Euro w/ a 128 handle = game over.

I may be able to go to Italy again. Unfortunately I'll have to visit my MIL in the UK sooner than I thought

I may be able to go to Italy again. Unfortunately I'll have to visit my MIL in the UK sooner than I thought

And you may be able to buy an apartment again.

Yeah! 2br 2 bth for 600K - maybe in 1.5 years I don't need new construction

Absolutely. I think the prudent buyers who have saved their money and have stable jobs may actually be able to afford the apartment of their dreams if they have the patience to let this market really come down. Assuming that one wants to live/own in Manhattan, I think that the next several years will provide buyers the opportunity to own an apartment that, in say 2006, would have seemed utterly out of reach.
We all know what the fundamentals are, and how they have all turned sharply negative. However, what we are going to be seeing over the next few years, starting now, are forced sales...people who cannot afford their mortgage/monthlies, and who have to sell. This is what you want as a buyer. I truly believe that apartments that were going for 3 mil plus will be down to 2.3 and below under the right circumstances. For buyers who are in a position to buy and close, now is the beginning of a great time for you. Be active, but patient. Make a wish list of about 7-10 units, and then circle them, put feelers out, and when you sense a buyer who needs to sell, and you will, that is when you paly hardball.
But remember, you have to love the place and view it as the purchase of a home, NOT as a part of your investment portfolio that is going to go up in value quickly and dramatically, that game is over.

Of course, the pound and euro could bounce back...

BUT, in the meantime, IMAGINE how high the carrying costs have become for all the foreign investors, even more pronounced compared to their incomes and depreciated net worths.

Mortgage payments, climbing common charges. All in $$. Ouchy-ouch-ouch.

All those investments have become very very expensive to carry.

Have you noticed all the apts that are for sale that are already empty? This means they probably need or want to sell already. Nothing in there so nobody is living there

I can see the brokers already - The dollar is STRONG because the economy is STRONG! BUY BUY BUY!

lol- they gotta say something. They love to hear themselves talk

Urbandigs. Did you see the Rogers interview? As usual, he made some great points. If we see a nice sell off by Friday I am going to start building a positions in ADM. Also, if FCX breaks through 30, I will be watching closely to pick up some more ifit reaches a lower price like 27. Rogers is right, these companies may get hit in the short term (2-3 years in my world), but when things turn around, they will still be the main players. I love days like this when I can look at all of these great companies trading at all time low multiples and know that I really can't get hurt on the entry, even if I wait another week or two.

and it's not just the Euro's value that's falling apart. Every major freely traded world currency is getting slammed versus the USD. Has anyone looked at the Canadian, Australian, New Zealand, Latin American, Russian and other currencies.......their values vs the USD are being obliterated. So much for all those foreign buyers. They may very well turn to sellers at some point to capture their currency exchange gains, as has been the case in the past.

More to come as American investors continue to liquidate their foreign investments and bring the funds home. The US recession combined with plunging oil & related import prices goes a long way at balancing our trade imbalances which further fuels the trend to a stronger USD.

mh23 - I would expect consolidation in the miners/copper sector. Hard to time it. No, missed his interview.

serge07 - I discussed that many months ago on urbandigs. Im about to do a follow up. I would expect deleveraging and distress for many foriegners that bought up our new development inventory over the past 12-24 months. We know there were tons of deals there on speculation, booming times at home, and currency trade

mh23 - I also find Rogers to be pretty entertaining, if not informative. I listened to him in 2007 and did very well on ag commodities trade. That said, his bet against the dollar must be causing him a massive amount of pain. Not sure his fund could have done well at all in the past year.

you know this dollar thing is an interesting phenomenom. There is no reason our dollar should be strong considering the policies we are taking and the crisis that faces us. Clearly, the dollar is strengthening as the currency unwind goes on, and 8 years of short dollar/long euro/pound gets reversed. I wonder if the end game has our dollar collapsing, but going higher first. It certainly is a strange world. Most of the traders I know, who are very savvy and right on top of this mess, are al very dollar negative. These are the same people who were scratching their heads in OCT 2007 when DOW was at 13,900 and in early MAY when DOW rallied to 13,000 as the fed removed 'systemic risk' by assisting JPM in the rescue of Bear.

Turns out there were right all along.

urbandigs, looking forward to reading your update. :)

As you stated & I have mentioned repeatedly on this board, their is an unprecedented amount of over-investment in the NYC RE market. Everyone & their dog thew cash into this market due to VERY easy credit, massive bonuses, very weak USD & unprecedented speculation. Developers responded in kind with a rush to build new condo buildings at a record pace & complete conversions all with more borrowed money.

It took years to get us to the current bloated valuations and I suspect the wringing out of the excesses will take an equally long period of time. That is the function of bear markets and I would wager this one will be something for the history books.

I was thinking the same thing. Why is the dollar strengthening as our financial system is collapsing?

its not that our dollar strentgh is representing a strong US economy. Its that market forces are taking hold and deleveraging is occuring in foreign currencies. Sell what worked.

That means sell long euros/pounds and buy/cover dollar shorts.

kgg, the EU and UK financial systems are also under severe stress. There have been a number of very high profile financial collapses and some of their banks have been basically nationalized. Not good for a free market economy and flows of foreign capital.

The major issue is a function of investment flows. American investors are in the process of liquidating their foreign investments across the board as the deleveraging process runs its course. The conversion the hundreds of billion that were parked in the EU, UK and emerging markets back to the USD is placing enormous pressure on the values of those currencies.

Urbandigs, your point is well taken, and it further demonstrates to me what a tremendous time we are in for value investors. Hedge Funds, retail investors, and maybe even some institutional investors, were so hungry for the fast buck, that in addition to pumping up the stock market to 13,900 based on bs, they created illusory bubbles in commodities, as well as currencies. Now that they have already dumped all of the quality assets, they are dumpimg their euro/pound positions. This is the type of crazy geed that motivated banks to underwrite mortgages with no doc and with inflated appraisals. But now look at the opportunities available for vulture investors to buy premium land and units for pennies on the dollar (It has already happened to a large extent in California).
That being said, when the dust settles, the economy, first and most appreciably in the US, will recover, and that is when stocks will regain their footing and appreciate. Quality companies who are flush with cash will face less competition than they ever have before, as access to credit has dried up. It does not take a genius to imagine the types of margins they will have, especially if oil goes back down to $60 or below. That is why I have been allocated the next year to slowly and deliberately build positions in the best of the best (low p/e's low forward p/e's respectable and consistent dividends, leaders in Market Cap,).

"BUT, in the meantime, IMAGINE how high the carrying costs have become for all the foreign investors, even more pronounced compared to their incomes and depreciated net worths."

good point. the counterbalance is that anyone who bought even in 06/07 could be up in local currency. though i think we could see a lot of guys who bought new development here and live mostly overseas will just walk away from their deposits. since deposit is likely less than price drop on apt + local currency depreciation.

We assume that a european buying a $1+ M apartment wasn't smart enough to hedge his FX bet?

toast, there is nothing to hedge as their currency is plummeting versus the USD. In any case, it's getting a lot less attractive for them to invest here specially with their own RE markets are getting killed.

The problem would be more for an American investor with Euro investments as the value of that currency decreases versus the USD. Those folks indeed need to hedge otherwise they are rapidly loosing value in both directions.