United States Heading towards a Depression?

The housing crash will be centered in 'Forclosure Clusters' of subprime buyers

The prices of homes in Geneva are a red herring. The prices of condos in Manhattan are actually going up due to European buyers taking advantage of a favorable exchange rate.

The real estate market is local not national. A good case in point is the Houston Real Estate crash of 1982. Nearly 16% of Houston's housing market entered foreclosure between 1982-87. It took 25 years for the prices to recover.

Where I'm located is called the Gold Coast or New York Waterfront on the Palisades. On the water front there are mega condo and townhouse developments and the builders have reduced prices by $100,000

One-bedroom residences from $500K 850 sq ft
Two-bedroom residences from $700K
Three-bedroom residences from $900K 1500 sq ft

(example)
http://www.corcoran.com/property/listing.aspx?Region=NYC&ListingID=1104788

Now if you go a few blocks away from the Waterfront the areas are city --- mixed use residential/commercial. Prior to the subprime explosion the buildings were owned by investors and the House PE ( Price/annual rent) was PE10. The wild subprime loans have pushed House Price Earnings to PE15.

There really isn't a solution. You can't lowball the properties because the bank owns it. In a couple of years, it will be good to buy.

A good article is: Pain Street USA: '08 housing outlook

"The forecast is for a longer, deeper home-price slump than previously expected, with double-digit declines in many markets."

http://money.cnn.com/2007/12/19/real_estate/steeper_price_slump/

 

Just because you have a six bedroom paid for in full!
Never been there to New York
You probally hate it but I think I would love it!
What is the PE thing?
What does that mean to the average person there?
Regards
Valley

 

House PE is price to annual earnings. So a $600,000 house that rents for $2500 amonth is calculated $600,000/30,000 = PE20

The historic PE is ten times earnings

Hoboken NJ is a good place to buy once the prices start to drop. It's connect by a path subway and 5 minutes to the village or 10 minutes to midtown.

 

You seem to get a better interest rate there.
Rental prices upside down here though
Norally cheaper to buy, but I have seen quite a few subs go through
£200 K loan = £1650 a month or rent the same house for
£650 a month.
It makes buyers and investors stall and will cause a slump, or just cirtain places to never sell

 

Pain Street USA: '08 housing outlook

 

Feel free to use my avatar. Right click > Save As > User CP > Edit Avatar

 

The second quarter of 2009 is forecast as bottom but who really knows.

 

I would just play it safe and wait it out. My bets are the it will get worse before it gets better so why buy now?

 

Most of American consumption is paid for by debt - Eventually you have to pay the piper or go bankrupt.

 

Florida, East Coast and California all I see is downside.

Also the US cement shortage is ending and that's helping to lower costs. The U.S. ending duties on Mexican imports.

At the height of the market in 2005 the cement shortage had a hand in driving up the prices.

http://www.msnbc.msn.com/id/8220043/

 

Not so, if I am spending more than my cash flow, I accumulate debt or liabilities. If at the same time my assets (say a house or two) are growing at a greater rate my net worth is increasing and my estate can sell the assets and payoff the liabilities and my heirs can go get piping lessons.

 

I talking about consumer debt like credit cards, etc - seldom used to create income producing assets.

 

are you one of those people who borrow against their house to buy stuff?

I read something like 1/5 of new car purchases are made with home equity loans

 

Ouch, most cases you can get a much lower APR on a new car than you can on a home equity loan!

Maybe if the rates were right I could see going that way, not currently though.

 

The home equity piggy bank is really no more different than the dot.com bubble of 2001

As housing slumps, realtors quit - Sounds like the rats are jumping off the sinking ship!

http://news.yahoo.com/s/csm/20080109/ts_csm/arealtors

 

Well there was a point that I was in a career transition for about a year and I accumulated debt and eventually consolidated when I refi'ed. I may push myself to that sort of situation again by buying a second home if price dip a little more. I can take a little short term debt accumulation so long as I have assets appreciating at a faster rate. I wouldn't mind getting up to a million dollars in debt so long as my assets get up to two million.

 

Which begs the obvious question, Mr. Speculator.

What do you do when your assets depreciate?