Open House Picks

3:52, you are very right that real estate busts happen slowly. I have been through a few bear markets (mostly in the stock market, but I was old enough in ’89-’95 to be aware of what was going on in real estate) and they always seem to follow the same pattern. Sellers can usually be convinced to cut price by a couple percent in a tough market, but any more and they feel like they are being taken advantage of. Conversely, it usually takes just a couple percent to convince some buyer to feel like they are getting a deal. They are happy to be getting a better price than the last guy, and never seem to appreciate that they are now the frame of reference for the next guy to get a slightly better deal than them. The buyer and seller set a new price point and there is a new frame of reference for the next set of buyers and sellers. And thus it continues until market fundamentale change and convert a down market into an up market. This is the same as the stock market, but the frequency of transactions is much slower so the collective frame of reference moves downwards more slowly.

The Brooklyn Brownstone market has hit a top and has barely started moving downwards. It will take a little for the collective frame of reference to move slowly downwards and find a bottom, wherever that may be. My guess is that it takes at least a couple of years.

Hey, isn’t 22 Clifton where that guy crawled into after he was shot? No one’s mentioned that. Has to be a huge selling point, heh.

You people keep saying the market is going down. People are still making money let’s take Energy, Utilities, Commodities and many others that are way up this year.

Aussie – no WAY are we at bottom in NYC – asking prices are still *astronomical*. What’s been at last happening though is that those asking prices are not flying. Basically, brokers/sellers have been pricing properties as if we’re still on the same upward curve of the last few years, where there was double digit appreciation from year to year. BUT, that appreciation is no longer something that buyers buy into, so they are holding back. So, sellers are basically having to either accept lowball offers, or cut prices. Does that mean we’re at bottom? Not at all. Rather, this is the earliest step towards prices being priced lower to begin with (once reality sets in with sellers). So, someone who would have priced, say an apt at 1mil will instead realize they have to price at 900K if they really want the place to move. Still a great price if you paid 500K in 2002 (plausible scenario), but more realistic. But this would be a 10% decline from what I think was the peak, probably this past winter/spring (just before Bear Sterns debacle). Real estate shifts happen slowly, so I don’t think the bottom is anywhere near where we are now, it’s just beginning. Hence, I think sellers would be wise to sell sooner rather later before a long gradual (or more sudden) decline begins, which may not reverse for a few years, or longer.