Why NYC Home Prices ( ) Headed For Collapse

classic ego defense mechanism

"When I said the world was going to end today, I didn't mean "today" today. I meant a day which when it occurs will be called "today."

"classic ego defense mechanism"

Maybe, but if you read the rest of the piece he makes a pretty compelling case (using actual data, not the proof-by-strenuous-assertion method that is so popular on SE) that the foreclosure overhang and eventual liquidation that has slammed the rest of the country is also bad here and, unlike in the rest of the country, hasn't even begun to be addressed. Based on the information presented, the overhang appears to be more of an outer borough phenomemon (using Queens as the detailed example), so the impact on Manhattan is debatable, but that doesn't make an apparently credible argument about Queens any less credible.

People who want to live in Manhattan are not looking to buy in the outer boroughs. Because of Manhattan's extremely strong co-op presence, it has (and will continue to) weathered the foreclosure storm well. Sure, prices could fall further in Manhattan. But that won't be fueled by a sudden glut of foreclosured Manhattan properties hitting the market--they just don't exist here to the extent that they do elsewhere.

^^foreclosed, not forclosured--momentary loss of communication skills...

Another reason why in a down RE market/economy, I am ever more content with that 30% down requirement in my coop and the 30%-50% down requirements in all the other coops surrounding me. Last thing I want on my list of things to worry about is a 10% condo where people are defaulting and/or units are being rented right and left to transients.

Agreed, Kyle. It's one of the reasons Manhattan has not gone into free-fall and is unlikely to.

Have there been many Manhattan condos that have been sold with only 10% down?

"Agreed, Kyle. It's one of the reasons Manhattan has not gone into free-fall and is unlikely to."

has not gone into free fall is the new up!

Never knew folks would be so happy about 20% declines.

;-)

Coop force field ON!

You guys are cute. Unicorns are cute. I hunt unicorns. Therefore I hunt YOU.

The flaw in that logic is prices can nEver go down if there are no foreclosures.

So I guess if Bush et al were able to stop the first foreclosure, we'd all be alright.

Go back to school.

these are interesting graphs which show the inevitable downward pressure on the lower end of the market. the big question is whether the high end in manhattan will escape. so far, foreigners and financial industry has propped up the market.

however, the banks in europe need to restructure -- that is why they are fighting the greek default with every last breath. european economists have been saying this for months. today is the first time I heard an american big wig say the same. leon fink from blackrock said europe is in trouble not because of greece ---but because the banks are in jeopardy. they are under capitalized. If there is a giant TARP for europe, I imagine that will place a lot of pressure on the high end of the RE market around the world-- we (manhattan) could lose the foreign buyers (as euro tanks) and the financial rich folk as bank problems are always contagious. think lehman brothers II, only bigger

"Because of Manhattan's extremely strong co-op presence, it has (and will continue to) weathered the foreclosure storm well."

I wouldn't be to smug about this assertion.

True, Manhattan largely missed the first wave of foreclosures -- those of people who bought beyond their means and couldn't afford their newly-reset ARMs.

But the SECOND wave of foreclosures -- those of people who easily sailed through board approval by buying within their means but are now among the long-term unemployed -- is still looming.

Stay tuned.

Jurow's initial prediction was made a year ago http://www.businessinsider.com/a-housing-price-collapse-in-queens-ny-is-almost-certain-2010-6
He could end up being right but who knows. He doesn't seem to have a prediction on Manhattan real estate.
Matt: You could be correct but the point is if the coop required 40% down, it is likely only the seller is going to lose money. Alos coops are fairly easy to foreclose on.

Is it really necessary for every thread about prices to have its own chickenlittle23 post flogging the greece-will-bring-down-manhattan theory (a.k.a., real estate six degrees of separation)?

Especially when "I have read at least 40 articles from reliable sources this weekend -- they all contradict each other", which doesn't sound like much of an endorsement of the theory in the first place
http://streeteasy.com/nyc/talk/discussion/26952-index-expected-to-show-new-low-in-house-prices

"Matt: You could be correct but the point is if the coop required 40% down, it is likely only the seller is going to lose money. Alos coops are fairly easy to foreclose on."

Most co-ops don't require 40% down.

And regardless of how much one puts down, if you lose your income, there's no paying ANY mortgage, no matter how high or low it might be.

And actually, co-ops are NOT "fairly easy" to foreclose on. All sales must still go through board approval.

How many coop board types out there know of residents in their buildings struggling to keep up w/ maintenance, etc.? That would surely be an early sign of possible foreclosure or short sale.

I agree that co-ops are more stable than other types of property, but you are mistaken to think that a higher portion of Manhattan's housing stock is structured as co-ops.

Brooklyn has a tremdendous number of co-ops. They are less expensive than Manhattan but there are zillions of them. And there are still zillions of rentals in Manhattan.

I don't think Manhattan has a higher percentage of its housing stock as co-ops. Of if it does, it's not significantly higher.

Is it really necessary for every thread about prices to have it's own anal retentive sideline sitter trying to keep valid information off the boards --everything except his own myopic posts.

Because you can't read sls -- the point of my posts is not Greece defaulting, though that is a problem-- it is the European banks restructuring. The small banks are in trouble and the ECB holds their debt. And it is not being reported in the US press --only the european press. But today, a major US player made that same point. Leon Fink manages almost 4 trillion. Is he chicken little too? If you don't think TARP for major banks will have an effect on world markets and on RE then , well, to each his myopic own.

http://www.bloomberg.com/news/2011-05-31/blackrock-s-fink-says-europe-s-financial-problems-go-way-beyond-greece.html

"How many coop board types out there know of residents in their buildings struggling to keep up w/ maintenance, etc.? That would surely be an early sign of possible foreclosure or short sale."

Five in my building alone.

I'm privately hearing of many other people in the same boat as well.

If the job market doesn't improve drastically, this is going to be a very bumpy ride.

Further on the topic of my reading difficulties, I guess I misread the title and initial post in this thread: http://streeteasy.com/nyc/talk/discussion/26909-more-headwinds-for-nyc-re. In my ignorance, I thought there was a connection posited between a Greek default/Euro crisis and Manhattan real estate.

But I guess the real point for today is that that thread is a few days old and since then you have heard someone new (Leon[sic] Fink) saying something - namely that continental European banks are undercapitalized - that is surprising only to the uninformed and adopted that argument just as you adopted the CNBC Greece story line a few days ago. A triumph of critical thinking. Congratulations.

And while we're on the topic of reading comprehension, where did you come up with "Leon"?

"And it is not being reported in the US press"

Here is an example of it not being reported in a NYT editorial a year ago:
http://www.nytimes.com/2010/05/30/opinion/30sun1.html

No maintenance arrears in my building, so those who're struggling are cutting back elsewhere.

my above post was referring to sls not nwt.

And, sls you continue to show your ignorance. Yes everyone knows that greece and ireland and portugal are near default. that is not new info and has been well reported. I notice that you had to go back one year to find an article that talks about credit contagion and doesn't specifically mention the pressure on the ECB which grew significantly LONG AFTER that article was printed. The articles I posted talked about credit contagion ---very relevant to NY RE -- do you even remember Lehman Brothers. Did you read the numbers in the articles i posted. Do you have any understanding. Or are you just going to continue to say you knew it all along so it is not worth posting.

You are an idiot with an ego problem. Why don't you just skip my posts. You seem to be the biggest know it all there ever was yet you are wrong in every thing you post.

What do your advisors have you parked in, $-wise?

NWT: what happened the last go-around (early 90s)? Did people give up on paying and sell?

"Why don't you just skip my posts."

Because this is way too much fun. Duh

nyc10023, I don't know. My co-op didn't convert until 1992. It was only ~50% sold at first, as many tenants felt values would continue to go down. (That turned out to be great for the sponsor, as he made much more on those 30% who eventually moved/died than he would've by selling to them at conversion.)

Judging by NYT and NY magazine articles from back then, no co-op debacle.

That boom-bust was as nothing to this one, though.

Just finished reading this article...

OMG!
What to wear for a shit storm?
Boots for sure
Safety glasses
Heavy 'fireman style' jacket
cloths pin

Fink is talking his book. He is promoting the idea of a "giant TARP" program for Europe, which he is no doubt positioned to profit from. Like a bandit.

I have nothing but respect for Blackrock but, really, they have no altruistic motives here. They made out like a bandit from the US TARP program and they want to feed from the same kind of trough in Europe.

Meanwhile there were more news-oriented stories today on the B-berg wire quoting European pols as there would not be massive restructuring of Eurozone countries' debt.

Restructuring = writing down debt = investors who hold that country's bonds taking losses.

I'm not sure what the solution is going to be, but the Euro leaders seem to be trying to get everybody to calm down. Not likely, that.