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]
you guys crack me up. obviously not a lot of wall streeters on here. reminds me of that scene in office space where they look up money laundering in the dictionary…
Hi Denton;
As you know, I come from an industrial background like you, and I am more optimistic about US manufacturing and industry. To respond to some of your points:
-I think it is hyperbole to say that the Japanese have overtaken us in manufacturing in all areas except for defense and aeronautics. To name just a few areas where US-based manufacturing still leads:
-Construction machinery: companies like Deere and Caterpiller have kicked butt, and are exporting all over the world.
-Fiber optics: Corning has the majority share of fiber optics manufacturing in the world, and it is made in two plants, located in Corning, New York and Wilmington, NC.
-Chemicals: Do the names Dow and Dupont mean anything?
-Steel: The US steel industry has made a remarkable comeback. Old dinosaurs like Bethlehem are gone, replaced by efficient operations like Nucor.
-Transportation equipment: Just GE, for example is the world’s leader in the manufacture of locomotives and jet engines. Sikorsky is the leader in helicopters, whereas Otis is the leader in elevators.
Let’s even talk about car manufacturing. Are you aware of how many plants the foreign companies have opened up in the US? Almost all of Honda and Toyota’s cars sold here are made here. The problem with our US domestic companies is their management (and government interference, and boneheaded unions), not our ability to manufacture. Cars can be profitably made in the US, as these foreign companies prove.
Finally, as to the issue of patents. This is my personal opinion, as someone who spent 15 years in Bell Labs, which was regarded as the top R&D lab in the country. Patents are a poor indicator of a compny’s ability to innovate. I am talking about a country’s ability to seize on these inventions, finance them and commercialize them. I ask again: where is the Japanese Google? Where is the Japanese IPOD?
We in the US are feeling down about ourselves right now, but I think folks should put things in perspective.
yass has a point, sign me up.
“I, for one, am planning to take up farming in 2009.”
Fat Lenny, commoditized farming options is what you should be taking up in 2009!
Seriously, there are tons of farmers who can’t even get small loans for fertilizer or seasonal crop helpers. See Roger’s article in fortune:
money.cnn.com/galleries/2008/fortune/0812/gallery.market_gurus.fortune/5.html
Now, farmers know that no one wants a food shortage (recession and starvation? no thank you!) and so if they have to pay 30% interest for fertilizer loans, they *know* they can pass that cost onto eaters. Now, it’s too hard and too much hassle to find individual farmers who need to borrow 15K, but if we put all these small loans together and slice them into commoditized farming options, the street will go crazy for them!
I’m telling you, the smart money in 2009 is on farm loan derivatives. I’m even thinking of starting the “brownsoiler” blog to cover the topic!
“Quick question: name one new Japanese company that is at the leading edge of a new indutry. Answer: none. It is still the same old companies (Sony, Toyota, Mitsubishi, etc.) focused on the same industries. Ditto for Europe. Our financial sector is a key factor in the dynamism of the US economy.”
Hey Benson:
While the Japanese are not inventing anything entirely new (except maybe an interesting and dynamic youth culture)they have virtually wiped us out in any sophisticated manufacturing industry outside of aerospace and defense, and even chip fabs are moving elsewhere.
And it’s not only the manufacturing, it’s design, from flat panel TVs to hybrid cars to pro camera bodies.
Five Japanese firms are on the list of the top ten companies in obtaining patents vs four American firms, and we’re a lot bigger country (http://www.uspto.gov/main/homepagenews/bak11jan2005.htm)
Just look at the pathetic US car industry, for example.
This is why I’m worried about the next stimulus package. A few decades ago, stimulus would have rippled throughout a large base and most consumer spending would have helped AMerican blue collar workers who mfgd products. Now the sales clerks and freight forwarders may benefit, but those TVs and dresses and shoes you buy with your rebate checks are not made here. The money will end up in China.
And our financial sector has proven that it is not all it was cracked up to be (pun intended).
Actually 1999 was a great year for me. Only 26 years old and made a killing in the market as a beginner. But this year has been almost as good as that year.
panda…6 months ago!!!!???? Don’t think so. Most people close in 45 – 60 days.
I dis…you dissed me 😉
Hoboken…your year was probably 1999.
Anyone who closed in the last 3 months went into contract 6 months ago. The bonus situation will be severe. Wall Street bonuses don’t just pay for big ticket items- but for day to day living. Most bankers I know deficit spend- counting on their bonus to pay off their debt at the end of the year and for whatever else they need. When Wall Street bonuses are bad- then lawyers bonuses are cut in half (already announced) and so on and so forth.
I think its great that some are more optimistic- but I think there’s still pain left to be felt. The major banks who have already announced layoffs (Citi- Merrill- BofA) have not finished the bulk of their layoffs yet. Most banks already announced that their bonus pool will be half of last years. It may not be World War III in 2009- but its going to be rough out there.