I firmly believe that New York will follow California’s housing decline. And as such we have a minimum of 3 years of declining markets. Take a look at San Diego and what is happening, See this site” http://piggington.com/.
Professor Laffer http://en.wikipedia.org/wiki/Arthur_Laffer in today’s Wall Street Journal Op-Ed piece ” The End of Prosperity” is very scary. http://online.wsj.com/article/SB122506830024970697.html
Another Blog on the topic NY centric is http://nychousingbubble.blogspot.com/2008/09/wsj-manhattan-wont-avoid-property.html
In Florida it’s so bad ( the market bust) they are giving bus tours of foreclosed homes. http://www.msnbc.msn.com/id/23814563/
So California , and Florida have been in serious decline, and after the total destruction of the NYC financial markets, how can NY be immune? It cannot, and don’t buy into the greedy ignorant self serving Realtor advice. NYC housing prices will plummet.
Last week I represented the seller of a home on Long Island. The purchase price $405,000.00. The purchaser placed $10,000.00 down , less than 3 %. The purchaser’s attorney requested a ” seller’s concession”, whereby the price of the home was increased 3% or approximately $12,000.00 so they could finance their closing costs. So now the price is $417,000.00.
Now given the banking crisis, the question you ask is ” who would fund this lunacy” . Uncle Sam via a “FHA Loan” The government funded the whole thing. Now if you deduct the Realtor commission of 6% from the ” true sales price of 405,000.00, the home’s valuation is really $380,000.00
So the taxpayers are paying 10 % over the true market value, and the ” market prices’ are still in decline. This is insanity, and taxpayers should not be in the market especially one that is falling perceptively.
The government funding of high risk real estate at above market prices in a declining market is economic suicide and risks failure of government funds for essential services ” health , safety and welfare of the public”.
Ownership of a home, house, condominium or cooperative apartment is not a ” right” of all citizens, it should only occur when a person has saved a sufficient amount, for a down payment of 20%. This market will not recover until real estate prices and the payment for same comes into balance with the historical average of 30% of ones income going to housing.
This brings me back to what I have said for over 3 years, this market is worse, than anyone imagines. Today NYU Professor Nourel Roubini states ” the worst is to come” , http://business.timesonline.co.uk/tol/business/economics/article5014463.ece I’ve felt this way for a long time. We have invested in ” financial instruments that no one really understands, nor can they value. Now the government owns them.
The un -precedent bailout of AIG is already ” insufficient funds’ they burned threw the government funds in less than a month. In his testimony this past week before Congress ” Greenspan ” used my words ” Economic Tsunami” .
Folks, be afraid, be very afraid I truly believe we are entering a second Great Depression. Consider the following facts.
1. Two wars being fought.
2. A Presidential Election with a complete change in economic strategy.
3. The complete eradication of ” investment Banking” which will bad for the nation and may cripple NYS and NYC.
4. The Dow , and world markets in synchronized downturns.
5. Unemployment and layoffs increasing daily.
6. State and local tax revenues eroding.
7. Bank failures ING, INDY MAC, WAMA, keep going.