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
mopar: You are quite wrong, at least with respect to me, although I would not place myself in this mythical “50 percent off crowd”.
So Christopher, to be a bit more clear, I cannot possibly give you a quantified answer, because that’s not how my thinking works. Or in the words of justice Potter Stewart, I will know it when I see it.
Miss Muffett, as I have said many times, your patience will be rewarded.
Christopher, most of the 50 percent off crowd aren’t serious about buying. They don’t know anything about real estate and are obsessed with prices. They’re the types who buy cheap crap they don’t need because some ad in the back of a magazine or late-night infomercial claims it’s a steal at six monthly installments of $12.99 and would normally go for $500.
Christopher: My view of the market is somewhat fuzzy, or put another way there have to be very strong indicators in a particular direction for me to predict movement in that direction. And on top of that, there is a generally inflationary bias, so the default if I am unclear is “buy” rather than “sell/not buy”. Right now, based on a large number of factors, I am highly confident in my “sell/not buy” view. At some point I expect to reach “unclear,” at which point I will probably buy (again, the default is to buy when uncertain because of the underlying inflationary bias). I just can’t tell you when I will get to that point, but as noted all that will be required is the absence of very strong sell signals, so the bar is frankly not all that high.
Christopher/Lechacal: One of the distinguishing characteristics of housing market is its relatively slow speed so I think a major shift will be relatively easy to spot with some leeway. The writing has been on the wall for a long time now about the imminent decline and I think signs of a turnaround (which is almost universally agreed to be far away in NYC, given that the declines have barely begun) would probably be evident to anyone following market closely. So, while I’m not trying to “time the bottom”, I also think that missing out is the least of my worries right now. It’s not as if suddenly, prices are going to start galloping upwards anytime soon at all. So my strategy is to just wait and wait until we find something we love at a price we can REALLY afford, given that now, as a result of other financial losses, the pot of $ we had put aside for a house will probably also need to be re-allocated in part towards college & retirement savings…
DIBS, Exactly as it should be. People have fallen for Brooklyn and moved in from all over the world for 200 years. Real Estate is not the stock market, it’s where you live. There should be no Bear or Bull in real estate. It should be as you and Christopher have stated.
Lechacal,
Thanks for the answer, I get you are hoping for a drop. What I’m really curious about is will you look to buy if the market appears to stabilize at 25% off, let say, Dec 07 prices?
What is your metric? What are you basing “25% off” on?
People keep saying 25%, 50%, etc…
50% off what? Today’s price? 2007 price?
I’m honestly curious.
Christopher: If the market goes up, then I will have bet wrong and will end up worse off than if I bet the other way. And I will be poorer as a result. It’s a pretty simple answer, really. Obviously, I am hoping I am right. This isn’t the sort of bet that one can efficiently hedge.
That being said, I’m pretty confident in my choice.
Legitimate question though.