Summary
The artical is important as it measures price falls and increases that occurred beginning with "Black Wednesday" in october 1987 through 1998 as we began to move out of the late 1990's bank failures and the RTC. However, the bottom is not here and may not be reached until late 2009 or 2010 provided the recession has passed.
Analysis
We all should remember the press constantly warning the public continually through2006-2007 "If you buy today your home may be worth less tomorrow". The constant articles and reports by the press and talk show hosts eroded buyer confidence which I believe was the beginning of the market decline. It's called "Buyer Confidence" a market without buyer confidence is a declining market that will only reach bottom when buyer confidence is restored and such confidence is along haul.
Our President has painted a gloomy message on the buying public, investors and employers by comparing today's recession as the worst since the 1929 depression when facts do not support his statements and which further depress buyer, investor and employer confidence increasing the unemployment in this Country and deepening the recession. If our leader cannot promise a chicken in every pot we will fear going hungry and not spend our money or invest for in a future that is uncertain. Installing confidence in all markets and within our people is the only way in my opinion to begin a new economy with buyer and investor confidence. We need cheerleaders and heros not doom and gloom.
With this said Manhattan's market is impacted by New Jersey's "Gold Coast" which is drawing buyers and renters to New Jersey and causing vacancies and unsold condominiums in Manhattan. The previous symbionic relationship has changed into a competitive relationship which may not adjust until the last quarter of 2009 or the first half of 2010 provided that their aren't massive bank failures.
Until the resale market sales velocity rates increase to the 2007 figures we will not see a market resurgence. The real estate market consists of buy up activity in volume. The price a home sell for is meaningless in a market return as prices are a symptom of the market but the lack of sales volume is the predictor of a stagnant market which then affects housing prices. its the chicken or the egg syndrome. In the housing industry volume generates the egg.
I have experienced market adjustments starting with 1970 and have seen more decline in previous recessions than we are experiencing today. I haven't seen the massive foreclosures on builders and closing of over 200 banks that created the RTC. In fact I question why our government has ignored the RTC solution of buying up acid investments as a means of recovery through a central source such as the RTC rather than giving away billions to banks for stock when the same banks will fail as unemployment fuels foreclosures.The banks will not be able to absorb the losses and fall like dominos. If this occurs and it may be on its way the bottom of the market will be beyond calculation.
Unfortunately, a new round of foreclosures and bank failures are on the horizon if the government doesn't take buy up the acid mortgages rather than buying stock in the banks for a takeover and creation of a Central Bank. Without government intervention and their buying up the acid investments of banks our markets will not recover. Massive foreclosures will prevent a resurgence of the real estate markets as those being foreclosed will lack a credit rating to again become buyers and the rental market will begin a resurgence. However, the banks will fail and credit will be again restrained and the foreclosure sales will impact the appraisals of homes and mortgages impacting the sale of market housing. The bottom of the market cannot be calculated until banks divest themselves of acid mortgages, become solvent and employment begins its recovery.
