What Lies Beneath?
Now that everyone’s had the weekend to digest last week’s insanity, how you feelin’ about ye olde real estate market here in Brooklyn? It’s been clear for a while that the some fringe areas are in for tough times, but how about the most blue chip ones like Brooklyn Heights and the choicest parts of…
Now that everyone’s had the weekend to digest last week’s insanity, how you feelin’ about ye olde real estate market here in Brooklyn? It’s been clear for a while that the some fringe areas are in for tough times, but how about the most blue chip ones like Brooklyn Heights and the choicest parts of Park Slope? How about some of those right in the middle like Clinton Hill? How far do you think they’ll end up falling from their peaks when all’s said and done?
Brooklyn Heights
Clinton Hill
Bed Stuy
Wall Street Reorg: Impact on Real Estate? [Brownstoner]
Photo by Gregory Taylor
Fringe area? The fringe areas of Midwood, Sheepshead Bay, etc… appear to be doing okay. Please correct me if I am wrong, but if most of the people who were buying in the Blue Chip areas worked in the finance industry, there won’t be too many of them left to purchase homes after they get laid-off. Neighborhoods that attract immigrant families, many of whom put down huge down payments, if they don’t just buy the house outright should fare better.
Nouriel Roubini the economist at Stern School of Business and one of the few talking heads to consistently get it right says he sees a light at the end of the tunnel. Unfortunately he thinks its the headlight from an oncoming train.
My paraphrase because i’m too lazy to track down the exact quote but the metaphor is his.
I would not be surprised to see 30%+ price declines in some neighborhoods. I would be surprised to see less than 15% declines.
I think the loss of the big 5 investment banks in less than one year (Lehman dead, Bear and Merrill bought, Morgan and Goldman converted to regular banks) will have a long lasting effect on the local economy.
Things are moving so quickly now (e.g., Bear blows up in March then not much happens until the last 3 weeks when all hell breaks loose) that it really looks like the house of cards is tumbling down and people who know what’s going on are SCARED. I *hope* a trillion dollars from the taxpayers will be sufficient to stop the bleeding…
I think the percentage of buyers with household incomes more than 200K per year will be going down substantially and prices will need to adjust accordingly.
I chose the same -31 to -40 percent range (although my prediction has been and still is -25 to -50) for all hoods. The difference between fringe and blue chip hoods was already built in before the boom got started. Let everything fall evenly and that difference will still be accounted for. The blue chips can run but they can’t hide.
I love Henry Paulson’s high pressure sales tactics to push through this bailout bill and avoid the compensation cap and bankruptcy protection for the little guy.
Drop is mortgage rates is good but only if there is liquidity to back it up. If the financial institutions continue to hold on to cash for a rainy day, there isn’t enough to lend out. Until we see differently, my bet is that it’s gonna stay tough to get a mortgage. Also coop boards are fussier than ever about approvals. They want more money down and more cash in the bank after closing and more income in general.
Even in Chinese that sign is funny. It reads: Jump Cliff Place.
Looking for the right spot to jump off the cliff? That way, dude.
MHO –
Govt bails out wall street to the tune of a trillion dollars by buying troubled mortgage backed securities. This does nothing to the common homeowner. Those securities will be held by the govt or subsequently sold.
But those securities are not real estate. It’s an ownership stake in a pool of mortgages. There is still pressure on the servicer to foreclose rather than do a work out and they will still be foreclosed. The only way they could change that is if the govt tracks down every single note for a particular issue and buys it out. Not happening… There will be a lot of homes on the market cheap as a result of foreclosures and it will pull down home values.
Don’t get me wrong. I’m glad the bailout is happening. It would be a blood bath otherwise, but it isn’t a fix for everything and it isn’t fair for the common guy to have to bail out the fat cats. The alternative is to die with the fat cats.
No one knows – but if I had to bet – I’d say allot closer to 40% than 10%.
Just like everyone was surprised how far “up” prices went – it is likely everyone will be surprised how far “down” prices go – it is a pendulum and it is swinging back fast and hard.
While everyone is sitting back waiting for prices to bottom is anyone considering how the interest rates on loans factor into the picture?
The interest rates are so low right now that I would think that by virtue of locking into a low rate you might fair better than in waiting for the pricing to do down further. Who really knows what the actual bottom would be. Is it enough to wait for higher interest rates?
I am no math scholar. Has anyone out there done a model calculation on this?