Shenanigans at 279 Clermont Avenue?
When the four-story brownstone at 279 Clermont Avenue in Fort Greene hit the Corcoran website in early July at the surprisingly-low price of $1,382,000, it seemed like a classic, and probably quite smart, strategy for bringing out the bidders. (It had failed to sell earlier in the summer at a much higher price with a…
When the four-story brownstone at 279 Clermont Avenue in Fort Greene hit the Corcoran website in early July at the surprisingly-low price of $1,382,000, it seemed like a classic, and probably quite smart, strategy for bringing out the bidders. (It had failed to sell earlier in the summer at a much higher price with a broker called Prospective Properties; we included it as an Open House Pick for $1,748,000 back in June.) In fact, there was enough interest that the seller held a “best and final” closed bidding process two weeks ago. One reader who took place in the process and bid over the asking price was more than a little miffed to find out ten days later that the seller had decided not to accept any of the bids. Instead, the listing re-appeared with a new asking price of $1,610,325. Illegal, immoral or just uncool?
279 Clermont Avenue [Corcoran] GMAP P*Shark
Wasder: Happy to do so. As I see it, the following factors are already in place and will cause prices to decrease. As with all things in the real estate market, this will probably take a couple of years at least.
1. Basic affordability issues. As in any classic bubble, people have been swept up in a feeling that they need to get in before prices get out of their reach, which feeds the bubble more. Once this natural cycle turns, the opposite happens on the way down. Put another way, the market has momentum in both directions and the upward momentum has clearly stopped.
2. Financing. There will probably never again be the same cheap and readily available mortgage financing that there was in the bubble run-up. This will put negative pressure on the market for a while.
3. Local economy. New York is going to go through a period of higher-than-usual unemployment in the finance industry.
4. High levels of foreign ownership (foreign buyers can turn into foreign sellers, and unlike residents they are not replaced by natural turnover). This is similar to the high levels of speculation in Florida, although the motivations of the foreigners is different.
There has been a very worrisome issue out there that was highlighted by Bloomberg News today. The credit rating for NYC is likely to fall because all of the banks and brokers and investment banks have booked all these large losses due to writeoffs. These losses are likely to carry through well into the next decade which means that the losses will offset any income these companies have. Where will the tax revenues come from????
The result is that these companies will not be paying any income taxes to NYC and NYC for many years. In fact, since they have prepaid some of these in early 2008 they are looking for refund of that money now.
http://www.bloomberg.com/apps/news?pid=20601110&sid=a4A3yRSaEHRA
“The economic forces that will cause the Manhattan and Brooklyn markets to drop are already in place.”
Please elaborate on this comment. Thanks.
Yeah, timing is a bitch. I wonder though why so many have the need to be right about the end of the world as we know it, the same as I wonder why so many are on this board trying to make a fast buck. Neither irrational exuberance nor “walking bummer syndrome” help anybody out too much in the long run.
…or Dow hits 8000. Whichever.
A few observations:
1. You should not assume that there is so much correlation between the stock market and the real estate market. Prices went up 2000-2003, when the stock market went down (a lot). There is much more of a correlation between the real estate market and interest rates (e.g., 2000-2005).
2. I would be astonished if the S&P hits 800.
3. The economic forces that will cause the Manhattan and Brooklyn markets to drop are already in place. They just need time to work. I don’t think the S&P is going to be particularly relevant to how this plays out.
wasder…DOW8000, through the use of his name, is making a prediction on an anonymous internet blog. He has not told us if he actually is short the market and if so, what he recommends as the short positions.
He has used that name, as far as I can tell, since July 16…when the market was 11,288 and it is now 11,631 so if he is short, he is losing money.
Timing is everything and the thing most people get wrong!
Nope, 2003 was not that long ago. I don’t know percentage-wise what the difference was between average townhouse prices in 2003 versus today but I have given up worrying about it. I made my choice, I bought a house for my family to live in in Clinton Hill and that is where I will be for the long haul, so worrying about every drop and rise in property values does me no good (does it do anyone any good to obsessively worry about things like that they can’t control?).
I am interested in your username though DOW. I guess that is a prediction of yours as you seem to be confident of your predictions of economic doom (malaise?). I am not arguing with you because as I said, I have made my choice. But are you really predicting the economic conditions in your user name?
“What would be the effect on the housing market if the DOW did in fact return to 8000 sometime in the near future. And when was it last at 8000?”
The effect would have to be significantly detrimental to comps because of a spike in unemployment and further tightness in lending. At worst, I would expect prices to return to 2003 levels. But just like widespread greed, widespread fear can make things overshoot.
Think about it. 2003 was not that long ago.