Halstead Property

Diane M. Ramirez
President
dramirez@halstead.com
(212) 381-3203

Study Finds New York Area Homes Lost 130B In Value From 2007 To 2008- Is Now The Time To Buy

BY CATEY HILL
DAILY NEWS STAFF WRITER

Sky-high real estate statistics usually don't faze us.  A $10 million price tag on a SoHo loft doesn't even raise eyebrows.  A dilapidated brownstone in Harlem fetching millions doesn't make us flinch.

But even normally unflappable New Yorkers may be shocked at the latest sky-high real estate number: $130 billion.

Homeowners in the NY metro area lost $130,291,409,688 in home value in 2008, according to Zilliow.com.  In the U.S. as a whole, home values dropped about $2 trillion, the study found.

More than half of this $130-billion loss - about $75 billion - came in the fourth quarter, as the Wall Street crisis and other economic woes hit the real estate market - hard, the study found.

"Over the last couple of years while much of the country had a debilitating downturn, New York was relatively immune," said Spencer Rascoff, COO of Zillow.com.  "But the party's over for New York."

Dottie Herman, CEO of Prudential Douglas Elliman, mirrored Rascoff's thoughts.

"If you think you're going to lose your job, you're not going to buy. [We're] a long way off from the past couple of years," Herman told CNN.

The data begs the question: Is now the time to buy?

This is a tough question to answer, but several studies suggest that home prices have a good deal more to fall before they bottom out.

Goldman Sachs recently issued a report predicting that New York City's real estate prices may fall by as much as 44%, according to CNN.  The Case-Shiller Home Price Index report predicted that prices would fall more than 20% in the next four years.

It also depends on where you want to buy.  Manhattan home prices actually showed an increase from the third to the fourth quarter, according to several of the city's biggest real estate agencies.  The median sale price of a Manhattan apartment rose 8% from a year ago, to $895,000, according to Halstead and Brown Harris Stevens, CNN reported. Prudential Douglas Elliman estimated the rise at 5.9% and Corcoran Group estimated it at 3%.

However, there were signs that even Manhattan is feeling the burn.  The number of closings for Manhattan homes dropped 34% from last quarter, according to a study by Streeteasy.com. This was the sharpest decline since 2005, when Streeteasy.com started keeping records. 

"What we are seeing is a lack of confidence among buyers due to the state of the economy and so much of what is happening on Wall Street, the credit crunch and even the Madoff scandal," said Sofia Kim, Vice President of Research from Streeteasy.com, a leading real estate website providing data across a variety of brokerages.

Some New York City neighborhoods are offering better deals than others.  According to Streeteasy.com, here are some of the neighborhoods where you might be able to find better read estate deals:

These neighborhoods saw the most price cuts from Q3 to Q4: Beekman (50.6% of listings cut prices), Manhattan Valley (45.7%), East Village (43.1%), Central Park South (41.9%), SoHo (41.7%).

These neighborhoods saw the deepest price cuts from Q3 to Q4: Clinton (10.93% was the average discount), Tribeca (10.83%), Flatiron (10.35%), Central Harlem (8.58%), East Harlem (9.98%).

From 2007 to 2008, Zillow.com found that these places in the tri-state area had the most drastic losses in home value: Newark down 13.1%, Jersey City down 14.4% and New Brunswick down 11.9%.

But will these prices fall even more?  Only time will tell for sure.  One thing that does seem likely is that New York City home prices haven't hit bottom yet.

Monday, February 02, 2009