"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
Shortage of housing is serious in Manhattan and many parts of Brooklyn, I guess that’s also one of the reason for the high housing price in London and Paris. Are there any other city in US experiencing the same? Maybe SF, but price is also high there.
Europeans are indeed buying in Brooklyn. We know a German who just paid for a house in Clinton Hill using Euros and it felt pretty cheap to her!
I agree with 9:51. Mortgage rates and unemployment affect the housing industry much more than anything else on the whole. Also agreed with 9:52 that alot of what makes nyc popular is how cheap it is compared to other cosmopolitan cities. Did you see NYT building sell for 3x its price in 2004. That’s a strong bet by a sophisticated investor. Brooklyn itself seems to be caught in a nice spot attracting priced out of manhattanites, manhattanites with children, and those looking for something edgier and different. Its popular in other words and I think that’s a big reason prices have held up in the borough.
Sylvia – you need to attend logic class with regard to your “unique” conclusion.
I hear that one of the things keeping the NYC housing market hot is that the British are buying properties here like crazy. The exchange rate makes our market a bargain to them. That still does not explain the prices in Brooklyn, where I doubt many rich Brits dare to tread, but I do think that the weakness of our currency is a big problem. I have nightmares of Americans having to use Euros or Pound Sterling as “hard currency” because they would need to carry a suitcase full of dollars to buy the family groceries. That sounds implausible but who would have foreseen ten years ago that ordinary Brooklyn brownstones would be fetching three and four million dollars?
I hope this is true and if so I can’t wait for it to happen. I agree with Brenda, people have just become greedy recently trying to sell houses for over a million that are worth far less. unfortunately for them they take these profits and buy an even larger overpriced house and when/if prices plummet they’ll be hit the hardest.
If the American economy suffers a recession, the rest of the world suffers too. There will be no foreigners stepping in to save the day if they’re all in recession.
By the way, I love the use of the word unique: New York is unique. Just like London and Paris. If all three of them are unique, then none of them are. Just sayin’.
New York is unique just like London and Paris. If the prices drop too much the chinese/japanese/euros will step in and buy up everything. If you think NYC is overpriced check out London.
I’d like to see some research which shows a time in history when housing prices crashed with unempoyment at 4.5% and mortgage rates at 6%. People on this blog have been chicken littling for over a year now. Give it up.