Housing Market Collapse: How Bad Can It Get?

There will be much needed pain so that prices are more in line with incomes. New York, especially Manhattan and Brownstone Brooklyn, will largely be immune:

1. New construction is very low in NYC
2. Demand is largely infinite
3. Incomes in New York, even with the Credit Crunch hiccup are massive.
4. Inherited wealth plays a much larger role in NYC than in the rest of the country.

There may be pretty good deals in Levittown though in three years.

Posted by: guest at November 1, 2007 9:27 AM

More affordable housing is not "bad" for anyone other than those who bought at the peak looking to flip, and those who HELOCed their house to the hilt to gild their lifestyle and can't make the payments. The "bad" things going on in some places -- abandoned housing -- are not likely to happen here.

Housing has been overpriced relative to people's incomes, and this has pushed down their standard of living.

he only way it stays overpriced is if the value of the dollar collapses and rich foreigners with more valuable currencies buy up all the properties. In which case the standard of living will stay low.

Posted by: guest at November 1, 2007 9:29 AM

I doubt Manhattan and Brownstone Brooklyn will be hit AS hard as the rest fo the country, but things are not looking good for them either over the medium term. Yes there is still a good amount of money around, but it is really the financial services sector that drives the kind of insanity that leads to $750 thousand dollar co-op studios. The big banks are laying off significant numbers (and transferring rising stars to Asia) and bonuses will be nowhere near last years for most that remain employed. You may not see huge price drops, but I wouldn't be surprised to see modest declines (after a period of broker-lead denial), especially in highly leveraged new developments.

Posted by: guest at November 1, 2007 10:01 AM

Considering that Brownstoner is usually filled with posters (as well as Bstoner and staff) complaining that everything is priced to high for 'regular' folks - shouldnt a housing downturn be widely cheered here?

FSRG

Posted by: guest at November 1, 2007 10:26 AM

Oh now you get your head out of your ass Mr. B. Now we are addressing the real issue.

Housing Market Collapse: How Bad Can It Get? It can get get REAL bad people. The credit markets are getting pounded and the short term paper they can't roll over. The mortgages written this year have crashed. Foreclosures are skyrocketing to new highs and this will not get better until 2015.

Here read this! The FED shitted on us yesterday to save the fucks on Wall Street.

What a Weak Dollar Means for U.S. Shoppers
http://www.smartmoney.com/dealoftheday/index.cfm?story=20071031

Grammar Nazi flame on. I'm going to get some coffee. ; ^ P

The What

Soon this war is gonna end...

BTW Wall Street is getting pounded right now.
http://www.bloomberg.com/

Posted by: guest at November 1, 2007 10:33 AM

Oh yeah, Forget about the housing bubble right now. The financial sector is something we need to worry about!!!!!! Pension plans, 401k, and bank deposits could go BOOM! Banks have very LARGE exposure to this shit. I think you need to pull your money out now, while you still can.

The $915B bomb in consumers' wallets
Americans have record credit-card debt and banks

http://money.cnn.com/2007/10/29/magazines/fortune/consumer_debt.fortune/index.htm

The What

Some day this war is gonna end..............

Posted by: guest at November 1, 2007 10:42 AM

The What

(I know I'll regret this but....) the article you posted indicates that the cost for imported cars, wines, jewelry will be more expensive - which sucks for 'consumers' of those goods - but arent you ignoring that this will be good for domesitic 'producers' of these same goods, which should lead to more jobs and incomes in these domestic industries.

FSRG

Posted by: guest at November 1, 2007 10:54 AM

"but arent you ignoring that this will be good for domesitic 'producers' of these same goods, which should lead to more jobs and incomes in these domestic industries."

Can I ask one question? What do we produce? We are a nation of consumers (tricks) that has been sucked dry. Chuckie and Joe Six Pack income have been vaporized from inflation.

Look around you! Where are the manufacturing jobs at? BTW there will be no bonuses for Wall Street this year.

You are seeing the final stages of this Mutant Real Estate Bubble!
When it blows, it will be hell to pay!

The What

Someday this war is gonna end............

Posted by: guest at November 1, 2007 11:04 AM

Dear The What,

Please stop obsessing endlessly about something in which you have no control nor any power to change.

Even if the greatest depression that ever hit America comes our way soon, the human race will still exist and life will go on.

If you need to publicly freak out every day about something, why not switch to global warming and environmental concerns for your subject matter? Because good economy or bad, life as we know it IS in jeopardy if we don't change our ways.

Have a great day.

Posted by: guest at November 1, 2007 11:05 AM

"Dear The What,

Please stop obsessing endlessly about something in which you have no control nor any power to change.

Even if the greatest depression that ever hit America comes our way soon, the human race will still exist and life will go on.

If you need to publicly freak out every day about something, why not switch to global warming and environmental concerns for your subject matter? Because good economy or bad, life as we know it IS in jeopardy if we don't change our ways.

Have a great day."

I have been on this subject for the last 3 years. We could've stop this thing a long time ago but, greed kept it going. Our children will pay for our folly and will ask this question 'What the fuck you were thinking?'.

I will beat the hell out of this drum and yes I has some control over it.

You have a great day too (no sarcasm).

The What

Some day this war is gonna end...........

Posted by: guest at November 1, 2007 11:17 AM

"There will be no bonuses for Wall Street this year"

and your source for this comment is?

I'm afraid you are kidding yourself if this is your belief! There will still be plenty of surplus in the Wall Street persons pocket come pay-day!!

Posted by: guest at November 1, 2007 11:23 AM

Bonuses on Wall St. are forecast to drop 10% this year, down from the record highs they hit last year. This is hardly something that's going to precipitate a major crash. Believe me, I wish it would - I'm not in finance and have been trying to buy for the last year, and crying as I see prices continue to go up and up. But I suspect all that will happen in NYC and BS Brooklyn is that prices will flatten and some inventory will sit, and then be pulled off the market by owners who don't have to sell.

Posted by: guest at November 1, 2007 11:29 AM

I knew I'd regret this but to answer your (The What) question as narrowly as possible -

The US is still a major producer of Cars, Wines and Jewelry.

So I repeat arent you ignoring the tremendous benefit that the falling dollar will have on those industries?

Posted by: guest at November 1, 2007 11:41 AM

"and your source for this comment is?"

Look at the BILLIONS OF DOLLARS in write-offs! Citi, Countrywide, Merrill Lynch, Credit Suisse do I need to go on. You must be smoking that good shit bro.

Here read this
Credit Suisse Profit Falls After Debt Market Swings
http://www.bloomberg.com/apps/news?pid=20601087&sid=aFa2pXTIMIec&refer=home

Yeah! When I get my bonus, I'm going to but that condo in the hood. Dumbasses!

The What

Someday this war is gonna end

Posted by: guest at November 1, 2007 11:43 AM

"The US is still a major producer of Cars, Wines and Jewelry."

IF Chukie or Joe Six Pack have no money then, Who going to buy this shit?

6 Trillion Dollars is home equity loan and mortgages have been made. That is the economy right there homeboy! No credit no money GAME OVER!

The What

Someday this war is gonna end..............

Posted by: guest at November 1, 2007 11:49 AM

Anyone who actually works in the real estate market, as I do, knows that things have absolutely slowed down, even in the "Brownstone Brooklyn" market. People who deny this are in denial. While no one knows for certain where it's all going and if it will get worse, prices have certainly dropped since this Spring season. I would guess the abundance of condos will be a problem because of a lack of demand and houses will be ok since there are so few on the market, but even house prices have gone down at least 10% except in very rare circumstances. I fail to see why people here can't accept this. If you've bought and plan on staying long-term surely you will be ok. If you are liquid you may even get a good deal if you are looking to buy. If you are over leveraged then you may have some serious trouble.

Posted by: guest at November 1, 2007 11:53 AM

How bad it can get?

NY ATTORNEY GENERAL SUES FIRST AMERICAN AND ITS SUBSIDIARY FOR CONSPIRING WITH WASHINGTON MUTUAL TO INFLATE REAL ESTATE APPRAISALS

http://www.oag.state.ny.us/press/2007/nov/nov1a_07.html

One little tidbit.
Internal E-Mails Show eAppraiseIT Executives Knew Their Scheme Was Illegal: “We have agreed to roll over and just do it”

Say good-bye. RIP Mutant Real Estate Bubble.

The What

Someday this war is gonna end.....

Posted by: guest at November 1, 2007 12:19 PM

I work on Wall Street and I can tell you without a shadow of a doubt that everyone expects that bonuses will be significantly down this year. In fact, it's basically a fact at this point -not a debatable issue. I think 10% is a good estimate across the boards, but it will be skewed unevenly across individuals based on how close their work is to the mortgage crisis. This means that there will be fewer buyers with happily lined pockets, and those pockets will be a bit shallower than they have been for the past few years.

This, combined with the general state of the housing market in my opinion definitely means that even the higher end markets will be affected. Only time will tell though.

Posted by: guest at November 1, 2007 12:26 PM

anecdotal observation: this condo of the day completely sold out in one building with pre-credit crunch financing (http://www.brownstoner.com/brownstoner/archives/2007/04/659_carroll_str.php). the one next to it got off half of its $1000/sq ft units before the crunch too. the buyers have moved into the second one, but the top two floors are still dark. $950k for ~950 sq ft, what a bargain. there are brownstone co-ops around the corner (also in 321), same size for $200k less now. it sucks to buy at the top (or maybe central air is worth 200k?)...

Posted by: guest at November 1, 2007 12:30 PM

Perhaps, but lawyers' bonuses are paltry, particularly young associates' bonuses. What will have more of an impact, a 20%-30% decline in banker cash comp from expectations of $500K, or increase in a lawyer's bonus to a whopping $35K?

Posted by: guest at November 1, 2007 12:43 PM

"Law Firm bonuses are going to be at a record high this year:"

Yep suing all those Banks, Mortgage companies and Brokers.
Divorce and Bankruptcies will pay well. LOL

The What

Someday this war is gonna end....

Posted by: guest at November 1, 2007 12:44 PM

"Actually, that's not true. Many homeowners have been taking out equity loans on their homes and using it to make purchases of appliances, cars, vacations, or paying down credit card debt. Rising home values was a boon to homeowners and falling home values will depress the economy by tightening spending which leads to fewer jobs and probably a rescession."

Yes -- and how many people (including on this Board) could not afford to buy their own home or coop or condo at the current (or the Sping 07) market? Most of the folks in my buidling couldn't.

Posted by: guest at November 1, 2007 12:58 PM

("more affordable housing" will have a much greater negative effect economy than to just hurt the flippers.)

What will hurt the economy is that things that cannot go on forever won't.

Americans, although they are among the hardest working and most productive people on the planet, have nonetheless spent vastly more than they have produced for years.

This has been possible only because they have taken on debts they can never repay in real money, and will now either not repay or will repay in diminshed money.

High housing prices do not create value, they transfer it from those who already have housing to those who want it, from younger generations to older. As far as I'm concerned, there is too much of that going on in this country as it is.

Posted by: guest at November 1, 2007 1:37 PM

I already own my place. I'm gonna be fine.

Posted by: guest at November 1, 2007 1:58 PM

"I already own my place. I'm gonna be fine."

No you wont! When the crash gets going, you hood is fucked. Crime, drugs and unemployment will skyrocket.

Foreclosed houses will be empty. Nice havens for Bums, Drug Dealers and Hookers. Yeah, keep dreaming, now go back to sleep.

The American dream requires you to be asleep

The 70's is back. Welcome to the future. Dumbasses!

The What

Someday this war is gonna end.......

Posted by: guest at November 1, 2007 2:14 PM

"I already own my place. I'm gonna be fine."

No you wont! When the crash gets going, you hood is fucked. Crime, drugs and unemployment will skyrocket.

Foreclosed houses will be empty. Nice havens for Bums, Drug Dealers and Hookers. Yeah, keep dreaming, now go back to sleep."

That's what you say. Who believes you? All you've proven is you can rant and copy links to financial stories. As we all know, economists are ALWAYS correct. Uh huh. I'm not a cowardly, worrying loser like you. I'll be here 20 years from now and we can compare notes.

Posted by: guest at November 1, 2007 2:25 PM

"That's what you say. Who believes you? All you've proven is you can rant and copy links to financial stories. As we all know, economists are ALWAYS correct. Uh huh. I'm not a cowardly, worrying loser like you. I'll be here 20 years from now and we can compare notes."

Ok then, have there been any good stories on housing in the last 60 days?

Why the FED cut rates if we are doing so great?

Why the Government lies about our cost of living?

Why are basic things going up in price (Gas, Food, Rent etc.)?

Why are people ignoring what's going on?

Here is my answer it's called Greed and Stupidity!

I dare any dumbass to prove we are doing OK.

Plus when you local bank goes BOOM and your ATM card don't work, I will be laughing my ass off.

Wake up folks! A house in Bed-Stuy is NOT worth a million dollars.

A 2 Bedroom Condo is Not worth 600k with carrying cost over 4000 k a month.

4.00 gas is NOT cool, I have a Fucking truck!

WAKE UP WAKE UP WAKE UP!!!!!!!!!!!!!!!!!!!!!!!!!

The What

Someday this war is gonna end...............

Posted by: guest at November 1, 2007 2:42 PM

"No you wont! When the crash gets going, you hood is fucked. Crime, drugs and unemployment will skyrocket.

Foreclosed houses will be empty. Nice havens for Bums, Drug Dealers and Hookers."

Where exactly in Manhattan and prime Brooklyn do you expect this to happen (aside from everywhere and to everyone)? You sound like a fool.

Posted by: guest at November 1, 2007 2:42 PM

"Where exactly in Manhattan and prime Brooklyn do you expect this to happen (aside from everywhere and to everyone)? You sound like a fool."

If you don't know then, You will be that dumdass who will get robbed and stomped out!

The What
Masters in Streetlogy

Someday this war will end......

Posted by: guest at November 1, 2007 2:49 PM

Oh Wall Street is doing wonderful NOT!

http://www.bloomberg.com/

Come on some show me some good news! LMMFAO Dumbasses!

The What

Someday this war will end...........

Posted by: guest at November 1, 2007 2:53 PM

"The What" used to be funny or at least slightly distracting. Now he/she is going off the deep end. Did you take your meds today? I mean, I'm bearish on housing too, but not to the extent that I leave my brain on the bus...

Posted by: guest at November 1, 2007 3:01 PM

Brownstoner, there needs to be a rule how many times someone can post on one particular thread. Especially when they are talking to nobody in particular and just ranting on and on. It's a thread-hijack and it's completely not readable. The more The What posts, the more often I hit the back arrow on threads here, these days.

Hey The What, maybe you could afford to buy a home and not worry so much about the economy if you stopped wasting HOURS on Brownstoner and you did your job instead. Whatever job that might be.

Posted by: guest at November 1, 2007 3:25 PM

"Brownstoner, there needs to be a rule how many times someone can post on one particular thread. Especially when they are talking to nobody in particular and just ranting on and on. It's a thread-hijack and it's completely not readable. The more The What posts, the more often I hit the back arrow on threads here, these days.

Hey The What, maybe you could afford to buy a home and not worry so much about the economy if you stopped wasting HOURS on Brownstoner and you did your job instead. Whatever job that might be."

It''s not about The What! It's about our way if life. America is getting Ass- Raped. the Pig -Men have made millions off of you. When not if it blows good bye. Don't worry about about my financial situation, I'm well off.

The What

Someday this war is gonna end.......

Posted by: guest at November 1, 2007 3:44 PM

I'm so over the rude, ignorant and incessant posts from "The What" that my days of reading Brownstoner are now over.

Thanks for ruining it for the rest of us, TW. Your brilliant ability to copy and paste the most obvious national headline RE links + your boorish derogatory comments to other posters have absolutely ruined this site.

Posted by: guest at November 1, 2007 4:17 PM

Get a life "the What"! Browstoner, please get rid of this trouble maker

Posted by: guest at November 1, 2007 4:20 PM

Get a life "the What"! Brownstoner, please get rid of this trouble maker

Posted by: guest at November 1, 2007 4:21 PM

2:25 PM here - I'm perfectly fine with The What's posts. This is America. Everyone's entitled to their opinion.

Posted by: guest at November 1, 2007 4:27 PM

I ain't seeing no damn decline in house prices...well I ain't seeing now damn new houses in my neighbourhood either...

It's a conspiracy!!!

They going to hold the house stock to keep the prices high. I'm going to get a piece of land in Brazil...and wear a bikini all day

Maria.......

Posted by: guest at November 1, 2007 4:32 PM

Get a real job What. And get back on the medication while you are at it.

Some day the What will get a job ........

Posted by: guest at November 1, 2007 4:46 PM

"The US is still a major producer of Cars, Wines and Jewelry."

IF Chukie or Joe Six Pack have no money then, Who going to buy this shit?

TW you show your ignorance (in many ways) but since you brought up the declining dollar's effect on these industries you should know that if the dollar declines then the people who are going to buy this "shit" is the countries whose currency is strong vs the dollar - making our goods much more competitive; this thereby helps employment and income in these industries which thereby gives Chuckie and Joe $ to buy this shit too

Posted by: guest at November 1, 2007 4:47 PM

The stock market is on life support. Brain dead. The DJIA wants to fall well below 12,000 but trading curbs, er "circuit breakers", have been activated. And Chopper Ben is injecting more heroin into the economic arm.

http://en.wikipedia.org/wiki/Trading_curb

Massive layoffs are coming. Sell your house and get out of stocks now and get your ass into cash (dollar will eventually rebound long term) and gold (but get set to cash out in a year or so). If you still owe after sale (underwater), so what, you'll have a better chance of avoiding foreclosure/bankruptcy. (No, this is not spam)

Can't say you weren't warned.

Posted by: guest at November 1, 2007 4:59 PM

Sell your house? Are you for real 4:50?

Posted by: guest at November 1, 2007 5:37 PM

4:59, did you really say "Sell your house and get out of stocks now.."? Are you joking?

You subscribe to the buy high sell low theory? That's great investment advice - NOT! You must work at one of those banking houses that got us in all this trouble in the first place.

Posted by: guest at November 1, 2007 7:20 PM

"I'm so over the rude, ignorant and incessant posts from "The What" that my days of reading Brownstoner are now over.

Thanks for ruining it for the rest of us, TW. Your brilliant ability to copy and paste the most obvious national headline RE links + your boorish derogatory comments to other posters have absolutely ruined this site."

Guess what?1 I don't care. In time, know go away.

the What

Someday this war is gonna end...

Posted by: guest at November 1, 2007 8:18 PM

""The US is still a major producer of Cars, Wines and Jewelry."

IF Chukie or Joe Six Pack have no money then, Who going to buy this shit?

TW you show your ignorance (in many ways) but since you brought up the declining dollar's effect on these industries you should know that if the dollar declines then the people who are going to buy this "shit" is the countries whose currency is strong vs the dollar - making our goods much more competitive; this thereby helps employment and income in these industries which thereby gives Chuckie and Joe $ to buy this shit too"

I had to read your comment 3 times to make sure I wasn't bugging.
Let ask you 1 question, do you get paid in Euros or British Pound Sterling?

This is called Stagflation. Same wages higher prices!!!!!!!!!!!!

If you do then, this would be true. But Dumbass you get paid in DOLLARS. That are LOSING their value everyday. You have to ether get more DOLLARS or another currency

This statement that you typed shows the ignorance of America.

The What

*** Shakes head ***

Someday this war is gonna end.........

Posted by: guest at November 1, 2007 8:45 PM

Now for the nitecap.

Dow plunges 362 points on credit fears

http://money.cnn.com/2007/11/01/markets/markets_530/index.htm?postversion=2007110118

"It's continued concern about subprime and the pricing of these securities," said Owen Fitzpatrick, head of the U.S. equity group at Deutsche Bank.

This after the FED cut rates!!! We're fucked!!

The What

Someday (soon) this war is gonna end.....................

Posted by: guest at November 1, 2007 9:10 PM

Hey 9:48 How much exposure do your bank have in Mortgages?
If you can answer that question, you would not argue with me.

"So, you need to face this reality, you baboon: People like me are not suddenly going to become poor. But you might."

Oh no homeboy, I'm out of everything. I have been poor before and know how to survive. Can you stand to lose everything? I leave that up to you

Good night

The What

Someday this war is gonna end.........

Posted by: guest at November 1, 2007 10:45 PM

To do list for The What -

Get a job
Take medication regularly
Learn to spell

Some day The What will get a grip ......

Posted by: guest at November 1, 2007 11:52 PM

Why does nobody seem to remember the late 80s-early 90s when prices went down significantly even in prime areas of the city? It seems like no one can bear to think of prices going down (owners/brokers that is) even though the run up in the last few years is clearly unsustainable. I have seen prices start to come down. Now, I own my apt but want to buy a house, so I have mixed feelings about this since obviously more affordable houses will mean that it will be harder for me to sell my PS apt. So it's cuts both ways, but even I'm stunned by the value we were given for our apt which has doubled in the last 5 yrs. Our incomes certainly have not, and the buying power of our savings has not.

Posted by: guest at November 2, 2007 12:24 AM

12:24- very well said. I couldn't agree more that people who deny that prices can/will come down just have blinders on and aren't looking at historical trends. This is so similar to Dot Com/high tech hysteria. No one believed that those companies were overvalued until all of a sudden the truth was staring them in the face and their portfolios were plummetting.

I have inlaws who live in FL and who bought so much real estate (speculatively) in 2005 believing that there was inherent value in these properties in spite of how ridiculously high they were priced and the ridiculous run up they'd had. Well, we all know the FL real estate story. They are not able to sell their investment properties and are renting them out at a loss right now.

People just forget to use common sense, which perplexes me time and again.

Posted by: guest at November 2, 2007 7:26 AM

To do list for 11:52 -

-Get a clue
-Stop smoking crack and drinking koolaid regulurly
-Learn to focus on the real issue (your equity's going bye bye)

Copycat What

Posted by: guest at November 2, 2007 10:38 AM

"Why does nobody seem to remember the late 80s-early 90s when prices went down significantly even in prime areas of the city?"

Because, at that time, most of these first-time-buyers on this blog were more concerned with their senior prom or SAT scores or "Saved by the Bell" to concern themselves with real estate. I remember, around 1994, telling older guys at work that, "you can't lose in real estate", and being vigorously corrected to the tune of "Oh yes you can!". I never understood them until now.

Posted by: guest at November 2, 2007 11:01 AM

"I own my apt but want to buy a house, so I have mixed feelings about this since obviously more affordable houses will mean that it will be harder for me to sell my PS apt."

SELL-RENT-BUY. After adjusting for inflation, you'll never see your 2007 value again in your lifetime. Take your profit now (if you're not underwater). Rent until the sky stops falling. Then buy for a bargain, say 2010. When the market's going up, buying means downgrading your residence (quality/location). When the market goes down, you can upgrade. It's quite simple.

Posted by: guest at November 2, 2007 11:07 AM