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
Prices in New York City are falling. I don’t see the actual surprise here. We ARE in a recession in one of the worst economic periods of most of our lives. The outrageous assumption that prices are going to dive down into the ground by 44% seems a bit outlandish to me. The number one rule in real estate has always been location, and New York City has IT. Real estate prices will fall lower, but the unique location of being in New York City is still going to have prices above what they would be in Kansas or another market. New York is New York, it’s different here.
http://www.nestseekers.com/Company/Agent/809
No one should write off GS now or ever. They are the best of the best. A lot of what happened was based on panic selling of their stock. They are still around unlike many banks and investment houses. They called the sub-prime crisis and if it hadn’t been so bad they would have been laughing all the way to the bank.
While you can laugh at the $200 a barrel prediction, you should recall they also (same analyst, btw) predicted $100 barrel oil when it was $30.
The guys who really called the NYC real estate mess were the big insurers. The guys who have been around for generations and plan to stay that way. MetLife unloaded almost all their commercial real estate holdings at the top of the market, and were quite open about saying they believed the market had peaked. TIAA/CREF sold a lot of buildings as well. They must be happy campers right now.
Piece of puzzle that is still missing is why people would sell for deep discount if they don’t have to. This is the same discussion following 1980s condo run in Manhattan. Developers will hold and rent out. Occupants will stay put. Investors will rent out (many weren’t intending to sell anytime soon anyway). Many will refi along the way. Rental mkt bears the brunt while economy sags, and then catches back up in time for the next down cycle. buy/sell lead in and back out.
The only segment this mkt materially helps is a buyer who is looking to get a 30 mill place for 25 mill.
Remember when the market crashed in 1987 and Wall Sreet was over? Problem with this blog is that most commenters started paying attention 3 years ago.
“what about renters with no cash? how will they fare?”
The will fare well if they trade down to a different pad (or negotiate in place) and not up to a nicer one. Rents are dropping too.
(Member Team Bear)
***Bid half off peak comps***
lestat,
try a reading comprehension course. it worked wonders for me in the 3rd grade.
“…35%-44…%”
OUT IN THE STREET THEY CALL IT…
***Bid half off peak comps***
There was no statement. I can’t even tell what you are trying to say. Your post consisted of a bunch of populist ramblings. There is nothing coherent enough for me to disagree with.
leCher,
just because you don’t understand the statement does not negate the truth behind it. or perhaps I offended your politically correct sensibilities?
oh my. me thinks he doth protest too much.
Legion, you just lowered the average I.Q. on this board with your cocktail of irrelevant quasi-folksy rubbish and awkward hyperbole. Please don’t post again.