New York Housing Market Could Still Collapse: Analyst

[Javaman]

http://www.cnbc.com/id/46310822

There's been a lot of talk recently about home prices reaching a bottom. Most notably, Bill McBride at Calculated Risk — perhaps the most respected housing market analysts in the blogosphere — says housing starts already bottomed and housing prices are likely to bottom in March.

But not everyone is convinced. Keith Jurow argues that home prices are nowhere near the bottom. In fact, he thinks that one particular market — New York City — is close to collapsing.

From Jurow:

Let’s look at the most misunderstood housing market in the country — the NYC metro. The published median sale price for both NYC and Long Island has seemingly held up better than other major metros — not much less than $400,000 for Queens or Suffolk counties. This has fooled people into thinking that the worst is over in the NYC area. On the contrary, the real collapse in prices is imminent.

In November 2011, Minyanville.com posted my 30-page New York City Housing Market Report. The report included never-seen-before charts, graphs and data that revealed what has been going on there. The banks have not been foreclosing for the past three years. This started well before the robo-signing mess. On February 7, 2012 there were a total of only 242 repossessed properties on the active MLS in Queens according to foreclosure.com. This is a borough with a population of 2.2 million.

more at link...

[no_hypocrisy]

1. The "true" price of NYC region properties has yet to be established.

I watched as homes were appraised higher than their value, knowing that a split-level surburban 3 bedroom house certainly wasn't $1.5 million on a half acre of land, built 50 years ago.

When my clients bought their over-priced home, the purchase price was $239,000 for a house that resembled the original Mr. Blandings Builds His Dream House. Black mold everywhere. A crack in the foundation. I insisted that the Seller at his own expense fix these deficiencies. He refused and he also refused to reduce his asking price. (The property was located in Sussex County, NJ.) The realtor for my clients told them to move on and find another property and the wife refused. She had to have a "lake house".

Doing research, I discovered that the house was purchased five years prior for $129,000 and the owner took out a home equity loan to the tune of $240,000. No way the property appreciated almost twice its value in 5 years but some bank gave him the money. And now my clients were going to pay that home equity loan for the Seller and he got to pocket $150,000 from my clients.

This is a small example of what was going on with NY/NJ real estate. Real estate WAS another version of ATM machines. And now property values are falling to more accurate numbers.