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I wanted to make a thread about the foreclosure/housing issues in NYC. If there is already one, I hope the admins combine it with the other one.
Either way, I think in the coming months, a lot of NYers are going to wake up to a new reality. Housing prices do not always go up. I think on the other side of that coin will be the fall out from this entire housing/credit mess. With that said, I came across a article in the NYT. It was about foreclosures, specifically it spoke about a lady who bought a home in Throgs Neck. It was 400,000 plus and the monthly was 4,000. She bought it with the full knowledge she only makes 2,000 plus a month. I just don't feel any pity for that level of absolute stupidity. You KNOW you can't afford it, why the heck would you put yourself out there like that? This whole housing mess is partly because of selfish greedy sellers and utterly clueless buyers. Anyway, here is the link. Hope others share articles or info they have on NYC housing issues. Oh and on a side note, I read on NYT and one other site (i forget which) that rent is down in SOME areas of Manhattan by as much as 7%. I hope no one rejoices at that though because, that is a sign of greater, more worrisome things to cme.
I read a great article in the mid-end January about fourth quarter numbers for NYC. Average prices in Manhattan had declined and would have been shown as such if it hadn't been for two ultra-luxury buildings that went on sale in the fourth quarter: The Plaza and 15 Central Park West. Those two buildings alone pulled Manhattan into showing 6% growth. Crazy, huh? IIRC, the article stated that the average selling apartment in Manhattan was $850,000ish, which is a good deal lower than $1M+ some years ago.
The credit crunch has certainly had an effect, though Manhattan is largely gobbled up by foreign investment. The stat is that 1/3 of Manhattan purchases were to foreign investment.
I am impatiently waiting for conforming limits to be raised to $700,000 area for high cost areas such as NYC. Almost everything in NYC is jumbo...lol.
It's gonna be bad, but I do not think that the prices will drop to early-90s levels! If so, then I may have to change my plans about investing in Philly!
Sorry to say it, but one man's nightmare is another man's opportunity!
Dont think in terms of prices falling to a certain year. The cost of any good can not out pace real income i.e. peoples ability to afford, long term. Example, Lets say you have widget A and people like it so much that the maker keeps raising the price. Now lets say widget A (let say its food of some sort), is now 30 dollars. But now the problem becomes people only have 20 dollars a day for their lunch needs. So widget A is now out of the price range of the average Joe. So then people stop eating as much widget A. Now only the rich are eating, but their numbers are not enough to offset the loss of the masses eating it. Now Joe can make less and bring in less profit or bring the price back down where supply will again peak demand.
This is the same with homes. You could look at the average household income in any given area Bx, Bklyn etc. right. Then you multiply that by three. That is how much traditional 30 yr fixed mortgages worked. So I think seven or someone said the average family makes like 60,000 or 70,000. So you just multiply that by 3 to figure out how much a single family home is supposed to run for in a middle income area. That is where prices will end up being. There is not enough foreigners coming into the city to make a difference in all the inventory building up, nor to snap up all these foreclosures. I want to also throw in that subprime is just the national anthem in a baseball game. The first ending hasn't even started yet. Prime mortgages were also based or partly based on exotic loans. When that starts to reset its really going to be a problem. That is why Fannymae is now talking about excepting jumbo loans, because prime loans are due to reset and once those guys get started its lights out. If you really love NYC just hold fast man, its coming. Just make sure you can hold your job down during this time because, its going to get real rough.
Dont think in terms of prices falling to a certain year. The cost of any good can not out pace real income i.e. peoples ability to afford, long term. Example, Lets say you have widget A and people like it so much that the maker keeps raising the price. Now lets say widget A (let say its food of some sort), is now 30 dollars. But now the problem becomes people only have 20 dollars a day for their lunch needs. So widget A is now out of the price range of the average Joe. So then people stop eating as much widget A. Now only the rich are eating, but their numbers are not enough to offset the loss of the masses eating it. Now Joe can make less and bring in less profit or bring the price back down where supply will again peak demand.
This is the same with homes. You could look at the average household income in any given area Bx, Bklyn etc. right. Then you multiply that by three. That is how much traditional 30 yr fixed mortgages worked. So I think seven or someone said the average family makes like 60,000 or 70,000. So you just multiply that by 3 to figure out how much a single family home is supposed to run for in a middle income area. That is where prices will end up being. There is not enough foreigners coming into the city to make a difference in all the inventory building up, nor to snap up all these foreclosures. I want to also throw in that subprime is just the national anthem in a baseball game. The first ending hasn't even started yet. Prime mortgages were also based or partly based on exotic loans. When that starts to reset its really going to be a problem. That is why Fannymae is now talking about excepting jumbo loans, because prime loans are due to reset and once those guys get started its lights out. If you really love NYC just hold fast man, its coming. Just make sure you can hold your job down during this time because, its going to get real rough.
You points are ABSOLUTELY correct, but as bad as the market is gonna be, it can also hold unprecedented opportunities. A $700K 2Fam on Ellery Street in Bed-Stuy/Williamsburg that drops to $400K can be an open door for someone, or some people, who wish to get a piece of the City of New York. Now, that price still may take more collective action (more than 1 person buying the property/partnership) and also everybody being able to hold onto threir jobs, but still.......
Main problem is that prices are still too fookin' high! They went up 300% in 7 years and now have come down 5-7%. I'm still renting and waiting. Used to own in Manhattan ... still own a shack upstate, but have no interest in letting go of that. But now Manhattan rents are falling toward Park Slope levels, so there's some hope.
I believe that too many peeps took out ARMs and had no business taking out ARMs. I never even thought about an ARM when I bought my spot! I mean, how much lower are the ARMs from fixed? Could peeps really not afford a fixed rate?
Main problem is that prices are still too fookin' high! They went up 300% in 7 years and now have come down 5-7%. I'm still renting and waiting. Used to own in Manhattan ... still own a shack upstate, but have no interest in letting go of that. But now Manhattan rents are falling toward Park Slope levels, so there's some hope.
be patient. The last housing market correction in NYC took five years, this my take that or even more.
Quote:
Originally Posted by scatman
I believe that too many peeps took out ARMs and had no business taking out ARMs. I never even thought about an ARM when I bought my spot! I mean, how much lower are the ARMs from fixed? CoSuld peeps really not afford a fixed rate?
Well, here is a example. I knew a guy who was bringing home 30,000 a year at one job and 10,000 at another, right. Yet, he wanted to own TWO rental properties and a condo. He used interest only loans to do so. With a fixed rate mortgage he may have been spending 9,000 a month between the three (probably more). Where as with the interest only loan, he was paying something like 1,000 a piece. He figured he would ride it out till they were worth a million. Well that day never came and last time I spoke to him, he said he was in jeopardy of losing them (being foreclosed on).
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