Goldman: NYC Prices Have a Ways to Go
“New York apartment prices are very high relative to the observable fundamentals. Using three alternative yardsticks—price/rent, price/income, and affordability—we find that prices would need to decline by 35%-44% to return to the valuation levels seen in the 1995-1999 period, before the start of the recent boom.” — Goldman Sachs via Curbed
HA slopefarm. TOTALLY
*rob*
From WSJ on Alex Rodriguez (AKA E-Rod in the playoffs):
Has cut the asking price of his Coral Gables, Fla., home to $12.3 million — just above the $12 million he and his estranged wife, Cynthia, paid for it in 2004. The Yankees slugger first listed the house in the fall for $14.9 million.
The 33-year-old Yankee is also trying to sell a Manhattan apartment for $10 million, $4 million less than what he had originally been asking.
Maybe real estate is acting so “Local” after all.
BRG,
You left out me, Wasder, Mrs. Limestone, Denton et. al, just paying our mortgages, enjoying our homes, swearing occasionally at contractors, enjoying our lives and raising a glass every once in a while.
Oh, and Rob will still be yelling at annoying kids in the hall (or strapping on some roller blades, bringing out a boombox with some vintage Abba and joining them).
omg miss muffet, please give that dead horse a rest. please?
*rob*
Also, folks, if you can tune in to Brian Lehrer right now (or check out the podcast later) which has a story on now about how NYC real estate market is hurting. Amazingly, there is a Corcoran broker on right now still trying to defend the recent crazy prices (reassuring a woman who just paid 2.5 mil for a condo that that is fine). It’s this broker’s stupefying defensiveness – especially in the face of the ever-mounting evidence of a massive correction such as that predicted by the illustrious Goldman Sachs – that drives my continuing posts. Lechacal is right that there is no reason to rush to buy now – every day, this is confirmed for us. Sure, we’re actively looking, but would only buy at this point from a buyer willing to give us a major discount to reflect the new reality.
cw…where are you?? what’s that link you used to compute inflation adjusted prices over very long periods of time????
“Eagles Defense “Sachs” Manning”
“NY Fans Foresake City, Move To Midwest”
“Property Prices Plummet On Loss Of Giants Fans”
“World Ends”
Correction: I wrote “relative to inflation”, but I meant valuation levels, meaning prices relative to fundamentals (rental value, buyer’s income, reproduction costs) — are remarkably consistent.
Although Shiller does also show that real estate prices in large important cities basically don’t go up much more than inflation.
It’s worth following the link to curbed. Goldman hedges their entire analysis saying basically “there are a lot of other variables, including reductions in crime, etc, so who knows?” Brilliant.