Is it time to panic yet?

Same message as above, this time with carriage returns...

It’s Sunday night, March 8. Feels like Sept 14, 2008, the Sunday night that it became apparent that Lehman would collapse. Markets are going crazy like I’ve not seen since ‘08:

- Crude oil has fallen 20% tonight

-The 10 year yield touched 0.5% tonight

- Dow futures are down 5% (hitting the circuit breaker a few minutes ago) - more than the Dow fell on Sept 15, 2008.

- Columbia tonight cancelled all classes through Spring Break, and possibly for the rest of the academic year

- The whole of Northern Italy, China, and South Korea are on lockdown

- Most major companies have severely restricted or banned all travel

- SXSW is likely to go bankrupt, and the global airlines will collapse if not bailed-out

Is anyone making offers to buy luxury real estate in this market? The plunge in interest rates lowers borrowing costs dramatically, but stock market’s plunge is wiping out trillions in wealth that might otherwise go into real estate. And with asset prices fluctuating so wildly, will banks get skittish on lending despite the massive surge in refi volume, precipitating a credit crisis despite low rates?

In a healthy real estate market, perhaps luxury home prices would do fine despite turmoil in other markets. But with the Manhattan luxury market already suffering for the last 5 years and hugely overbuilt with developers on the edge of default, are we facing a situation that’s worse than even the most bearish among us have failed to predict? Or is this a big panic over nothing that will blow over, with low interest rates bringing buyers off the sidelines despite their asset portfolios taking a hit?

I will make one prediction: this entire situation is terrible for coops that don't allow a lot of financing and have huge post-close liquidity requirements. [

Feels like a credit event is just around corner

I think any bank which offers a cash-out refi now is being extremely foolish. What will be interesting to see if banks try to stop closings on loans they have already committed to.

This has all been triggered by a virus that kills maybe 2.5% of people it infects, so roughly 97% of those infected survive. And if the data is accurate the vast majority of these people that die are over 70 and or have serious underlying health issues. That said the panic is real and the subsequent fall out of that panic is real.

It's just too early to tell what the long-term damage will or perhaps will not be. People don't like to compare this to the flu, but the fact is that particular strain of a virus kills over a million people a year. And there will eventually be a vaccine for this current coronavirus. The sanitized and homogenized Western world is getting a taste of what it's like to not be so sturdy, bullet proof .

Based on what's been happening so far, I think we can agree this is not the end of humanity. Many people are going to get sick and die but the vast majority will survive this with little to no damage.

So I'm not panicking, this is simply part of biology and this part does really suck. I remember my grandfather telling me what it was like during the Spanish Flu, he survived being infected with it, the millions died, life went on. We're just not used to being faced with diseases that we can't control, especially here in the West.

Let's revisit this in 3 months...

Keith

I missed the the stock market rally post 2008-2009 crash. I wont miss this one. Timing is the tough part. Like catching falling knives but if you have some free cash and some staying power,this is an opportunity.
As per current stats 80% of those who get this will not have any severe reactions. It is more like a very bad flu yet with the 24/7 news cycle its morphed into something akin to the black death. Viable treatment in 2-4 months, vaccine hopefully in less then a year.

Science, not panic

Start with what is coronavirus?

https://www.cnn.com/audio/podcasts/corona-virus

Renewing my call for 35% to 50% slide off peak RE prices in New York.

@keith- it doesn't matter that the virus only killed 2.5% of those infected so far. the problem is that there is currently no cure or vaccine and it will take months/years for one to be developed then scaled for distribution. the world has only learned about this virus for a short period of time so it's extremely dangerous and naive for people like you to make an assumption that it's "not that bad"

2.5% ? hardly. You dont need a phd in statistics to realize that is based on reported cases. Even with the current seasonal flu, the statistics are questionable. More then likely reported cases are only the tip of the iceberg, with corresponding death rates logically being much lower. How in the world would one get a 2.5% death rate when its obvious not every case is reported. If the reports are true that 80-90% experience mild symptoms, its obvious a large amount of cases are not even reported.

I agree 100% with knewbie and his assessment of the situation. I think Keith is the proverbial ostrich with its head in the sand.

God bless us all and pray that the situation doesn't get worse. I'm Italian, from Northern Italy, and I can tell you that this is no joke or a mere "flu." Many of my fellow Italians in Milan and Venice are infected and terrified. Keith, have you seen Death in Venice (Morte a Venezia)? Give it a watch and then make your arrogant assessments........

It isn't the death rate, it is the amount of care that the sick need to get better and the knock-on effects of over-taxed hospitals. Our vulnerable are defenseless and the only way to keep them safe is by enacting social controls. Yes, you can look at the cold hard numbers of the death rate, but they're not much comfort given the surge of sickness that we're about to experience here in NYC.

And I'm with Urban Digs: waiting for the credit event, which has been brewing since the Fed had to fix the repo market a few months back.

Panic isn't going to help at this point, but let's not be naive and gloss over the hurt that is coming. We're living through history and looking back at the Spanish Flu (!) for guidance is not much comfort!

I'm not trying to be arrogant I'm simply trying to follow the facts and the science. According to the scientists, 80% of people who get this will have mild symptoms. And this is not a new coronavirus it's just the first time it's lept from the animal world to humans. I'm not sure how having this attitude is like having my head in the sand? Listen to Dr. Gupta on his CNN podcast, I'm not making this stuff up and I've never insinuated this was not a very serious issue we're all facing.

And I'm not sure why battery Park City confused put, "it's not so bad" when referring to my comments, I never said that.

Unexpected oil price war is triggering todays events - without that, I dont think we would be seeing what we are seeing now, halted trading with 7% down expected open. This is when credit events occur and feeds on itself. Its becoming a liquidity problem. I still expect massive stimulus, fiscal and monetary, at some point in next few weeks

@davenezia are you really going to compare this to a cholera outbreak in Venice written about a book from 1912? I'm just trying to be sensible here, I think it's folks like you stirring the pot and creating panic that are our greatest threat.

What I'm hearing/reading is they're starting to think that there are two strains, one weak and one strong. The big question being will the weak strain help immunity against the strong? I also think that this will really rear it's ugly head in the USA next fall/winter. I'm not aware of any cases in S America but that could change when their winter starts. I switched over to bonds after the inversion last April and stayed there. Also have been cashing out the last few years as much as I could without upsetting my retirement tax structure. Things have been too good to be true in the market for quite a while.

It is more like a long overdue correction after the non-stop bubble initiated by Obama and fueled by Trump

Olshan Report today was pretty good, as were Brooklyn sales. Will buyers continue to shrug off any concerns?

Anton: overdue yes but the bubble started with Greenspan, imo.

Markets were way too complacent before and now are realizing the reality of what we are potentially dealing with.

The issue with COVID-19 isn't just the mortality rate. It's what may be required to bring the disease under control and other potential black swan events that could be driven by it. For the former, people don't seem to have any idea that China basically shut down 50-70% of their economy for multiple months to bring this disease under control. That's a lot of potential economic pain for other countries if they follow that playbook. For the latter, we currently have 3 candidates over 70 running for President. Now imagine some combination of them getting sick in the middle of the campaign. Now think about the age of other political, business, and religious leaders and how vulnerable they might be to COVID-19. That's how you can get major disruption even with a 1% mortality rate.

My opinion is that the economic damage from the quarantines is worse than damage from the virus itself. I think I agree with Keith here but I don't want to put words into his mouth.

This is not ebola, and it is not the spanish flu....use common sense, wash hands and try to keep the economy from bottoming out which will harm the entire globe.

I have been saying for years that NYC real estate is over heated and COVID is merely another reason prices will continue to fall.

Stocks were also over heated, trading at all-time highs on a PE multiple basis. The entire 2019 rally was based on multiple expansion, not earnings growth, meaning that the stock market was priced to perfection despite slowing growth globally. And with COVID reducing supply AND demand, on top of an oil shock, it's no surprise that asset prices are falling.

Will we see a recession? Probably? But maybe not a super severe one. Domestically, the US energy/fracking industry is screwed, airlines & hotels are screwed, overall demand for everything will be soft but the underlying economy is relatively solid and the financial markets are functioning and strong. And oil price cuts & low rates will serve as stimulus.

Anyway, I continue to forecast bad times for NYC real estate. I have been waiting for over a decade for prices to correct.

@Tomnevers If you've been waiting for a decade for a correction, do you think that prices should be at the lows we saw right after the crash? Surely in 10 years there should be some price appreciation in the market? What do you think is going to happen to the lower end of the market (i.e. apartments below $1M)? I am in contract and about to have my close and definitely very nervous. I'm not looking to sell for hopefully a long time, but if a 2008 type decline is happening I could be underwater for years and, based on your comment, for a much longer time!

To Burkhardt, who pontificates on every issue as though he knows everything about everything (and obviously doesn't), I am not saying this is like the cholera outbreak mentioned in the book, but I know that many in Venice (my relatives) are ill and/or terrified. And I'm not "stirring the pot" at all, I personally am being very cautious and am hoping that everyone else will be as well. I can't and don't intend to influence anyone. With your bitchy comments and attitude, you're the one who stirs the pot with ignorance and arrogance. Hello kettle, you'er a pot!!!!!

Remember, economics is about what happens at the margins. Anyone saying 2% death rate is not a big deal is missing the point - new construction has been built in anticipation of a marginal increase in demand, so if that increase flips to a decrease, it's a big deal.

PS: I meant to say, Hello Pot, this is Kettle -- You're Black!!!!!! Pardon my stupidity, my English is not the best.

Did any of panic mongers notice the average age of people who died?
https://www.google.com/amp/s/www.bbc.com/news/amp/world-europe-51777049

“The national health institute said the average age of those who have died was 81, with the majority suffering from underlying health problems.”

And Keith, How dare you correct the panic mongers?

Noah,
I absolutely agree with "Unexpected oil price war is triggering todays events - without that, I dont think we would be seeing what we are seeing now," but I also think that shows there are more problems than just overreaction to Coronavirus. Just like when people claim WWI started because of the assassination of Archduke Ferdinand.

Oh ofc there were issues underlying. Still are. But remember, we are in a juiced world for over a decade where it was avoid a recession at all costs, still is. That means mal investments don't get punished. So now that the tide kinda went out, we see who is swimming naked. The issue here is a record high stock market completely complacent plus a virus that is causing public panic plus an oil war all at the same time. The math was ripe for a big move down. Factor in an election year and you will see massive stimulus, it's started last night and will continue. So question is, does that abate the liquidity issue, for how long, or does it delay the further reckoning to another day

jas: you can blame the whole neo-cons era, but the immediate damage started from QE1

Fiscal stimulus rally part 1, fail.

Ruh roh

Mortality rate for seasonal flu is .1 percent far lower than 2.5% for Coronavirus. And we do not know much about this virus.
Factoring in the incompetence of the Trump administration, this could have devastating effects.

Italy has closed off the entire country.

"This has all been triggered by a virus that kills maybe 2.5% of people it infects, so roughly 97% of those infected survive. "

Not even close to that. Missing from so many world figures are the ones who are positive but too mild to notice.
That first cruise ship tells the story. Forced testing of every soul in an isolated environment.

700+ positives , 6 deaths
All those deaths were over the age of 70.
When does that first young one die? At 1 in a thousand? 10,000?
Anyway age aside, its still less than 1%

How low is 1%?
So low its less than any year's inflation rate.
So low that when given payment terms 1%10 net 30, nobody ever pays in 10 days.
So low a broker would not sell or lease a home for this amount.

Though it is higher than what DeBlasio polled for president.
Come to think of it, Id rather be over 70, have emphysema, and have to spend a year in Wuhan than have Bill DeBlasio as president.

A contra point in the "is it time to panic yet"? category... I have a Chinese mortgage broker (not our old friend Sunny) telling me that members of his network are now more interested in hard assets. Will those foreign buyers actually materialize? It's too early to tell, of course, but I'm going to raise it as a possibility. I sell mostly co-ops and I assume foreign money wants condos, but there are certainly some nice luxury assets to choose from.

I'm with tomnevers that we may get a recession, we're ripe for one anyway, and also with digs that there's going to be some election year stimulus. I'd say a choppy but not impossible market .. which is usual for election years.

Ali,
We had three contracts signed over the last few days. All the buyers that I spoke to are of course rattled like the rest of us. However, they all felt very good about buying at this particular time. Some of the concerns other clients have had, that are currently in contract; post-close liquidity after the big jolt to their portfolios. And I have two clients in the energy sector, you can imagine what they're dealing with right now...

congrats on all those deals!

The enonomy is like that 70 year old with emphysema who's been stimulated and manipulated so much there's a limit to how much economic Viagra is going to do at this point which won't be limited out by his underlying conditions.
https://www.urbandigs.com/forum/index.php?threads/how-will-coronavirus-affect-the-market.17/

I'm a buyer currently looking for a 2bd 2ba luxury condo. Do you guys think new developments will be more negotiable if we keep waiting, especially if completion is expected in the next couple of months? On one hand, I feel like interest rates are low enough many buyers will consider this a great time . On the other hand, they might be like me with money stuck in stocks that they don't want to liquidate due to the whole virus issue.

Here's an interesting article from Doctor Joon Yun, MD who is also a hedge fund manager, founder Palo Alto investors;

https://www.worth.com/how-mass-hysteria-is-making-coronavirus-worse-than-it-actually-is/?amp

Article from a doctor saying not to worry, all will be fine later this year. He also happens to be a hedge fund guy that invests in healthcare stocks. No disclaimer about his hedge fund's current stock holdings. This guy definitely does not have an agenda or conflict of interest. What would he have to gain, or lose?

-.-

I wonder what Ken Jeong's opinion is?

Haha.

This article points out what the problem is with the general investment universe is right now (not just Real Estate):
https://therealdeal.com/2020/03/10/pension-fund-money-is-getting-tangled-in-some-controversial-housing-deals/

There is tons of capital chasing returns right now. But at the same time as interest rates are being pushed ever lower to stimulate the economy, people still want high returns on their investments. What no one wants to talk about is the only way that occurs is increased risk. But everyone selling underplays the risk - even some very savvy investors are holding their noses and see senselessly ignoring risk. Look at the WeWork train wreck. Risk isn't just a 4 letter word - there are actual consequences. Everyone overuses the term "Black Swan" because it's supposed to be an event when almost never happens - but we see these supposed Black Swan events happen every time there is a crash and then everyone who sold these risky instruments act surprised.... And then expect to be bailed out (although they sure we're fine cashing all those checks on the way up).

Ray Dalio gives a good idea of where we are heading:
https://youtu.be/PHe0bXAIuk0

Here is an example of a deal that uses complexity to hide it's insanity:
https://wolfstreet.com/2019/12/11/brick-mortar-meltdown-manhattan-style-lenders-foreclose-on-times-square-tower-with-six-retail-floors-that-are-90-vacant/

No one should have ever pulled the trigger on any of this, but people held their noses and looked the other way. And this is far from a totally unique situation - as things start to unravel these deals will pop up like Whack-a-moles.

The real Black Swan should be from those junk bonds and debts related to the cracking industry or bubbles like WeWork, and it is yet to happen

Nothing scares me more than walking into Bed Bath on 6th ave in flatiron on a saturday at noon and being able to bowl 10 frames in any aisle uninterrupted .
Is everyone all of a sudden shomer shabbos or is it just further evidence of the Amazon apocalypse on brick and mortar retail?

So we're in contract and due to close on April 7th for an 1.5 apartment in Greenpoint. Rates are getting lower whch is good, but seriously wondering if we're ending up buying at the very wrong time, and if so what would our options be :X

Container Store across the street was a zoo on Sunday. Nobody wants to be quarantined in an unorganized apartment.

https://theweek.com/speedreads/901470/coronavirus-10-times-more-lethal-than-seasonal-flu-trumps-task-force-immunologist-says

We are officially in a bear equity market as of today.

We are officially in a credit event situation too. Starting to get very real now. How long until everyone and everything just shuts down for a month or two. Seems like it's starting.. Dr Fauci seems to be stressing containinment measures.. so how far does this go after last night's EU travel ban, NBA suspending, etc

Are people starting to throw away earnest money to get out of even recently-signed contracts? Olshan Report next week will be interesting.

Suspect only a limited amount of people will do that. If you are planning to hold long term (that’s the only way to buy in Manhattan now) I think you can see through any temporary drops in valuation. Provided you didn’t get into contact and wildly overbid to start

+1 on Mina's comment (and dying to know whether Mina has made a purchase decision yet).

The Dow is down 25% on the year. Anybody who thinks this won't have an impact on NYC real estate is living in a fantasy world.

This is an enormous hit to personal wealth. This is an enormous hit to personal liquidity.

Who knows how much the equity market crash and the measures implemented to contain the virus will affect local employment. But it's only going in one direction.

Not complicated. RE brokers on these threads will continue to blow smoke. Any sentient creature, however, sees the reality of the situation.

There is such a thing as a buyer who buys below their means such that their ability to remain in their chosen home during times of crisis is not threatened. While certainly not the norm in today’s world, I think those buyers will follow through on existing contracts.

There is a question of ability but also willingness. There are high quality stocks today that can be bought for half their price a month ago. With the headwinds to NYC real estate, it could be totally rational to forfeit a deposit and preserve cash to invest in better assets that could appreciate more rapidly. I'm beginning to think that 30 is right. Another -30% on luxury NY real estate seems totally reasonable.

First article from the WSJ's new housing reporter...

https://www.wsj.com/articles/coronavirus-seen-slowing-crucial-spring-season-for-housing-market-coronavirus-looms-over-crucial-spring-season-for-housing-market-coronavirus-threatens-crucial-spring-season-for-housing-market-11583963949

With almost no seller dropping their asking by 10%, you can't see people wall away and give up the deposit

You're right George. And as someone who lives well under their means, a personal preference, I'll certainly be looking to buy some great companies on sale.

However, in my experience, most New York City home buyers are only putting a modest portion of their total liquid net worth down on an apartment.

There are many people who like to own the home they live in. I know you can't relate to this, but it gives them peace of mind, a particular kind of satisfaction. Some of the same people have expressed to me, they're a bit fed up with the stock market. I guess some see a 25-30% decline in assets in 10 or 15 days as not such a comfortable place to have a lot of your networth.

I appreciate the stock market and it's helped me create a nice nest egg for my family and my upcoming retirement. I just try to keep things balanced and keep everything in perspective. Yeah I'm down over 22% or so, however I was up a little over 30% last year. And I've been invested for about the last 9 years.

So I'm not arguing that this rout won't affect real estate prices, or buyer psychology, it is and it will. But it's also affecting the psychology of equity investors.
Personally I don't check my zestimate everyday, but I do tend to peek at my brokerage account more often than I like to admit. A Habit I wish I could break!
These are certainly scary times, however it's not the end of the world. And in my opinion the 2008 financial crisis was much scarier (financially speaking) that's just my perception I'm not sure if it's fact. However we did get through it and we'll get through this.

The 2009 swine flu pandemic was no joke either, the CDC estimates it killed approximately 575000 people worldwide and I believe close to 13,000 people in the US. that was a rather strange concoction of several viruses teaming up! Let's hope we see some good progress over the next several months so we can all get back to normal!

Keith Burkhardt
TBG

Keith says

"Some of the same people have expressed to me, they're a bit fed up with the stock market. I guess some see a 25-30% decline in assets in 10 or 15 days as not such a comfortable place to have a lot of your networth"

Are you saying that these people are so fed up with the stock market that they're going to sell now (after a 25% decline) in order to invest in NYC real estate at pre-coronavirus prices?

If so, I'd love to play poker with them.

In other words, Keith, I can't imagine many people saying "Right, I'm out of this stock market now! I've had enough! Time to invest in a coop!"

Sorry. Calling BS

And you're right, Keith. Swine flu was bad.

Remember how swine flu stopped the global economy in its tracks? Remember how people stopped traveling because of swine flu? Remember how the market plunged 25% because of swine flu? Remember how NYC shut down all Broadway shows, and the NHL/NBA/NCAA and MLB cancelled their seasons because of swine flu? Remember how swine flu was transmittable even without symptoms? Remember how travel in and out of countries was fully curtailed because of swine flu? Remember how people engaged in 'social distancing" because of swine flu? Remember how universities and cities' entire public school systems were shut indefinitely because of swine flu?

Yeah, neither do I.

The financial crisis was very bad. But we had very capable devoted people who were able to steer us out of it.

We have a serious crisis but this administration does not know what they are doing as far as dealing with this crisis nor do they want to know what they are doing. It seems the president is looking for ways to profit from it and he has spoken about emergency executive powers today. He will use this crisis to fasten his grip on his power and don’t rule out election cancelation.

Some countries use 10,000 tests a day for the Coronavirus, our country uses 10,000 in a month thus making it impossible to contain the spread. Now with no capable people in charge I fear a worse situation than the financial crisis.
Did anyone see Trump on TV last night? A lot of traders did, and look what happened today.

It's unfortunate that some of these anonymous posters try to put words in your mouth or twist your words. I've not had that imaginary conversation that you made up 'your name here'.

I own and invest in both real estate and equities. and if you don't think there are people out there that don't feel the stock market is not exactly the most reliable and safest place to park assets these days? I think you're kidding yourself. There are many people who have not psychologically recovered from the rout in 2008, and still not gotten back in the market.

And just to be clear I don't consider owning a primary home necessarily part of my investment portfolio more do I necessarily consider it an investment as I would equities. It's a different animal, it's a place I come home to every night a place that I share with my family and enjoy, in up and down markets. And essentially it's a necessity, a home that is. Whether you want to rent or own that's up to you.

Keith Burkhardt

That's my point, why didn't swine flu stop the global economy in its tracks? Why was there no fall out at all when over half a million people died? The data doesn't suggest this new Coronavirus is exponentially worse. However the reaction and panic has been. I'm naturally curious why?

What we know: 80% of people that get it will only have minor symptoms.

The majority of deaths are in people over 80 and with serious underlying health issues.

We have no idea how many people have or had it. So how can we accurately calculate the mortality rate?

Once the panic calms down, people will re-evaluate their risk tolerance for equities. Some of the people who do not own a home but can afford to buy one may decide that they want to buy a home as they will enjoy it rather than putting all their money in equities. And interest rates heavily favor buying vs renting for most resales. Of course, there are many upset people and perhaps their even more upset wives/spouses who will think that they should have taken some money off the table from equities a few weeks back and set aside for downpayment.

Sounds like Reno/yournamehere is hurting but I could be wrong.
“This is an enormous hit to personal wealth. This is an enormous hit to personal liquidity.“

Sorry it is not reno.

People are panicking because they have no faith in a lying crook.

That is just politics and I want to stay out of it.

@300_mercer- I was thinking the same thing about those who did not take money out of equities before that market tanked; that group will always find a reason to keep their money in the stock market, much like the gambling addict who can’t leave the poker table - “I can’t leave now, I’m on a streak!!” Then they lose a big pot “ I can’t leave now, I’m down!!”

Some people prefer chasing alpha to the exclusion of all big purchases, and no stage of the housing market will likely ever be right for them. Different strokes.

@Keith and @streetsmart - A friend has been predicting that this administration was hoping for an event like this for the reasons you state; I loathe the guy, but I subscribe to pure incompetence over any plan. I do believe in our country’s scientists and believe this too shall pass.

Some of the equity heavy people have good jobs and cash flows. While they may not take out the existing money from equities, additional savings may not go into equities - essentially they will change the future asset allocation without reducing existing investments.

The ability to stay in the market is a proven winner. If you timed out in 2008, when do you get back in ? .Most investors dont ever get back in. You may feel good in the midst of 08/09, but you sure missed the huge gains in the years that followed.

MCR,
Hanlon's Razor.

I think there are plenty of people who have been waiting for the Real Estate market to crash and then will jump back in with both feet. However I think they are mostly investors who have been in the market before and sold out when they got offers on their properties they thought were ridiculously high. As for "consumers," they usually fall under the rubric of "Real Estate is the only thing no one wants to buy when it's on sale" (Credit Hayden Coleman, former principal of Coleman Neary Realty). He said "If Bloomingdale's marks a rack of sweaters 50% off people will slash eachother's throats trying to get one. But if Real Estate falls 50% no one will touch it."
However, after prices start to rise back up just a little, anyone not TOTALLY going solely on emotion looks at the numbers and realizes how bad an idea it is not to get in on the action before everyone else jumps on the bandwagon.
Example: 200 West 20th St.
It was a late conversion in 1989, 14 studios / one 1 BR per floor. Initial prices approximately $90,000 to $120,000.
In the first 6 months of 1992 I personally sold 6 studios there ranging from $27,000 to $42,000 - 5 as a broker and one as a principal flipping a contract (side brag: how many brokers do you know who have sold 6 units in 6 months in one building who weren't doing Sponsor sales?). Past few years most of the sales in the $450,000 to $550,000 range.

One of the biggest problems for this country is that "someone" decided it was a waste of money to have a bunch of doctors/scientists on the government payroll "just in case" something like this might happen and fired them. Contrast to how South Korea is handling the crisis:
https://www.bbc.co.uk/news/amp/world-asia-51836898

@30yrs - Yes, Hanlon’s razor. I also think your point regarding consumers vs professional investors is well-taken. I think it is painful for professionals in either real estate or traded securities watch the masses (like me) leave money on the table (or light it on fire). Because I have no idea how to time any market, I just stay the course and ignore the storms around me, probably living in a boat that is sturdier/more minimalist than it needs to be. No changes to any of my investment or spending decisions despite the turmoil, but definitely taking the pandemic seriously in terms of common sense hand washing and eliminating non-essential community interaction.

And re the dummies who eliminated all the funding for pandemic response (not just DJT; plenty in Congress had a role in that), mercifully many scientists in academia and in industry are rising to the challenge. I am hearing some inspirational stories out of my small network, so I can only imagine what is going on across the globe in that community.

Urban Digs had a great interview w the Warburg CEO a while back who said it best -- "Most cities have a hometown industry, in New York the hometown industry is the finance industry." Doesn't mean that NYC doesn't have lots of other industries (tech, advertising, law, etc. etc.), but the equities and credit markets really still provide the life blood of the bulk of real estate buyers in NYC. Unless things bounce quickly, it's Pollyannaish to assume this isn't going to weigh on the condo/co-op market here.

My guess of what happens -- transaction volumes are going to slow to a crawl, as buyer bids go way lower (possibly overshooting "fair value") and sellers are slow to adjust. The sellers that do meet bids (estate sales, divorces, overleveraged, etc.) record low prices and then sellers who don't have to sell take their listings off the market.

Hard to say how much prices fall, but the one thing I know for sure is that a lot of NYC real estate brokers are going to find new jobs.

https://medium.com/@noahrosenblatt/talking-manhattan-fred-clelia-peters-of-warburg-realty-5fa077cc5aac

Combine the above with what 30yrs has hypothesized about January bump (and his prescient thought about coronavirus) and we may well be done seeing new contracts for 2020.

yournamehere, most of those investors bought below DOW 20000, not last week, so most of them don't see a loss yet

Sure people might not have a paper loss, but if you are down 20-25% from peak (just a few weeks ago), then your purchasing power is down.
You are probably reconsidering purchasing this year or lowering your budget.

steve, that's why most of the asking prices are still at peak -:)

@Anton - btw, I have been following your posts for awhile now and don't think you are crazy. Current events falling in line with some of your comments.

Final random thought of the morning: I am wondering whether our economy will end up like Michael Jackson. Apparently in his final days he was talking uppers to mitigate the effects of his downers and vice versa, until his body just gave up. What does the world look like then? While my boat is sturdy, it is not submarine sturdy. Nothing I can do expect batten down the hatches and hang on, but I it is all quite unsettling.

multicityresident, F**K off please!

I do not think it is time to panic. Quite the opposite. I think it is time to be grateful that we live in such a wonderful country and such a wonderful city.

I do believe that a lot of NYC real estate prices will fall but I think they will fall on the basis of too much inventory that doesn't match the type of demand that is out there. That could change if there is a major tax or policy change, such as reinstating the full SALT deduction.

I do not believe we can extrapolate an impact on Real Estate prices at this time based upon this stock market downturn.

@Anton - Oh my. Maybe do take the whole pill.

People are forgetting the power of low rates and fed actions when it comes to resales in move-in condition in $1000-1800 per sq ft range. New level of rates puts buy vs rent heavily in favor of buying for 7-10 year min hold. We had George being quoted 1.75 percent for 10/1 from Citi. Rate clearly will do nothing to address ultra-luxury oversupply.

Here's a koan for you: if the stock market is down 20%, but the cost of money is also down 20%, what happens to real estate prices?

@yournamehere I'm probably the mythical buyer you mentioned. Moderately equity heavy, but now looking to diversify. Sold all my REITS earlier this week, but am looking to jump on any specific property that looks undervalued.

As @mina said, I'm in it for the long run. Still need a place to live (unless I die from the virus :p ) And @300_mercer noted, all the math is in favor of buying now given rents. I'm looking at 1 bedrooms and the rent of those is often equal to monthly payments (mortgage + maintenance) on a purchase, even assuming $0 in tax deductions.

@300_mercer - Anton's moodiness aside, I think that has been his point for awhile, but I will leave him to elaborate or clarify in the event I have misunderstood the totality of his posts.

Ali, There are people with a lot of sideline cash and fast accumulating cash flows. Downpayment is probably less than 20-40 percent of their liquid assets - amount people keep in cash/treasuries (talking resales in $1000-1800 per sq ft range). Cost of money is down more than 20 percent (10/1 from 2.75 just a couple of months back to 1.75-1.90) and the rents are up yoy. Fed pumping money big time into the economy. Imagine what happens in a few weeks IF Coronavirus is well under control and rates are still ridiculously low due to Fed pumping money and some fiscal help as well. Will be have Q2 close to zero gdp growth - pretty close. Prolonged recession, I do not think so.

Will WE have Q2 close to zero gdp growth - pretty close. Prolonged recession, I do not think so.

Knewbie,
Completely agree with below. I am sure some people, who didn’t have to sell, panicked and sold yesterday.
“The ability to stay in the market is a proven winner. If you timed out in 2008, when do you get back in ? .Most investors dont ever get back in. You may feel good in the midst of 08/09, but you sure missed the huge gains in the years that followed.”

Last comment on the rates: Fed is going to cut rates even more and wouldn’t increase for a long time as where is the inflation?? So it is conceivable that even 30y mortgage may be well below 3 percent for a long time.

The crazy low rates lasted about 2 days and then shot back up. You can check for yourself here:

https://online.citi.com/US/nccmi/purchase/ratequote/flow.action

Best rate now is 2.5%.

Chase also has a useful quote feature with basically the same rate:

https://www.chase.com/personal/mortgage/calculators-resources/mortgage-calculator

The problem is that the bond market dislocated such that even when equities fell, bond prices fell too and yields rose.

So I don't expect low rates to help prices much.