Manhattan Prices to Drop! So says Noah Rosenblatt

I probably sound stupid but does the treasury rate affect the mortgage rate?

There is no 'direct' link, but it certainly follows the 'trend' of the treasury rate. I.e mortgage rates cannot be 1% when treasury is 5% as there would no investor in the world stupid enough to buy the mortage bond over the treasury bond. The mortgage rate must always be competitive with treasuries

Interesting just two days ago and I quote Noah Rosenblatt made the following statement "While it is not a frenzy market like it was back in February & March, the scale is still biased towards a sellers market here in New York City"

Although I am not disregarding higher interest rates one shouldn't disregard the stock market hitting an all time high on Monday and just because it has dropped over the past few days doesn't me the housing market in NYC will plunge. Quite frankly I hope it does so I can scoop up a good deal. Rest assure there are plenty of buyers like vultures at there waiting for a price drp in NYC housing market.
I'm going to take the contrarian view an expect the prices to stabilize or go up in the next several months.

Is Noah someone who has a good track record...He sounds all over the place.

to #4. I am one of those 'vultures', I have 700k in cash but personally I'm waiting for at least 20% drop. When rates were low, people would care much less about the price as it was 'free money'. Reality changes when it's YOUR money or the value of money has returned.

keep waiting. there will not be a 20% drop. ever. unless you are looking at orlando, you are going to be sol.

good luck. there is a beautiful townhome in "the villages" waiting for you!

is there any indication that the mortgage rate might drop any time soon?

to #7.

"there will not be a 20% drop. ever."

MMmmm why did prices drop 20% in the early 90's in Manhattan? :) and why that can never "EVER" happen again ..

#8, rates are going to continue to climb thru 2008

#7, there are already plenty of examples where the prices have dropped over 15%, and they're still not selling.. It's going to get worse

http://www.streeteasy.com/nyc/sale/64337-condo-30-west-street-battery-park-city-new-york
http://www.streeteasy.com/nyc/sale/32858-condo-425-fifth-avenue-midtown-south-new-york

I am a vulture too. I have about $560,000 and I want to put it all cash down, but I am weary of buying an apt in a bad area or an apartment the size of a closet in a good area. Some apartments I have been following have been on the market for 2 years (no joke). I know there are deals to be had but I just need them to get a lot sweeter or go down more.

Housingheads think a 200% rise is not only *not* absurd but normal -- yet a 20% drop could never happen.

CUT TO: Little Black Arrows, continuing to rain down around HOUSINGHEAD FAMILY.

HOUSINGHEAD: I don't think the heavy stuff's gonna come down for quite a while...

The fact remains that interest rates are at historic lows. Please also note that the 10 yr bond
is still below the level it was just a measly two years ago. Just because the 10 yrs note has gone up over the past two weeks doesn't mean it will continue to move up. Still well below the 5 yr high as well.

to #14.

The issue is that RE prices have been inflated to reflect the low rates. If rates go up unexpectedly and quickly, the current prices cannot hold

Looks like a 5 year high to me!

http://finance.yahoo.com/q/bc?s=%5ETNX&t=5y

Look at the 52 week range it is not even at the high it was back several months ago.

I agree the 10 yr note was higher last March.

It's silly the 10 year note ticks up a teeny wean and all of a sudden this guy is bond market guru.The net result on mortgage rates will be about 1/8 to 3/16 higher which by the way means very little to NYC purchases.

to #16 and #17

According to Bloomberg, we just made that 5 year high.. and the trend is still up

"Treasuries Extend Drop, Pushing Yields to Highest in Five Years"
http://www.bloomberg.com/apps/news?pid=20601087&sid=aNsVLU8wLrA4&refer=home

#5, Go read his archives and you will see that he is not all over the place. He is consistent with the factors that affect NYC RE.

The thing he does that no one else does right now is tell us, the general public, what he sees happening in his job as a RE agent. If this sends contrasting signals from one week to the next then that is what the market (i.e. the buyers and seller) is doing.

His news is much more up to date than the corcoran and miller samuel reports that always report at the end of the quarter and then only one closed sales that are additionally another month or so old.

to # 5. I've been reading urbandigs for a year now, it really is the most honest blog from a realtor I have found. Either he two-faced (turns into a rar rar BS broker in person) or someone who just tells it as it is. Impressed so far

ever i repeat. ever. in NYC it is not going to happen.

people bring up the early 1990's like the same conditions could occur.

For 2006, the total crime index in New York City was 2,517.1 crimes per 100,000 people. Out of the 244 U.S. cities with a population of 100,000 or more that reported to the FBI and where a Total Index Crime could be computed, New York City ranked 230th between Fontana, California and Huntington Beach, California. Out of the nation's 25 largest cities, New York ranked safest based upon Total Index Crime rate per 100,000 population.

unless the scumbags drop the big one on NYC there isn't going to be a 20% drop

keep waiting. prices will slow, and speculation time is over, but anyone buying now will not lose money in the next 5 years.

talk of bond rates and other macro economic factors are a joke with regard to NYC real estate and they always have been... too much foreign money, too little space, too many bankers

#22, I am a fixed income manager, I trade Treasury rates and I sit next to the mortgage desk and have just watched mortgage rates scream higher. Though I work in finance, I also live in the real world, and like most people (even most bankers) don't have the $1.5mm - $2mm in cash I would need to buy a 2-bed apt in Manhattan. Like other people, I would need a mortgage, and the increased payments on that mortgage would be a factor in my decision whether or not to buy. NYC real estate may differ from the rest of the continental USA, but it cannot ignore the laws of econoimics entirely.

Furthermore, your argument about crime rates is nonsensical when you are talking about the possibility or otherwise of a 20% price drop. It was not a suddden increase in crime rates that caused prices to drop in the eraly 90s - in fact crime rates genereally fell. Rather, it was the economy, and mortgage rates.

new york was a dirty s-hole in the early 90s. i was here. different place and time.

money is still relatively cheap, and with the dollar being weak, NYC real estate is a bargain

i live in tribeca and the chinese are buying everything up; too many positive forces

the debate will continue on these bords ad nasuem, but the reality is that if there is a momentary blip of 5% it will be erased a year later

look at the predictions for NYC in summer of 2006; same thing (market is going to tank) then look at what happened

5 year time frame no problem; bargains for vultures, doubtful

lets not forget one more point: this city has become a place where more people are raising families and as rates increase you may see the burbs prices impacted but the lack of prime area and the demand in NYC is not going to allow for a 20% correction. I sat on the sideline for too long wating for rates to rise, subprime mortgages to blow up, demand to decrease, job market to tank, bonuses to disappear and prices continued to increase. Finally, I said screw it - i need a place to live, found a place i love and locked in a 30 year rate.

definitely get a 30. rates wont be down anytime in the next 5-7

buy now, lock in and enjoy the ride . . .

It will be interesting to see if the current upward trend for families staying in the city continues or reverses due to highter interest rates. I predict 'burbs in the area will see an increase in price in 1 year or so as families who can't afford the city need to move back to the burbs. I think 'the vultures'should be looking at some of the prime burb places NOW, while costs are low.

Crime rates, dirt, blight, etc. were very much present in NY during the early-mid 1980s, when real estate prices showed explosive growth. None of those increased from the 80s to the early 90s. What happened was massive rounds of Wall Street job cuts and generally weak financial markets. Yes, that will happen again, but no, nothing today allows you to time it.

And just so you have a sense of what high mortgage rates are, around 1980 or so they were something like 17% in the US.

Mortgage rates are still historically at low levels. The 10yr can go to 6.5% and we would still be at historically low levels. NYC is a completely different animal than the 90's. Look for continued softening in the Studio and 1BR apaprtments, flat to slightly up in 2BRs, and continued rise in 3BR and larger apartments, particularly ones in good locations.

And look for for softening in the 2BR and decreases in 3BR with a rise in the affordable 1BR and Studio market.

I trade mortgage backed securities at a major investment back . Rates are rising, will continue to rise, and will eventually stabilize at a level not seen in many years. This will undoubtedly and negatively impact real estate apt. price in NY. Its very basic economics. The more expense it is to borrow money, the less money will be borrowed. Therefore, prices will drop .

I trade mortgage backed securities at a major investment back . Rates are rising, will continue to rise, and will eventually stabilize at a level not seen in many years. This will undoubtedly and negatively impact real estate apt. price in NY. Its very basic economics. The more expense it is to borrow money, the less money will be borrowed. Therefore, prices will drop .

Where to start; first of all, treasury directly correlated to mortgage rates. That's why mortgage rates are priced every day. When a bank packages a loan for an individual, after closing, the bank can keep the debt or sell the debt. The price he sells it for is correlated to the fixed income market and there are very similar spreads from instrument to instrument. Hedge funds make sure the spreads stay in line. If yields are going up, people are selling the treasury because they can get better/ safer yield somewhere else. If the cost of money goes up buyers can only afford to borrow "x" dollars.

Should you buy or rent is the question, because we all need a place to live. Today, it is still cheaper to rent. This in not an opinion, this is a fact. When you buy real estate, it should be looked at as an investment. You also need to look at the risk. Does it make sense to tie up 200,000 on a 1,000,000 apartment? How long will I live in this small 1 bedroom apartment for $1,000,000. Could I be upside down on my loan in five years? What would be the expected rate of return on my $200,000 investment?

Will the market go down? This in not the question; it is impossible to time the market. Ask any value investor. You cannot catch the bottom. Value investors need time. Do you have enough time to make money on your investment? The banker said it perfectly, I am in the real world and who has enough money to buy a $2,000,000 apartment? I do pretty well, and a $2,000,000 apartment is a big nut. If you put down $400,000, you need about 11,000 monthly all in to live in this average 2 bedroom apartment with small bedrooms. To cover this you would need a stable $500,000/ year income and you are not spending the summers in the south of France. It would still be tight living. This would not be enough money to send your 2 kids to private school.

Since we cannot time the market, the question is; what is the expected rate of return over the next five years. My opinion is the upside is very small compared to the possible downside. My opinion is I can safe quicker then what I believe is the upside movement in the market over the next few year. If the market goes up a few points, I will have more saving to put down on an apartment and have a smaller mortgage with possibly higher interest rates. If rental rates continue to rise which they should, it might make more sense to buy, but today, it is still cheaper to rent.

I am not a broker, and have owned real estate in the past. I sold in 2/6/2006 and the value of the apartment I sold is still flat to down 10%.

#32/#33 are absolutely correct. I live in a decent size 2 br apt/lux building and pay $5100 a month. Equivalent apts in my area are a minimum $1.8-2MM, which as #33 says is $11K a month. Anyone who thinks buying is cheaper than renting these days is smoking crack.

I've got a bunch of friends who bought in the 12/18 mnths and some of them are forced to move (lost job, outgrew space, etc.), and after transaction costs, have lost 10-15% on their investment. Meanwhile, the S&P has gone up 15-20% in the timeframe.

#32/33/34 - If you think people in Manhattan are buying 2-3m apartments putting 20-25% down you are nuts. Most of these are putting 50% or more down to keep their monthly payments at rational levels. You do this then take a 30yr fixed I/O mortgage so you can invested what would be useless principal in the apartment. This is why 3br and up have been and will continue to be strong in good residential family areas. But in some of these new buildings in poor or spec areas and you take on undue and unnecessary risk. This includes areas like midtown west behing TWC and other new buildings like 325 5th, place 57, 59th and 3rd. Stay in residential family ares like UES, UWS, gramercy, your apartments will continue to appreciate. NYC, a micro real-estate climate of its own will have further wide divisions in areas. Bonus levels in 2007 will greatly exceed 2006 and liquidity will continue to drive the good areas up. Just look at all the private buyouts of public companies. That is what is driving te S&P.

On the other hand, I bought a place about 16 months ago that is in a prime Manhattan location and in an excellent building, and a comp unit just sold for 20% above what I paid.

As to the argumenr that Manhattan prices went down 20% in the 90's, they didn't go down that much everywhere. Harlem, Hell's Kitchen, Kips Bay, and places like that definitely took a hit of 20%. But where I was living in the prime Village, palces DID take longer to sell, but prices held pretty steady or dropped only very modestly (less than 5%), and in those cases, usually for the less desirable units in the Village (bad layout, bad light, bad condition, etc.).

Also, to all the vultures -

SO you save your money and wait for the Manahttan real setate market to drop 20% and find the place you want and you buy it. Then you take out a mortgage. The mortgage I just locked in was 6.25. If the real estate market does go down 20%, you can bet mortgage rates will be be higher - maybe 7.50%, which is a 20% bump from what I paid. So you either buy now at a higher price but with cheaper money, or you buy later with a lower price or more expensive money.

Basically, it's the same damn thing.

And interest rates (should it come to the doom n' gloom scenario you're all hoping for) could be much, MUCH higher at that point.

How many people do you think received 1mm dollar bonuses? Actually 2mm and greater to account for taxes. Not as many as new apartments being released over the next 36 months. For $3mm you can buy a 6000 square foot house in Greenwich (average area). YOu also get the schools for free.

Can someone please answere the following 4 questions.
1.Why were so many people stating the NYC market was over priced in 2003 and it was not a prudent investment to buy then.

2.Why were so many people stating the NYC market was over priced in 2004 and it was not a prudent investment to buy then.

3.Why were so many people stating the NYC market was over priced in 2005 and it was not a prudent investment to buy then.

4.Why were so many people stating the NYC market was over priced in 2006 and it was not a prudent investment to buy then.

5 Why were so many people now stating the NYC market is and is ot a prudent investment to buy now.

To pay $750k for a one bedroom is crazy...but let's face this is New York.

I could bought a one bedroom in Tribeca in 2004 for 350,000 and I felt then was too expensive and besides someone who understands the financial market told me renting was more prudent so I passed on it. Dam Now the same apt is going for 825,000. I still want it but now now it's to expensive and beside this real financial guru has informed me now is not the time to buy but rent is much better because it's cheaper to rent.

If someone spends 750-825K on a one bedroom...what could you possibly sell it for? That's what makes me nervous about buying now..will I lose thousands if I want to sell in five years. How much higher can a one bedroom go for??

That's exactly what I told myself in 2004 when that one BR was selling for 350,000. I said "self if I buy this now how can it possibly go any higher than 350,000." Sure glad I listened to that financial genius who told me renting at that time was more prudent--not

#35 here: Location, Location, Location. Liquidity, Liquidity, Liquidity.

There is unbelieveable liquidity in NYC and that will continue for many years to come. Buy in the proper location and you are fine. The only thing higher interest rates hurt, is studios and 1BR's. Also, thanks to 30yr fixed with 10yr I/O option mortgages which is a great way to invest in NYC without through more money at the same investment (or lessen the payments rather than lessen the timeframe of a 30yr), things are still very affordable.

Are you saying an average one bedroom selling now for $725k will sell for $1 million in five years??

#35, you should get some real numbers to back up what you say.

Here's a tip. Go to nyc.gov/acris and find a recently constructed apt in a rich area. Then look up the mortgages that ppl took out.

In my building which is full of $1.75-3MM apts the mortgages start at 1.5MM with many 10% down purchases. It will take time because you have to take the image option but you will find your assertion to be incorrect.

Lot's of ibankers in my building and even million dollar bonuses are only just enough for a 10-15% dp on a 2.5M apt after taxes and paying of the credit card debt that the base 150K salary necessitates.

#45, to me an average 1BR is 500-600 sqft, is not new construction and is typically a coop (much more coops than condos in Manhattan) and you can find many of these in the 350K-500K price range now. Thus I would say your average 1BR goes for 400K and is likely to sell for 550K in 5 years (same percentage you used from 725 to 1M). Doesn't sound so bad with those numbers does it?

The average transaction in New York is over 1,000,000

http://www.prudentialelliman.com/NYCPhotos/retail_reports/mmo1q07.pdf

But you missed my point. Who needs to spend 1M on a 1br if you can get a perfectly good one for 400K? That average is affected by the many $5M+ apts sold but there are plenty of apts in the affordable range for real ppl. No need to just rely on average numbers when there are plenty of real 1BRs out there for 400-500K.

See my point now?

This is what gets me when ppl talk about how unaffordable nyc is. You'd think they just looked at reports and averages instead of finding a real apt for much cheaper than the averages.

Anything over 3MM is going to be relatively safe, but the market below that is going to get VERY SOFT over the next 12/18 months. All the people who are saying that prices have consistently gone up since 2003 isn't taking into consideration the differential between owning/renting during that time period. Back then, it was easy to argue that owning made more sense then renting - since then, prices have gotten out of line compared to rent increases during that period.

COOPs with high down payments usually sell for much less because they are illiquid and had very strict boards. Who wants to deal with a board that needs to approve everything that you do. I would agree that buying for 800k and less numbers make sense, but I am married and will have kids at some point. The apartment with the least demand right now is a 1 bedroom. So if you want something at a disount to the highs, 1 bedroom would be the best choice. They should really restict these comments from brokers. How could any $3mm investment be save. They only one that I know is a tresury bond that earns 5%. This yields $12,500. I can find a suite rental for $12,500 and not risk a dime and have guarenteed protected on my principle.

Number 50 is saying an average one bedroom in manhattan is $400k...where?????

exactly my thougth #54! Probably an alcove studio in most parts of the city is in the $400K range - and in the Village or Chelsea that will get you a "cozy studio." A true one bedroom is $475K +

#54, #50 has to clarify. I just bought a 1 br so I know the market - the prices vary depending on building amenities (doorman?) proximity to the subway, etc.

Also, many places are listed as a '1 br' are actually 'jr 1'. If you're looking for a REAL 1 br for $400k your best bet is in a coop building without a doorman. Also check out the UES.

If you want a 'real' 1 br with a doorman, around 600 sq ft. in a good location expect to pay at least $550k.

#50 here. Average to me is something not very good. If it was good then I would have said that. Average is less than good. I am not talking about average prices which mean nothing due to the spread of prices in Manhattan.

A good 1 BR on let's say the UES (Doorman, recent lobby, mechanicals, elevator etc) can be had for $550K.

A pretty shabby, average looking 1BR in a non-doorman building on the UES can be had for 400K.

Not too hard to understand eh?

Plus, my point was to address #45's point (see #47) who was using (as I keep saying) the nonsense average numbers to prove a point. As did #48 and #49.

I put $400k in the street easy listings and could not find any one bedrooms anywhere in Manhattan. I truly wish you were correct since I would love to buy a one bedroom.

This week I lost out in my THIRD bidding war in six weeks.
What market crash?

First of all, Noah Rosenblatt is one of those 'good' mortgage brokers. 'Good 'in that he does what's best for his client, is very ethical and is well-informed with the market dynamics, at both the macro and micro levels.

Secondly, anyone who thinks that the huge jump in the 10 yr Treasury won't cause additional downward pressure for housing prices must also believe that the extremely low interest rates of the past 5-7 years did NOT fuel the housing boom.

The truth is that artificially low interest rates did help fuel the housing boom- likewise, rising rates will fuel a housing drop when it retraces back to historically normal levels.

The huge surge in 10-year Treasuries has been what everyone has been waiting for years. Combined with the weak dollar, the Fed faces the prospect of a vicious cycle where interest rates for the 10-year Treasuries will need to continue to rise in order to offset the declining dollar which we are already witnessing.

The truth is that Manhattan housing has a high correlation with Wall Street's well-being. Global liquidity and easy money for consumers and corporations (adios LBOs) is ending with the changing Global climate of increasing interest rates. The credit tightening cycle has begun, and the Bull run will give way to the Bears.

The market is too much in a transitional state to make a huge commitment like buying a house.

Here's the BOTTOM LINE:

Given the tremendous run-up in housing over the past 5-7 years, the chance of housing prices rising is lower that the chance of it stagnating or going lower.

As a result, renting for a year while the market sifts itself out could very well be a prudent and smart move, especially since one of the largest factors affecting housing prices- mortgage rates- have just shot up. The housing market still hasn't digested the change yet- in fact, it still hasn't fully assimilated the sub-prime fallout which occurred earlier in Q1.

People getting into Bidding Wars at this point in the market should ensure that they are not getting emotionally involved with the transaction.

To #60: Huge surge? What everyone has been waiting for, for years? The 10yr bond yield is LOWER today at 5.11% than 1 year ago. We double topped on Friday and the treasuries had a massive rally sparking the big stock market run. I'll give you surge when we break 5.75%, levels not seen since 2000. Even at 5.75%, 30yr fixed mortgages will be around 7.25%, still at historically good levels but yes, that will stagnate the housing market.

Wow...Can't believe I caused such a stir! Where to start in responding. How about here:

#4 - That statement was me saying the months of JAN - APRIL were hot sellers markets here in NYC, and now we have started to tick back down towards a midway point; however I think right NOW we are still slightly biased towards a sellers market because of tight inventory and still healthy buyer demand. In my post titled 'MANHATTAN PRICES WILL DROP' I stated that buyers will wake up to higher rates at a lag and realize later that they cant afford as much as they think. So, I think prices will soon come down in Manhattan RE as buyers realize a restricting amount of purchasing power. Or do you prefer to wait 6 months for the ultimate reports to come out showing this; because you do know this data comes out at a lag!

I have maintained my caution on the Manhattan re market and have been discussing inflation pressures and the higher rates that must come to normalize the markets for some time now. I also discussed tighter lending standards as early as January 2006:

http://www.urbandigs.com/2006/01/regulations_on.html

"If regulation is enacted on the lending industry I think the biggest side effect will be less options for potential homebuyers. While this is a good thing in protecting uneducated buyers, it will be 1 of many ingredients that will prolong a slowdown in the housing market."

For those that read my stuff, you know I discuss inflation pressures and how that will spread to purchasing power via higher rates. I also discussed how housing will take time to play out, that Manhattan is a different animal than every other market, that buying vs. renting is a personal and unique decision based on a few important factors (salary/job security, assets, timeline to own), and that Manhattan is a seasonal re market. If I change my short term view on Manhattan re, its because I am seeing a change in the marketplace and reporting it to you immediately. I use caution and wait about 1-2 weeks to make sure the change I see is real, and not just a anomaly.

Take the site for whatever you want! I truly can care less if you like it or not. I take the macro side and write alot about what I know after 17 years of following the tradable markets, and 6 years as an equities trader. Im a contrarian investor and like to buy when a market is down an out, so there is a bias against my stuff. I bought in NOV 2001 and sold in July 2006, so call me a sucker!

Personally, I write about what I think people should pay attention to, the risks that outweigh the rewards, the danger on the horizon, that I think could affect investments. I told readers to LOCK IN their rate on May 17th after my interpretation of the jobs report and other recent econ data:

http://www.urbandigs.com/2007/05/jobs_market_strong_rates_headi.html

and I discussed why 10YR yields would move from 4.5% to 4.75% in a 4 week period back on March 17th, 2007 (and it did!):

http://www.urbandigs.com/2007/03/fed_talk_will_g.html

For #2 - the answer is YES! And if you want a good guide as to where lending rates are headed in the very near term (weeks), look at the 10YR bond yield for any noticable trends especially when there is a surge either up or down. Its as reliable indicator as there is out there to find any trends.

Perfectly said; "the risks outweigh the rewards". I bought in May 2002 and sold in Feb 2006. I am not waiting for a crash, it is just better today to have you money in the bank. THis can change without RE pricing going down.

Interesting that a real estate agent is now predicting a price drop right before one of the slowest periods of the year-- the the summer months. By the way in reading some of your posts on your website you have been recommending that the buyer be patient and wait for the summer for prices to drop because it is historically a slow part of the year.

Okay if you are so cock sure that rates will go up as your forecasting than why don't you put all your money in the futures market and short sell the 10 or the 30 year bond.

#65, can you tell me what I need to do in order to do what you suggest please?
What kind of account do I need to put money into the futures market and how do I short sell the 10 or 30 year bond?

I have a schwab brokerage account where I can buy stocks or mutual funds and I don't know anyone on Wall St. Any help in this would be greatly appreciated.

#65 that is why you need to have a broker and not buy/sell stocks or mutual funds on your own.

So a broker will do all that for me?
Can you recommend one? Or a brokerage firm please?

Wow...Can't believe I caused such a stir! Where to start in responding. How about here:

#4 - That statement was me saying the months of JAN - APRIL were hot sellers markets here in NYC, and now we have started to tick back down towards a midway point; however I think right NOW we are still slightly biased towards a sellers market because of tight inventory and still healthy buyer demand. In my post titled 'MANHATTAN PRICES WILL DROP' I stated that buyers will wake up to higher rates at a lag and realize later that they cant afford as much as they think. So, I think prices will soon come down in Manhattan RE as buyers realize a restricting amount of purchasing power. Or do you prefer to wait 6 months for the ultimate reports to come out showing this; because you do know this data comes out at a lag!

I have maintained my caution on the Manhattan re market and have been discussing inflation pressures and the higher rates that must come to normalize the markets for some time now. I also discussed tighter lending standards as early as January 2006:

http://www.urbandigs.com/2006/01/regulations_on.html

"If regulation is enacted on the lending industry I think the biggest side effect will be less options for potential homebuyers. While this is a good thing in protecting uneducated buyers, it will be 1 of many ingredients that will prolong a slowdown in the housing market."

For those that read my stuff, you know I discuss inflation pressures and how that will spread to purchasing power via higher rates. I also discussed how housing will take time to play out, that Manhattan is a different animal than every other market, that buying vs. renting is a personal and unique decision based on a few important factors (salary/job security, assets, timeline to own), and that Manhattan is a seasonal re market. If I change my short term view on Manhattan re, its because I am seeing a change in the marketplace and reporting it to you immediately. I use caution and wait about 1-2 weeks to make sure the change I see is real, and not just a anomaly.

Take the site for whatever you want! I truly can care less if you like it or not. I take the macro side and write alot about what I know after 17 years of following the tradable markets, and 6 years as an equities trader. Im a contrarian investor and like to buy when a market is down an out, so there is a bias against my stuff. I bought in NOV 2001 and sold in July 2006, so call me a sucker!

Personally, I write about what I think people should pay attention to, the risks that outweigh the rewards, the danger on the horizon, that I think could affect investments. I told readers to LOCK IN their rate on May 17th after my interpretation of the jobs report and other recent econ data:

http://www.urbandigs.com/2007/05/jobs_market_strong_rates_headi.html

and I discussed why 10YR yields would move from 4.5% to 4.75% in a 4 week period back on March 17th, 2007 (and it did!):

http://www.urbandigs.com/2007/03/fed_talk_will_g.html

For #2 - the answer is YES! And if you want a good guide as to where lending rates are headed in the very near term (weeks), look at the 10YR bond yield for any noticable trends especially when there is a surge either up or down. Its as reliable indicator as there is out there to find any trends.

# 64 - so whats your point? That I tell clients to wait for the market to be slower to buy?

# 65 - okay, where will rates go right now after they moved! Tell me.

Wow...Can't believe I caused such a stir! Where to start in responding. How about here:

#4 - That statement was me saying the months of JAN - APRIL were hot sellers markets here in NYC, and now we have started to tick back down towards a midway point; however I think right NOW we are still slightly biased towards a sellers market because of tight inventory and still healthy buyer demand. In my post titled 'MANHATTAN PRICES WILL DROP' I stated that buyers will wake up to higher rates at a lag and realize later that they cant afford as much as they think. So, I think prices will soon come down in Manhattan RE as buyers realize a restricting amount of purchasing power. Or do you prefer to wait 6 months for the ultimate reports to come out showing this; because you do know this data comes out at a lag!

I have maintained my caution on the Manhattan re market and have been discussing inflation pressures and the higher rates that must come to normalize the markets for some time now. I also discussed tighter lending standards as early as January 2006:

http://www.urbandigs.com/2006/01/regulations_on.html

"If regulation is enacted on the lending industry I think the biggest side effect will be less options for potential homebuyers. While this is a good thing in protecting uneducated buyers, it will be 1 of many ingredients that will prolong a slowdown in the housing market."

For those that read my stuff, you know I discuss inflation pressures and how that will spread to purchasing power via higher rates. I also discussed how housing will take time to play out, that Manhattan is a different animal than every other market, that buying vs. renting is a personal and unique decision based on a few important factors (salary/job security, assets, timeline to own), and that Manhattan is a seasonal re market. If I change my short term view on Manhattan re, its because I am seeing a change in the marketplace and reporting it to you immediately. I use caution and wait about 1-2 weeks to make sure the change I see is real, and not just a anomaly.

Take the site for whatever you want! I truly can care less if you like it or not. I take the macro side and write alot about what I know after 17 years of following the tradable markets, and 6 years as an equities trader. Im a contrarian investor and like to buy when a market is down an out, so there is a bias against my stuff. I bought in NOV 2001 and sold in July 2006, so call me a sucker!

Personally, I write about what I think people should pay attention to, the risks that outweigh the rewards, the danger on the horizon, that I think could affect investments. I told readers to LOCK IN their rate on May 17th after my interpretation of the jobs report and other recent econ data:

http://www.urbandigs.com/2007/05/jobs_market_strong_rates_headi.html

and I discussed why 10YR yields would move from 4.5% to 4.75% in a 4 week period back on March 17th, 2007 (and it did!):

http://www.urbandigs.com/2007/03/fed_talk_will_g.html

For #2 - the answer is YES! And if you want a good guide as to where lending rates are headed in the very near term (weeks), look at the 10YR bond yield for any noticable trends especially when there is a surge either up or down. Its as reliable indicator as there is out there to find any trends.

Urbandigs-slower means sellers are more flexible and and they are more likely to drop their price

In my opinion interest rates will go down over the next several months --why you ask well because everyone including grandma is for forcasting interest rates to go up.

#72 - yes, that is what I stated regarding summer months.

8-10 months ago EVERYONE jumped on the RATE CUT bandwagon and talked how rates will ease because of a slumping housing market. The stock market rallied on any days because of these hopes. But I publicly stated that I thought rates will go up, NOT down, and that inflation was a problem people were not paying enough attention to.

At this point AFTER the move, rates may trickle down a bit. However, rates are still at low levels and there is plenty of upside potential given global inflation issues and rates rising around the globe.

I believe there is plenty of downside potential for rates as well. If we get a weakening of consumer confidence, weaker housing market coupled with potential slow down in employment then what will follow is a slow down in the economy and a decrease in interest rates. I believe the 10 yrs spike may just be a blip. Time will tell.

Hey UrbanDigs...how much less can you care?

"Take the site for whatever you want! I truly can care less if you like it or not."

I'd be concerned if my advisor made that kind of grammar mistake...lol

It's a very common mistake. One that is common in American English but not the Queen's English. I hear that phrase every day and it grates every time (I'm from England but have lived in nyc for the last 15 years) but watcha gonna do? This is the way youz guys speak.

#65

So a broker will do all that for me?
Can you recommend one? Or a brokerage firm please?

# 77 --Just asking a question like that means you should not even think about throwing your money away with what ever idea may be roaming around in your mind.
Now I know why stock brokers make so much money.

I do very well with my investments (stocks, munis, RE) but have never bought futures or shorted treasuries. #65 recommends this and I am trying to get him to explain how easy or not this is to do. If it is not something that the general public can do easily then his point is useless.

So how about you give it a go #77? Is the futures markets and going short treasuries open to the general public or do you advise that only for more sophisticated investors? Or are you #65? Either way, how about an explanation?

Yes the futures market is open to the public. Just google futures brokers and you should get several that you can speak with. Tell them what you want to do and then watch out. The futures market is highly leveraged so if the treasuries go again you a few ticks you will be asked to put more money in.I think the statistics of you making money in the futures by shorting treasuries is way way against you.

Thank you. In that case #65's point is useless. Thank you for proving my point.

#58, go to corcoran and do the same search

Web IDS below
1002526
918140
908098
912551
995211
977556
925010
998917

We are in a long term trend of widening credit spreads back to historic norms. People who don't see this as an negative impact on the manhattan housing market are in denial.

Okay that means prices are definitely going down. It's about time for us vultures. Yum yum yum I'm getting me a nice 2 bedroom for under a mil in Tribeca.

i think you all forget how much wealth there is in the city. granted these increasing rates will result in somewhat stagnant market in the short term , but it will not lead to a major decline you all forsee. but i could be dead wrong. maybe we will see more double digits appreciation even with interest rates over 7% (still historically low). london's prices are double what ours are. maybe thats where we're heading. who knows.

well if prices go down - vultures from all the boroughs, renters in manhattan and foreign nationals will jump in. So i think this will dampen the effect. If all the people who can't afford to live in manhattan see the opportunity, then it will be less of an opportunity. Let's see.

to #85. The main reason London prices are high is because of TAX RELATED international demand. A foreigner actually LIVE in london and not pay any tax on income generated outside UK.

#87, you are wrong. Yes, international buyers looking for atax refuge are pushing up the very high end of London real estate. But if anything, real estate is far more tax advantaged in the US versus the UK, because mortage interest payments are not tax deductible in the UK. The major reasons prices have gone up so much in London are (1) the City is generating enormous wealth, (2) immigration to London from Eastern European EU accession countries, and (3) low levels of new construction relative to need. One final thing: Prime London prices are not double that of comparable housing in Manhattan.

Not sure why people always have to rationalize the inevitability of mortgage rates going higher by saying "historically low" (such as #85 above) - this is a pointless thing to say. The bulk of the people buying RE today haven't experienced those "historically high" rates and so don't have any context and it's moot anyway - the only thing that matters is how much the rates are today relative to your income. And people are going to start feeling the squeeze soon - ARMs resetting are going to put a big hurt on people who went with adjustable financing over the last few years, and now there's not going to be any relief at the longer end of the yield curve for refinancing into a fixed mortgage. Many little black arrows going down in the near future

to #88.

I was born in England, so I am very in-tune with the real estate in U.K
- there is no TAX when selling real estate no matter how long you live there
- The tax is MUCH MUCH more favorable in London than in US because the international buyer pays ZERO tax. Nada! why pay someone a dollar to get 30c back?
- Some Prime parts of London are SO prime, you can only buy a 100 year lease.
- by the way, in the 80's interest payments were deductable, but that was phased out. I dont recall the effect on RE prices on that change.

but anyway.. no one knows what is going to happen.. just do what you're comfortable I guess..

why do so many people think that at $1200 a sq foot, manhattan is overvalued, but it $800 it wasnt. maybe its under valued at $1200. maybe it should be $2000. after all, this city is only getting better and better. in the early 90's you still had run down neighborhoods. how many of those exist now below 125th street?

You people are all idiots if Noah Rosenblatt says prices are going down well dammit then prices are going down. Why are you all so stupid? It's so simple rate go up real estate prices go down so easy to understand but you dam idiots don't get it.

so when the rates were above 7% in the 90's, real estate prices declined every yeaer?

Scary picture:

http://www.marketwatch.com/tools/pftools/rates/RateChart.asp?sid=159412

more little black arrows going down

to #93. What was the price to income ratio in the 90's and what is it today? Thats all that matters

#93, in the early 90s, yes.. in the late 90's RE prices started rising, but only because they were recovering from bottom levels. Today, we're talking about what a higher intrest rate environment is going to do in a bubble market where prices are unsustainably high.

wasnt the rate even higher this time last year? who's to say it wont go down again?

#96. who's to say this is a bubble market? way too much wealth here.

#97 - http://bloomberg.com/apps/news?pid=20601009&sid=a9iKxh02VvU4&refer=bond

to #97. Your statement of

"wasnt the rate even higher this time last year? who's to say it wont go down again?"

is the same as saying "house X was 20 % cheaper last year, who's to say it wont be the same price this year"

You can't have it both ways!

But to amuse you. Heres why "I" think the rates are only heading up
- The rest of the world are rasing their rates, New Zealand, Europe. We're now in a global economy and this affects US
- US politicians are getting impatient with China's currency manipulation, this could have an affect on their treasury purchases which in turn increases mortgage rate indirectly
- 7 to 8 % 30 year fixed mortgage is considered historically low. Rates have just been kept articially low the past years.

to #98. There is alot of wealth here.. but thats extreme wealth looking at the very top range of the market. How many MORE millionaires are dying to buy a 800K 1 bedroom apartment non NON-SPECULATION reasons??

#98 - if you're a person in the market for 5M+ apts then I agree you're not affected by interest rates, but you're most likely not reading these boards. I suspect most people who read/post here are in the market for < $3M where interest rates DO MATTER. Do the math yourself on the monthly payment for your average 1.2M mortgage for a bullshit 2br apt at 5.75% and 7% (which it will likely go up to over the next 6 months) - tell me that isn't significant and going to cause people to re-assess how much house they can afford.