NYT: Housing Not Out of the Woods Yet
“Plenty of pain yet to come,” is how one economist summed it up in an article in the New York Times this morning about the country’s housing market. The article’s main point is that the improving data we’ve seen over the past three months may very well be a head-fake rather than the first leg…
“Plenty of pain yet to come,” is how one economist summed it up in an article in the New York Times this morning about the country’s housing market. The article’s main point is that the improving data we’ve seen over the past three months may very well be a head-fake rather than the first leg of a recovery:
Artificially low interest rates and a government tax credit are luring buyers, but both those inducements are scheduled to end. Defaults and distress sales are rising in the middle and upper price ranges. And millions of people have lost so much equity that they are locked into their homes for years, a modern variation of the Victorian debtor’s prison that is freezing a large swath of the market.
Closer to home, the data from Case-Shiller show that New York City is still holding up relatively well, with prices down just 10 percent over the last year, as compared to 30 percent in Las Vegas and 15 percent in Seattle.
Fears of a New Chill in Home Sales [NY Times]
Graph from the New York Times
“Workers at 23 top investment banks, hedge funds, asset managers…. ”
stevieb maybe a broader swath of people is getting paid than I thought. my business is still crushed, so I may be a little biased. That raw number is high, I can’t argue that — but I would still point out that hedge funds don’t have very many employees, i-banks only made so much because they had less compitition, and a lot of the pay is going to be in shares and deferred comp. Still, you’re right, it will support park slope.
“Hey Wasder,
I don’t know how small that number of people is. If half the people in this city are single, and therefore more flexible than those with kids, there are plenty of people able to wait.”
Snark–you are likely right that the group of single or childless people should be fairly large. However, BHO was referencing family size apts and houses in the suburbs so I was responding to that. My situation did not allow for that kind of flexibility but I can’t speak for anyone else.
Miss Muffett–I was careful to say that I don’t know if this is the reason, just guessing. Also careful to say that I personally do not know any renters with kids. However, that doesn’t mean they don’t exist.
I do think that there must be something to the fact that smaller apts seem to be taking more of a whack than whole homes in Brooklyn but I don’t pretend to have some overarching economic or social theory behind it. Just the anecdotal info that its tough to be a renter with kids.
> The number of people … is very small.
Hey Wasder,
I don’t know how small that number of people is. If half the people in this city are single, and therefore more flexible than those with kids, there are plenty of people able to wait.
With all due respect, Wasder, I don’t think you can attribute the softening of the rental market to there being no takers since families would prefer to own. I hear what you are saying about the security that comes with owning your own home, but I also see that rents are relatively cheap these days and in this climate, I’m more nervous about spending a few hundred thousand dollars extra to buy, than I am spending a few years as a renter. I have kids, and many people I know with kids DO rent year to year – don’t forget, NYC is still primarily a renters town. It’s just that NYC is getting hit by all the bigger economic forces, and that’s why rents are coming down, and prices on purchases too – albeit slower than initially predicted.
“35% below the peak of the bubble, which is hardly a complete collapse”
But 75% loss on 20% down damn near is, wasder. Deleverage is a bitch!
“Total bonus pool going up after 100,000 layoffs translates to much higher pay check per person.”
Theoretically could be 5 people. Get my drift? Less people eyeing a fatter inventory IF they even want to buy RE. Bonuses are overhyped by agents. Didn’t stop prices from declining 20% in better times (recovery my ass).
***Bill Thompson for Mayor (TUESDAY!!!)***
BHO — numbers on newly issued debt don’t matter. for China, new issues are small drops in a big bucket. if they want to marginally change their holdings, say from 700Bn to 600Bn, it’s more efficient to turn the spigot off than to dump out of the bucket (sell bonds) why? because the older, “off-the-run” treasury bonds that they own are less liquid than new ones, so they’ll pay a transaction cost if they sell. It’s cheaper to adjust their position if they just let bonds mature. You can’t read that spigot-shutting as a total rejection of the US treasury market; it’s just not so. People are using that new-issue data to mislead the public.
The relevant number concerning new issue debt is what the treasury has to pay in interest to borrow. It’s historically low, which means that investors, wherever they are in the world, are happily stepping in to invest in the US.
I guess if a depression happens we will all be screwed and me only somewhat more severely than the average renter. I can only speak for my particular family and situation but the stability and security I get from knowing my home is my home and knowing that the payments I make on it will always be the same is worth the risk of losing a few hundred thousand dollars. I don’t know any people with kids who are willing to live in year to year leases for any extended period of time. That is why that aspect of the rental market may be collapsing (I have been blissfully unaware of the rental market for some time now)—there may not be enough takers for those properties.
This is where your master plan has always fallen apart. The number of people with the flexibility and fortitude to stand like Don Quixote and tilt at the windmill of price collapse is very small.
“25% below where we are now” = -40% from peak. Ah, round down to half off, joe! WE DO know what the net impact is: down. Don’t get lost in the details.
stevieb – Read joe @ 12:44. All is not well for the “banking middle class”.
***Bill Thompson for Mayor (TUESDAY!!!)***
>on the bonus thing: you have to rememeber that the number of people getting those checks is way smaller, even though the checks are big, and they are mostly repeat-check-getters.
here is a quote from the WSJ from oct 14th:
“Major U.S. banks and securities firms are on pace to pay their employees about $140 billion this year — a record high that shows compensation is rebounding despite regulatory scrutiny of Wall Street’s pay culture.
Workers at 23 top investment banks, hedge funds, asset managers and stock and commodities exchanges can expect to earn even more than they did the peak year of 2007, according to an analysis of securities filings for the first half of 2009 and revenue estimates through year-end by The Wall Street Journal.”
link attached:
http://online.wsj.com/article/SB125547830510183749.html
Total bonus pool going up after 100,000 layoffs translates to much higher pay check per person. There is no guarantee that it will not affect the PS housing market. I think it will.
***Bill Thompson for Mayor (TUESDAY!!!)***