"Real Wave of Pain Just Beginning"?
In one of the grimmest articles we’ve read to date on the US housing market, the Market Oracle scoffs at Treasury Secretary Hank Paulson for saying on Friday that “the housing market is at or near the bottom and that the subprime mortgage situation is not a “serious problem.” Which begs the question, How serious…
In one of the grimmest articles we’ve read to date on the US housing market, the Market Oracle scoffs at Treasury Secretary Hank Paulson for saying on Friday that “the housing market is at or near the bottom and that the subprime mortgage situation is not a “serious problem.” Which begs the question, How serious a problem is it? Deadly, thinks fund manager Kenneth Heebner:
The real wave of pain and foreclosures is just beginning… would expect that housing prices in 2007 will decline 20% in a lot of markets…What you are going to see is the greatest price decline in housing since the Great Depression.
If the doomsday scenario does play out across the country, the $64,000 question will be to what extent is New York City (and Brooklyn) dragged into the mess.
Is It Too Late to Get Out? [Market Oracle]
Photo by billypalooza
“I guess if you downsized(who does that) or moved to Montana you could get some money back on your “investment” ”
1:22, I, for one, have done that (no, not Montana, but Dutchess County). I bought my apartment in Brooklyn in 2003 for $200K and sold it recently for $450K. I bought a lovely renovated 3-bedroom 2-bath house with a secluded back yard in the Hudson Valley for $325. And I’m happy as a lark.
Hey – 11:48 – would love to ask you a few questions about that article if you’re in the business. Have an e-mail?
I have no idea whether this guy’s right or wrong, but I don’t think this article makes a particularly coherent argument for the bubble. It’s difficult to trust an article so shrill in tone. A couple of things struck me though—the author says:
“If so, it won’t be the brokerage houses or savvy insiders who get hurt [via their investments in HFs]. It’ll be the little guys and the pension funds that take a drubbing.â€
First, there are no “little guys†investing in HFs…unless the author himself has got so much money that he considers accredited investors “little guysâ€. Further, pension funds are not so stupid as he makes them out to be. If I had to make a wager between those $25MM HNW individuals and PF managers having the inside scoop on the market first, I’d have to go with the pension funds.
Finally, I work in Derivatives and we have lately done a huge business in IRD CDO and ABS securitizations, so his assertion there made some sense. Has it been enough to disperse market risk? I don’t have a clue. But I don’t think this guy has a clue either.
Actually, 11:01, this past Fall there were a lot of chicken littles who did say things would go in the toilet. They said don’t buy now, the prices will get lower in January. But they didn’t get lower, they got higher, and any person who actually listened to those armchair real estate “experts” missed out on some real deals that Fall when sellers were dropping prices as much as 15% and 20% on co-ops and houses. And missed out on the last remaining good deals in neighborhoods like Clinton Hill, where prices on houses have now skyrocketed.
Plain and simple, if you know you want to live in NYC long term, there’s no reason not to buy at any point when you can get a good rate on your mortgage. That time is now. The other smart option is to find a rent control apartment you love and that’s adequate and stay there forever, and be sure to save your extra money not spend it. Plenty of New Yorkers from all income levels are renters; it’s not shameful. It’s even smart financially, depending on one’s perspective and needs. I think the people who are really in a real conundrum now are those paying high rents. Because then the choice is pay even more money for a mortgage, but at least it’s towards equity, or keep wasting money on rent during the time you’re unsure whether the RE market will continue to go up and up. It’s tough.
a year ago everyone on this blog talked about the market will hold up. Today 90% say it will go in the toilet.
As Jesse Livermoore said, once the public opinion (unsofisticated investor) has an opinion on an asset do the opposite.
i own union picnic restaurant, located on the williamsburg/greenpoint border. i owned bean restaurant from 94-2006, and have lived in the neighborhood since’93. before that, i lived on the LES from ’88-93, and the west village from ’87-88.
i never had much money, still don’t. today, i went to klenovsky’s on metroplitan to buy some paint. i just knew that somebody i knew was going to show up. sure enough, it was margaret, my neighbor from n.9th street.
we chatted,compared paint samples. she had purchased the apt downstairs from mine (on n.9th, just off bedford) when i was her upstairs neighbor. tub in the kitchen tenement. (kind of glorious, north south breeze). i opened bean, and could barely afford my apt rent, which was about $500/month. she and jan purchased the apt when the building went condo for $46,000.
this whole fucking thing is completely retarded. i can still walk my dog in mccarren park at midnight, and be the only person in the park. all that glorious acreage is mine; has been for all the years that i’ve lived here. it’s mine, i’m alone, with my dog,and it’s beautiful. where are all of the people who demand this living space? they’re not in the park.
who gives a flying fuck about status? i’ve been beyond that crap since i was first able to form a thought.
not to brag, i’m just not made of the cloth that pays attention to any of that – form.
thing is, i was walking home from the restaurant the other night. i picked up my dog, and we walked to mccarren park. i looked up at the building on the corner of bayard and n.12th, and saw a light. this guy was there, in the big TOTAL glass wall space, 3rd floor, with what must be a glorious view of the skyline, THE MANHATTAN SKYLINE, working on his computer. WITH HIS BACK TO THE VIEW. WITH HIS BACK TO THE VIEW.
go figure. so far as prices falling or rising, remember – globalization is ever shifting economic terms. takes people awhile to catch on. the street has been the chesire cat for a long time – don’t expect them to budge when they can’t swallow the whoe canary, or even the canary whole. that ridiculous statement having been made, i’ll wager that the price of real estate in desirable parts of the adjoining islands will not go down in the near future. the market IS on fire.
the dollar is at a ridiculously low price, but is it a dangerous price? no way, globalization is a whirlwind (you know, how the globe spins kinda thing?)
anyWHO, prices aren’t going to take a hit in the NYC market, though the condo glut will allow people to buy an $800K condo for $695 in the very near future.
you heard it here first, folks.
try the ribs. i’ll be here all week.
What will kill the brooklyn real estate market is this, if it were to happen: if all those anti-immigrant forces actually force the DHS to strictly enforce the immigration laws and put up a border fence, etc, Brooklyn will become a ghost town.
Tell your congressperson “yes to amnesty!”
The housing market is not all that expensive in most of Brooklyn right now. There are a lot of bargains, but you have to get out of the “Brownstone Crescent” . There are very nice homes in Marine Park and Bath Beach and Bensonhurst and Bay Ridge and Canarsie and even in swanky Manhattan Beach/Breezy Point. The trendy areas are really outposts of Manhattan, which march to a different drummer. It’s about prestige and hipness rather than affordability and contemporary convenience. To each their own. I am very suprised that there are enough people out there willing to pay these prices for these old, rather inconveniently laid out houses, but they are out there in real numbers, go figure.
couple of things. People here and media and politicians keep quoting the 1 million new resident in next 30 years.
Please be more aware and critical of how this number comes from (very sketchy and questionable assumptions) instead of just repeating this as some sort of fact. What would predictions about NYC population have been made 30 years ago about today?
Second, folks talking about glut of condos (and yes there do SEEM to be lots of development). Just emember there are over 900,000 housing units in Brooklyn alone so 10 thousand here or there is small %age of existing (many of which are substandard and aging and becoming obsolete as we speak).