyers? They've all been laid off or had their pay cut in 1/2. Lawyers are the ones SELLING, not buying.

CW - Right, those are problems, and certain elements of that formula are entirely unrealistic for NY. But as I said, it was their formula, the one they used to justify their result of -39% for the greater New York MSA. The formula may work very well for Orange County, or Akron, or even for Wayne, NJ, which was one of the cities they included in their New York MSA. But the formula doesn't work for Manhattan for a lot of different reasons that are all fairly complicated. Therefore, to take this formula (and their other criteria), which are very flawed, and to apply them to Manhattan and conclude that price will go down another 39% is completely unrealistic. The -39% didn't even apply to Manhattan, it was meant to the greater area of Wayne NJ, White Plains, etc. etc. as well.

One of the big flaws, which I alluded to earlier, is that median incomes are perhaps not so important for the prime NYC market, as compared to other areas of the country. The DB report bases almost all of its conclusions on median incomes. Without being a statistician or an expert on this topic, I would suggest that it is the higher-tier incomes, not the medians, that will eventually dictate prime Manhattan prices. Whether this means buyers will start coming out in droves to to buy empty condo units when prices go down another 10%, I don't know. But I am suggesting that logic would say there is some point where buyers will show. And that point is not another -39% from here, IMO.

but the higher income people already own places, no? so, they either have to sell ---putting more pressure on prices -- or buy a second home in manhattan? the problem you have in supporting your position is where the hell do these buyers come from?

"

aboutready - I think the leading indicator for housing to go up or at least stabilize is a significant improvement in the office vacancy rate.
This is how I think this mess will unwind.

NYC has unlimited demand at low enough prices. That is, lots of people want to be here they just can't afford it or at least they chose to stay where they are because dollar for dollar it makes more sense to stay. Once office space in NYC gets closer in price to Anywhere USA then companies will relocate here. A company in Long Island, Pittsburgh, or Scranton may desire a Manhattan address (not only for marketing purposes but because they can get better educated/trained employees in Manhattan) but with $70/ft rents it makes no sense for them to be here. But at $30 net effect rents for decent space more companies will choose to take the space (or companies here will take more space because if they only have to pay $30/ft then they can afford more employees. As the office space fills this means more employees. People from all over will be applying for these jobs as jobs are so difficult to find anywhere. But first we'll need the office owners to bleed a little and then they'll eventually lower their prices.

These new employees will be renters and the low rent neighborhoods will see their rents firm first. Labor is cheap right now and the new hires won't be able to afford rentals in prime neighborhoods. Then 2nd tier neighborhoods firm and finally rents in prime neighborhoods will firm - then rents will go up. With higher rental rates buying condos (that will have fallen much further than they already have) to rent out as investment properties will finally pencil. This new demand for condos (and co-ops with generous sublet rules) will firm prices for co-ops and condos and then we start to go back up. The issue is that it will take a few years before the vintage 2011, 2012, 2013 new hires make enough money and have the 20% down to qualify to buy, but when they do we'll see strong price appreciation again and people will be pissed that we didn't building more new product from 2010 to 2015.

At least, this is was my fortune cookie told me last night."

Jeez, just because something happened the last 3 or 4 times we came across the same situation doesn't mean it's going to happen again (where's that irony emoticon?)

NYC RE will drop from $800/sq ft to $500/sq ft in the next 3 years. That's a 37.5% drop. That's what will happen - hear me now, believe me in 3 years.

"the problem you have in supporting your position is where the hell do these buyers come from?"

Buyers???? LOL - good one. THERE AREN'T ANY BUYERS. That's the whole problem (if you are hoping to sell).

Having an unlimited demand does NOT mean that everyone in the world wants to move here. Having unlimited demand simply means that there are more people who want to be hear than can possibly be unlimited. It doesn't mean 2 billion out of 2 billion want to be here: if the max space is 5 million and demand is 50 million, that's enough to be "unlimited".

but its gotta be more than you want to be here--you have to be able to afford it. and the irony, of course, is that even with the extreme drops that we are debating most if not all of the world still can't afford it. so easy to forget that to most people $1 million buys a lot more than a 2 br with a 1,000 sq ft.

"but its gotta be more than you want to be here--you have to be able to afford it."

the original premise was:

"NYC has unlimited demand ***at low enough prices***."

therefore you can't use "can't afford it" as a counter argument.

"but the higher income people already own places, no? so, they either have to sell ---putting more pressure on prices -- or buy a second home in manhattan? the problem you have in supporting your position is where the hell do these buyers come from?"

I've already said it in theory, but I guess I have to spell it out literally? How about the 30-year old, 4th year associate at Sherman & Sterling (or insert law firm or investment bank), who's making $350k/year, or whatever the going rate is, I honestly don't know. This guy (or gal) has been renting and working their ass off for years and now wants to buy a nice 2BR in NYC.

Is this truly so inconceivable? Does this person not exist? Why is this so utterly unfathomable that this type of person might want to buy an apartment at some reasonable price? I really don't get it...

"Isn't that what caused a lot of the problems to begin with? That 40% of all purchases were being made by investors which was considerably higher than any historical average?"
One of the causes was indeed investors however there is now a big difference. Investors who were buyers in 2007 were buying to flip, rental income played no part in their underwriting. Investors who will be buying over the next few years will all be about rental income vs overall expenses. They will actually care about cap rates - imagine that.

AVM you dont get it! Manhattan will be the hardest hit. The lawyers and bankers in NYC will be geting laid off for the next couple of years. Orange county is mostly blue collar people and they will still have jobs. Manhattan is the epicenter

samadams. I just ran a search on associate salaries. they've come down. my $350k is probably too high, it may have been too low a few years ago - but that's not the point. some people have gotten laid off, but that's not really the point either. If 10% of the lawyers in NYC have gotten fired, there are still the other 90% that could fit my descriptions. and the big banks are now net hiring again. there is nothing to "get" or "not get" here. agree to disagree.

AVM the law firms are firing people and that includes Sherman. The reason that guy would not buy is he knows he will most likely not make partner and will be making 120,000 a year forever doing inhouse

Lawyers in NYC - those who are still are employed, that is - in 2009 will make 1/2 of what they made in 2007. Period. The rest have been fired / not hired - about 30% of potential associates (20% fired, 10% not hired out of law school). The Biglaw business model is DEAD.

AVM you dont get it. Its over, the finance bubble is done. Sherman cant bill out at 1000 $ per hour and hedge funds cant charge 2 and 20. Its over

Sept 2nd - "This just in: Kirkland & Ellis earlier today laid off more than 20 associates in its New York office, according to a person familiar with the matter. Associate layoffs also hit the firm’s Washington, D.C. office.

The layoffs came at the end of the firm’s annual associate-review process. Associates deemed to have not been on track to make either equity partner or non-equity partner were asked to leave, the person familiar with the matter said. The numbers of associates asked to leave were higher than last year’s, partly due to the economy and partly due to a lack of attrition experienced by the firm throughout the year.

Kirkland is one of a handful of firms that has weathered the downturn in the economy without making dramatic salary cuts or deferring start-dates. The firm hasn’t instituted layoffs since this time last year. The firm recently made several dozen associates non-equity partners, and gave offers to a significant majority of this year’s summer-associate class."

THIS IS GOING ON AT EVERY NYC LAW FIRM - except maybe Wachtell. Forget about LAWYERS propping up NYC RE prices - ain't going to happen.

AVM-
"Look at DB's report, page 20- take their very own affordability formula. Plug in $1MM for the price and calculate the income required to qualify. The answer (unless I've made an error), is $145,000. Again, this is their formula, not mine."

I don't know if you made a mistake or not. But No way in hell that an income of $145k will support a $1M property. I would say at least double that. I wouldn't feel comfortable with anything less then $300k and I better be damn well sure I had virtually ZERO chance of losing that income. And that"s with $200K down. Now tell me how many people make that kind of money. No way near enough to support the huge inventory. Not even to mention the shadow inventory. New York has a ton of money, no question, however it is not spread among enough people to support these price's. Its really that simple.

If you want a $1MM apt, you need to put $300K to $400K down or the bank won't even consider you for a mortgage. That's why upper-end NYC properties are doomed for the foreseeable future.

AVM as you can tell i am somebody in the feild and the scenario you should be looking at is this. The 5th year lawyer who purchased last spring 2008 put all there savings into the downpayment. Got a little to fancy and there monthly is now 6000 a month. This person like most others will be let go this year and sent to do inhouse and make 120,000 but shit how are they going to pay 6000? They wont be able to. Now they are forced t sell has no equity right now if they sell and if they wait till next year will be underwater. Do you get it now?

If I had to pay $6000/month for housing on a lawyer's salary, I'd shoot myself in the head. After taxes, anybody making $150K in NYC will only end up with $80K after taxes, etc.

boy oh boy...seems i have aggravated more than a few people here...!! :)

First, DCO and BSexposer-- regarding that DB formula -- Yes indeed, it is a complete joke. It assumed 5% interest rate and 10% down payment. That's a joke. Of course I know that. And of course you cannot support a $1mm apartment on $145k. But don't you think these things call into question the credibility of their entire report in the first place? Their entire analysis seemed utterly ridiculous to me, at least as it applies to NYC.

Regarding lawyers-- look, I'm not saying that lawyers are going to save the day. It was just an example, as a proxy for professionals overall. You guys clearly know more about the legal profession than I do. But the notion that Big Law is dead forever seems a touch naive to me. Same thing for hedge funds. 2 and 20 is probably gone for good, but that doesn't mean HFs can't make a lot of money for a long time - they can, just not as much as before. Overall, I don't think it is realistic to believe that these industries are headed for extinction. Salaries for white collar professionals simply cannot keep going down forever and ever. Well, if they do, we've got a whole lot more to worry about besides apartment prices.

As to the larger picture, is is really nice to think that maybe there will sometime come a day when we can buy everything for half the price of what it costs today, or 40% lower, or 30%, or whatever. Maybe that day will come, and then we who have waited can all rejoice. I try to continually challenge that view as to whether it's realistic. Still don't have the answer, but I guess it's probably pretty obvious which way I'm leaning...

Didn't Jonathan Miller say that he hasn't heard of anyone buying in the last month who didn't pay all cash?

one other thing, samadams -- your example makes sense, thanks for providing it. That really sucks for that buyer. I would only ask -- what percentage of 5th year lawyers at big firms are getting sent to do in-house? I'm genuinely interested. Is it 10%? 30%? 60%? Seems it is the % frequency of this type of event would have the most implications...

good night.

"Salaries for white collar professionals simply cannot keep going down forever and ever."

who said they were? the point is that they are not going to (in the aggregate) go back to the inflated levels of the last few years.

AVM that is a real story and its somebody I know. AVM they are a 6th year now and the better question is how many 6th years have a chance of partner and the answer is close to zero. You only have 7 years to make partner and then you are asked to leave. There will be very few partners made the next 2-3 years

I believe the NYC housing bubble as everywhere else is due to easy loans and subsequent flipping not the salaries of white collar professionals. Once credit tightens we are going back to prebubble pricing perhaps with an overshoot.

High NYC salaries cause a premium in prices but this was true before, during and after the bubble and had nothing to do with the bubble per se. It's just the numbers are bigger than say CA or FL.

samadams, most firms string you along for 10 years these days.

AVM, if you've made equity partner you're likely OK, not certainly, i know some EPs who look to be on or near the chopping block, but likely.

For most others the bets are all off the table. And it's not just the 10% that have been fired, it's the 50-100% (yes, a couple of firms hired zero going forward or cancelled next year's summer program, rare but still) fewer that are being hired each year. biglaw is not dead, it's just not as big, and the EPs know that they get what they make and aren't damn likely to want to share with lots of underhoured associates and service partners.

doctors are often in a similar situation. newish doctors will have a very hard time finding an established practice to hire them.

pitchfork, i think it's the uncertainty in employment and the lack of household creation caused by fewer employed in high-paying fields that will contribute to that "overcorrection." demand certainly affects price.

@BSexposer
If you want a $1MM apt, you need to put $300K to $400K down or the bank won't even consider you for a mortgage. That's why upper-end NYC properties are doomed for the foreseeable future.

Is this true? The latest lending standards?

Thanks

Goldman Sachs Actual/Projected Net Income (in millions of $)

2005 2006 2007 2008 2009 2010
Q1 Mar 1512.0 2479.0 3197.0 1511.0 1814.0 2441.5
Q2 Jun 865.00 2312.0 2333.0 2087.0 3435.0 2440.0
Q3 Sep 1617.0 1594.0 2854.0 845.00 2109.7 2276.5
Q4 Dec 1632.0 3152.0 3215.0 -2121.0 2746.9 2834.0

Year 5626.0 9537.0 11599 2322.0 9645.1 9780.2

Interesting -- after a horrible 2008, 2009 ia back above 2006 levels. And half of the year's already done and booked.

Here's JP Morgan...maybe this is not a perfect comp for prior years, due to lots of M&A activity in the interim. Still, it's coming out above 2005 levels this year.

2005 2006 2007 2008 2009 2010
Q1 Mar 2264.0 3081.0 4787.0 2373.0 2141.0 2857.8
Q2 Jun 994.0 3540.0 4234.0 2003.0 2721.0 3338.0
Q3 Sep 2527.0 3297.0 3373.0 527.00 1994.7 3698.2
Q4 Dec 2698.0 4526.0 2971.0 702.00 2155.4 4196.8

Year 8483.0 14444 15365 5605.0 8292.3 13230

And 2010 is shaping up to be very good indeed, if you believe the sell-side analyst community.

sorry, that pasted in horribly. hopefully the numbers are still decipherable

i am being offered 25% down on conventional with good rates for the purchase I am making in Manhattan, so asking for 30-40% down may apply to people with iffy credit or speculative income

Who ever design that model needs to get kicked to the curb.

AVM - -exactly what I was going to say. Ibanks are having a phenomenal year. Now, I doubt it will translate to great bonuses, as long as they can get away with it based on the competition, but people are making money. BTW, I work at an ibank.

AVM those banks would all be out of business had the gov. not bailed them out and allowed them to dump losses into AIG to give the appearance they are making money. Goldman Sachs was insolvent

LP1, question for you. and i'm not being snarky. what's the upward mobility like right now at the IBs?

"i am being offered 25% down on conventional with good rates for the purchase I am making in Manhattan, so asking for 30-40% down may apply to people with iffy credit or speculative income"

I am talking about jumbo loans.

http://www.nytimes.com/2009/07/05/realestate/05mort.html?_r=1&scp=2&sq=jumbo%20loan&st=cse

"To buy a home with a jumbo mortgage of less than $1 million, Astoria’s borrowers must have a down payment of at least 25 percent; and for mortgages above $1 million, borrowers must have 30 percent. Astoria’s jumbo borrowers must also have more cash on hand than a year ago, Mr. Redman said. On loans below $1 million, borrowers need 25 percent of the loan’s amount in reserves, and that figure increases as the loan amount grows."

BSexposer - so some quick math - a $1M place you need min $300K to buy plus $50K for closing costs - then reserves of $250K - so minimum for a property over $1M you need $600K of cash. Then as he says "and that figure increases as the loan amount grows." - So perhaps a $2M place you'll need $1.3M of cash?
There are more properties for sale than new buyers (that is buyers who are buying a unit and not selling one at the same time - buyers who actually will help decrease inventory levels). How many "new buyers" have more than $1M cash? Some but not enough.

Inventory levels stay high for a long time and we'll continue to bleed a slow death for years.

Bsex what is up with Astoria Fed? Somebody was telling me they are in for a real shit storm and not to have anything to d with them. He said it was the go to place for liar loans during the boom?

Jazzman - welcome to the new era of tight credit - if the govt isn't guaranteeing your mortgage, you may as well just pay all cash or forget about it. This is why I contend that high-end NYC properties are in the initial stages of a prolonged collapse - bottoming out in 2012.

BSexposer - Jonathan Miller said last week that he hasn't heard of anyone buying with a mortgage in a month.

BS, what killed me was the line that astoria wasn't offering jumbo fixed at all. 5/1 is all they're offering. in normal times i'm a big fan of the 5/1, but now, it's like playing russian roulette.

samadams, i don't think that's correct, i think astoria keeps its loans on its own books and that generally reduces awful underwriting by quite a lot.

Not in law myself, but I know of many firms that pushed back their start dates by 6 months to 1 year for new-hires that were supposed to start after Labor Day. Some of those firms also offered every still-employed person to take the year off at 1/3rd their normal salary.
I don't think that the lawyers that still make their normal salary this year are going to be doing many real estate transactions for fear of what might come next...

omg alan is too funny. and, he is correct. i saw Deutschebank at an open house on the UES last weekend, trying to stay inconspicuous..

so with such tight new credit rule what happens to the people who will no longer quilify for the mortgage they are in when there ARM expires? Any mortgage brokers ?