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.
dave, I disagree with your comparison of trophy homes in the major cities. Perhaps there is a price differential, but by no means is it significant enough to hold out as justification for some kind of rebound in the NYC market. I really am surprised at how willing people are to believe the statistics thrown out by these surveys without going behind the numbers to understand them (particularly when they seem so obviously wrong to someone who moves around a lot).
Dave, you know I’m always happy to give DOWhat’s prediction of the world ending on October 16. We have 34 days left (why did DOWhat stop his countdown? No probs – I’ve got his back)
“I say in about 90 days all hell is going to break lose. The crash will be very very bad. Then you will here from me in a big way. When I post something like this: I love the smell… There will be no refuting any of my arguments!
The What (Tick.. Tick.. Tick..)
Someday this war is gonna end…
Posted by: what at July 18, 2008 2:52 PM”
Oh wait, I almost forgot: In the middle of all of this, expect a big dump of new condo inventory into the NYC market. Let’s see how condo prices hold up when a few thousand (at least) new units get dumped on the market while it sinks in that this will be an unhappy Christmas for Wall Street.
Sorry guys, this is just reality. The rest of the country has been going through a very healthy correction and is therefore ready for a rebound. NYC real estate is still bloated and simply will not rebound before it has a correction.
lechacal, even trophy Manhattan townhouses are cheap compared to London, Tokyo, Paris and Hong Kong
Dave….of course we are in this mess because of lax standards. And we will get out of this mess by banks requiring the 10-20% down, as you mentioned.
But here is the problem; most Americans are so in debt there is no way they will have 10-20% for a downpayment. At least not for at least another 5 years or 10 years at current prices. Lower rates are not going to help when people do not have job security or a large cash reserve. Banks (the few left) can resist the lowering borrowing costs because there will no longer be a market to resell those loans.
The national market will rebound. NYC will not.
And no, all of the issues with those financial institutions are very much not behind us. Expect very significant layoffs over the next year as these institutions try to figure out how to become profitable again in the new financial world. Expect many laid off bankers and lawyers to sell their homes. Expect few buyers to be waiting to pick up their homes for anything close to top-of-the-bubble prices.
Also expect a significant drop-off in foreign buyers, which have been a big driver in NYC real estate (unlike the rest of the country, which, as I pointed out, will rebound while NYC founders).
And the surveys that show NYC as a not-particularly-expensive city as compared to other financial centers are misleading. Consider what counts as “New York City” in that survey and what counts as “London” or “Paris” or “Tokyo.” New York housing, at least where anyone who actually works in the global financial engine wants to live, is amazingly expensive.
If B of A buys Lehman, not only will the equity be worthless but they won’t pay the bondholders just like they did with Countrywide.
There will be inside deals to retain employees, many of the best are already jumping ship.
7andfive….the issue on buying a home and getting a mortgage has simply reverted from one of too much liquidity and lax standards to one of much more logically tighter standards. Should mortgages ever have been given to people who can’t put at least 20% down? I don’t know but that’s the issue now. There is plenty of money out there as long as you are a qualified buyer. Whether that means 10%, 15% or 20% down (plus of course an acceptable credit score) is open for debate.
When the Fed lowers rates it’ll open up the mortgage floodgates again. Banks won’t be able to resist the lowered borrowing costs and the higher mortgage rates!
Hey Dave,
How’s life? Well you know I must disagree with your economic assessment. “and the sixth, lehman will likely be sorted out today or Monday.â€
Selling of a bank does not make it sorted out. The Macs are not out of the woods yet, in fact we’ll see more movement in the next few months. WAMU will probably be under by the end of the year. There are very few banks in this country that are on solid footing.
But I wish that was the least of our problems. It doesn’t really matter what the interest are if there are not enough banks with money to lend. I think most people are still bullish on buying a house at a lower price but they can’t if they don’t have a job or a bank to lend them money.