Bank Predicts NYC Market to Fall Another 40 Percent
If a certain bank analyst is to be believed, New York real estate has a long way to go still before reaching bottom. A Time article earlier this week cites a Deutsche Bank report predicting that housing prices in the New York metropolitan area will fall 40 percent from their March levels. The major driver…
If a certain bank analyst is to be believed, New York real estate has a long way to go still before reaching bottom. A Time article earlier this week cites a Deutsche Bank report predicting that housing prices in the New York metropolitan area will fall 40 percent from their March levels. The major driver of the bank’s estimate is an affordability index that shows New York is still relatively a very pricey place to shack up.
New York Home Prices Forecast to Drop 40% [Time]
Photo by tomodea
if prices drop 40%, NYC residents (bull or bear) in big trouble. banks will be coughing blood, layoffs everyday, big tax hikes to plug growing NYC gov budget shortfalls,…..
was there a mention of how long they predict the 40% drop would occur?
“I am pretty sure there would be more than a few people who might be interested in that.”
Posted by: AndYouWillKnowUsbyTheTrailofRenters at June 18, 2009 9:51 AM
Sure – and they’ll stay interested right up to the point where the banks won’t lend them the money….
They are talking about a drop in the NY metropolitan area which includes NJ, Westchester, and, probably, Long Island. Yes, prices in subdivisions within a 2 hrs bus commute from New York City keep dropping. What’s new?
Here’s the article on bberg relating to the research.
U.S. Home Prices to Fall 14% More, Deutsche Says (Update1)
2009-06-16 17:54:22.674 GMT
(Adds New York’s decline in fifth paragraph.)
By Brian Louis
June 16 (Bloomberg) — U.S. home prices may fall another 14 percent, led by the New York and Orange County, California, metropolitan areas, before reaching a bottom as an increase in unemployment offsets lower prices, Deutsche Bank AG said.
“Affordability is no longer the driving issue in the housing market, and we believe prices still have a ways to fall in many areas before home prices reach their trough,†Deutsche Bank analysts led by Karen Weaver, wrote in a report yesterday.
“The bottom is getting closer, but we are not there yet.â€
Home prices are forecast to fall 41.7 percent from their peak, Weaver said. That’s higher than a forecast she released in March and reflects “the actual declines to date and the expected future impact on home prices from rising foreclosure inventory and unemployment.â€
In March, Deutsche Bank had forecast a 16.5 percent decline in “current-to-trough†prices. While today’s projection is less than that, many metropolitan areas will still see steep declines, the report said.
In the New York metropolitan area they may drop 40.6 percent from the first quarter to the bottom, the report said, less than Deutsche Bank’s March estimate of 47.4 percent.
Financial firms have cut more than 183,000 jobs in the Americas in the global credit crisis, driving down prices and rents in the New York area. In New York City, Manhattan co-op prices slid the most since 1995 in the first quarter, according to data from Miller Samuel Inc. and broker Prudential Douglas Elliman Real Estate.
Orange County Declines
The New York metropolitan area’s median home price peaked in the second quarter of 2007 at $552,000 and has since fallen to $446,000, the report said.
Home prices in Orange County, California, are forecast to fall another 19.1 percent, Deutsche Bank said. Prices in the Los Angeles-Long Beach-Glendale metropolitan area may fall another
11.3 percent from the first quarter to the bottom. In Riverside- San Bernardino-Ontario, they may fall 14.3 percent.
California leads the nation in foreclosures. U.S.
foreclosure filings surpassed 300,000 for the third straight month in May and may hit a record 1.8 million in the first half of the year, RealtyTrac Inc. said in a June 11 report.
The U.S. unemployment rate will likely exceed 10 percent by early next year, Deutsche Bank said.
For Related News and Information:
For U.S. housing and mortgage data: HSST For economic data: ECO Stories on mortgages: TNI US MOR Stories on the homebuilding industry: NI HOM Stories on the U.S. housing market: TNI US REL U.S. home foreclosures: HOMFCLOS GP U.S. economic forecasts: ECFC News on mortgage delinquencies: STNI MORDEL Most-read property stories: MNI REL
–Editors: Alan Mirabella, Sharon L. Lynch
To contact the reporter on this story:
Brian Louis in Chicago at +1-312-443-5920 or blouis1@bloomberg.net.
To contact the editor responsible for this story:
Alan Mirabella at 1-212-617-4149 or
amirabella@bloomberg.net.
This is such a joke. People need to use common sense. Home prices in Vegas and Phoenix can fall 50%+ because there is an ungodly amount of undeveloped land and no constrain on supply. Prices can fall to ridiculous levels in Detroit because no matter how cheap housing is people will not be running to move or invest there. Unless the 40% decline is from 20% inflated asking prices values will not fall that much here. This is one of the 5 best, brightest and most in demand cities in the world people! There are 8 million people here and even in this economic climate more people are arriving everyday. Not to mention people who would want to invest in NYC property. So if prices dropped 40% and a condo that went for $1m in ’07 in was now $600k I am pretty sure there would be more than a few people who might be interested in that.
Can values fall that much in places like LIC, Harlem, Crown Heights or other “fringe areas” that were not traditionally strong but really ramped up in the last 5 years? Of course they can. But to have headlines predicting 40% declines in overall NYC housing is just foolish. If prices do fall that much I am becoming a real estate agent. Sure the checks will be smaller but I am sure volume will make up for it. Maybe I just believe in this great city a little too much, but you are not going to convince me otherwise.
It’s great to look at affordability, but it ignores two of the major reasons why prices have not fallen as much in New York as the rest of the country: investment and condominium development. New York is one of the few places in the country where rentals are relatively safe long term investment. On top of that, the fact that such a large percentage of available properties are new condos essentially gives the banks control of prices for most of the city.
what a crap article. zero value added. how much did they make on advertising by getting people to click on that? it’s outrageous what passes for news these days.
I’m going to try to find the real DB article and see if there’s any substance to it. By the way, denton, DB has a very reputable research group & is a major presence in the US.
Err… at a 40% discount, NYC is STILL at a premium. Do you even realize how expensive this city is housing wise?
A $75,000 job here is $48,000 elsewhere for a REASON. It’s not the price of coffee.
At least it’s almost summer. It can be quite refreshing to be underwater when the weather’s hot!