National Prices Fall 18%, New York Further to Go
Along with yesterday’s headline that houses in the nation’s 20 largest cities fell an average of 18 percent year-over-year in October was the news that single-family homes in the New York metropolitan area declined a more modest 7.5 percent. (The 20-city index has now fallen more than 23 percent since its July 2006 peak.) Reason…
Along with yesterday’s headline that houses in the nation’s 20 largest cities fell an average of 18 percent year-over-year in October was the news that single-family homes in the New York metropolitan area declined a more modest 7.5 percent. (The 20-city index has now fallen more than 23 percent since its July 2006 peak.) Reason to cheer? Not exactly, says the Wall Street Journal:
Markets where price declines have been slightest may be in worse shape, because prices still have further to fall before enough buyers step in to bring housing activity to normal. Meanwhile, heavy foreclosure activity in hard-hit areas like Phoenix, Las Vegas and San Diego are bringing prices into equilibrium. Those cities may be closer to a turnaround…In the language of Wall Street, with asking prices not dropping to levels where bidders will pick them, the market isn’t “clearing.”
The Journal article goes on to say that New York City’s slower decline resembles past patterns: It took three years between 1988 and 1991 for prices to fall just 15 percent. This go-round, “the price decline may be far more severe,” the article predicts. “Right now, people are still living on last year’s bonus,” says Barclays Capital economist Ethan Harris, who is based in New York. “You can sort of feel the local economy on the edge of a cliff.”
New York, Boston Prices Expected to Fall Further [WSJ – Sub]
Home Prices Fell at Their Sharpest Pace in October [NY Times]
Local Home Prices Fall 7.5% [NY Post]
BrookylnGreene, it’s not an invalid criticism – which I started my point off with (you may not agree with the bonus culture in finance).
My point was that those bonus dollars filter down into the economy, whether it is spent at fancy restaurants, designer clothes, interior decorators, etc. Take that out (or dramatically reduce it) and the ripple effect will be felt right the way down to the bottom.
I for one will not lament the loss of “luxury as the base standard” but luxury does employ a lot of people…
“I just have to add…if all that bonus money had not been sucked “up” the food pyramid all these years, each year more shocking than the previous one, and the money had been distributed to people (i.e. if salaries for your basic workers had kept pace and not slid backward) who would spent in on more mundane things, than maybe we wouldn’t be in this huge mess.”
Hi BrooklynGreene;
Well, let me use Japan as an example again (the reason I use Japan as an example so much in this thread is that I work for a major Japanese firm, and go there often).
Japan has just the system you want. The Japanese consider themselves to be an egalitarian society, and the rato of CEO pay to the bottom level is intentionally kept WELL below that of the US aaaaaannnnnnddddddd….
……that did not prevent Japan from experiencing the biggest property bubble in world history. In 1998, the value of real estate in just downtown Tokyo was worth more than ALL of the real estate in Canada. Seems incredible – like tulip bulbs being worth alot – but it happened. It took more than 10 years for Japan to recover from that bubble.
Given this historical fact, I don’t think your hypothesis holds.
One thing that is lost with the loss of these jobs and these firms is the money that is donated and supports many charities and the arts. Already many have had to severely cut back their programs and some have even shut their doors. The amount of money that Lehman and Merrill gave away each year was phenomenal.
Going back a ways in the thread, if my kid were to go into the arts or media against my most ardent wishes (I’d rather he not follow me in my path) I’d absolutely insist he learn a skilled trade too. We just had a house painting team do some work at our house who were fine art painters. Harrison Ford was famously a top carpenter in L.A. until he finally made it as an actor. I’ve known other actors there who did that too. One actor, who never got huge but he got roles as an actor, was contractor to the stars, did all the big jobs. Beats waiting tables.
I just have to add…if all that bonus money had not been sucked “up” the food pyramid all these years, each year more shocking than the previous one, and the money had been distributed to people (i.e. if salaries for your basic workers had kept pace and not slid backward) who would spent in on more mundane things, than maybe we wouldn’t be in this huge mess.
Again, sorry for my “share” but I’m hardly the first person to point this out.
Anyway, no one will even bother reading all these comments since we’re all running home by now.
Again, Happy New Year! 2009 will certainly, if anything, be very interesting. I hope we can pull it together and help those among us who are the most needy.
you may not agree with the bonus culture in finance but it does undeniably sustain a big chunk of the economy. Suck out that spending from the equation and everybody feels the pinch to a greater or lesser extent.
ooo…I have some comments but don’t know if I should add to the rather New Year’s contentious tone…
Well, one thing I wanted to point out what that Prodigal Son referred to “bonuses” when he really meant “commissions”. Salespeople (call them what you will) in many different industries get commissions…often they will not be in companies regular bonus scheme because they already have been paid commissions throughout the year.
Just a point that jumped out at me.
Young Rob, we need to careerbuild for you…though I’m not sure if this current moment in the American financial landscape is a good time to get a new job.
I think it was BRG who told Hobokenrocks that “maybe in 1999” he might have bought a Brooklyn Heights brownstone. Um…I think she should have written “in 1989”. Unless one of you internet-savvy youngsters can find more information on real estate prices, I can’t remember when a brownstone in Brooklyn Heights sold for less than $1 million. Certainly not in 1999. Prices in FG were edging that way in 1999 and Prospect Heights was as well. Brooklyn Heights was well over $1 million for a brownstone by 1999.
Just my “share” for the day.
I have to wonder how much the current prices are impacted by the expected bonuses upcoming. I would imagine people are taken this into account. I certainly hope people are not so overextended to have to sell their homes/apartments just because their bonuses drop. That would really be ridiculous…but who am I? Maybe that just might happen…? Eeek!
Anyway, where is someone going to run to? Do people think they can sell in a crisis and then manage to buy another place and pocket any real profit? Buying and moving do cost something. I have a feeling the mortgage rates will be low enough that those whose bonuses are about to plummet end up refinancing.
HAPPPPY New Year, Everyone!!!
DIBS;
I don’t understand the point of your e-mail. Where did I say that the US has leadership in subway or bullet train manufacture? Where did I say that Deere and CAT are the biggest?
The point of my e-mail was that US manufacturing is competitive in many sectors, not all. Moreover, my bigger point is that the US has clear leadership in new industries. No one has still answered my question: name one new growth industry where the Japanese have leadersip. I’m not talking about a new type of TV, flat-screened or otherwise. I’m talking about a new industry, LIKE internet search engines, clustered computing, fiber optics, etc. Name one new Japanese brand or company that has been planted in the minds of the world in the last 20 years. In the past 20 years the names Cisco, Microsoft, Google, E-Bay, Amazon and Intel have become world-class brands and companies. Where are the Japanese equivalents (or European, for that matter, with the exception of Nokia)?
benson
-Komatsu & Kubota are bigger than deere and cat
-Yamato Kogyo rescued Nucor
-We don’t build bullet trains and Kawasaki is getting the new orders for subway cars
I’m not trying to denigrate US manufacturing but these are the facts, sad as many would believe.