(Yes, this is a repost. The media finally caught on to what DB was saying.)
What’s it feel like to survive one hurricane only to be told that another is on the way? New York City–area homeowners are in just that spot. After the region suffered the brunt of financial-industry cutbacks, the next big wave of woe could be a nor’easter of collapsing home prices. That’s the forecast of an extensive new report on residential real estate by Deutsche Bank, which calls for home prices in metropolitan New York City (which includes Westchester, northern New Jersey and other nearby areas) to fall 40.6% from the prices that prevailed in March.
Ironically, that dire forecast is wrapped in an improving forecast for nationwide home prices. Back in March, Deutsche Bank analysts had expected national home prices to decline 16.5%; now they foresee just a 14% decline. That mildly upbeat news does not hold true for the New York City area, however, which is expected to see a 40.6% drop. While that is also a slight improvement from the March forecast, it is dire
New York City’s big problem is not so much the financial-industry meltdown as it is an intense lack of affordability. As the report notes, metropolitan-area New York home prices peaked in the second quarter of 2007 at $552,000. By the first quarter of 2009, the median price had dropped 19%, to $446,000, but the market swoon was less than half the drop recorded in many other areas of the country. Today among the 10 biggest metropolitan areas, New York ranks as the least affordable.
From the Wall Street Journal:
How much further could home prices tumble in the New York City metro area? Deutsche Bank predicts a decline of 40.6% from the first quarter of 2009.
That’s a slight improvement over the 47.4% decline that the bank’s analysts had forecast in March, and it reflects in part the fact that prices have dropped since then. Still, prices would have to drop another 32% from the first quarter of 2009 to return the New York market to levels of affordability not seen since 1998.
Median prices in the first quarter of 2009 dropped to $446,000 in New York, down 19% from the peak of $552,000 set in the second quarter of 2007. Deutsche Bank forecasts a total peak-to-trough decline of 52.1%.