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.”
Prices certainly have come down a lot in New York already. They are off 30 to 40 percent in the “marginal” areas of brownstone Brooklyn since 2006 and 10 to 15 percent in the “prime” areas since the beginning of the year. This mirrors what has happened in the rest of the country already during this downtown and previous ones. The question is how much worse can it get? There are likely to be worse job cuts (and no new job creation) than in previous downturns and if you can no longer do 20 percent on a jumbo loan, that’s a big difference. But don’t forget there are plenty of wealthy people living here. Barring complete collapse and no police, we’re not going back to the 1970s. New York City is becoming a wealthy area like Boston, SF, Paris. Except for the 1970s, it’s always been a place that’s difficult for the average person to afford going back to the 1840s.
wine lover – I would not call 500-600 psf for a brownstone in a prime part of Brooklyn that cheap. That’s still 1.4-1.5 for, say a modest 3 story brownstone. And yet, sellers still have such properties on the market for over 2 million dollars which is insane. I agree that demand has increased in recent years, but I’m not so sure you can count on that to prop up prices forever, esp when NYC is facing an era of potentially higher taxes, service cuts, etc. Just look at every other sector of our economy right now. Demand has fallen off the cliff for just about everything else, so why would NYC real estate be the one sole exception to this? But yes, I agree that finding a place you like is hard – we have had the same experience in buying in the past. This is why we are actively looking all the time, and not trying to “wait” til market bottoms out per se — but we are also not financially stupid, so will refuse to overpay even for a nice place we like – as we’ve also learned in the past, there’s always another.
miss muffett – well, hell, i’m not telling anyone to buy. but, having been a brownstone buyer in 1996, i can say that i don’t think we’re going anywhere near those prices not because of the bubble, but because the demand for brooklyn has increased beyond immensely huge for brooklyn property. when i moved to brooklyn then, barely anyone i spoke to in day to day life had a clue as to why i did it or where the hell i lived.
the demand isn’t going to collapse to the point where the psf prices on brownstones become cheap.
in any case, in any market it’s very very difficult to find any property you want to buy. i’ve always had to look really hard to find a place that worked in my price range regardless of what that was. hell, i’d sometimes look at places i couldn’t even afford and hate them.
if you ever find something that works, i would say buy that place, not just buy to buy.
muffett,
dont forget that many of those old time buyers may have HELOC-ATM’d their way into poverty.
wine lover – you misunderstood me. I did not mean that the people who have lost their retirement savings are those who bought at the height. On the contrary, there are tons of people out there who bought a long time ago who are probably now retirees or close to it. People who bought a long time ago (more than 10 yrs) can still make a killing, even if prices come way down, since prices skyrocketed in last 10 years – all those folks who bought brownstones for less than 500K that shot up to 2-3million, and now, even if they go down to 1.5-1 million, it’s still a lot. Even many people who bought as recently as 5 years would do fine even with a major correction. I’m not saying this downturn must last 10 years, but I also think it’s possible it could. There are too many variables at stake for any of us to know the answer. How policy-makers react to this crisis will make a big difference. But many economists and financial experts recognize that this is a unique historical moment that followed a very long, sustained bubble. And, no matter what you or others say, some people always need to sell. Also, the population pressures you quote could also change in the years to come – it’s happened before.
What galls me is the assertion that now is a great time to buy in NYC since there is a perception that prices have come down so much, but historically, they are still unbelievably high. The only difference is that they are now no longer going up, and more and more sellers are starting to crack and either start cutting prices, or in some cases, are starting to put things on the market at less aggressive prices. But they are in the minority. Eventually, others will join them. This is all classic bubble stuff since it takes a while for sellers to finally adjust to new price levels. But pretty much everyone on this blog, bulls included, have now conceded that prices will readjust – the only real debate is how much, how long.
miss muffett – well, yes, you can always sit tight and rent. who on this board bought at the height, but somehow needs to sell to fund their retirement in 2-5 years? that makes them 60 now? anyone near retirement certainly did not buy a house at the height of the market.
personally, if i had to move, i’d rent my place out. i know for damn sure, that in the not so terribly long run, i’ll be making plenty of money.
also, whole supply and demand thing can not be so easily dismissed either. we still have a small supply versus a large demand in regards to real estate in new york city, but right now, everyone is in fear mode, so no deals are happening. supply will actually really really go down when the following 3 things happen –
1) new buildings go rental instead of condo
2) population increases
3) very few new condo buildings get started/built
AND, unlike the last downturn, interest rates are crazy crazy low. i remember when in bought in 1997, and couldn’t believe the 7% + rate i got. you cannot talk about previous time periods without talking about interest rates. they were up in the teens!
don’t get me wrong, i understand the the world is in a financial crisis right now, but the 10 year downturn won’t happen.
must. . . resist. . . picking on miss muffett. . .
so. . . difficult. . .
Traditionamod – re: your argument about how a lot of people will sit tight – many, many people were not able to “sit tight” during the last market downturn (late 80s/early 90s) and financial conditions are arguably MUCH worse now than they were then. Many people can’t just easily rent out a whole house if they are underwater and/or need money for their retirement since their 401K has vaporized. So I find this a specious argument. Also, I put little faith in the “experts” saying this will be a short-lived problem – where were these experts when the writing was on the wall? Cripes – was Enron not enough of a warning bell? Let’s face it, we’ve lived through an unbelievable asset bubble and the correction will be long and painful – if anything, New Yorkers who bought real estate longer than 3-5 years ago are a bit cushioned since this is the last of the assets to be affected so can sustain a 50% fall and leave many people breaking even.
“Fox reports, “Henhouse is secure.”
Thank you for cracking me up, yet again, Snark, I needed that!