Mark This note: Manhattan real estate fall 40%

ita - at least - and it's still would be expensive at 40% off. Million dollars for a one bedroom is ludicrous

charley...you are sooo right. everyone says 40% reduction and the world is falling. Manhattan real estate is crazy high so 40% would bring it in line with 2001 prices.

you were dead on on the last one but be honest, are you pulling this number out of your ass? 20-25% I can stomach but 40% would be a bitter pill.

I thought 20-25% was a lot 6 months ago... but, I don't think this is so far off anymore...

HimWhoKnows, it shouldn't be a shocker considering the run-up this market has had. It will make things more interesting if the Euro were to fall back to parity versus the USD. I suspect that would turn a few of the EU owners to potential sellers. In any case, the EU economies & their precious Euro are in a world of hurt and that's an added kink in the machinery.

Have said 30-40% and I'm beginning to wonder if it will be more.

Geez, I thought I was a bear. No way it falls 40%, it is still NYC. 25-30% seems to be about right considering the numbers that are out there now. Asks won't fall for another month. But as soon as one new development drops they will all follow. Next few weeks will be very interesting for sure. If I was in the market, I will just offer lowball numbers and see who bites.

"No way it falls 40%."

Who knows? It fell almost this much the early 90s (actually fell more in some neighbhorhoods / some apartment types), and I believe this run up was unpredented in history .. prices have doubled in the past 5 years and tripled in the past 10 years .... difficult to say,

Frankly, I dont know what Paulson and Bernanke will do - prick the bubble, or scuttle the currency ..

If there is runaway inflation (say, 15% for the next 5 years) - then it's likely the fall in real estate prices will be smaller, but then - the rest of us holding money market funds are robbed.

No certainty in this market ..

I agree ... it's almost as if they have no choice but to print money and devalue the currency ... but unfair to those who weren't reckless

checkpoints;

-weak housing market and consumption level in eu
-strong dollar gains vs. euro
-tight global credit
-europeans seen negative to NY real estate 09'

-ue levels in NY continue to increase
-commercial real estate dropping quickly price per foot
-vacancies up

-weak demand, increase inventory
-perfect credit===still no credit due to crunch

conclusion:

worse economic situation since or during GD will lead to NY real estate having significant deterioration
in the price level. due to increased and higher UE, people will relocate out of ny leaving substantial inventory for market buyers. sellers, in crunch and deflationary environment will be forced to sell as loans are called in and more recent buyers find decreased wage and or unemployment with no costs per monthly mortgaged.
prices should go down until mid 2010 and then flat lined ~2012.

Why would runaway inflation keep real estate prices steady?

Inflation makes the real cost of your mortgage payments lower. If your mortgage costs $6K now, and inflation is 20% over 2 years, your mortgage is only $4,800 two years later in real terms ...

dont bet on inflation...as the BIS (bank of international settlements) issued in june 2008 report the world will likely see deflation.

for those of you who wont to bet on inflation, short the dollar...that play is 5-10 years back. china and the saudis not in a position to stop buying or supporting dollars.

this is the Credit Crisis, next phase will be currency crisis (but first we get another irrational boom).

"don't bet on inflation"

I agree. There is no push pull inflationary forces with weekly unemployment claims running well above 450K, plunging commodity values and extraordinarily tight credit conditions.

The USD will continue to strengthen for the simple reason that US investors are liquidating foreign holdings across the board and converting those investment funds into the USD. In addition, a US recession (lower demand for imports) combined with plunging crude prices (US imports around 67%) goes a long way at reducing our trade imbalances.

Don't think inflation is likely either - unless the Fed literally decides to print money, which would result in 70s era staglation

""Inflation makes the real cost of your mortgage payments lower. If your mortgage costs $6K now, and inflation is 20% over 2 years, your mortgage is only $4,800 two years later in real terms ...""

True, but only if your income adjusts accordingly.

I think NYC real estate is going to decrease by at least 40%. I agree with Himwhoknows!

"No way it falls 40%, it is still NYC."

I have no idea how much the market will fall but this notion that NYC is somehow immune to significant price drops or that real estate can't tank like it did in the late 80s/early 90s because NYC is so much nicer than it was then is silly. How much has the real estate market in NYC gone up in the past 5 years? 30%? 50%? 100%? Is NYC really that much nicer than it was in 2003? Maybe a bit, but it seems more or less the same to me. There's no reason why we can't see 2003 prices again.

I thought 20-25% tops a couple months back, but now... 40%. I don't think thats much of a stretch at this point. We're talking about reverting to 2003, when stocks have already reverted to before that... and we are a town completely dependent on the market.

"inflation is 20% over 2 years."

If inflation was 20% over 2 years, your mortgage interest rate would hover around 15%.

"How much has the real estate market in NYC gone up in the past 5 years?"

100%.

2003 prices.

Because it is New York City, it is in fact different. It will drop MUCH more than the rest of the country because it rose much more. The dynamics here are different enough that the drop will be WORSE than it was in any other town. Factors like European investment, a weakening Euro, Wall Street's Woes, as well as general economic malaise, we are in for something unlike what anyone has ever witnessed in any market.

I just hope that this decline that's a guarantee will reduce my rent by at least 40-50%

What ever y'all are smoking, I would love some.

Yeah, but it might take five years. And I would guess macro trends will trump that before we get to -40% or -50%.