Home Prices Keep Falling, Prolonging Financial Crisis

My crystal ball shows green Buy LOW sell HIGH

Stevejhx, I really want to believe, but I just haven't seen it yet in NYC in my criteria. Will it take another year, two years? Just wondering what people think. I've been seriously looking since December, made a couple bids below asking, but no bites yet.

If you ask any of the doom-and-gloomers, the answer is always the same - 6 more months

Frankly it depends on the neighborhood you are looking to buy. I don't see park avenue experiencing huge drops because most of those people may not need to sell and can hold on to their property for 2 more years. However, Washington Heights, Inwood, Riverdale, Westchester, Astoria, Williamsburg, Manhattan Valley etc. these neighborhoods may experience significant drop. There is no doubt that supply continues to increase while the demand continues to decrease. Just search in streeteasy for these neighborhoods and see for yourself some properties have been on the market for well over year and have not sold.

Also keep in mind the lending is coming back to a state where you need to put down at least 20% down for a home and have a credit score well over 700. Things have changed so it only makes sense that the supply has increased. I plan on buying in some of the neighborhoods above but at much lower prices then what sellers are willing to bite on. If I can't find a place at a low price in these neighborhoods I will rent in some of them.

There will always be an opportunity to buy in my mind. I don't believe in the theory of being priced out forever, if the right opportunity presents itself then go for it. If not move on its just an apartment.

been waiting with baited breath................
listening to the gurus on this board sparked eternal hope
however,
when we started looking last year there were several choices in UWS and Harlem we could afford
Today
that pool is v small indeed
still waiting for that stroke of lightning
that razes the prices once and for all
so a beautiful domicile arises in our vision

Thanks for posting something about what is going on in Iowa and West Virginia and other parts of the country. Can we get back to NYC now?

What does this article have to do with Greenwich Village, West Village, Soho and Tribeca?

Anyone that says 6 months, 1 year its all a guessing game. Nobody knows when this will end. When Lehman Brothers said back in March it was over after they had cash infusion they were fine the stock shot up to $43/share now look at it. The financial institutions have caused a big mess in the US Real Estate economy and many home owners are paying for it now. There is no telling when the end will come and if NYC is completely immune. I don't think NYC is immune at all especially with lending standards changing.

For what I'm selling and looking to buy, NYC hasn't dropped a dollar yet... Actually made money the last year!!!

Still waiting for the Steve CRASH!!!! BRING IT ON BABY!!!!!

I do beleive you can still get a good deal for apts in crappy buildings, crappy neighborhoods, with crappy layouts and crappy views. I am sure the price of those apts have gone down

"I do beleive you can still get a good deal for apts in crappy buildings, crappy neighborhoods, with crappy layouts and crappy views. I am sure the price of those apts have gone down"

No doubt... And I'm pretty sure you can find a place that was listed for 5 Million that you can steal for 4.3 million.... or a 20 million dollar place for a 17 million dollar bargain.

Back in reality for a 1 bedroom in a nice area the places I'm looking at have stayed the same or increased the past year. At this point I'd welcome a nice 30-40% dip and grab a place listed at 675,000 today for $400,000 tommorrow. Or how about a 450k studio today for 270k Cash!!!!

Now THAT'S what I'm talking about :rubshandstogether:

bring that on!!!!!!!!!

spunky: "What does this article have to do with Greenwich Village, West Village, Soho and Tribeca?"

"their analysis is that to get back in line with their historic relationship to rental costs prices must fall even further, by nearly 40 percent peak-to-trough."

LICC: "Thanks for posting something about what is going on in Iowa and West Virginia and other parts of the country."

stevejhx: Yes, Manhattan is special. I forgot.

jsmith: "If you ask any of the doom-and-gloomers, the answer is always the same - 6 more months"

well, if you ask the bulls, it's always "buy NOW or be priced out FOR EVER.... " (and the EVER part is usually said with arms stretched out wide, and with some sort of fire in the back; followed by a villianesque "mu-hahahahahaha")

The market has turned in Manhattan, asking prices are down significantly (do a search), inventory is up (if being kept off the market in hopes of a short-term turnaround) and the stalemate between buyers and sellers has begun.

That's the first step.

Agree with Steve here...that's how a major downturn tends to begin. The same pattern played out in San Diego, it happened in Phoenix, Miami, Las Vegas, Cape Coral, you name it. There is sort of a calm before the storm, where it looks like everything might be okay. Asking prices inch down (some of the recent declines are hilarious - I've actually seen $10k cuts on $1.5 million properties), inventory languishes and the bid-ask spread widens. All of this happens without much evident closing activity. Eventually things start to crack, and the dam collapses rather quickly.

I've been reading these threads for a few months now, and I don't ever recall any serious comment from anyone that said "Buy now or be priced out forever", or something similar.

LICC, read again. Maybe search on, "Now's a great time to buy."

Like I said great deals are to had for apts in crappy buildings, crappy neighborhoods, with crappy layouts and crappy views.

Re: six months, maybe some people have been saying this. Others (maybe not here) have been consistently saying that Manhattan prices will fall once Wall Street uncertainty turns into reality: lower bonuses in Q1 2009 than the previous couple years:

http://www.urbandigs.com/2008/01/bonuses_its_2009_that_will_hur.html

This will be the catalyst for falling prices. Manhattan is an unusual market (lots of wealth, second homes, foreign buyers), but I doubt that real estate prices will stay flat when Wall Street bonuses decline.

"I've been reading these threads for a few months now, and I don't ever recall any serious comment from anyone that said "Buy now or be priced out forever", or something similar."

Same here - I think the Bears are fighting some fight against imaginary Bulls....

spunky, how are rents doing in your neck of the woods?

oil almost at $120, time to fire up the Hummer.

"This will be the catalyst for falling prices. Manhattan is an unusual market (lots of wealth, second homes, foreign buyers), but I doubt that real estate prices will stay flat when Wall Street bonuses decline."

one of the catalysts for the recent spate of exhorbitant spikes in nyc r.e. values was the record wall street bonuses funneling into the r.e. market. assuming those folks have the financial stamina to stay in those properties, the fact that wall street bonuses are depleted should not per se cause a decline in the real estate market, rather same would simply reenforce the flatness of the market as no new wall street bonus money will go into real estate.

TA, I imagine most high-end Wall Street buyers paid cash, so they will probably stay in their properties. I am more concerned about new buyers being generated -- I think first-time buyers will stay on the sidelines and current owners will wait to upgrade. If the number of buyers falls, demand falls, and the supply is expanding, eventually prices will fall. All things being equal, real estate values will track incomes, up or down.

"the fact that wall street bonuses are depleted should not per se cause a decline in the real estate market, rather same would simply reenforce the flatness of the market as no new wall street bonus money will go into real estate."

We kidding with that? You think if bonuses go down 50% then RE stays flat?

Wait until the quarterly housing reports start showing prices being down year over year once 15 CPW and the Plaza are removed from the sales data. The media will declare the Manhattan market dead, buyer confidence will be tarnished, sellers will dump their apts. on the market in panic, and things will turn ugly.

On that note, don't expect any significant changes in the market for the rest of 2008. Nothing major will hapopen until 2009.

"Wait until the quarterly housing reports start showing prices being down year over year once 15 CPW and the Plaza are removed from the sales data. The media will declare the Manhattan market dead, buyer confidence will be tarnished, sellers will dump their apts. on the market in panic, and things will turn ugly."

NICE!!!.. Then We BUY BUY BUY!!!!! ?

yup... when its "dead" is when its time to buy. But, I think we have still ways to go before the funeral. We still have quite a few bulls (some honest, some shill), and it could take till bonus season to fully weed them out.

Can't wait... As I've said - the Apts I'm looking at haven't lost a dollar yet.... They are up from a year ago.

rents are up in the West Village but they are down in Youngstown Ohio and Utica New York

Actually, spunkster, you're wrong. At least according to TREGNY:

Where Prices Decreased:

Harlem— Non-doorman one-bedrooms (0.8%), non-doorman two-bedrooms (4.4%)

Upper West Side— Non-doorman studios (0.5%)

Upper East Side— Doorman studios (1.4%), non-doorman one-bedrooms (3.7%), doorman one-bedrooms (0.9%), non-doorman two-bedrooms (1.2%)

Midtown West— Non-doorman studios (2%), non-doorman one-bedrooms (0.9%)

Midtown East— Non-doorman studios (6.1%), non-doorman one-bedrooms (3.3%), non-doorman two-bedrooms (4.8%), doorman two-bedrooms (5.3%)

Murray Hill— Doorman two-bedrooms (5%)

Chelsea— Doorman studios (1.6%), non-doorman one-bedrooms (5.6%), doorman one-bedrooms (2%), non-doorman two-bedrooms (1.8%)

Gramercy Park— Doorman studios (2.9%), doorman one-bedrooms (2.1%), non-doorman two-bedrooms (4.9%)

Greenwich Village— Non-doorman studios (1%), doorman studios (1.2%), non-doorman one-bedrooms (0.9%), non-doorman two-bedrooms (0.9%)

East Village— Non-doorman studios (4.6%), non-doorman one-bedrooms (1.5%), non-doorman two-bedrooms (0.3%), doorman two-bedrooms (3%)

SoHo— Non-doorman studios (4.5%), doorman studios (2%), non-doorman one-bedrooms (0.8%), non-doorman two-bedrooms (1.2%)

Lower East Side— Non-doorman studios (2.5%), doorman one-bedrooms (7.2%)

TriBeCa— Non-doorman studios (2.2%), non-doorman one-bedrooms (3.3%), non-doorman two-bedrooms (3.6%)

Financial District— Non-doorman two-bedrooms (3.5%)

Battery Park City— Doorman studios (1.4%), doorman one-bedrooms (1.2%)

Stevejhx, interesting data. Certainly not dramatic decreases, but very informative. Thanks

I believe you have to let the real estate market hang before the dramatic drop. If you wait until late 2009 -- after the properties have sat and sat -- the prices will come down by significant drops. People who have lost money in portfolios, and are waiting for the recovery or their home ask may very well not get either wish. If you believe prices will rise -- it is good to own. I have made big bucks on manhattan real estate in the past (1997-2007)-- I just think there are better places for those assets now and renting is MUCH cheaper than owning -- even before and drop in principal. So, NYRENewbie -- try to be patient. It could save you a mortgage!

Interesting but wrong on every Gramercy doorman place I looked at.

That's why all this "data" means nothing and you have to look at each individual place in it's own context... COmparing to the same building would be better

No one should worry, the federal gov't will pay for your home, if you can't pay your mortgage. Major correction on the horizon and there is nothing anyone can do about it.

The most recent telling sign came this week from American Express earnings report. Besides missing estimates and seeing a huge decrease, the most telling sign was the huge drop in what they consider high end customers. These are the same type of people, that would be able to afford NYC RE. It showed a significant decrease, for a portion of the "consumer", that was thought to be well positioned for the downturn.

The 1-2.5 million range will see the biggest hits. Mostly the 2 Bedroom units. The buyer in this range are going to be most effected. That's not to say that the others will survive, they also will be hit just as hard. I just think that price range will see the fastest decreases. Most married couples (without children) will be forced to buy 1 Beds because they will not qualify for higher priced 2 beds. Or they may just not feel comfortable in this market to over extent themselves. Singles and Married will gravitate to studios and 1 beds and those with children in the city will seek 3 beds. Of course they can rent and this will lead to less demand. Either way demand will decrease to the lowest levels since the depression and supply is poised to sky rocket.

reaper: "Interesting but wrong on every Gramercy doorman place I looked at."

Did you compile statistics that you'd care to share?

"COmparing to the same building would be better"

OH NO! Ask LICComment - comparing the same building is STUPID.

Steve - If you are looking for a 1 bedroom apt in Gramercy ON THE PARK or on certain blocks and you come to the party with all these stats filled with apts on 3rd ave and on 23rd st and east of 3rd ave then you come with the wrong playbook.

When you are shopping for an apt you have to know exactly what the stats mean...

I'm a huge sports fan, especially Football and we play around and talk about what the Stats REALLY mean every day...STATS LIE. Then you have people who come to the table JUST with the stats....

Stats are generalizations and often lie..... For real stats break down the specific building you are looking for and a few neighboring that you KNOW are real comps....

My apt just sold for almost 10% over last years comps and an offer I had - that means more to me than something you cherry picked to prove some point you are hung up on.

Again., I AM NOT A BULL.... But, I think your claims of a CRASH is way too generalized. And if it does happen, it brings OPPORTUNITY!!!!!!

Again, I'm waiting for that 675k apt in Gramercy to fall to 450k.... BRING THAT ON!!! BRING THAT THE HELL ON MAN!!!!!!

I agree stevejhx is the king of cherry picking certain numbers to prove his argument. He's very good at it. Whether one sells there apt at 10% over last years prices or rents their apt 5% over lasts years rent doesn't make i difference with stevejhx.

spunkster, if I'm th e"king of cherry picking certain numbers," you're the king of providing no numbers.

The numbers I use are the published numbers. The theories and methodologies I cite are the accepted ones.

You, on the other hand, contribute nothing.

reaper, "STATS LIE." No question they can be misleading, which is why you have to look at lots of them. I know nothing about football, but in baseball, RBI is RBI. Now, just because different stadiums are different in size - Yankee Stadium has a very long left field and a short right field, favoring left-handers - doesn't mean that the RBI figures for players who play there are wrong. They just affected, and there's nothing we can do about it.

I'm glad everyone else sees how steve cherry-picks all his data in misleading ways.

steve, you rbi analogy is good. If a player's rbi declined one year to the next, you would say he is not as good of a player and his skills are in a crashing decline. However, he may have been traded to a team with a worse line-up (say Kansas City rather than New York), or the players hitting in front of him were injured and are on base less than they had been the year prior, or the player himself may have had an injury and missed games. You, however, like to pick a statistic that suits your wish and desire for a real estate crash, ignore any other data, and apply your stat in any way possible, appropriate or not.

Yeah, there's something you can do about it... You favor Lefty Pitchers and Lefty Hitters.

reaper, that's why there's so many southpaw pitchers - easier to throw to a rightie.

LICC, if by "everyone else" you mean spunky, juiceman, petrfitz, houser et al., then you're on the losing side of the argument. Go back and read spunky's drivel from January.

This is particularly good: "steve cherry-picks all his data in misleading ways."

I reprinted ALL the data about which prices went up, which went down, and I'm "cherry picking."

Very good. Very good.

When steve would make his conclusion about the baseball player, he would then cite a MLB statistics report and proclaim his conclusion correct because of the source he cited.

"When steve would make his conclusion about the baseball player, he would then cite a MLB statistics report and proclaim his conclusion correct because of the source he cited."

What?

"I've been reading these threads for a few months now, and I don't ever recall any serious comment from anyone that said "Buy now or be priced out forever", or something similar.
"

Very true - all I see is on one side are the so-called "bulls" saying that prices are going to be soft/flat for the next couple of years, and if you can afford it, RE in general is safe long term - vs the bears who claim that "THE WORLD IS COMING TO AN END"

Who are being the extremists?

> "Buy now or be priced out forever",

I do.. there was an entire thread posted on it.
And, if you include curbed, you get all the sneakypete brilliance as well...

> vs the bears who claim that "THE WORLD IS COMING TO AN END"

Now who was complaining about exaggeration again?

> Very true - all I see is on one side are the so-called "bulls" saying that prices
> are going to be soft/flat for the next couple of years, and if you can afford it,
> RE in general is safe long term

Yes, I know.. its called BACKPEDALLING.