Goldman Sachs2009: 44% drop in Manhattan prices

Just for calls on a 75% drop in NY real estate from boom to bust would indicate S&P 500 in trading range of 550 and DJIA ~5000-6000 level.

I'd expect to see an abundance of firesales or forced liquidations in coming months of new developments, factor in the spike in UE, and deflated salaries and the equation from Dr. Einstein appears brilliant for anyone holding Cash 2011.

i think we will be at 50% down from peak for the higher end properties by spring 2010, 40% for the middle market.
Ultimately I think we go lower than that.

50% decline is a little too optimistic. In the GS report the 44% drop decline clearly states that it will only drop 44% in the event "conditions do not worsen". That means the U.S. exits recession in q1-q2 as most analysts predict and that the S&P and DOW finish the year much higher.

With that said, I think January speaks for itself. We're off to a very very bad start and that's why the smart money expects 65-75% decline for Manhattan real estate.

"we find that prices would need to decline..... to return to the valuation levels seen in the 1995-1999 period, before the start of the recent boom." -Goldman Sachs

I want to buy in Manhattan, having missed the boom altogether and having lived overseas for the last few years and now returning to NYC, but when I look at actual buildings I am familiar with I just don't see any big discounts........so....I can't square these wonderful projections of declines with what I really see.

Please see my post on The CHelsea Grande -- where I lived 8 years ago, which has since doubled in price, and has yet to show price declines.

you need be patient. this is a long deep contraction. the effects on the "real economy" have just started it's 1st inning a few months ago...you'll see lots of "going out of business" signs going up, including forced liquidations at new developments.

Just relax, enjoy your cash:)

can you post the GS report. thx.

http://www.forbes.com/feeds/reuters/2009/01/08/2009-01-08T211739Z_01_N08540988_RTRIDST_0_NEWYORKCITY-APARTMENTS.html

*was issued start of year under assumptions "fundamentals would not worsen"...BUT i think we may have much worse projections for NYC real estate in 3-4 months.

"New York City, one of the costliest U.S. real estate markets, could decline even further if per capita incomes fall to just two times the national norm, the report said."

The 800K 1 bedroom in good conditions would fall to 480K"...but i believe the 800K 1 bedroom will likely be headed to 300K, and the 1 BR today at 600K is going to 180-260K...

Imagine a 1 bedroom in NYC at 100K...THINK THE IMPOSSIBLE!

himwhoknows, you want to put your money where your mouth is? I will bet you $20,000 that the S&P does not close below 550 in 2009. straight up. so what is it, are you really himwhoknows or just himwho-blabs-about-stuff-with-no-conviction-or-understanding?

HimWhoKnows, if you read the same article I did and then concluded that apt prices are going to drop 65%-75%, you seriously must have a reading comprehension problem.

The Reuters summary and interpretation of the Goldman report (wanted a link to the report not an article about the report) said worst case scenario is prices drop 44% and gave Wall Street income levels falling and overall economic health of the city as a reason. But to counter that speculative statement, they also said maybe RE may only fall 19% if other factors such as continued population increase and jumbo mortgage rates fall.

It should be obvious to everyone that nobody is willing to say what is going to happen, b/c nobody knows. Just as nobody knew the severity of the global recession.

If RE is your business or concern, yes, problem by the end of 09 things will across the board fall off, but I do not know to what level nor does anyone.

the report factors in a severe recession with 44% drop, it does not factor in a depression. Under depression, i'm adding an additional 30% drop to the GS report....

IMF warns of Depression.

http://www.google.com/hostednews/afp/article/ALeqM5hBXduWJwfmSRP6rfd4UoCdxbdMlQ

Roubini/Edwards say markets to fall (S&P/DJIA)another 20-40%.

http://www.bloomberg.com/apps/news?pid=20601087&sid=aAZEkBMAM9xY&refer=home

Citigroup Issues warning on U.S. T-bills

http://www.bloomberg.com/apps/news?pid=20601087&sid=aLo0Fh1bNmVw&refer=home

*Please let's use some logic to the systemic crisis.

@ Special-K, I place bets with brokers, not guys from a random forum. Thanks for offer. in all honesty you are correct, but analysis says not.

we only have 300 point drop in the S&P to hit 500-550 level...should be in line with Roubini/Edwards analysis.

i could see the S&P drop below 500. The Nikkei is down 80% 20 years later and we have followed the exact playbook of the Japanese. Congrats!

drivers in line.

The only thing that doesn't make me thing that this is ridiculous is how wrong everyone was about the crash (and how confident they were in their predictions), and how fast things have gotten this bad.

Ideally, 1BR should be less expensive then this. 1 BR's in the 180-270K Range

May 6 (Bloomberg) -- Crude oil may rise to between $150 and $200 a barrel within two years as growth in supply fails to keep pace with increased demand from developing nations, Goldman Sachs Group Inc. analysts led by Arjun N. Murti said in a report.

http://www.bloomberg.com/apps/news?pid=20601087&sid=ayxRKcAZi630&refer=home

Thing is, they were right.... we did break $150.

It never even touched $140.

http://en.wikipedia.org/wiki/File:Price_of_oil_(2003-2008).png

So at peak oil they were predicting it to rise another 30-50%. I call that way wrong and very irresponsible.

If any of you actually believe anything a banker or analyst spews from their mouth after the last 6 months of evidence i feel sorry for you.

Its just a bunch of hot air whatever comes out of these guys mouths.

"It never even touched $140."

mike_s55, you are wrong.

The wiki chart you refer to does not reflect intra-day prices. That's like pulling a yearly chart and not knowing what happened to prices in between each year.

For example, on Jun 30, 2008, August Brent crude was up $1.78 and touched $142.09 a barrel during the day.

So, it DID touch and pass $140.

where can i find the GS report?

according to 60 minutes, they were right because they helped cause it...

Oil hit $147 a barrel, and then Russia went into Gaza...............and oil went...........

Sorry Russia went into Georgia..........

Ok who gives a chit if oil went to $147 - $180 - a gazillion. It was a blip on the radar. When goldman issued that statement they werent expecting people to day trade oil and get out within intraday movements. They predicted the price to reach that and potentially stabalize.

Look I understand the climate we are in you would have to be a fool to not think prices are getting pressured. Are they gonna fall 50% i really find that hard to believe - sure they may be right but I dont give Goldman or anyone else any credibility anymore. That is the point. And based on you thinking they were right with their $150-200 oil prediction that would mean if you want to time the real estate market crash you will have about 20-30 days to get in at a 50% discount. Which could mean moving quickly on a foreclosure etc. I am sure most of you wont have the balls to move on a property anyway instead you will be here just writing comment threads here about how manhattan real estate is gonna fall to $150k 1 bedrooms and $75k studios.

Look, I'm just calling you out on your statement:

"It never even touched $140."

It did. And as a result, that is a wrong statement, and readers should be aware and not be misinformed.

That's it. Nothing more or less.

My guess is equity markets sell off hard on bad news starting 02-09-2009...just seems so with current climate which is heavily divided in congress.

All trust in the financial system appears lost. How do we start over, and when is the question?

why 2/9 specifically?

just a random guess. markets seem fragile and it looks to move lower by my opinion.

himwhoknowstoomuch... yep... I'd say in the absence of bad news the cochroaches are coming out of the woodworks... hope springs eternal...

mike_s55... Corcoran's new marketing line : "Most of you don't have the BALLZ to buy property."

HWK, have a look at this thread and tell me if you still beleive that report. What a joke.

http://www.streeteasy.com/nyc/talk/discussion/7464-gs-take-on-nyc-re

i think goldman slightly too optimistic on NY real estate with even a 44% drop.

Volcker today put some pretty good color on the situation...listening to his testimony seems as if the financials are in dire shape...sounds like another 700B taxpayer bailout maybe in the cards this Spring.
the question is will taxpayers give in? after the failure of Tarp?
When this is said and done it'll be interesting to see what NYC taxes and federal taxes will be. with this defecit i'd say higher than ever...

if Volckers remarks regarding the financial system and need for even "more help" are true, my guess is far more troubles ahead. this certainly isn't your typical recession.

i pointed this out in early 07, but it's hard to do so on these boards because most people are still delusional. nobody wants the big party to end, although 100 people are enjoying the last bottle. the big hangover is just beginning...

Unfortunately, one thing that never changed is we live in a town run by unions with INSANE taxes on business. NYC is at the bottom of every "cost of doing business" list there is.

This was ok when Wall Street ruled the world, as there was enough money to cover the extras.

But, pull out the Wall Street money, and we are a SHITTY, SHITTY place to do business. Small business are getting killed, and it will get worse - paid family leave, more taxes, etc. We have CRAZY obligations to the unions which can't be reduced, and income has tanked.

Without all the extra cash sloshing around, how on earth does anyone think all the law firms, printers, high end retail, etc. are going to last in this town?

"We have CRAZY obligations to the unions which can't be reduced, and income has tanked."

I wanna add one caveat here, if I can. I must first disclose that I am under this blanket of "union obligations," so my opinion might be considered biased. However, I will also say that I am not really a pro-union guy. I see the good they've done, I see the harmful things. So, I'm not taking my line because I'm a strong supporter.

That said, many of these "obligations" are only seeming like such because of the current economic situation and are being used as a whipping post when they really shouldn't be; at least without the whole story being presented.

First, many of these things were promised when times were good. Now, in any good governmental body, they should only be proposed and agreed upon if they can be backed up. Unfortunately, we don't have a good governmental body...anywhere. They did not "save" during these better times to ensure they could live up to their end of the bargain during the rough times.

Secondly, many of these things were promised in lieu of immediate measures. For example, raises had been halted for years on end (including cost of living) by the city that crippled the pay of the uniformed services. Most people would be pretty upset if they were denied raises, including cost of living, for 5+ years and not given some sort of retribution.

Now, the city made this "bearable" by extending promises of higher compensation in the future by having better health benefits and better retirements. Much like the federal government and many spendthrift Americans, they figured "things will be better in the future" and they'd have no problem paying them off down the road.

Third, the pension plans promise a set rate of return. I'm not an expert, so I don't know if this can be adjusted or not. But, I will say, a large part of the problem of the return is that it is a guaranteed % and, over the previous decade, interest rates have been below this promised return. The city was able to deal with this by having profitable market returns; however, this all changed with the carnage of last year. Now, they're at a shortfall that must be funded instead of the usual surplus.

The thing is, if interest rates and inflation went (or go, as I think they will) the other way, this promised return will diminish greatly and could, possibly, be BELOW what the prevailing interest rates are. This would certainly make things easy for the city, yet it would kill the employee relying on those returns.

The uniformed services are tough jobs. Many require lives to be put on the line and many others are in charge of the safekeeping of lives. These are pretty stressful job;s, both mentally and physically. I don't know about you, but I don't see too many uniformed retirees that are in great physical shape and without injuries that hinder mobility. Many have had their bodies beaten to a pulp after years of abuse through carrying out their duties.

Lastly, don't let them fool you. Surviving with the quality of life that you've had while working when you retire on the city pension system is not easy. Most of the folks I work with have had to add extra to 401/457 plans to ensure they would have enough to live on when they retire. And, just like everyone else, they've taken massive hits on those accounts which have brought their futures into question.

If you'd like to see, just look at the price of a starting police officer/firefighter in Nassau or Suffolk county and compare it to what the NYPD/FDNY is paying. Imagine if the unions demanded salary comparable to those departments for doing the same, if not a more dangerous, job.

So, if I can do anything, please let me, at least, make you guys aware of a little bit more about the situation with the uniformed workforces in this city. There is much more to the story than what the
finger-pointing pundits will have you believe. All I ask is that you be objective and get the information from all sides. Please don't be too quick to judge.

"That said, many of these "obligations" are only seeming like such because of the current economic situation and are being used as a whipping post when they really shouldn't be; at least without the whole story being presented."

100% incorrect. These items have been pointed out for YEARS. Hell, Bloomberg mentioned in years back. Read the book "While America Aged", which is from over a year ago.

Hell, the NATIONAL law was changed only a few years ago to get these obligations on the books.

Pretending this is a NEW thing is nonsense.

> First, many of these things were promised when times were good. Now, in any good governmental body,
> they should only be proposed and agreed upon if they can be backed up. Unfortunately, we don't have
> a good governmental body...anywhere. They did not "save" during these better times to ensure they
> could live up to their end of the bargain during the rough times.

You are confused by how this works.

Are you aware that the LEGISLATURE in NYC has made restrictions on what the city can do? They have outlawed any changes to benefits.

You want to say these things were "won", that is insane. You can't get elected without union power in this town. To pretend it was some "well negotiated agreement" that got this is ludicrous.

The union has been BUYING these giveaways for years.

Look up the history of the Working Families Party if you don't agree.

You can't get elected in this town without the unions. Pretending then that negoatiations between the union and the politicians they got elected are "fair" is INSANE.

Why do you think that government unions gets BY FAR MORE than non-goverment unions?

Its because it was NOT fair negotiation.

HimWhoKnows
about 2 weeks ago
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"My guess is equity markets sell off hard on bad news starting 02-09-2009...just seems so with current climate which is heavily divided in congress.

All trust in the financial system appears lost. How do we start over, and when is the question?"

*AND SURE ENOUGH THE MARKETS MOVED LOWER STARTING THE WEEK OF 02-09-09.

HIMWHOKNOWS.

any other predictions? how low do we go? or do you stand by S&P 550?

And people scoffed at me when I said I'll get my 2 br 2bth dm bldg in yorkville for around $500K - hey maybe less!

I didn't scoff...Manhattan has not seen the sell off yet, most sellers are holding on, most buyers are on the sidelines. Very few transactions are being done. So how long can this go on? How long until the sellers in this market start to feel the heat and holding is no longer an option as they wait for a buyer living in their same dream world to hit their price?

They have been waiting for the economy to get better...I think we have a long way to go on that. If and when we wake up to the news that BoFA and Citi have been nationalized panic will set in and Manhattan RE prices will dive. There is no magic shield protecting our fair city from the beating the rest of the world is taking. We have to shake off 10 years of unrealistic gains to get back to a place where we have a healthy/sane market where we can make some sense of prices.

The dow is at 1997 prices..what's keepng RE from going there?

cccharley - less.

Manhattan real estate fall another 40% from current levels.
DJIA is going to swim around 4-6K level the next 2-3 years.
S&P 550, is in line.
in my opinion there will be an implosion of the u.s. t-bill bubble in the later half of the year followed by a steep decline in the dollar. this will agitate the global recession into a depression.

foreign wise investors are unloading u.s. dollar based holdings , you'll like see an abundance of manhattan real estate inventory by summer 2009.

crisis is moving in line, and according to my analysis of sequences and stages. We're in the 4th inning of a ball game which may go into extra innings.

Look for gold to hit 1200 and quickly jump to 1500 sometime in the next 3-6 months. There's more shocks to come.

interest rates can go to zero including a jumbo 30 year mortgage...when your salary is 500,000, how much f--kin apt are you going to buy with that (200 base leaving 300,000 bonus which is 150,000 after tax)...??? that's what sushi costs in manhattan...good luck to all those retarded sellers out there holding on...keep dreaming...you are all f--kin children...

him who thinks, is he who anticipates.

In line with forecast, and Volcker..you solve the equation...

http://www.youtube.com/watch?v=EUlMkMpsYjI