Where and When Will The Market Bottom?

I’m just looking at this thread two days later and am sure no one will look back at it now, but I just wanted to said “Thank you!” to Jebby, Benson, Nostalgic on Park (I thought you were going to come back to Brooklyn? Come on already!) and the younger set, Wasder, mopar and even the often rude Lechacal and Miss Muffet.

I don’t have a lot of time or energy to always pop out one of my long, long, long entries so I mostly read the conversations of others…skipping quite a bit when certain people post endless repartee I don’t find adds much of anything positive…or, considering the generation gap, I actually don’t follow (!!!).

I have to say I get a kick reading comments and feel a lot of warmth for all the young people who comment on this blog, the one’s who feel everything is out of reach, other’s who quite fortunate and officious, those who have recently bought a first home…even though the commentors are obviously a self-selected group, they do seem to cut across the population and generation lines.

I find it fascinating to “listen to the conversation”, especially because in person, the different people (separated by age, income, “class”, etc.) might be very reluctant to converse in the same manner we see on these pages.

Hats off!

“We wait for everything else to go on sale. Why not houses?”

Because sometimes that means waiting a matter of years and some people are not as obsessed with the bottom line as you to put their lives on hold while waiting for the optimal deal. Its a matter of priorities. Your main priority is money, mine is comfort.

Benson:

I don’t necessarily see contradictions in your experience and my own. Whether it was 12 months or 15 months after the ’87 “crash,” we both lost considerable equity for a time.

For my building — which wasn’t purchased by absentee landlords looking for write-offs (that simply wasn’t allowed) — the glut of cooperative apartments (and conversions) at the time helped depress sales. And because virtually all the owners in my building worked on the Street, the ’87 collapse segued without interruption into the ’91 recession in terms of sales, freezing apartments for the decade, unless owners were willing to take a big bath (which some did).

Because I’d paid cash for the apartment and could ride things out, I wasn’t badly affected. But others were (those with mortgages, especially). I stepped out years later with a profit, but as I mentioned, lost everything, both gain and principal, in the current stock market plunge (regardless of my trust officers’ “conservative” approach!).

Again, I can afford to ride things out (and through other forms of asset accumulation am well ahead of where I was in the 80’s). But every dime from that particular real-estate adventure evaporated.

New York real estate is cyclical. When, where, and in what form people step on and off can create big differences in their gains and losses, even in the same block or building. (My parents had my New York apartment for years before leaving it to me. My situation is entirely different from the Wall Street hotshot who bought 18 months ago.)

My advice is what my grandfather told me when I graduated college: “Look for a place to live and live in it.” Decades later, I fully appreciate the old man’s words.

NOP

NOP and Whuh;

I have to say that I am really taken aback by some of the statements that are being made here.

Whuh, for your information, I was born in this city in 1957, and bought my first house in 1988. I’ve seen this city go through a few cycles.

Now, let me address some of the statements that is being spread around here:

-the real estate market in NYC did NOT collapse in 1987, at the time of stock market correction. It corrected at the end of 1988, right after I purchased my house. Here is an article that states the same thing:

http://www.tregny.com/content/press_archives/2008/02/04/new-york-residential-real-estate-echoes-1980s-boom-and-bust/

Google “1980’s NY real estate bubble” and you will find a whole host of articles that says the same thing. Note also the level of that correction. In may particular case, my house went down 20% in a year, and stayed that way for about 5 years. Basically, if I had decided to sell within those 5 years, my 20% down payment would have been wiped out.

-the real estate collapse of 1988 had nothing to do with the stock market correction of 1987. The stock market correction of 1987 was short-lived. By the end of 1988 the stock market had recovered all of its losses, and was soon to go on to greater gains. Again, I ask all to look at the stock market charts to verify my statements.

-the economy was also fine in 1988. The next recession was in 1991-1992, and it was this recession which brought down the BushI presidency.

-the main reason that real estate corrected in 1988 was the implementation of the new tax laws, which had eradicated the use of passive losses as a shelter against earned income. In the 1980’s, many properties were purchased solely for their use as a tax shelter, not based upon their value as an income-producing property. This fed a speculative bubble which collapsed in 1988.

Whuh, I agree on the value of a historical view. In doing so, let’s get the facts straight.