Headwinds

It's like that nasty fully-expected unexpected deep freeze that hits just when spring's green shoots sprout.

Looks like another bad year for my tomatoes.

I think its likely that we're in the bargaining stage now..

http://changingminds.org/disciplines/change_management/kubler_ross/kubler_ross.htm

unfortunately, as will be revealed, there is no way out.

West,
Re values in this town have been slathered in 'anti-gravity fluid'.
Where have you been? The most significant financial reversal of our life time barely made a dent in this town. OK, it slowed construction but small projects are coming back to life.
The end is always near, just not as near as you think.

What you say seems to make sense, West.

But I am pretty astounded by the "relatively" strong Manhattan market so far. Sort of like the Energizer Bunny. It just keeps going and going.

Why New York City Home Prices Are Headed for Collapse

http://www.minyanville.com/businessmarkets/articles/housing-market-report-new-york-city/5/31/2011/id/34852

What's the percentage of apartments in prime Manhattan that is co-op? What's the average down payment in that co-cop? (Guessing minimum 20%, probably closer to 30% when you factor in all the building that permit no more than 50%...etc.)

In order to afford the co-ops, not only are the down payments enormous by national standards, but you have to prove that you have significant, comfortable income to afford to live there at your financed level. So, let's see, this formula = little strain on owners who may be having financial troubles because most have a good cushion to work with and even if one did, you have so much skin in the game, you still won't be under water on your mortgage.

As for the condos, several places I bid on before recently buying I lost out to retired couples paying all cash. Seems like this pool of buyers is never-ending...so long as Manhattan continues to be the place everyone wants to be, I don't see more than another 10% correction and only in certain sectors of the market that are simply over-priced.

Queens, totally different story, but prime Manhattan...who the hell knows, this market has a mind of it's own and now that I'm an owner and not a renter, I'm suddenly bullish. Go figure...

NYC10007, true story: In the 1990 or so NY RE crash, coops (despite dp and liquidity and good breeding requirements) fell about 50% ... and took ten years to start appreciating much.

"not only are the down payments enormous by national standards, but you have to prove that you have significant, comfortable income to afford to live there at your financed level."

that reasoning never made sense to me. the board package is a snapshot of your CURRENT finances. but people lose their jobs, people lose their money in the market, they overspend *after* buying their co op. what they have at the time of purshase is not guaranteed to remain intact and even if they have X amount to float them for X amount of time, that money will run out eventually. i don't follow this stuff the way you guys do, but i think that's the only reason the abysmal shock of the crash hasn't been felt here yet. people just haven't run out of money - yet. but they will.

And in 1990, the proportion of owned units that were co-op was virtually 100%. Condo's did not exist in Manhattan at that time, it was either co-op or rental.

i think the co op system has protected itself so far, but the reserves those owners presented at the time of purchase were supposed to float them for a while. and they have. but to say this is an indication that everything will be fine going forward just doesn't make any sense.

I think if the coop system was going to fail it would have done so already. Lehman was in fall 2008, which is almost 3 years ago now. No question coop owners lost their jobs or lost their money in the market or otherwise. But its a pretty small % of people who have the emergency savings to float them for more than a year or maybe two. Given that, I just can't see, respectfully, the logic of thinking that their money will run out soon/its only a matter of time et al. Of course, if there is another Lehman, that is a different story, but unless and until then I just don't forsee prime Manhattan coops correcting further than they already did. Just my two cents.

that may be the first time someone here disagreed with me respectfully so thank you for that. i just meant that it's silly to say that because an owner had X at time of purchase it's a guarantee that X remains intact and the owner's finaces are safe.

What part of "Wall Street was propped up temporarily" don't you follow, those of you who don't follow that? That disproportionally assisted NY employment. The big question is what happens to employment in NY when assistance to Wall St. (in all its forms) is removed. And it's a rhetorical question.

Re: The big question is what happens to employment in NY when assistance to Wall St. (in all its forms) is removed.

Thank you Alan, that's the question I've been asking all along. And there's no QE3 coming this time. They may be too big to fail, but are they too big to slooooowly wither now that the money spigot is turned off?

I loved this one from the comments section of the Minyanville article linked earlier in this thread...

"You cannot buy a co-op (or condo) in Manhattan unless you convince the co-op Board that you are financially stable. It doesn't matter if you're paying 100% cash for the apartment, they also want to see that as a co-owner of the building you have deep pockets to help pull the building out of trouble financially if needed. So if we did have 10% or even 20% deadbeats, the remaining owners are already pre-screened and proven financially stable enough to pick up the shortfall."

As if co-op owners would never sell into the face of a worsening fiscal position! Perhaps the board could keep them all captive by rejecting new applicants if the sales price were too low. All while the condo building across the street is selling at a 30% discount.

I'm not saying anything bad (or good for that matter) will happen to the Manhattan market, but the logic of some folks is just seriously flawed.

1. Homeowners in NY with defaulted loans (NOD) have not made a mortgage payment in 21 months on average. Does anyone know *when* the banks will (voluntarily or forced to) actually kick the people out and sell the homes? Who thinks the 21 month number is incorrect?

2. Currently, more than 90 percent of new U.S. mortgages are backed by the government entities Fannie Mae, Freddie Mac and the Federal Housing Administration. Anyone believe this statistic is wrong? Anyone think that percentage should be *much* lower? *When* will it be lowered?