Real Estate: 40% more to go?

6/19/2009:

Downward Spiral

I’m sure many of you saw the news reports this week, where a Deutsche Bank report predicts that the New York metropolitan area Real Estate prices are predicted to fall 40% before the market stabilizes.

Others believe it may fall even further, if eliminating the mortgage interest deduction comes into play as well.

new-york-city-real-estate-price-drops

What does that mean for Hoboken?

Hoboken is just about as “NYC-Metropolitan Area” as you can get – so what does that mean for all the new construction and swelling inventory?

If you have your eye on that $500k condo – will you be able to snag it for $300k in a year?
Or that million dollar pad for $600k?

What about that place at 912 Castle Point Terrace? Which a year ago was $2.3 million, and is now being offered at $1.58 million. Will that fall another $600k? Or more?

Is this news just terrifying for Realtors? How many prospective buyers who were on the fence recently – will now “stick it out” for another year?

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27 Comments on "Real Estate: 40% more to go?"

nubber
Member
nubber

Shiller shows improvement in many areas of country, however declines in NYC metro are increasing. over 1% declines it looks like month over month.

jobs pick up, real estate will follow, if they dont real estate won’t

mcgato
Member
mcgato

People should look at fundamentals. Historically the ratio between rental for a year and purchasing has been between 10 and 15. So take your annual rent, multiply by 10 to 15, and that is a reasonable purchase price. With that in mind, my place should be priced between 180,000 and 270,000. The unit two below me, that has a deck, is priced at about 350,000. Is that deck worth 100,000? No.

Just says to me that prices need to drop a lot before fundamentals are back in whack. Until then, I’ll be renting. And hating any potential Hoboken property tax increase.

Asmodeus
Member
Asmodeus

Looks like the dropoff they are talking about isn’t another 40% but a total of a @40% decline in the median since the height of the market in the 1st Qtr of 2007.

Of course, this will result in people who don’t have to sell simply renting their places out rather than selling at a bottom in the market and of course, banks are geneerally requiring 20% down these days, so even if you find a nice $350k condo you are still gonna have to pony up $35-70k to get a mortgage.

bradykp
Member
bradykp

i know for most borrowers they are requiring more down payment, but my brother in law just bought a house in wilmington, de with 3% through FHA. for people with real credit instead of the fake shit that existed over the past 6-8 years, it’s still possible to get the lower down payment loans.

In response to Asmodeus who said:
Looks like the dropoff they are talking about isn’t another 40% but a total of a @40% decline in the median since the height of the market in the 1st Qtr of 2007.

Of course, this will result in people who don’t have to sell simply renting their places out rather than selling at a bottom in the market and of course, banks are geneerally requiring 20% down these days, so even if you find a nice $350k condo you are still gonna have to pony up $35-70k to get a mortgage.

Skywalker
Member

Yeah, lots of “hard to believes” have come true in this Great Recession. A few years ago it was hard to believe that Lehman Brothers would go belly-up, AIG would become a ward of the state, and GM would go belly-up AND become a ward of the state. But they all became reality…so with stuff like that going on, how hard-to-believe is another 40% drop in RE prices as the last leg of the unwind from a ridiculously overheated market. Not very hard, IMHO.

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