Housing Crisis Will End on June 30, 2009
So says James Cramer in New York magazine this week. Prepare to break out your wallets on that date, because housing prices, he says, will bottom and it will be “the best opportunity to buy since the 19891991 real-estate crash.” He gives 10 reasons why, including the eventually evening out of supply and demand; the…
So says James Cramer in New York magazine this week. Prepare to break out your wallets on that date, because housing prices, he says, will bottom and it will be “the best opportunity to buy since the 19891991 real-estate crash.” He gives 10 reasons why, including the eventually evening out of supply and demand; the $300 billion mortgage relief legislation, turning high-interest mortgages into more modest, 30-year versions; prices lowering so much in some areas that buyers won’t be able to resist; and the slow bottoming out of New York City. Immigration and population growth will play a part too, he says, and it looks to him like we hit bottom this summer and are starting on the slow road to recovery. Well, not that slow, apparently. Who out there agrees?
End of the Housing Market Free Fall [NY Magazine]
Photo by jkeys.
Aussie: Again, focus on change, not static truth. NYC has the most millionaires in the world. Fine. But that is not new information. Prices are where they are (very high) party as a result of that. So pointing it out is just like various other static facts that don’t actually change the direction of NYC real estate, like limited space, or desirability of living in The City. In a sense they impart inertia on prices to the extent they don’t change, but focusing on them at all is kind of missing the point. On the whole, the forces that act upon NYC real estate are changing substantially for the negative.
Compare this to Fort McMurray in Canada. You could point out that it is a frozen wasteland in the middle of absolutely nowhere hidden up in some remote corner of our socialist neighbor to the North. And you would be right. But if you pointed out these static truths as evidence for an argument that prices there should be low, you would be wrong. It turns out Fort McMurray sits near vast reserves of oil that just became economically feasible to extract, and now has some of the highest real estate prices in all of Canada. Again, focus on the change.
And in NYC, nothing is changing for the positive. Except maybe interest rates, but the effect of lower rates will be overwhelmed by things like tighter credit, lower employment, less foreign buying, a surge in new condos on the market, etc.
Chicken,
NYC has the most millionares of any city, not in USA, but in the world. That is just a fact, but if you think millionares didn’t save Florida so they are irrelevant to NYC that is OK with me.
Bit strange to compare NYC to Florida though, so far as what has happened with property.
jim cramer, the emeril lagase of stocks. only if joe shmo could buy a house just like joe shmo buys a stock when jim says to. talking head.
If one believes that history repeats itself and this cycle is not unique, then historically real estate corrections are most accute in the first two years of a drop (i.e. 1989-1991) and then level off. As such, it would be logical that the end of 2008 represents a full two year down turn with bottom in 2009.
http://mysite.verizon.net/vodkajim/housingbubble/new_york.html
Do you also really respect what this guy has to say?
http://www.amazon.com/gp/reader/0385514352/ref=sib_dp_pt#reader-link
He was the chief economist for the National Association of Realtors when he penned this gem in 2005.
Ahh yes, it sounds like 1988 all over again.
I really respect what this guy has to say as well….also not terrible news…
http://www.urbandigs.com/2008/09/manhattan_real_estate_the_sky.html
traditionalmod: Real estate prices are driven by change. You have pointed out a static truth that has not changed. Thus it will not change the markets. Other factors are changing around this static truth, and the market will move accordingly.
I don’t think the housing crisis will end for a while. NYC has been fortunate due to foreign buyers (like London, which my friends call it ‘Moscow-on-Thames’). And the i-bankers are still in trouble. We will just have to ‘bear’ with this for a while.
Park Sloper – I agree that psycology place a huge part in all this BUT – the thing that I can’t figure out is – where will future mortgages come from to support the housing market:
The current plan (universally accepted apparently) is to shrink Fannie and Freddie – well since they provide the vast vast majority of conventional loans, who is going to take their place – clearly investment banks arent going to be jumping into this market for a long long time – nor can they compete with the cost of borrowing that even a smaller Fannie and Freddie will be able to offer.
The Government now controls the housing market 100% – either they open the spigots and re-inflate everything (at the expense of the treasury) or we are in for a long long long period of falling and stagnate home prices.(and do not ignore the demographic reality of an aging population – which will further put pressure on housing prices)