Babs Corcoran "Not Worried About Real Estate Prices"
She’s not worried at all, in fact. That’s what she told AMNY in an interview. Also, her advice: buy now. “Real estate will be more expensive once again, and everyone will look back and say, ‘Why didn’t I buy then?’ Because the truth of the matter is these are the good ol’ days everybody dreams…
She’s not worried at all, in fact. That’s what she told AMNY in an interview. Also, her advice: buy now. “Real estate will be more expensive once again, and everyone will look back and say, ‘Why didn’t I buy then?’ Because the truth of the matter is these are the good ol’ days everybody dreams about.”
z – hahahahafunny
The truth of the matter is that all of you are right on some level our another. If one bedroom condos in Manhattan below 96th street were to drop to $500K and two bed condos to $750K, everyone would be running to the bank for a mortgage or asking a rich friend to spot them the cash. But, that’s not our reality. Our reality is that we have a bunch of $500K one beds and $750K two beds located in (some cases) remote and/or unpopular areas of Brooklyn.
The bottom line is that those Brooklyn one beds and two beds should be priced at $30Ok and $500K because anyone that can get a mortgage right now over $500K or has a rich friend that can spot the cash, is simply not buying a condo in a remote and unpopular local in Brooklyn…no matter how spanking brand new it is.
Interesting conversation. Would any of you wizards be real investors? If so perhaps someone’s interested in a four unit brownstone in Harlem below 125th street West of Seventh Avenue? Asking $1,050,000…seller financing optional…has existing rent roll but can be delivered vacant.
One more thing, since I just can’t let the distortions stand. TM, you write: “For people to willingly take a loss of several hundred thousand to a million dollars on a brownstone in your main targeted area of Park Slope, Miss Muffet, that would be a foreclosure and bankruptcy.”
Let’s do the math. Prime brownstones were going for around, even under, a million as recently as 2001 (we’re talking 4 story 20 footers in PS for example). As of very recently, the asks on these were 2.5mil and up. So, let’s say there’s a major correction and that kind of property goes for 1.5, which of course is a steep decline. But, that price is still well above what many owners paid, so how is that taking a loss as you say?
I agree that those who purchased at the peak may indeed be forced to take a loss, and those are the people who will fight the hardest not to and do whatever they can but not all of them will be in a position to just rent it out easily to cover their bills anyway, since purchase prices went so far above rents.
I also realize that some people HELOC’ed their way into financial disaster, and that is truly tragic if they are now in over their heads but that’s not quite the same thing as simply looking at the unprecedented rise in prices.
Also mopar, please show stats to back up what you’re saying about prices already being down by so much. Yes, they are starting to come down somewhat, but are still sky-high. And actually, the mid-90s was a great time for people of modest means to buy – I know tons of people who did so. You and the other bulls can say whatever you want, but it all sounds like denial to me. I’m not saying that things will crash (though I think a 50% decline, given the run-up, would not even constitute a “crash) but I am truly amazed by the degree of defensiveness and continuing attempts to explain why NYC will defy what is happening all around us everywhere. Again, I’m not denying that some of the factors cited make sense but they are already factored into prices that are extremely high and went up to clearly unsustainable levels – and even with large declines, would **still** be high by just about any measure.
Traditionamod – we can go back and forth til we’re blue in the face. Cleary we both are coming at this from different points of view. Just curious – what do you think will happen to the brownstone Bklyn market? If you see declines, what’s your gut re: percentage drop?
Miss Muffet, the article on inventory increase you’re talking about in the NYT is exclusively about Manhattan apartments. Most of us are living in Brooklyn neighborhoods where we know exactly what houses are on the market and how many. So it’s hard to convince us there are larger waves of brownstones hitting the market.
The thing is for your targeted areas you can’t only compare the PSF with what the PSF was 5-10 years ago to determine whether it makes sense, because these-a-days you have to compare that PSF to Manhattan too. Those Brooklyn areas are now competitive with Manhattan for the new wave of family buyers. Which is something new.
Traditionalmod – I’d be happy to get a 25-30% discount, and I’m not saying I WANT a 50% discount. Only saying that anything is possible in this market – the only thing that is sure is that some significant correction will occur. Again, exact number depends on many factors. Also, today’s NYT reported the beginning of an increase of inventory – exactly what starts to happen at beginning of the end of a bubble. Will inventory shoot up sky high? Probably not (then again, did anyone expect to see what’s going on in every other financial sector?). But really, I do not think expecting prices in the 500s psf on a modest house is so outrageous – in fact, it’s a pretty healthy number! A lot of places were going for in the 300s as recently as 2001…And there are plenty of good schools (154, 10, 295, 39, 107 etc.) which are hardly in the “prime” areas of PS. As far as I’m concerned, a lot of places are still way overpriced, but we are starting (*just* starting) to see that change and can happily wait to find the right thing as this trend continues. As I’ve said repeatedly, we’re not waiting for a market crash or bottom, just a return to rationality…
The homeowners (and importantly the renters and potential buyers) of brownstone Brooklyn in the 80’s are COMPLETELY different from all those in the same neighborhoods now, Miss Muffet.
Here’s the truth and the rule you can’t get around: For a really big price drop to occur it can’t just be that people have less money to spend but the supply has to increase and do so substantially. So far, the inventory of houses for sale in Brooklyn brownstone neighborhoods has not shot up. In the rest of the U.S. where values dropped the most, those aren’t cases where the inventory dropped too. It’s the opposite; the inventory is huge in those places. Massive. In the places where inventory is more steady they’re doing much better. You just can’t reinvent all the rules of economics.
The ability to rent is what will help keep our available inventory from being so crazy high like it is in other areas of the U.S. and it helps owners hang in there however long it takes. For people to willingly take a loss of several hundred thousand to a million dollars on a brownstone in your main targeted area of Park Slope, Miss Muffet, that would be a foreclosure and bankruptcy. Not just a little ole job transfer or divorce. And so far, thank goodness (because it’s a good thing when people do okay in bad times!) there have hardly been any foreclosures in Park Slope or the historic brownstone neighborhoods. People who have to sadly divorce, or are transferred, will rent out their houses if need be. You’ve said your targeted areas are the best school districts — people don’t have a problem renting out family size properties in those school districts.
In the end the mere idea you’d actually want this to happen so you can invest in a house is so strange. Looking at all the factors above if we had such a huge downturn it would look more like this — a continuous drop in prices over many years resulting in values of prime brownstone neighborhoods reaching 50% lower 8-10 years from now, and then taking 5-10 years to recover. In which case you would SO not be buying, you’d continue renting for a long long time. If you really do want to buy a house in the next couple years as you say, not rent, and hope for it to be a decent investment for you and your family, you should be hoping to find a 25-30% discount and a rebound starting to occur at least 5 year from now. It’s for this reason I actually don’t believe you really believe in the whole 50% discount thing.