From the New York Times:
After five years of paltry inventory, rising prices, and bidding wars, the seller’s market has finally started to turn into a buyer’s market—or at least the beginning of one. According to a report released this summer by appraisal firm Miller Samuel, the number of sales last spring—traditionally the busiest season—were down 14.8 percent from the year before. A typical home now sits on the market for 144 days, 42 days more than the previous year. And while the average sales price of a Manhattan apartment so far this year is $1.38 million, 5 percent higher than last year, prices aren’t accelerating anywhere near as high, or as fast, as they did in 2004, when appreciation clocked in at 30 percent. Futures traders at the Chicago Mercantile Exchange forecast that New York City prices will fall 6 to 8 percent by next August, while our own city’s most recent budget report predicts sales volume and prices will sag for the next four years.
All of this adds up to what Jonathan Miller calls “a market in transition”—though the rest of us might call it confusion. Those who own homes—particularly those who bought at the exuberant height of the market—are wondering if now is the time to cash out and take cover in a rental. Some sellers are still getting bids within a day of putting their homes on the market, while others are watching weeks turn into months. Some, in a hurry to unload, are slashing prices twice and three times.
Buyers too, meanwhile, are wondering whether to take advantage of the market’s favorable turn, or if there will be even better deals in six months. Alyssa Gelper, a lawyer who abandoned her search for a two-bedroom, two-bathroom apartment last spring (“I didn’t want to be the last sucker to buy high before the market tanked”), has decided the waters are safe to wade in: She just started poring over listings last week. Open houses no longer feel like cattle calls, and buyers who luck into something they like don’t need to steel themselves for a battle of best offers.
In a very short time, the rules of the real-estate game have changed dramatically—and buyers are more in control than they have been in a while. “They’re taking their time, and they’re not afraid to make an opening offer that’s 10 to 15 percent off the asking price,” says Corcoran’s John Gasdaska.
The market is FROZEN.
Long way down before prices are ‘normal.’
Greedy Grubbers with vacant houses and two mortages are in deep guano.
“Buyers too, meanwhile, are wondering whether to take advantage of the market’s favorable turn, or if there will be even better deals in six months.”
You would have to be a fool to not realize this is just the beginning. The lawyer has decided the waters are safe to wade in? Alyssa, there’s a reason open houses are now empty, and that reason shouldn’t make you feel all warm and fuzzy about being there. Run Alyssa, run!
This is typical New York Times spin! Isn’t it interesting that they include an anecdote about a lone greater fool who suddenly decides the market has bottomed? Where are the anecdotes from all the other folks who are saying “No way, I’m not catching a falling knife”?
From CNN/Money:
Lowe’s: Housing ‘correction’ may take 18 months
Home improvement retailer Lowe’s, which warned on its full-year results Tuesday, expects it could take as long as 12 to 18 months for the slowdown in the housing market to stabilize.
Lowe’s, the No. 2 home player in the sector after Home Depot, warned that its full-year 2006 profits would be at or near the low end of its previous forecast. The company blamed the cooling housing market as a risk to its business.
…
Housing turnover is down 13 percent this year, he said. That, in turn, has negatively impacted mortgage refinance activity, which thus far has helped fuel overall consumer spending.
Even though income and employment growth is still relatively stable, Bridgeford said Lowe’s will be challenged to grow its market share in a slowing economic environment, particularly in the housing “bubble markets” on the West and East coasts.
“We’re seeing conflicting external forces. The process of correction could take over a year to 18 months. The key for us is for moderation in home pricing to occur between now and the next 18 months,” Bridgeford said, adding that he anticipates a pick-up in the second-half of 2007.
Average rent in Manhattan is $3,970 a month? Are you kidding me??? It’s totally nuts to pay that kind of money for 850 sq. feet of space. What are people thinking?
$4K will rent you a primo house on the North Shore of Long Island, or a great NJ town.
I never understood the attraction to living in a congested, smelly, crime-ridden place.
I was looking at moving back into the city for commuting reasons, after a number of years in NJ- and I found rents to be so incredibly ridiculous, I jst shook my head and decided my current place was an even better deal (rent-wise) than I’d thought. $3500+ for one-bedrooms in the city was not unusual…they were nice & new, but 600 sq feet!!
Steve
I have a 1200 sq. ft. apartment in Montclair that I rent for less than $1,200 a month. And I’d rather live here than in Manhattan!
I feel like I’ve got a steal.
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