is this what the bottom looks like?

w67th, you be hedging? 'cause i ain't hedging.

in answer to the title of your thread, no this is not what the bottom looks like.

Who's putting posts in my iPhone? Hedging as in sleeeping with 50 women to ensure booty? Nope me not hedging, nowhere nearz bottom.

I'll know it's the bottom when both ar and w67 actually buy apartments

OK guys, talk is cheap. Map out some scenarios where we see 30% down. I%u2019m a buyer and another 10% doesn%u2019t do it for me.

Please be graphic.

OK guys, talk is cheap. Map out some scenarios where we see 30%+ down. I'm a buyer and another 10% doesn't do it for me.

Please be graphic

sorry for some weird errors.

you should never ASK w67th to be graphic. too much christmas shopping, brain is dead, will respond later.

Conforming mortgages go from 5% to 7% (if not 8-9%). Prices decline 30%. Plus another 10% just because they're declining and people are freaked out. Do you really need to know why mortgage rates might increase? If the FHA stops doing its thing (which it should since it's BK but the administration has decided that a redistribution of wealth is needed) the whole house of cards collapses.

nyc10013... BINGO. I'm waiting for a normal IR and home lending mkt w/o Obama/Geitner/Bernie doing a three man naked spread eagle on rates all the while yelling at the banks to get their balance sheet in order.

LMAO, do you know how much of the bank's "great" bonus season of 10' is based upon the three naked guy spread eagle trade? What happens when these joes get up and dust themselves off and IR bounces sky high... ya thinks Goldman can do it again, like Spears?

The repercussions of keeping rates so low for this long are going to be devastating, which is why the gov't is trying to hold off as long as they can. Our deficit is so large and our national debt is becoming more unattractive to would-be buyers - the only way we can remedy this is to raise interest rates. The U.S. is not a resource-based economy like Australia & Canada (we have nothing the Chinese want) - what is going to make our debt worth anything? Rates have to go up.

And raising it just a little will have a huge impact because the economy is bad, people in general in no way factored in the possibility of even a 1% rise in interest rates in their budget. So what happens to the Manhattan market when you have a massive national tidal wave of foreclosures, even supposing that 99.99% of owners here are on 30-yr-fixed (they are not, but you get my point).

What happens when you have a reduction of asset prices (assume there is any market) in such a catastrophic way (and don't forget our dollar's buying power is ridiculously inflated as well)? Beyond just a bursting of the housing bubble, this is a scenario that everyone should be freaking about, deep down. Having a stash of dollars is not going to help.

So yeah, prices going down 30% is the least of it. You may find Manhattan RE going for free...

welcome back.

So, in a ridiculous kind of way, it makes sense to have as little $ invested in your housing situation as possible - either rent or have a large mtge. Then keep your more liquid assets protected so that they can't come after you if you walk away from your mtge payments. This is the kind of scary economy we have, boys and girls.

scary indeed.. that's the word for it...

Looks like all the justifications for much lower re prices are based on higher interest rates. What if rates stay around 0 for extended period of time? My business is based on a tangible product (advanced technology) that I conract manufacture in China and have done so for many years.

I can tell you that our entire economy is joined at the hip with the Chinese and for better or worse that is not going to change. No matter what you think about the Chinese they accept the status quo and are as dependant on us are we are on them. If we don’t buy the stuff that they make who will? If the Chinese don’t accept the value of our currency then what?

In this environment Europe simply does not matter and China has replaced the Soviet Union in this classic adversary/partner relationship.

So maybe the value of everything is less than what it once was but equilibrium is maintained because like in MAD there is no alternative.

So I see my scenario working out over a very long period of time at least another generation and so maybe not another major shock to the system just a long slow burn. People forget.

What happens when the Chinese credit bubble bursts?

"In Manhattan, they have vacancy rates of 10-15 per cent and they feel like the sky is falling, but in Pudong [the central business district in Shanghai] vacancy rates are as high as 50 per cent and they are still building new skyscrapers,” she said.

“If you look at GDP growth, then China looks like a new engine driving the global economy, but if you look at how growth is being created here by so much wasteful investment you wouldn’t be so optimistic.”

-- Zhang Xin, chief executive of Soho China, one of the country’s most successful privately owned property developers

China’s not what you imagine. Synthesis of what’s left of communism/socialism and capitalist thinking. It doesn’t have to make sense to outside world. Infrastructure spending on a massive scale by gov and speculators makes unoccupied buildings unimportant. Because of poor maintenance and climate they fall down in a dozen year or so anyway. Point is that we need them and they need us and a massive devaluation of the dollar huts them so it won’t happen.

Do you really want worldwide suffering on a scale unimaginable so that you can afford an apartment beyond what you’re worth is? Isn’t that what got us into the pickle in the first place.

I was tempted to by a new construction apartment as an investment in guangdong some 8 years ago for like $35 a sq ft..
In the end though, you own nothing and rules and laws there can change on a dime. For those who don't like NYC 99 year land leases and a Democrat pres and congress, try it with a truly communist governemnt.

yeah, you'd be a fool to invest a yuan in the place.

China will certainly find themselves in a pickle within 10 years. The US model doesn't work for them.
We were/are 250/300 million exploiting the labor of 1 billion plus.
The chinese don't have that ratio to work with to fuel their growth.

Your're no getting it. It won't look like the US in 10 years because it can't. They are not following the US model.

So the answer is that China does not have a bubble because China is different? Where have I heard that before?

"Do you really want worldwide suffering on a scale unimaginable so that you can afford an apartment beyond what you’re worth is? Isn’t that what got us into the pickle in the first place."

Yes. And I am bald and wear a monacle too. No actually, what got us into trouble was prolonged low interest rates put in place to cushion the impact of a recession. Sort of like right now, except the funds are flowing to different assets.

neither do i. they continue to make stuff, ship it to us on credit and we never pay them for it? i honestly don't understand. now, we're borrowing more money from them to pay the interest (all be it, very low rate wise but a lot of dollars) on our previous borrowing. how can this be sustained or end well?

ieb, we have had mortgage rates similar to these for a number of years. the difference in the nyc market is the amount down (for condos), and the fact that banks don't, largely, want to hold mortgages. if they can't sell them to the GSEs or have them insured by FHA they don't really want most of them.

medium term there are a number of factors that suck for the NYC real estate market. state/city gov't finances, demographics (incoming, outgoing, retiring and possibly birth rate), unemployment (including lower levels of hiring of MBAs and JDs), commercial real estate (including huge and not before seen delinquencies by renters), new rental buildings opening in an awful market, generally tight credit, no real growth in revenues for companies, continued outsourcing, increased taxes, the condo fiasco, weak underlying bank finances, etc., etc., etc.

the banking system didn't implode, and with free money and the market being amenable to their raising capital they've managed to plug $1.5 of the $1.7 trillion hole. but this is kind of like star trek, captain, i can't hold her for much longer. she's gonna blow.

ieb
"Your're no getting it. It won't look like the US in 10 years because it can't. They are not following the US model."
I thought that was part of the point I was making.

Part of the problem with China is they don't play along. In the eighties we borrowed all that money from Japan when a dollar was worth X amount to the yen and we paid them back when the dollar was worth half of that rate. At the end of the math, we ended up with a decade long interest free loan.
China wouldn't allow the exchange rate of the yuan to properly rerate in value to the dollar over the last 4 years throwing a monkey wrench into the whole scheme. But they didn't realize how joined at the hip they are to us.
It's a downright mess.

Anyway, look for India to have the best chance of growing into a true powerhouse 20 years down the pike.

brazil seems to be doing well.

I'm certainly not a bull and not on a “high horse” I'm just very frustrated that I can't make the deal that I want and I’m perfectly willing to wait it out but I keep seeing signs that that next leg down might not be such as big deal. Look at UD’s post today for more.

ieb, that post was trying to show both sides. and i wouldn't put too much stock in the ibo's predictions, they've been all over the place. obviously NYC has been greatly aided by the fed's monetary policy. we haven't done too poorly in terms of stimulus distribution, also. but those things can't continue indefinitely. some of the programs will likely be ending or be greatly curtailed by spring. some estimate that the fed's purchasing resulted in mortgages rates being a least a point lower. they don't even have to raise their target rate for mortgage rates to increase, they just need to stop their buying spree, which i think is inevitable given how poorly those are likely to perform.

I like to look at changes in saved searches over some recent period of time. An incomplete, unscientific picture, but still interesting. Mine over the past 2 weeks (excluding duplicate listings):

Contracts: 14
New listings: 11
Price decreased: 5
Off market: 2
Price increased: 1

This little 2-week snapshot hardly presents a market on its knees. Don't know if it looks like a bottom either.

To state what is probably already known to most, I now see Urbandigs presents this same data (from SE), and there have been more listings than contracts in recent months. I guess my numbers are anomalous for whatever reason. Carry on.

It looks to me that for the 1, 7 and 30 days scenarios, new listings are outpacing units selling (i.e. contracts signed) by 40%. I can only assume that the reduction in inventory is ewither shifting to "off the market" or "shadow inventory". In addition the ratio of units cutting their prices to new listings seems to be hovering around 20%. That seems like an awfully high number to me.

To answer your question about China from the perspective of someone in finance:

The central problem with China is that the nation doesn't have a firm concept of law. Yes, they have certain restrictions and guidelines, but they have no law as we know it in the United States. The reason why people will continue to invest in this country and in Europe is due to the fact that an investor is able to take a course of action against any disturbances or illegalities, i.e. if a real estate broker rips you off on your apartment you can sue your broker. Try doing that in the PRC (In the HKSAR, I understand that things are somewhat better).

I don't buy the argument that China is going to suddenly take over the United States by storm. In the 40s, we were terrified of the German economic machine and mystified by their sudden recovery and prosperity. These things run in cycles. In the 60s it was the Soviets, in the 80s it was the Japanese and now its the Chinese. In my opinion, China will not overtake America in the predictable future. Quite frankly, no one is even sure how accurate their economic figures are although the fact that they are experiencing tremendous growth is indisputable.

Likewise, real estate in this country also runs in a cycle which seems to be repeating itself in conjunction with trends in the 1920s. First Miami popped, but even a few years later rents in New York were sky high. I have no doubt that apartments in this city will sell at 2000/2001 prices in a few years time. I know there are a lot of people who may be reading this and will think to themselves, "Oh no, that would never happen in New York! Not to me. Look at this city and look at my apartment, who wouldn't want to pay two grand a foot for this sick view of the alleyway below my place. I mean, it's industrial chic, right?" Foreign cash isn't going to save this market either as foreigners with the cash to buy in Manhattan are traditionally the sublimely wealth and are going to be going to the trophy properties running around this city. Unfortunately, there are also very few foreign buyers who are looking to snap up that overpriced two bedroom (converted from six rooms to five!!1!!) on West End Avenue, so I'd just hold tight if I held property in the city.

To those who refuse to believe, I'd suggest you take a look at Greenwich and any other luxury suburban real estate. No one predicted these prices would fall below their peak price just a few years ago, but now brokers in the suburbs seem to be cupping their balls praying for deliverance. Don't be surprised if that happens here. The decline has already begun. Wait a few years and watch the economy tank a bit more before you make a judgement.

2001...by 2010.

Don't worry about China, they are so azz backwards in their business dealings, laws, infrastructure, politics etc etc etc.... their $ policy is the least of their worries. Try and feed 1 billion mouths three times a day with manual farming methods... itz f'n azzed backwards.

if you accidentally kill a migrant worker, you just send like $10K to their kinfolk in the farmland... done deal, no investigation, no inquiry, all the officials take their share and the death is "buried" in red paperwork. THINK about that, bc worrying about the yuan/$ trade....

No. This is what the bottom looks like http://tinyurl.com/cslb2g

I don't think China wants to take the U.S. over - just worried about the repercussions of U.S. debt, trade imbalance, etc.

As for India, maybe. They have to get past the caste system and gender issues first.

nyc10023, always nice to read your sharp posts.