Last Week's Biggest Sales

And it would seem that prices collapsing would actually make it even more likely that people would hunker down and not sell given the fact that they won’t get the price they need to break even. So we are here to stay dumbass>

You are, by far, the biggest idiot alive twhat.

Of course you have nothing constructive to add to the conversation.

And now you think the price of oil declining is the end of everything. When the price was rising you said people were driving less and it was destroying the economy. You don’t even remember what you said.

What medication are you on? I think the general public and the FDA need to know so we can all be warned and begin the process of a worldwide recall.

@wasder 3:47, in theory yes. It’s a question of the impact of nominal v inflationary pressures. Nominal is what you see in terms of the selling prices going down, inflationary is “stealthy” and creeps up on you.

I still think there is some way to go for nominal prices to go down. After that, I see prices stagnate while inflationary pressures kick in.

@11233. I spend most of my day thinking about this stuff – it’s my job! Not to say that I’m right but I have the time to really think about it and get to the bottom of it,

The Chicken: I see where you are coming from now and I believe I understand your concept of price decline. This would assume that people have no equity to start with, i.e. they are not selling one property at a profit and using the net proceeds to move up the property ladder? If my understanding of your position is correct, then all of NYC is overpriced and needs some serious corrections.

I do think that there are a lot of people who liquidated one position to take a greater one. That might explain how we still have some huge prices on places in Park Slope. Now that the market has tightened, people will simply sit where they are until they get a sense of the market. I think it will take a life event (kids) for people to move from, say, a co-op to a house. And that house will probably not be in Park Slope.

It is interesting since I went from renting to owning an entire house, which I think is rather rare nowadays. As such, I had to use the same factors you are using for affordability. That is what made Bed-Stuy an option for me.

The more I think about our posts, the less I think your point of view is “off-the-wall”. (Nothing personal about my initial impression.)

I am ready for that drink whenever you are.

Wasder: I live just outside the eastern edge of the Stuyvesant Heights historic district. I am around the corner from Dave. So when I tell you that his stoop needs some attention, I know of what I speak!

Thanks for your comments 11233 and wasder.

I must admit personal bias since I don’t own there yet but by acknowledging this I hope I’m able to limit bias in my analysis.

The days of flipping are behind us but how far behind us are they? I don’t know where to get this data but it might be interesting to compare the number of transactions from the run up (less what could be considered the “normal” run-rate for house sales. ie those genuinely purchasing a family home) against the numbers sold since the peak. That might give an indication of the level of investor/flip property backlog.

11233 – the ratio I’m using is an affordability one. There are lots of factors that go into it but the main ones are; income, taxes, target savings ratio (both for deposit and for disposable income), interest rates, and repayment schedules. My estimate for the fall is based upon the real level, not the nominal. For example, if (through inflation) everybody made twice as much money as they do currently but house prices remained the same then that is a 50% fall in my books.

I’m not using this as a way to backtrack on my expectation – it is a real issue. My dad’s first house cost him gbp2,000 and is now worth about gbp70,000 so that looks like some real appreciation (it was over a long time!). However, when he first bought the house he was making gbp15 a week (approximately a 2.5x multiple of annual gross income) and someone doing the equivalent job now makes about gbp15,000 pa so the same house is on a 4.7x multiple. The “appreciation” in value over time that I prefer to look at is not 70,000/2,000 (3,400%) but 4.7/2.5 (88% increase) – big difference!

The prices above are, in my opinion, transaction marks on the way down. If I am right then subsequent transactions for similar houses will keep coming down. If I’m not then they’ll start going up (adjusted for the inflation factor described above).

The two of you have taken opposing sides to location v pricing decision. My first house was in an “up and coming” area of London – I got a lot more property for my money that way. My next house will be in a “nice” area of Brooklyn – because I don’t want to move again. There’s no right or wrong answer and it all comes down to personal circumstances.

11233 – it will have a wraparound porch and I will be taking you up on that drink. Might be 1-2 years though! 😉