From the NY Post:
HERE’S something to toast at midnight tonight: 2006 has been a great year to live, work and own real estate in New York.
Even those not lucky enough to toil at Goldman Sachs shared the riches. The stock market defied all odds and climbed more than 16 percent as measured by the Dow Jones industrials, while a reported $28 billion Wall Street bonus pool kept local real estate prices sky-high and stores and restaurants humming.
In fact, it’s fair to say that this year, Wall Street’s disconnect from the rest of the country grew wider than ever.
It’s little wonder then, that the street’s top economists, living here in hedge-fund land, are almost universally sanguine about the economy and the housing market as we head into 2007. In fact, in a recent Wall Street Journal poll, more than two-thirds of those surveyed believe the worst of the housing market decline is behind us.
Indeed, perhaps the most contrarian bet for 2007 would be that the U.S. housing market will get worse before it gets better. The case from the housing bears goes something like this: First of all, the so-called soft landing we’ve seen in the housing market in the year just passed isn’t enough to wash away the excesses of the bubble years from 2001 to 2006.
In fact, according to Merrill Lynch, the glut of unsold homes continues to grow – with a record 4.3 million residential units still for sale this fall. And with new construction still booming by historical standards, Merrill Lynch estimates it could be at least a year before the supply overhang starts to dry up.
In other words, any turnaround in home demand and prices will take us well into 2008.
Even Ben Bernanke’s Fed has put the nation on notice. In the statement following its December meeting, the Central Bank called the slowdown in the housing market this year “substantial” – clearly raising the red flag about a housing fallout in the months to come.
It’s a bold prediction, but one that comes from the nation’s heartland – a place where they may not be partying like we are in Manhattan this New Year’s Eve, but a place where they may have a better sense of the pulse of the 2007 economy.