Knakal: Supply, Not Demand, the Problem This Time
When comparing 2009 to the recession of the early ‘90s, a striking difference is that today there is a tremendous amount of patient capital waiting on the sidelines eagerly awaiting buying opportunities. The reduction in sales volume in the early ‘90s was primarily a function of lack of demand, as supply was significant. Today, the…
Good Mopar but the problem is the 20-25,000 dollars a month. If that is suppose to come from the rent you will be collecting and that way the market is headed I don’t see rents at 5000 dollars a month per floor. If rents are 2000 dollars a month your house income is circa 80,000 dollars gross. The banks not I will assess you house at about 700-850,000 dollars if you do not have proper collateral to cover the full value of your home. That is why I don’t understand how people are asking 2-3-4 million dollars for investment properties.
Hannible, others, houses are cheaper to buy now than they were in 1990.
$4 million at an interest rate of 6.5 (with 20 pecent down) is $20,000 a month.
$1.9 million at an interest rate of 20 percent (with 20 percent down) is $25,000 a month.
Well there is a limit supply of homes because our wonderful mayor said not too long ago that there was room for 1 million more people in our city-I think he wants us to all sleep in bunk beds. If unemployment really starts to hit the city then you will see as much as half a million people leave the city. That will be more or less 200,000 high end apartments empty! Once severence pays and unemployment benefits run out so will the high rent money. Unless renters get TARP money I see alot of forclosures on the way!
People seem to think that markets react very quickly like the stock market. People forget that it took over 4 years for the city to hit bottom after the 1987 Crash. IsnIt will happen again now.
The thing is that the flipper market is dead and all recent buyers are now stuck with a small loss since the financial meltdown (say 5%). Most people are waiting it out. Give it some more time and people will be forced to sell due to relocations, divorces and job loss. The average person moves within 5-7 years in the US.
Sad to say that this is a natural phenomenon. However, home prices increasing 20%+ year is not natural in the long rrun.
“Brownstones are less than 5% of the Brooklyn market by volume.”
Before and after the easy credit spigot was turned on and then off.
“this time it’s different”
Famous last words.
***Bid half off peak comps***
Yeah, this time it’s different.
😉
Brownstones are less than 5% of the Brooklyn market by volume. They are in a permanent and increasing state of scarcity. THis is not to say their desirability or price will increase permanently, but many of the traditional symptoms of oversupply simply don’t apply to this kind of housing stock.
I don’t get it — what supply is constrained? The only constrained supply I see are the flippers and “Irish carpenters” thinking they can invest in NY real estate and make a mint. What about all those half-sold (at best) new condos all over the city? There is plenty of supply (albeit not brownstones). Coops/condos — not selling — no one is even trying unless they are are forced and pricing is down 20-30%.
In 1990 interest rates were very high. That is another piece of the equation. No one thought we would survive that. things were very very bad. New York Magazine wrote an article about someone who actually bought a house in Cobble Hill, because no one could believe that there was anybody buying anything anywhere.