Quote of the Day
I pick cereal very quickly thank you very much. Just don’t want to pay a crazy price when I am literally seeing price cuts in the hundreds of thousands for some properties we’ve looked at (but rejected for other criteria). There is basically unanimity that prices will go down in 2009, and possibly through to…
I pick cereal very quickly thank you very much. Just don’t want to pay a crazy price when I am literally seeing price cuts in the hundreds of thousands for some properties we’ve looked at (but rejected for other criteria). There is basically unanimity that prices will go down in 2009, and possibly through to 2010 and beyond. We only sold a few months ago, and the meltdown happened, so we’re just actively looking, but not rushing. We have a list of flexible criteria for the property we’re seeking, of which price is just one element – but since price impacts so many other parts of our lives – esp time spent with our kids! (big mortgage = more hours working to pay the bills), price is a major criteria, esp in an environment when prices are headed down.
— by Miss Muffett in Last Week’s Biggest Sales
dittoburg, just because the UK is screwed does not mean that the US is not – it’s all relative.
The dollar’s strength since the middle of the year to the end of November caught a lot of people offside and it’s mainly down to the underestimation of the dollar being the global currency of choice. But that game is over now.
Whuh, what are you talking about. My dollar buys way more now than it has for the last 5 years in my home country (UK). And in the US we’re on the verge of deflation, at least disinflation, that is what we are trying to avoid. Please explain what you mean…
My gas tank now costs half what it did to fill in the summer.
Exactly –the prudent are now getting screwed. Setting aside how much mindless housing speculation contributed to this fiasco, the next wave of “bitterness” won’t be limited to renters. First it will be everyone who stayed out of debt and lived within their means; then it will be everyone –i.e., every American who, after celebrating the return of their house price to par, realizes their dollars buy a third of what they used to. Dollar is right now cratering, thanks to Helicopter Ben. But some people still think they’ll emerged unscathed, because their investment properties in urban fringe areas are still “worth” x number of dollars. Incredible.
“The Chicken;
During the 90’s, the Bank of Japan set interest rates to zero. It did not stop the long deflationary cycle there.”
Posted by: benson at December 16, 2008 4:44 PM
“But Dave, it’s not a trade. ZIRP did nothing to keep the Japan property bubble inflated in the 90s; and now the Fed is totally out of bullets. If this cut doesn’t stave off deflation, we all just sit and watch as prices slide, slide, slide. Also, if I buy now with government-mandated low rates, what happens to the price of my house when rates rise? (Hint: ouch.)”
Posted by: Whuh at December 16, 2008 5:11 PM
Whuh, the Fed is not out of bullets yet. It has exactly one left – buying back long-dated government paper. ie turning on the printing presses (and you can bet Helicopter Ben has been waiting for this day).
and Benson, this is why today is not like 90’s Japan….
And that is why responsible savers like myself are f@#ked.
HOBOKENROCKS:
Those high rents you’re talking about are for apartments that were leased months ago, long before the stock market and housing market’s imploded.
Our economy is a shell of what it was a year ago and current market rents reflect it.
NYC rents are already dropping like rocks in an avalanche.
Brooklyn rents have already dropped 25% in the last two months alone. The days of $2000/mo rent for a small one bedroom apartment in Park Slope are over, folks. Think $1200 to $1500/mo max next time you have a vacancy, unless you’re willing to hold out for a naive over-payer, in which case your total rent collected for the year will decline nonetheless since you’ll sit for months with a vacant apartment while you wait.
Rents are more like stock prices than housing prices because they change nearly immediately when demand declines — which makes perfect sense since a one year rental lease can be increased just a year later, and collecting a significantly lower rent is still far better than collecting no rent at all.
When folks sell their house, it’s usually the biggest financial deal of their lives, and there’s no going back if they sell too low, so obviously sellers are much more reluctant to lower prices than are rental landlords. But little by little, as sellers are forced to drop their asking prices in line with their competition, a big time NYC price correction will occur which may take years to bottom out.
“Huh? Schiff was right for three years, and now because stocks have popped back to where they were ten years ago, you think you have the right to cut on Schiff? Some people are headed for the bread line.”
Uhm Schiff predicted the fall but he also tried to predict what was going to go up. He is wrong on that. He predicted that gold would be 1200 by now and 2000 by early next year.
He also predicted the dollar would collapse this year. He is also wrong on that.
Many of his predictions about what was going to go up along with the market crash is wrong.
But as I said, his ‘edited’ predictions makes a nice YouTube video.
Actually I have a two family each apt is paying 1750 a month. My first floor apt is underpriced by at least 250 dollars since they get the deck and backyard access. These rents are actually low compared to what others get in the area for similar apts. I am happy to have good tenants and won’t be raising their rents any time soon.. So I think I am fine. This is jersey city though. In Hoboken my home would be over 1 million and my rents would be at least 2500 each floor, most likely more since they are true 3 bedroom apts..
Rent is another thing in for a correction. Take for example your rent Hobokenrocks, 3500/month is $42K a year. Using the currently valid 36% of income to be sustainable one would need to make $116K to be able to afford that rent long-term. That is certainly more than most renters make per year. So long term, rents will have to fall in order to actually have a sustainable market of long-term renters. Sure you will get short timers who rnt until they run out of money, but short-term renters are not what landlords need to stay in business. Its ALL due a severe and painful correction