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…
I am experiencing exactly this in the high end. Brownstones/townhouses on the market in Park Slope are few, with the same ones being on the market for a few months. If these sellers are in a position to wait, that is what they are doing and being advised to do.
Once again, fox reports henhouse is secure…
“…in real dollar terms you could realistically see 2012 NYC home prices at 1990 levels. i’m not saying this scenario is guaranteed but its a real possibility.”
Depends on the number you use for inflation, but if you use 4% then the factor is (=1.04^22) or about 2.4 x the 1990 price, 22 years later to get a “real dollar” number. That would mean christopher’s 800k house would be about 1.9Mil, pretty much “brownstones half off” from the peak.
the report is a classic example of attempting to give an air of authority through statistics (to 2 decimal places) but completely missing the point.
The supply might not be significant yet but it will be soon.
Now this could be attributed to a vested interest broker who is motivated to try and keep prices up. However, he would probably be better served to tell it how it is and urge prospective sellers to try and sell now as a means of preserving capital or providing a cash cushion in the event of redundancy.
Supply is hidden. The foreclosure process is chronically slow (If it was faster and less tenant-friendly like other states, voila! We wouldn’t have this thread). And banks don’t want to move that fast anyway because they know it’ll depress prices on holdings they’re already trying to sell. You’ll see. An inventory glut will be front and center very soon.
***Bid half off peak comps***
Massey Knakal can try to paint it whichever way he wants to make his sellers feel better. Supply constraint? Blah, blah, blah. Yo Knakal, financial jobs are evaporating in this city, how is that for a demand function…
Did any of you ever receive Massey Knakal’s sales report in the mail? Over 75% of their closings seem to be cash deals.
Lately I’ve noticed a few owners of 6 to 8, 20 to 40 unit apartment buildings unloading their property, sort of like a last hurrah since prices are slated to go down. Every now and then a see a little spike like that but I think it may have as much to do with individual owners aging as market conditions.
“…in real dollar terms you could realistically see 2012 NYC home prices at 1990 levels. i’m not saying this scenario is guaranteed but its a real possibility.”
Posted by: martis at January 28, 2009 11:36 AM
In my opinion that would be great…
In 1990 the building 2 doors down was offered to us for $800k. In 2003 it sold for $3 mil. In 2005 it sold for $4.4 mil.
I realize that wont happen exactly (the $4.4 mil building will not list/sell for $800k in 2012, etc…) but to see things listed/sell for even half of what they are now would be a very good thing imho.
hannible … you are exactly right. there will be whipsaw unlike anything that’s been seen before. when credit begins to flow again we will be staring at an inflation threat unseen for many decades. the ONLY way to head that off will be by jacking rates up very very quickly. and then BAM! house price declines will resume their declines. in real dollar terms you could realistically see 2012 NYC home prices at 1990 levels. i’m not saying this scenario is guaranteed but its a real possibility.