Housing market in collapse: Toll, Horton, etc

Whatever. Streeteasy has been around for a year and people have been predicting collapse the entire time. The economy is decent, there hasn't been that much overbuilding and crime in Manhattan is low. Everyone chill. Things are balancing out. I am not sure of the goal of people who post this crap -- they aren't enlightening anyone.

Get out your sandwich board and head to Union Square. The "End is Near" guy needs a replacement.

its only a matter of time until it catches up with whatever is left of the middle class in NYC, however even those Wall ST suits are the lower rungs should be concerned.

boring........

For all the nay sayers, doom and gloomers and those that are praying for a housing market collaspe read and weep the following link www.therealdeal.net/issues/MARCH_2007/1172687024.php

Nice "evidence": a broker-sourced fake article. In other news, RNC sources say Libby guilty verdict good for White House. *BARFS*

I am not a broker but I just lost out on an apt that I amde an above asking offer due to multiple bids. Is that enough evidence for you. In fact over the last three monts I have made offer at or abaove asking price and lost out on a hige offer.
If you don't beleive me when the next studio or 1 bedroom condo comes on the market that is priced right and nice views in GV, West village, Soho or Tribeca come to an open house and see all the people looking. Once again I am not a broker in fact for the most part I am not fond of them either

If the ripples had to come they would have by now. There is no subprime or predatory lending here. Majority of the inventory is co-ops with stricter rules than mortgage lenders. Crisis will happen only if there is a big recession.

I've been hearing about bidding wars on apartments lately. I wonder if that is a new broker strategy for boosting prices? Price low then start a (blind, of course) bidding war for the unit. PRESTO - possibly a much higher price is realized.

The onl bidding wars are for apatments at Maison East!

Just don't think it's as easy as an across the board correction. The market at the very high end and the very low end will probably be fine, BUT - the broad middle market of NYC real estate probably will see some kind of stagnation at best, and correction at worst. One size doesn't fit all. Same goes for locations - prime locations along Fifth, CPW, in the Village will probably drop the least if they drop at all, and snap back the fastest.

Agree - those who bought new condo builds in outer boroughs, Harlem, etc. at $700+, $800+, $900+ per s.f. have the most to fear if a correction occurs. Not anything to do with Manhattan being 'better than' anywhere else, but that's just the market reality.

I agree with #8. Even with all the new condo constrution, 85% of the housing market is coops. This produces a population of homeowners who are not highly levered, are not taking advantage of subprime lending, and reduces the liquidity of the housing market (hard to flip a coop). As rates rise and fixed terms end, there will not be the massive sell off of NYC coops that is expected elsewhere in the market. I don't know anyone who bought an apartment in the late 80's (market peak) and now bemoans the losses they incurred in the housing crash. Why? Because if they sold during the crash, they bought another property at the same time.

Yes, the NYC housing market crashed in the early 90's. But that crash was NOTHING compared to the overall US housing market crash. And prices picked back up within a few years.

you can argue that wall street is supporting the NYC housing market. I think we'll quickly see buyers pulling their offers after the plunge in stock markets in the past few days. Don't forget sentiments on wall street is closely tie to equitie markets

You could argue that wall street is supporting the NYC housing market. But that would ignore the fact that when the stock market is weak, people historically shift their money into other investment vehicles...such as housing. Rational investors put their money where they get the greatest return for their risk.

What plunge the Dow is only down a few % points.

In addition, one has to remember that in the event that there is a major real estate correction, interest rates will most certainly be significantly higher (and may be one of the contributing factors to a correction). If that's the case, there's no major difference between buying a place for a higher price with a historically low fixed mortgage, or paying 10% - 20% less for a place, but having a mortgage that is 1% - 2% (or more) higher. In the end, it's the same monthly cost.

Most importantly, if you're buying over a long time horizon (10+, 15+ or more years) all of this matters much less than if you're a 'flipper.'

spunky - you're right that dow is only down a few % points YTD but it's off 7% from the high. take a look at may last yr, a 10-15% correction doesn't make a bear market but it will change sentiments.

I bet that most of those saying taht the market will hold own, and most who are saying it will crash rent. The fact is that no one knows what's going to happen (including economists), so we all just believe what we want to believe.

Just do what makes the most sense for your family, don't take crazy risks, and hope for the best.

To #12, #13, et. al. You say that the "outer" boroughs (not sure what that term means) are in danger of a "correction" but that Manhattan would be unaffected by this. Really? If, after such a "correction," you could get a large one bedroom in a doorman, elevator building in an established neighborhood for 130K or a house in Merrick for 250K, why would you squeeze your family into a rat-infested walk-up studio for 400K? I am not suggesting that you'll see a precipitous drop like that. I'm just pointing out that Manhattan is an island only in the geographical sense. We are all in this together, like it or not. With that, keep in mind that New York is predominantly a working-class town with immigrants and first-generation Americans (i.e., not wealthy). Surely a few of them were given unqualified mortgages for condos and houses.

By the way, has anybody noticed that poverty and homelessness are up significantly? Could this have anything to do with the median New York income being less than it was a decade ago? Could this have anything to do with housing costing double what it did a decade ago? Maybe it's all just a coincidence. So, where are you going for brunch this weekend?

Manhattan is different. People will always pay a premium for the convenience of not having to commute. I wouldn't live in Merrick if you gave me the house.

#21 how about park slope, brooklyn?

park slope will be a slum in the future

Folks, when over $50 bill of bonus cash is handed out, no matter how uneven the distribution is, it's going to produce the dead-cat bounce we are seeing, albeit in slow motion due to the illiquid nature of real estate.

Here's another thread... on an economics blog. some comments about in there about nyc.

http://www.rgemonitor.com/blog/roubini/182196#readcomments

MMAfia

Okay now feast your eyes on this
www.therealdeal.net/issues/MARCH_2007/1172687024.php

Keep posting that shill "article" spunky. I had too big a lunch. *BARFS*

I wonder which article is more widely-read: spunky's or Gretchen Morgenson's?

why will park slope be a slum in the future?

Well check out the facts for yourself. Next time a condo in GV, West Village or Tribeca comes on the market and has an open house go to it. See the boatload of people viewing the apartment. If it's in a decent location and has views it will probably get muliple offers.

The market will be down 25% by year's end and an additional 30% by the end of 2009 in Manhattan. Only the blindly hopeful are buying now!!!

Oh wise one are you forcasting a drop in rental prices of about 50% as well over the next two years as well.

buying is about living the american dream of owning a home. i've rented for the past 7 years in light of individuals stating the market will slow down and prices will dramatically decrease over time. It's now 2007, the only thing I did was lose out $$$ in rent living in Manhattan rather than paying off a mortgage for the past 7 years and calling the place my own. Rents have repeatedly increased over the years. My initial rent was $1500... now it's a whopping $4000/mth. Post #30 is very unrealistic... how is the market going to decrease by 25%??? If most prices are ranging at $1000-1300 per sqft, do you think the market will come down to $750 per sqft in less than 9 months till 2008? That is very unrealistic!

Look at Harlem and the Bronx. Many have said the place is a dump and not to invest in that area two years ago. From what I've seen, the market in Harlem and Bronx are off the chart these days with prices inflating over 15-20%. Let's take a closer look at Long Island City, Queens. There were individuals, like poster #30, who said don't invest in LIC... but the prices of new developments are now 30-40% higher than last year. Same goes for Williamsburg.

If you paid careful attention to Mayor Bloomberg's message a few weeks ago, the economy is changing with an expected growth in the population by roughly 1 million people. Where will everyone live? Prices will continue to inflate as the percentage of housing availability decreases. It is simple economics principles taught in High School - supply vs demand. As the supply increases, the demand/prices decreases. As the supply decreases, the demand increases... thus, prices will also increase.

Rent:
Chelsea: 2004 Studios $2000 (avg) 1-bedroom $2500 (avg) 2-bed $3000 (avg)
Chelsea: 2005 Studios $2200 (avg) 1-bedroom $3000 (avg) 2-bed $4000 (avg)
Chelsea: 2006 Studios $2400 (avg) 1-bedroom $3500 (avg) 2-bed $4500 (avg)
Chelsea: 2007 Studios $2500 (avg) 1-bedroom $4000 (avg) 2-bed $5000 (avg)

If you include broker's fee of 15%... that's an extra 1.8x of the rent the first year. So that's a few hundred dollars more per year.

I'm not going to be a fool and pay $6000 extra rent to renew my contract. I would rather buy my own place and pay rent to the bank as mortgage. At the end of the day, I will have a place to call my own and I will certainly have equity in my portfolio.

To #32.

Have you heard the saying "When the last bear turns bull..... this is the peak".
Do some research on this and you'll find every absolute peak of a bubble was marked by this.

Ans also, if you like listening to Bloomberg, I believe last year he warned about declining prices in New York

how many new condos have been purchased in the last year that are just now closing?....15 broad....30 west....the list goes on and on.....how many people that bought to flip are now trying to rent out their apartments now?.....just look at the lists in here.....now if the subprime mortgages are no longer letting anyone and everyone have a mortgage (if you can call these loans this) the flippers are not buying anymore....the first time buyers are on the sidelines...who picks up the slack.....think about it ..... new york is not like the rest of the country in pricing.....but the finance jobs in new york do depend on how the rest of the country is doing with respect to the growth of the economy....the rest of the country doing crappy = new york eventually doing not so hot.....what does the average manhattanite take home a year.....do the math.......it doesn't just keep going up forever.....easy money financed the housing boom after the fed lowered rates after 9-11.....it's that simple nothing else and things got ahead of reality.....now is the time to pay....that simple.

“When the last bear turns bull….. this is the peak”. Couldnt be more true.

'Those who cannot remember the past are condemned to repeat it.' - George Santayana

"But this time is different". Wow people, get a grip. Things go up and down, it's called a C-Y-C-L-E.

just read the headline in todays new york times front page......crisis loams in mortgages.....but don't worry all is fine that does not prove a thing....oh and new century financial....the use to be 2nd largest subprime......not to worry no housing slump no effect on the economy and no reason to buy here or anywhere.

Gee these kinds of debates have been going on for the last 40 years in the real estate market.

http://bp1.blogger.com/_GMFF5jY6gGs/Rerx-e7EqFI/AAAAAAAAAyM/YvxOpheCTJw/s1600-h/7stages.jpg

I'd say we're somewhere between denial and fear right now. Quite a few levels to go, wouldn't you say?

if any idiots can give me the % of subprime borrowers in Manhattan... especially housing below 90th St... then I would trust that the article also pertains to Manhattan real estate. Most of these subprime mortgages are based on 100% financing. How many condos and coops allow 100% subprime financing??? If I didn't have to save up for a down payment to buy here, I would be the first in line.

how do you know that most of these are based on 100% financing? They also are no doc loans, interest only, adjustables and so on and so on and i can tell you there are lots of people in nyc using these types of loans to buy and flip....sooooo don't worry.....there is no reason to worry....and those wall street boys who got the big bonuses....they are the ones in the article who are having problems in their portfolios....read the article....

and to the comment 37 NEVER has there been a time where prices have appreciated at the rate they have over the last 5 years......will the stock market go up or down...this was a question in 2000 also.....it goes up over time.....just don't get in when the market has had its biggest run up in history.....

well said #41

to #37. The use on subprimes and IO only neg ARM loans are probably only in the Manhattan condo market and for single family/townhouses in the other boroughs. The prices of RE in the outer boroughs and national wide(to some extent) will affect overall Mnahattan prices because:
- people moving into manhattan from outside will not be seeing their existing RE at a premium
- implosion of the subprime market will affect jobs on wallstreet that re-package these loans
- prices of manhattan condos may decrese IF there was usage of crazy loans. X percentage of buyers are now unable to purchase overnight
- psychology will affect potential buyers
- over the long term, RE prices will be fine, but who wants to be the sucker that purchases an overpriced unit this year when they can buyer it much cheaper 1-2 years later. If prices were reasonable then this would not be an issue but prices have gone up 100% in 3 yrs so buyers are rightly concerned.

i want to buy a home so i should not because its in brooklyn?

no you should wait and rent for one more year....to see if things are cooling off.....you definately won't miss the boat from prices rising over the course of a year.

There are good deals out there. Certainly nothing wrong in looking for them.
People have been telling me the market is going to turn down since 2002.

YOU should rent, yes rent the apartment that I bought as an investment. If you rent it then I can buy another one with your rent money.

renting is a smart move if what you're paying in interest payments is more than what you are renting, which frighteningly, in this market, is more commonplace than one would think.

Wow, #32. I didn't think anyone really believed that bunk that Bloombucks was trying to sell about 1 million more people moving to New York. Remember, he's got to find a way to justify all of the welfare he's dishing out to real estate developers. His numbers assume a population growth in the next 15 years the same as it has been in the last 15 years. That's a huge assumption for a transient population. The immigrant transients who saved New York may not keep coming if the federal government gets its way. During the immigrant/real estate boom, the suburban shift did not stop or even slow down. Prediction: In 15 years, the population will be about the same as it is today. And if that happens, New York real estate will be dropping in five years (after all of this new construction is completed) when the rest of the country's will be recovering.

#49 this is interesting. all this new construction is very very scary. also renting and waiting a year sounds great to me but we love the place we found and really feel that its menat to be

Yes I agree NYC real estate price way too expensive they will go down.

Too bad you're probably sitting on the sidelines with a million others HOPING PRAYING it goes down so you can come in. Well if it does, you will be bidding against the others and that will bring it back up. Its all about demand... once you and all the other renters and the owners don't want to live here is when there will be bad things in the real estate market.

Anyone have an opinion on Brooklyn Heights? We've been outbid now twice on co-ops there which I found surprising. I'm not sure whether its a hot market in the neighborhood or just a fluke. Now we're faced with either bidding at asking or not bidding at all. Anyone have the same experience in the neighborhood?

bidding wars don't occur anymore in NYC. Are you referring to 2004.

Remember when the dot-com bubble burst, everyone was saying that the crash is contained in the 300 so dot-com /tech names and should not spill over to the blue-chip stocks. Guess what happened to the overall stock market. NYC housing housing market may hold up better but it's difficult to see it decouple from the rest of the nation.

NYC should secede from the US and really be an international nation

Thx for comments #54- afaid this is last few weeks and maybe just my bad luck. Or even better- maybe these are crappy real estate agents and I'm bidding against myself!Don't know if brooklyn heights worth it anyway.

Bidding wars have indeed been happening the past 6 weeks or so in the prime spots of nyc. (am not as familiar with brooklyn)There was a great deal of buyer trepidation in the fall, and all of a sudden everyone is jumping to buy.Personally I feel the current frenzy will die down somewhat in the next month or 2.

Bear in mind too that many of these bidding wars were on properties whose asking prices had been cut during autumn slowdown and uncertainty, or on properties priced (relatively) low based on most recent market activity. The bidding wars are not like those a few years back that catapulted prices prices to unforeseen heights. Since the market is viewed as relatively healthy, you won't find the kind of price chops that helped create the climate for the bidding wars.

Are there bidding wars or is this hype by real estate brokers. I dropped the broker because she drove me nuts!!!

Anyone who doesn't know there's bidding wars right now clearly has not gone to an open house or really looked at a property in the last 2-3 months. They are still dreaming that prices will pull back 50% or more back to their price point.

We bid on a coop the day before the open house. The day of the open house two more bids came in. For two days, we all haggled until we had an accepted bid, higher than our original. We had no broker. Some of the arguments on this discussion seem ludicrous. Good apartments (space, light, view, convenient, price) still seem in demand. Perhaps less desirable apartments will stagnate more, but the good ones will get gobbled up. After a year of looking at 100 apartments, I feel pretty sure I'm right about this logic.

New York has finance jobs with bonuses equal to the price of the homes in other states. Foreigners LOVE new york and its significantly cheaper then London or Tokyo. You think a rich foreigner is going to buy a place in bumblef, FL or manhattan? Also there a huge number of dual high income no kids (DINKS) in Manhattan. Prices may pull back in non peak seasons with buyers who need to get out, but dream on.

Brokers could not hype something that was totally untrue. Anyone who is looking to buy right now is well aware of the state of the market. Go to an open house in a desirable neighborhood and see how many people are there. Keep track of listings that look good and are priced appropriately and then see them change their status to "signed contract".

The naysayers here do not have the finances to even consider buying here and thus are trying to discourage you. If you have the cash flow to do it, then do your own evaluation.

are the comments regarding bids true or are they coming from brokers who want to hype the market...

Brokers are doing everything they can to stall the truth. i spoke to a broker and in the first three minutes she said "this is a great time for sellers but a really bad time for buyers" (i'm a buyer). She also said I need to move very fast because prices are rising. Needless to say I switched brokers.

#9, don't listen to us and go to an open house or two. Recall that wall street had a record year for bonuses. If you have been checking streeteasy, prices went up 5-10% on the buildings that I've been tracking.

err comment 68 was meant for 66. go out and see for yourself the high level of activity

#66 -- I am #62. I don't know how to convince you that I am not a broker. This is the dilemma with the forum and internet communication. Hard to know who to trust.
I am not surprised by bidding competition on attractive properties in Manhattan. We were in one and, in fact, we had bid on 3-4 other apartments that we pulled out of, but there were other bidders also vying at the time. (this was last summer/fall)

#62 summed it up. Good apartments are still flying off the shelf and crap is not selling. The misconception is that even the crap was selling when the market was super hot. Now that those apartments are being marked down, people are grasping onto it as evidence the sky is falling. It isn't. There are still too many people that want to live here and the island is only so big.

"[T]he island is only so big" yet somehow developers figured out how to build UPWARD and have for DECADES. Who knew? *BARFS*

Heh funny, cuz its your rental buildings that are converting to condos and that means lower rental inventory and higher rents. Enjoy

Same reason it costs $600/mo to park your car where 5 years ago it was $300. Less supply.