It’s time to share my Three Cents Worth (3CW) on Curbed NY, at the intersection of neighborhood and real estate in the capital of the world…and I’m here to take measurements.
Check out my 3CW column on @CurbedNY:
After last week’s release of our rental report for Manhattan and Brooklyn and with all the talk about the gap between the boroughs closing, I thought I’d revisit the topic and add the sales market to the rental mix…
As an added bonuses, notice all the troll commentary in this post. I’m noticing there is more of this as the market rises.
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My latest Three Cents Worth column on Curbed: Brooklyn Prices Closing Gap With Manhattan [Curbed]
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Altrendo Images | Getty Images“This is a mix of home issue,” warned 
But one of the authors of the indices, Robert Shiller, told CNBC Tuesday: “We have encouraging signs in the market, we are seeing some signs of hope.” His cohort, S&P’s David Blitzer, agreed. “Digging into the details, it’s a whole lot better than the headlines,” he said in the same interview.Finally, index co-author Karl Case explained: “We lag, and the indicators for the last three, four months on the quantity side have been real positive, so we look like a bottom. You have to pick to find real negatives.” So why are they optimistic?Markets like Phoenix and Las Vegas are coming back—Phoenix in home prices, and believe it or not, Vegas in construction.But just because they are coming back from extreme lows does not mean that we’re going to see huge price appreciations any time soon. This is just the second-straight month that we’ve seen monthly price appreciation (seasonally adjusted) on the indices, and it’s very slight, under one percent. “Transaction volumes for both new and existing homes have improved somewhat over the past few months, but that doesn't mean that prices will rebound on the same timeline,” notes Miller Tabak’s Peter Boockvar. “The market has reached the point that low prices themselves are finally driving some better demand again. Prices will eventually follow, but in fits and starts, and it’s still very possible that they go lower still.” One cannot discount distress in the market, especially when we look at markets like Phoenix, Las Vegas and Atlanta. Phoenix and Vegas are seeing huge investor demand, which has pushed inventories lower, while Atlanta is still working through its distress and prices therefore are plummeting at the worst pace in the nation. With all sorts of government and banking forces distorting the distressed market, either through the $25 billion mortgage servicing settlement, or through various government incentives to keep loans out of foreclosure, it’s hard to say whether this improvement in prices is permanent. “As servicers implement settlement guidelines, we will see an increase in short sales and foreclosures, as a very large number of borrowers, especially those in PLS [private label securities], won't qualify for [principal] write-downs,” says Josh Rosner of Graham Fisher. “This is especially true for those who have failed to make payments or do necessary maintenance for many months. These problems will be especially felt in the former bubble markets.” While many analysts, like Ed Stansfield at Capital Economics, believe home prices have, “reached a floor,” they admit there continue to be downside risks, not the least of which is the euro-zone crisis. “For now, we continue to expect any upturn to be modest. Given the likelihood that the divergence between city-level performances will remain high, further house price gains may well be interspersed by the occasional reverse,” Stansfield says. Questions? Comments? document.write("
Buyer traffic is strong, supply of homes for sale is low, and yet home prices continue to defy the usual formula, falling again in March. Prices usually rise as supply shrinks, but demand is still too low to make those historical “norms” compute, not to mention that the type of supply available is largely distressed. Foreclosures and short sales (when the home is sold for less than the value of the mortgage) accounted for 47.7 percent of sales, in a three month running average measured by 
Close to twelve million borrowers are now in a negative equity position on their homes because so many other borrowers were unable to afford their mortgages. The logical assumption would then be that as foreclosures ease, organic home prices will rebound. But what if the current, unique state of the housing market turns that assumption on its head? 
The median price of a new home came in at $212,300 for October, which is up from a year ago, but October of 2010 represented the big fall after the end of the home buyer tax credit. The fact that October of this year saw the lowest price of the year so far is not good news going forward. What this means for the nation's big builders has the analysts split. "While we continue to believe prices may fall slightly from current levels, we believe pricing is essentially near its trough, and therefore should result in minimal impairment charges for the builders in 2012," writes Michael Rehaut at JP Morgan. "New home prices are still at a 31 percent premium to existing home prices (vs. 14 percent historically), and given the high level of existing home inventory, we expect pricing pressure to remain," notes Dan Oppenheim at Credit Suisse. New home sales are still at half the normal historical levels, and they are in for more fierce competition in 2012, specifically, foreclosures. Banks are ramping up the repossessions again after year-long delays in the process, and that will mean inventories of distressed properties will rise. These rock-bottom priced properties may or may not compete with new construction, depending on geographical area, but they will bring overall existing home prices down, and that will do nothing good for consumer confidence. Inventories of new construction are approaching healthy, at just a 6.3 month supply (far better than that of existing homes at an 8 month supply). In raw numbers, they are actually at a record low of 162,000 (or at least since the data tracking began in 1963). Unfortunately, that's not helping prices in and of itself. "The bigger picture is that house prices are still being weighed down by the huge number of discounted existing homes coming onto the market," writes Paul Diggle at Capital Economics. "New home sales will also be held back by the weaker pace of economic growth that we are expecting next year. Admittedly, at some point activity in the new homes market will have to rebound to reflect underlying population growth. But that is still a few years away yet." So will the big builders continue to slash prices in order to compete? Can they? "Commodity prices remain elevated, and that doesn't give builders much room to cut prices too much without really sacrificing profit margins again," says Peter Boockvar at Miller Tabak. That's why analysts are being very selective in their approach to the home builders and are "muting" their outlooks for 2012. "This is shaping out to be the worst year on record for the single-family housing market," says Patrick Newport at IHS Global Insight. "New home sales (data start in 1963), single-family housing starts (data start in 1959) and single-family permits (data starts in 1960) will all set record lows in 2011. Existing home sales may avoid the cellar, but only because a third of them are selling at “distressed” prices." So what will get housing back on a strong foundation for growth? All the analysts agree: Job growth. Questions? Comments? document.write("