Trump Speaks - "Only a matter of time for NY"

Thank you for your posting.

He acknowledges that Manhattan is different but it could be impacted by the overall state of the economy. On CNBC, he ecourages investment in real estate.

http://www.cnbc.com/id/15840232?video=625091311&play=1

We are so in a recession right now!

If we are in a recession right now, we should be counting our blessing — it's a very mild recession indeed! And it's alomost over anyway. I went to open houses on UWS this week — they are packed.

the recession is almost over??? open houses that are packed??? you must be dreaming.

openhouse, your comment is more interesting every thread i read it on.

Almost over?!?!

What part of - "Only a matter of time" leads you to believe the recession is almost over....

You must be a broker...

Trump is in the business of self promoting his buildings. Of course he is going to pretend the recession is over!

Trump never said the recession is over. He said we are already in one. Re Manhattan RE, he said it was still strong though he was not sure how long it would last.

http://www.cnbc.com/id/15840232?video=625091311&play=1

If you plan on staying in a home for an extended period of time- 2008 will be an excellent time to buy real estate. It's difficult, if not impossible to time the market in terms of prices- but interest rates are on the lower end of what has been recorded in the last 30+ years. If you plan on moving or selling in the shorter term (5 years or less)- buying now may pose risks purely associated with pricing and the economy. In the longer term, the pricing issue is not nearly as signficant as other things (crime, preferences of city living vs. suburban, value of the US Dollar, etc...).

semerun - "...but interest rates are on the lower end of what has been recorded in the last 30+ years"

This is not correct. Jumbo mortgage rates are higher now than they have been at any time since 2002 with the exception of Aug 2007 - immediately after the credit crisis started. Libor and fed funds rates are irrelevant. You are not a bank - you borrow at the mortgage rate. Lowere lending rates for banks does not automatically mean lower mortgage rates.I'm basing this off real data. See "Bankrate 30 yr Jumbo Home Mortgage New York" on Bloomberg. Ticker ILMJNY.

I agree with what you are saying that libor and fed fund rates do not stipulate mortgage rates. Still if the guy is talking about a span of 30 years (i.e. not just since 2002 as you state which is really a short period of time), then he actually might be rate (i.e. on a relative basis, mortgage rates are not too high).

We have seen fed funds rates in the neighborhood of 3% several times over the past 17 years - e.g. 1992 and 1993 and 2002 until 2006. It's not a rare event. So I still disagree that we're seeing something remarkable compared to the past 30 years. Remember we saw 1% in Jan 2004. We're 3 times higher than that now. Sure it's low compared to the 80's or when it was almost 20% in 1981 - but that's irrelevant.

From a real estate affordability point of view the only thing that counts is the period of time covering the most recent ‘cycle’. From 2002 to the end of 2006 was when we had the big run up in Manhattan prices. This closely corresponds to the years when fed funds were lower than, or as low as, what we're seeing today. Just because we're coming down from the temporary 'highs' of 2006/2007 you shouldn't expect some great stimulating effect on prices. We're just getting back to the levels we saw from 2002 to 2006. (This is strictly fed funds I’m talking about here).

A bigger issue are credit spreads on anything to do with housing and in particular the conforming/jumbo spread which is running around +100 bps because of the lack of capital in the MBS market. As a result jumbo mortgage rates are higher than they have been for the past 5 years. So I don’t buy that there is any interest rate stimulus effect for Manhattan housing where nearly all mortgages are jumbos. Bernanke can do what he wants – banks still don’t want to lend money for houses if they can’t get it off the balance sheet.

You’re dealing with a credit problem here – not an interest rate problem.
If you see the general consumer credit problem addressed and participants re-enter the MBS market then I think you’ll see the rates really come down. I would imagine, hopefully, that there will be a lot more variation in rates based on your equity (down payment) and your credit, to avoid a repeat of recent history.