New York Home Prices Forecast to Drop 40% (Pelham: for sale, real estate market)

[ac325ci]

http://www.time.com/time/business/ar...0.html?cnn=yes

what do you guys think ? not sure about this but in certain areas of queens, i do not see this happening.. i have been to many open houses in bayside, flushing, fresh meadows, douglaston and the offers just pour in like crazy... every time i want to put in an offer on a decent priced house, the RE agent always tells me that there's a few ppl who have offered full price already.. it's ridiculous ppl... Mod cut: TOS violation

[mathjak107]

if we see another 5% drop ill be surprised.....40% sounds like someones wishful thinking

[bluedog2]

Did I miss something ? Because when I went to the link I saw a very short 4 paragraph piece with no data,research or anything to substantiate the headline. I kept looking for a second page or something but there wasn't one.

At the very end it says that because NY is the least affordable metro area in the country the prices will drop another 40%. And it shows a picture of a house for sale in Atlantic City,NJ,which isn't even in the NY metro area last I checked.Is that the sole basis of their conclusion?

Two weeks ago I had my coop appraised( by the bank) because I bought with a 6.25% loan and locked in a refi at 4.5% a month ago.I bought this apartment less than a year ago. The apartment appraised at almost 10% more than I paid! The appraiser told me that prices of coops in my neighborhood never really fell at all and had started to climb again about 2 months ago.She said that there have been lots of sales all Spring and that the market seemed very lively.I checked on Property Shark and sure enough 6 apartments within 2 blocks of my building had closed in the last month at good prices.

So,I don't know what to say about this piece.I won't even call it an article because a 4 paragraph piece with a scary headline and nothing to back it up doesn't deserve to be called an article.

[twingles]

No way. You'd be taking prices back more than 10 years. No would sell at those prices.

[BaReSe67]

Nope, not 40%. I would say 20-25%. Like a single family home selling for 450k, loses about 100k in value. But its been extremely overpriced for awhile, so glad to see it back to normal and within a reasonable means for the average person.

[ddhboy]

I guess none of you are particularly familiar with NYC real estate cycles. Yes, I certainly see it happening. The problem with NYC real estate now is that there is a HUGE market for affordable housing, but it seems that no developers have ever bothered to consider to develop for this market because the profits are minimal as best. So what is happening now is that your having a glut of open real estate that is out of most people's prices, and eventually these luxury condos will HAVE to drop to this level to accommodate the market.

And for those who say that offers are coming in left and right, you should check out Curbed more often. Condos that cost millions have been dropping by 50% in the last two months, and we're starting to see the early signs of these in more moderate start prices. Proof positive that the days of easy money in real estate is over can be found in Williamsburg and The Financial District, and if developers are reluctant to lower their prices now, they'll be rushing to when they're properties become ghost towers like Oro in Brooklyn, and the banks are threatening to foreclose on them.

Honestly I think that they'll go back to being rentals just to save face, but if they do that, then I'm telling you that this city will be going back to 1970 in a matter of years.

[bluedog2]

There is a problem with generalizing like the headline in the Time piece.The problem is that there is no single New York home market.There are many different markets and they are behaving differently.

When I asked the appraiser that I referred to in my prior post why the coop market in my neighborhood was so strong she gave me a totally logical answer.She said that 1)prices in my neighborhood( Pelham Parkway,Bronx) were undervalued before the crash last Summer and Fall, 2)the prices in the area are very affordable( 1 br's 125,000-160,000)(,2br's$160,00-$200,00)(3br's $200,000-$250,000 3) that the coop market in The Bronx( and presumably elsewhere) has been swamped with buyers who were looking at single family and two family houses in the area before the crash and who now either can't qualify or don't feel they should take on a $450,000 mtg to buy a house and 4) people from other(very high priced) areas of the city who are looking at The Bronx as the only affordable place there is.

So prices will probably drop some more in neighborhoods( like Williamsburg and some parts of Manhattan) where prices got absolutely ridiculous and may rise in neighborhoods that were undervalued and are quite affordable and where essentially there was no bubble to begin with.

While there may be certain neighborhoods and developments that will see continued large drops,I think it is ridiculous to generalize that the entire metro area will drop 40%.

New York has always been the "least affordable" or most expensive real estate market .And let's not forget that despite all the doom and gloom, 90% of us are still employed at the same jobs at the same salaries as before the crash.The only things that have changed for that group is that prices have come down and interest rates are at one of the lowest point in 50 years.It is logical that people in that category should be out buying.
That's when you should buy.... real estate or stocks... when all the headlines tell you not to.
Especially if you can get a 5% or less mtg.

[gradstudent77]

Originally Posted by ddhboy

I guess none of you are particularly familiar with NYC real estate cycles. Yes, I certainly see it happening. The problem with NYC real estate now is that there is a HUGE market for affordable housing, but it seems that no developers have ever bothered to consider to develop for this market because the profits are minimal as best. So what is happening now is that your having a glut of open real estate that is out of most people's prices, and eventually these luxury condos will HAVE to drop to this level to accommodate the market.

And for those who say that offers are coming in left and right, you should check out Curbed more often. Condos that cost millions have been dropping by 50% in the last two months, and we're starting to see the early signs of these in more moderate start prices. Proof positive that the days of easy money in real estate is over can be found in Williamsburg and The Financial District, and if developers are reluctant to lower their prices now, they'll be rushing to when they're properties become ghost towers like Oro in Brooklyn, and the banks are threatening to foreclose on them.

Honestly I think that they'll go back to being rentals just to save face, but if they do that, then I'm telling you that this city will be going back to 1970 in a matter of years.

1) Extrapolating data from the <10% of the real estate market that is luxury in this metro to the entire metro's housing pricing is dicey, to say the least.

2) Developers might build more affordable housing if regulatory bodies would let them build more units. Imagine if a developer could easily get approval to build a new 40-story tower on the extreme west or east sides of Manhattan with like 1,000 units in it-I'm sure at some apartment size, the units become somewhat affordable (although, that is still a funny word to use for manhattan RE) and the developer makes as much or more than luxury development. Imagine, further, that the city zoned land for this sort of development in the outer boros and imagine that some of the metro's suburbs were similarly re-developed.

[bmwguydc]

In transitional areas where shaky (at best) feasibility studies were drafted with the most beneficial projetions possible for untold millions in profits by setting the market in areas that did not have historically high demand, sure there are going to be dramatic drops in prices, but few sold in the first place.

In areas that have solid demand, people are willing to pay to move into them and drop the issues surrounding the latest in faux luxury towers in areas that were better suited to moderate home pricing and amenities in the first place. A solid area like bluedog2's will attract a steady stream of buyers since it's positioned properly, an area that does not have too much to either extreme in home prices.

Affordable housing is not easy to build, and may not always be profitable, since the municipal red tape to get things off the ground and sold can cause the carrying costs to be much higher. Plus, land is so expensive that subsidies are needed to make it a reality, or a grant of city owned land, which brings a layer of municiapal and community scrutiny to any such development. And, even without those in place, affordable housing can suffer from NIMBYism is in full force and effect in many parts of the city, since few owners have a problem with a luxury tower that's going to drive prices up in an area, but some may complain loudly about anything that could serve to undermine prevailing prices in an area. That's why much of the affordable housing being built has municipal involvement and is done in areas that are undergoing redevelopment. Few areas in Manhattan could take such large scale affordable housing without a host of issues to begin to get it off the ground. Of course, this is referring to the definition of affordable housing, not using an indexed value of prevailing properties to come in on the affordable side of market-rate by offering fewer amenities, upgrades, and perhaps smaller units.

[Otis_Nevins]

I don't see it happening unless this refers to foreclosures in "desirable" areas (where ever those may be) opening up. If there's one thing we are in New York City, it's survivors. The developers who put up the expensive apartments will wait until things come back or they will find the buyers regardless. Rents are high, too, and, like the sellers, the renters will simply wait for the highest bidder. It's worked that way in the past, it will work that way now.

...affordable (although, that is still a funny word to use for manhattan RE

Totally agree. "affordable" has no meaning here. The general expectation, as I've seen it, is that the typical buyer comprises a married couple earning a combined $200k after taxes. This is a lawyer-lawyer, doctor-lawyer, young banker-etc. couple. That is, two high-paid professionals who can "afford" plenty, either paying in cash or a large down payment. The $1 million two-bedroom apts are marketed to this model.