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July 27, 2007
Bubble Bursting?
Has anyone been watching the markets this week? Everyone is getting shellaced. I've already heard today called "Black Friday" and a whisper that Bank of America's bond trading desk is down $150 million.
The rest of the country has seen their housing market badly injured at best and we have all been holding our breath knowingthat our market follows the banks....
Comments
Shorted the market today, huh? Get over yourself.
Posted by: Anonymous at July 27, 2007 8:46 AM
No, just a stay-at-home mom with a concern about my soon to be listed apartment. You wake up this way? Does coffee help?
Posted by: anonymous at July 27, 2007 8:49 AM
yeah 8:46am,
as if posting on the Brownstoner forum is going to have the slightest impact on the New York real estate market.
of course there's going to be a major correction. the hard question is when, not if.
Posted by: Anonymous at July 27, 2007 8:52 AM
Wow really I hadn't noticed. What a revelation. Thank you for the newsflash.
Posted by: Anonymous at July 27, 2007 9:02 AM
OH MY GOD I'M PUTTING THE HOUSE I BOUGHT IN DECEMBER ON THE MARKET NOW!!! SELL SELL SELL GET OUT NOW AAAAAA!!!!
you jackass.
Posted by: Anonymous at July 27, 2007 9:16 AM
I know that we don't have a crystal ball. I just wondered if people felt that prices would come down soon?
So many people on this site are buying and selling homes.
Posted by: anonymous at July 27, 2007 9:18 AM
Is a $150 loss for BofA's fixed income desk supposd to be a large figure?
You have got to be kidding me.
Posted by: Anonymous at July 27, 2007 9:18 AM
I don't know if it's a big number. Obviously to a non-financial person it sounds big. When I was told, I think that I was supposed to think that it was a big number. Was I wrong?
Posted by: anonymous at July 27, 2007 9:24 AM
well treasury bonds rallied yesterday as people took money out of the stock market and riskier bond issues were delayed or canceled. This has caused the yield on treasury bonds to drop significantly.
Since mortgage rates are based on the treasury yield this will cause them to drop.
Lower interest rates mean people can afford to pay more for a home.
Also, this morning it was reported that the economy grew at a faster pace than expected so the underlying fundamentals - minus housing - are strong. The housing issues don't appear to be hitting NYC yet, they are mostly in those parts of the country that have been overdeveloped by companies like Toll Brothers.
So, I think you are going to be OK.
Posted by: Anonymous at July 27, 2007 9:36 AM
The above statement is partially true.
I disagree that the drop in treasury yields will result in people in being able to afford to pay more for a home.
That is because credit standards have tightened and spreads to treasuries have tightened.
In many cases this has made homes less affordable despite the drop in yields.
Posted by: Anonymous at July 27, 2007 9:41 AM
Edited for those with delicate sensibilities:
The NYC market is not going to be ok. Yesterdays blip down scared a lot of people but it is just a tiny move compared to the run-up in index values (if not true values - the us dollar has swooned world-wide lately so true values in terms of world currencies have probably gone sideways).
Anyone who thinks the entire country can suffer through housing doldrums for the next two years (see todays news) but nyc is left "mostly ok" is just making stuff up. Lunacy! wall street can't support nyc by itself, and wall street is supported, ultimately, by the consumer economy around the country, it isn't a bunch of suits selling stuff back and forth to each other (although recently i thought that had become the case).
This can fall further. What would be considered a brownstone valuation tragedy by most here would merely be a revert to values seen in 2004 or 2003. Hardly a disaster. Yet it is clear that if this occurs many posting here would be frozen - unable to sell+move for pleasure, for fear of recognizing their large equity paper loss. They better hope their job doesn't downgrade or move, or they don't get divorced, or have unexpected medical bills (Seen sicko?) or any one of all the other problems people cope with ok when they have a proper $ cushion, not just some paper numbers estimated by looking up the "just sold in" column in the ny times.
(At the time I edited this it looks like the market has not bounced back despite the economic growth figures).
Posted by: Anonymous at July 27, 2007 9:56 AM
Gee, there seem to be an awful lot of people trying to scare us this morning.
Posted by: Anonymous at July 27, 2007 10:13 AM
Gee, there seem to be an awful lot of people trying to scare us this morning.
Posted by: Anonymous at July 27, 2007 10:14 AM
9:56, you forgot to take your meds this morning.
Seriously, "nobody is going to be ok"? It's only money. Relax.
Posted by: Anonymous at July 27, 2007 10:25 AM
"Gee, there seem to be an awful lot of people trying to scare us this morning."
no, there seem to be a lot of renters on here this morning.
Posted by: stoner at July 27, 2007 10:26 AM
How ridiculous. Wall Street makes plenty of money overseas to domestic losses in one sector.
Posted by: Anonymous at July 27, 2007 10:39 AM
I agree with Anon 10:39 - unless the global economy takes a fall there will always be safe havens. IMHO, housing will likely take a hit, but nothing that can't be rebounded from. Either way, I don't think there should be a sense of hysteria or panic - twenty years ago housing busts, oil shocks and economic doldrums were fairly common and only registered on the radar of the truly business minded.
And, not to be flip, we can't do aythign about it - so, have your coffee. And a stiff drink tonight.
Posted by: Anonymous at July 27, 2007 10:52 AM
9:56 quite an intelligent argument. I stopped reading your rant after your profane language and distorted syntax.
Posted by: Anonymous at July 27, 2007 11:24 AM
Wow, you people are really in denial. I won;t argue with you because there is no point, but take it from those who work in the credit markets, things are not good right now. The residential sector is just beginning its downturn. But continue to believe whatever you want. Every profitable trade needs a sucker.
Posted by: Anonymous at July 27, 2007 11:32 AM
Why be so nasty to the original poster? This is a legitimate question.
I believe that prime NYC real estate -- almost all of manhattan, BH, PS, CB, CG and most of Williamsburg -- will remain largely immune by the meltdown in the credit markets (which should not be underestimated as they will have a significant impact on Wall Street earnings and bonuses -- and the turbulence in the credit market goes well beyond sub-prime mortgages). The reason for this relative stability (influx of international buyers, co-op regulations, record Wall St. bonus money, etc.) have been well-documented here. That said, I believe peripheral areas in Brooklyn as well as later-to-market condos in the prime areas will be affected by this.
Here's a link to an interesting article in Slate that details the rise & fall of some of the big lenders who fueled the sub-prime debacle. It also includes a link to a blog about Orange County real estate, which is in the midset of a significant (10-20%) price correction.
http://www.slate.com/id/2171235/fr/flyout
Posted by: Anonymous at July 27, 2007 11:33 AM
OK--don't argue with us but what's your prognosis then? That housing will drop? That a recession will grip the city and all fringe areas will be burning like Newark 40 years ago? Will the Chinese markets tank and the pound and euro slide? Tell us from your from your credit market perspective...
Posted by: Anonymous at July 27, 2007 11:37 AM
"Welcome to the Forum. Posting in this area is restricted to individuals seeking advice or services related to real estate or home renovations."
It is very distressing to see this Forum being taken over by horses asses.
Posted by: anon at July 27, 2007 11:38 AM
i welcome the market slowing down. it's a cycle. means the next wave up is that much closer.
if you got in to flip then you might be screwed.
the rest of us still have places to live in the best city in the world.
calm yourselves.
Posted by: anon at July 27, 2007 11:41 AM
So long as the dollar stays weak the NYC market should stay pretty strong. Overseas buyers can get a real bargain here right now and they will continue to be big buyers of real estate for the considerable future. Foreign buyers are often what keeps a real estate market strong - they are particularly good for Brooklyn as they keep Manhattan overpriced and cause people who can't afford those prices to move to areas in Brooklyn. The dollar has a long way to climb before NY stops becoming a bargain
Posted by: Anonymous at July 27, 2007 11:47 AM
You seem like such a nice person, I thought I should answee.
I'm not a prognosticator of credit markets (who is?). Simply a statement that many on this board minimize the issue to sub-prime mortgages when many big corporate debt deals have been pulled because of the market turbulence.
As for outlying areas experiencing riots (Newark's, of course, caused primarily by racial strife, not an overheated housing market, but why let facts get in the way of venom...) there's a lot of room between that and a 10-20% correction that mirrors what happened after the last real estate bubble burst.
Anything else?
Posted by: Anonymous at July 27, 2007 11:49 AM
You seem like such a nice person, I thought I should answer.
I'm not a prognosticator of credit markets (who is?). It was simply a statement that many on this board minimize the credit market issue to sub-prime mortgages when many big corporate debt deals have been pulled because of market turbulence.
As for outlying areas experiencing riots (Newark's, of course, caused primarily by racial strife, not an overheated housing market, but why let facts get in the way of venom...) there's a lot of room between that and a 10-20% correction that mirrors what happened after the last real estate bubble burst.
Anything else?
Posted by: Anonymous at July 27, 2007 11:50 AM
"The parts of the country that have been overdeveloped by Toll Brothers" Like Brooklyn- particularly Williamsburg. :)
Posted by: Anonymous at July 27, 2007 11:54 AM
I agree with 11:38.
Why don't you go post this on some financial blog where you can all duke it out with your big egos, or better yet, start your own blog. I think wallstreetjerks.com is available.
I mean, NONE OF YOU KNOW WHAT IS GOING TO HAPPEN. This is all just a bunch of hooey and a contest to see who has the most overinflated sense of self importance (that's where the REAL bubble is).
It's all "I know because _____ index is trending in an upward swing and a major correction is on the way as evidenced by the ____, although the underlying financials are solid". BLAH BLAH BLAH.
So if you do know so much, why are you posting in this blog and not publishing a financial newsletter (actually, those newsletter guys don't know either, but they are better at convincing people they do know) or writing books or an economics fellow at Oxford?
So just stop. Please.
Now I'm going to go back to paying my fixed rate mortgage and gardening and ENJOYING living in my house instead of looking at it as if this were a bad remake of "Trading Places" or some sort of get rich quick scheme, knowing that in the long run, I WILL come out ahead.
Posted by: Anonymous at July 27, 2007 12:07 PM
Plastics
Posted by: Biff Champion at July 27, 2007 12:11 PM
Why did you think I was being venemous? Let's not get into it--but terrible economies do often increase racial strife. Why I mentioned it, tounge in cheek. But, anwyay, I did want to hear your thoughts.
I do have other question, yes. But not sure you're serious to answer them or if that was a sarcastic sign off...
Posted by: Anonymous at July 27, 2007 12:18 PM
11:38 - Um, this is related to real estate.
Posted by: anonymous at July 27, 2007 12:28 PM
this guy is always good when you want to scare yourself:
http://www.marketoracle.co.uk/Article1589.html
Posted by: Anonymous at July 27, 2007 12:31 PM
12:28 - Um, this is NOT related to "seeking advice or services".
Posted by: Anonymous at July 27, 2007 12:31 PM
12:28 -Would you have been happier with; do you think it's a good time to sell a house or apartment? It's the same question.
Posted by: anonymous at July 27, 2007 12:37 PM
I agree with 12:37.
The answer is NO.
Hold on and never sell.
That was Bill Gottlieb's mantra and he did quite well with it.
NOW can we move on to a relevant thread?
Posted by: mortimer duke at July 27, 2007 12:41 PM
Um....11:38 here. I thought that this kind of silly ranting was to be confined to the main pages of Brownstoner. This kind of discussion is always so puerile, so uninformed, so repetitive, and so utterly ugly. It was my impression that the Forum was for concrete issues related to the maintenance and renovation of brownstones.
I really think that Brownstoner is over. What a shame.
Posted by: anon at July 27, 2007 12:45 PM
12:07- As you stated, you are in it for the long run. Not everyone has the luxury of such job or financial security. Youn are fortunate. The term "starter house/apartment" doesn't exist for no reason. For many people real estate is a way to work toward the kind of home and garden that you enjoy. Also, many long term owners are people who have put the bulk of their wealth into their property and see at as an investment that can provide things like college education for their kids or even a means of support in their golden years.
Posted by: anon at July 27, 2007 12:53 PM
I write this from under my cheap dining room table. It's difficult to type sideways from the fetal position. Please stop trying to frighten me so that I can go about my life and look forward to my next "shellace"-ing.
Seriously, if you're about to put your place on the market, stop watching the news. There's probably some reason having nothing to do with the markets causing you to sell your place, and that thing probably won't change based on what's happening in the markets today or next week or next month. (I could be wrong of course, I'm just basing this on you referring to your soon-to-be-listed place; you weren't asking if it should be listed.) You're not going to be able to time it right no matter how hard you try, so just concentrate on getting the best price you can. De-clutter your place, remove extra furniture, clean it until it shines, and always remember that your broker is more interested in getting a deal done than in getting a deal done the very best way for you (the difference in commission is pretty tiny on that extra $20K they talked you out of holding out for). And good luck!
Biff, you're cracking me up, as usual.
Posted by: Amy at July 27, 2007 12:55 PM
12:45- so the Brownstoner bubble is leaking air?
Posted by: anonymous at July 27, 2007 12:56 PM
yeah, biff if at anytime you'd like to ditch amy and wife-of-out-of-work-husband-and-near-foreclosure-with-nanny, and join the REAL plastics, let me know.
Posted by: anon at July 27, 2007 1:00 PM
Right. Brownstoner has become a mess. It doesn't know what it is anymore. This Forum is supposed to be for people who are interested in the mechanics of taking care of BROWNSTONES.
Sometimes, somehow in spite the helter skelter reporting on condo development, broker gossip, silly polls (stroller mom heaven/hipster hell???????), opining with incomplete information on values of apartments, etc. etc and finally the
and indulgence of every manner of truly sociopathic wierdness, sometimes we get stuff on Brownstones. But it is getting rarer. I need to find a 12 step program to deal with my addiction to this site, but it is just not worth the time anymore. I need a "this old house for Brownstones" since it is definately a high maintenance undertaking, buying one of these old buildings, but sure as hell, this isn't the place.
Where is "Ask the ARchitect?". The technology of this site is beyond belief too.
Posted by: anon at July 27, 2007 1:54 PM
"brown shorts" and "freaking" is profane?
distorted syntax because unfortunately I can't edit what I wrote due to this silly forum brownstoner has.
Actually, wait, I can. And I will..
Posted by: Anonymous at July 27, 2007 2:26 PM
There you go, its all edited nicely for you guys.
The message is the same though.
Posted by: Anonymous at July 27, 2007 2:34 PM
2:34 did you graduate from high school? Or did you just skip english class?
and yes I think using the word "d***" is profane. What has happened to civility in this country?
Posted by: Anonymous at July 27, 2007 3:55 PM
3:55- What has happened to civility in this country?
Posted by: 3:55 at July 27, 2007 4:01 PM
"2:34 did you graduate from high school? Or did you just skip english class?"
english should be capitalized, like so: English.
Sigh. It is always the same. A grammar/profanity nazi on a forum never looks at their own posts too carefully.
Anyway this is totally off topic. If you can't deal with the message flame the messenger?
Posted by: Anonymous at July 27, 2007 4:09 PM
So, professor: would you say it's time for everyone to panic?
Posted by: Kent Brockman at July 27, 2007 4:50 PM
Yes I would, Kent.
Posted by: Professor at July 27, 2007 4:52 PM
Hey, when you click on Kent or Professor you get some Simpson's thing. What is it? Movie opens today, right?
Posted by: anon at July 27, 2007 4:56 PM
Well, since we've gone this far off topic, let me fan the "flames" and tell everyone to go to Simpsonizeme.com, where you can upload a picture of yourself and it will, well, Simpsonize you!
Posted by: Amy at July 27, 2007 5:18 PM
Touchy, touchy. You can smell the fear. Sell soon or lose your paper gains forever, folks!
Posted by: anon buyer at July 27, 2007 6:19 PM
i think that's your breath your smelling, 6:19.
Posted by: anon at July 27, 2007 9:09 PM
And your hands are trembling as you lift the kool-aid for another swig, 9:09! Glub, glub, glub, Mr. Going Underwater. At least what I own is paid for.
Posted by: anon buyer at July 27, 2007 9:39 PM
You both need to take your hands off the keyboard and slide them in your pants for a little calm down time. Better yet, maybe you should get together.
Posted by: anon at July 27, 2007 9:45 PM
I hope that all ends well. I am a sucker for a happy ending.
Posted by: anon at July 27, 2007 10:17 PM
Wow! Lot's of comments on this issue.
The short answer is the New York real estate market will be affected in 08 and 09. Why?
Growth in the New York real estate market is mostly depend on the bonuses of the financial sector in New York. The big firms have been hurting due to losses suffered in subprime mortgages (look at Bear Stearns). Mortgage debt is packaged and sold on secondary markets, and no one wants to buy this debt anymore. One of the reasons for the gains in the equity market over the last few months has been because of leveraged buy-outs (private equity companys and banks borrowing large amounts of money to finance mergers & aquisitions). Some big deals this week went soar because of fear of the risk of taking on too much debt. This and the subrpime mortgage fears caused the market moves this week.
The problem is that all these issues are affecting the bottom-line of New York's big financial companies. Many have already implemented a hiring freeze over the past few months. The result will be little or no bonuses for their employees next year and the year after. In fact, there may even be lay-offs if the markets tumble further.
There has been a sharp drop in treasury yields this week. However, the banks arn't passing these on to lower mortgage rates because of the fears outlined above.
It's going to be a rocky road......
Posted by: PL at July 29, 2007 9:19 AM
...and we all know what little or no bonuses means. There is no way that any person is going to work any Wallstreet job for their base salary of $100,000.. A bad year will mean the same bonus as last year for the people that are valuable and cuts for the others as a way of sending a 'hit the road' signal to them. And anyone getting lay-off will get a packeage that would make most think they had hit the lottery.
All that said, even with this more realistic picture of how the jobs will be effected, the response will be as though the sky has fallen in.
Posted by: annon at July 29, 2007 10:00 AM
perhaps you should run for fed chairman, 10am.
with so much indepth and knowledgeable predictions you've come forth with, i'm sure you'd be highly qualified.
Posted by: anon at July 29, 2007 5:51 PM
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