Is the Doom Forecast for New York Real Estate Well Founded?

By
Real Estate Agent with http://www.CapeGroup.com & http://www.REindex.com 9023635

There are real estate articles beginning to circulate that New York is in for one of the biggest declines in real estate values they've seen in decades.  Hold on!  Before you chime in on the negativity with, "Well what were they expecting with condos selling in the millions," or "Of course with the wall street mess...," or what ever your chime in is, there may be an alternative, and even may be alternatives - plural.

Of course those alternatives are dependent on some large ifs.  Fortunately for the New York real estate  market many of those ifs may turn into actual solutions.  The large ifs are actually more whens - and the whens are coming soon.

Here are some ideas that have basis.  For one, many of the banks receiving bailout funds haven't begun to apply them yet.  (I didn't say spend them, I said apply them.)  When those who took funds, start circulating dollars the way they were intended to be circulated, the real estate market will respond.  On top of that, there are many smaller (un-publicized) banks that do not need to take funds because they didn't participate in poor lending decisions that some of the larger ones did.  When both of these begin to catch attention, the real estate market will respond.

Next, there are some procedural ideas beginning to bubble to the surface that will help people stay in their homes.  These bubbles are popping up with plans, ideas, and programs that will provide employed people who are still paying bills, relief from the value declines that are affecting every owner.  There are many who can make their payments but are still upside down in their values.  There are others who also could make payments if they were given some principal relief or interest rate relief or both.  When these bubbles start popping, watch for a market that can stabilize.

This mess was created "behind the scenes" by people connected to each other by relationship, by company, by industry, and by interest in making money.  These same types of connections are going to, and are even now beginning to, clean up the mess.  There is a cleaner-upper for every spill.  Keep your eyes opened and watching for opportunity.  It is on the verge of appearing!

Happy Selling and Listing!

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Rainmaker
622,510
Morgan Evans
Douglas Elliman Real Estate - Manhattan, NY
LICENSED REAL ESTATE SALESPERSON

As an agent here in Manhattan I am seeing first hand the struggle that sellers are having to sell their properties relative to their current asking prices.  Right now most buyers are coming in 10-20% below the asking price and if they don't get their price they move along to another seller who might be more motivated.  We are spending a lot of time educating our sellers right now that they need to lead the market and decrease their prices so there will be a perceived sense of value for the buyers that are entering the market.  The first quarter will be very interesting as its bonus season and the traditional buying season for Manhattan.  Bonus season is not going to resemble what it once was, but it will give some buyers more liquidity to make a purchase.

Jan 20, 2009 06:25 AM #1
Ambassador
1,485,851
Jim Crawford
Crye-Leike REALTORS® - Atlanta, GA
Jim Crawford Atlanta Best Listing Agents & REALTOR

I beleive it is, and my relatives that still live there also believe it.  I lived in New York during some of the last down turns in pricing in the 70's and 80's.  They are in for a major correction this time.  This downturn does not compare to the economies of those days in any magnitude. A home I sold back in 1980 for 50K was going for almost 1.4 million in NY.  The neighborhood has already backed off substantially from those highs.  Jumbo financing, and the ability to use bonus money to obtain a mortgage in a a banking and stock brokers town does not go to far these days.  I will say one thing, the New York Market was the last one effected, and may take years to adjust.  The foreclosure process in New York is a very lengthy one, and can take years. Unlike the south we have non judicial foreclosures and it could be on the block in 6-8 weeks.  Just my 2 cents.

Jan 20, 2009 06:26 AM #2
Rainer
179,139
Mark MacKenzie
Phoenix, AZ

Heath,

I don't know the New York real estate market and as such I can comment on that.

The one thing I think people are overlooking in terms of credit is that even if credit improves, and personally I think it may take longer than most expect, there still needs to be a demand for it.

Mortgage rates are at historic lows, yet mortgage purchase applications have been largely unimpacted by this - not a good thing.

Jan 20, 2009 06:52 AM #3
Rainer
116,722
Bo Hussung
Bell Title /Triserv LLC - Nashvle, TN

Heath, all good points and well thought. Here are a few facts to sprinkle your hypothesis. One, many of the banks that were given TARP funds are no using them to re-distribute the moenies the way they were intended, but to retire debt. And, perhaps the bigger one is that for those homeowners that are being helped with either restructuring or modifying their loans, the statistics show thatover 90% are foreclosed within 6 months. So maybe these great ideas are not working because the economy still requires a good old fashioned cleansing to work out the debt. I am interested i some info to the contrary. Sorry to throw cold water. YTo be honest, I wish I was wrong

Bo

Jan 20, 2009 09:50 AM #4
Rainmaker
595,511
Associate Broker Falmouth MA Cape Cod Heath Coker
http://www.CapeGroup.com & http://www.REindex.com - Falmouth, MA
Heath Coker Robert Paul Properties Falmouth MA

It is going to be interesting as we see that the new govt has to offer.

Jan 22, 2009 06:32 AM #5
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Rainmaker
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Associate Broker Falmouth MA Cape Cod Heath Coker

Heath Coker Robert Paul Properties Falmouth MA
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