Where and When Will The Market Bottom?
Most people interviewed in this weekend Times article about New York’s real estate market finding its bottom seem to agree that prices so far have come down about 25 percent; how much further they have to fall is a matter of more varied opinion, though it sounds like 10 or 15 percent would be a…
Most people interviewed in this weekend Times article about New York’s real estate market finding its bottom seem to agree that prices so far have come down about 25 percent; how much further they have to fall is a matter of more varied opinion, though it sounds like 10 or 15 percent would be a consensus range. Which means we could be closer to the bottom than past cycles would suggest. Even if the New York market were to end up being 35 to 45 percent down, he said, to the degree we’re seeing deals done at 30 to 32 percent down anyway, it’s not very far away. What may happen, some speculate, is that the correction, however brutal, could be accelerated into a shorter time period that last go-round. It’s possible that rather than seeing price declines spread out over a six-year period, this time it could be concentrated in a two-year period, said Ingrid Gould Ellen, co-director of the Furman Center for Real Estate and Urban Policy at NYU’s School of Law. That possibility, along with the fact that there are plenty of folks waiting in the wings wanting to buy, has the brokerage community cautiously optimistic that the real estate business may avoid having a lost decade. After all, what broker’s need to get paid are transactions more than high prices.
Looking for Bottom in N.Y. Real Estate [NY Times]
Photo by simplerich
Ah yes, thanks for reminding me, Whuh. The broker told me, as I was on my way out, that the sellers were “motivated” and would consider “all offers.”
“christopher – maintenance charges may never drop – but expenses sure have – the increase in RE taxes is more then offset by this years plunge in Oil (heat) prices and the overall decline in Insurance prices (since a high point in about 05)”
Posted by: fsrg at March 9, 2009 10:47 AM
Sure, oil prices have dropped, lately, but what about the times when they spike? How about replacing a roof, windows, or a facade? Condos/Co-ops keep cash reserves for such instances. Some years these expenses go down, some years they go up. Some years they spike (remember $5 a gallon gas?).
The maintenance charges won’t go down because they are used not only for daily operating expenses but for cushion in anticipation in a rise in operating costs. Some years this creates a big reserve, other years the reserve gets depleted due to the higher expenses.
“For instance, in the Great Depression, the stock market lost more than 90% of its value, yet from what I have read real estate dropped by about 25%. To take a personal example: I used to own a two family house in Brooklyn that was built in 1928 and sold for $16,000. At the end of the depression, it was selling for $12,000. In 1961, it sold for about the original sale price again.”
Please cite what you have read, Benson. I do not believe that NYC real estate fell only 25% from the peak after the Crash of ’29. Your personal example lacks detail. Was the house sold immediately after it was built before the crash or maybe right after, like 1930? Where is your info coming from, propertyshark?
***Bid half off peak comps***
The open house I went to was busy but it also featured a broker who insisted, repeatedly and audibly, that the sellers would “entertain all offers.” The psychology has shifted…
Benson,
I was speaking with an economist who was presenting a talk on social programs during the Depression who told me (or admitted – he was arguing that there was more leverage in the system then than today) that people regularly put down 50% downpayments on their homes in those days and had 5 year mortgages. That’s why real estate didn’t suffer too much – it wasn’t overly leveraged.
Another one… http://manhattan.blockshopper.com/property/1015131141/171_e_84th_street/
Obviously some are selling above last sale price, some below.
Godwin’s Law is now in play.
Here is an example of a sale below last sale price. http://manhattan.blockshopper.com/property/1015131315/150_e_85th_street/
Note that many of the apartments don’t have prior sale history.
Even you don’t believe that shit, What.