Rounding out a few of the recent real estate forecasts, Mark Zandi, co- founder of Moody’s Economy.com in New York “forecasts a decline of 3 percent in the last quarter of this year and subsequent drops of 4 percent to 6 percent for the following three quarters” in the San Francisco Bay Area.
While a bit closer to home, Ken Rosen, chairman of the Fisher Center for Real Estate and Urban Economics at the University of California in Berkeley declares “no place will be immune” and forecasts “[h]ome prices will decline 5 percent to 10 percent from last year’s peak in New York and San Francisco” based on increased supply, decreased demand, and a psychological shift (to the negative). No place? No kidding.
∙ New York, California Metro Home Prices May Decline [Bloomberg]
∙ JustQuotes: Parsing The UCLA Anderson Forecast For The Bay Area [SocketSite]
∙ JustQuotes: NAR’s Monthly Moving Target (September Edition) [SocketSite]
WSJ reports that, rather than slowing down, builders have decided to keep building, but just build smaller. I think it’s great that they are continuing to build more and more and more housing.
Go builders!
Rosen is one of the only credible voices out there, I’ll listen to him. He was spot-on during the internet meltdown for commercial property vacancies. The NAR might as well close up shop, they’ve lost all objectivity since calling a market bottom and anticipated recovery during every quarter of the past year!
Ken Rosen deserves tremendous credit for calling a decline in commercial real estate following the last peak in 2000. I do take some exception to the previous comment that he was “spot on”. Although he was alone among prominent economists in forecasting the real estate downturn, I recall that his prediction was a much more modest downturn than actually occurred.
interesting that he includes New York in his downturn forecast, as every segment of that market continues to show solid to strong appreciation.
The big question for S.F.-imho- is how any price decline will be spread across the market. Will high end properties take a hit? There’s such a bifurcation in the S.F. market right now that it seems very difficult to predict overall price declines in the 10% range, though there’s really no downside to predicting price declines in this market. If Rosen is wrong, so what?
The prediction is 10% across the Bay Area which includes the east bay, peninsula, north bay, etc. I would expect in the outlying areas you may see 15%-20% drop but in SF, San Mateo County you may only see single digit declines which then average to a 10% bay area decline. (IMHO)
Which sign of the apocalypse does a correction in real estate values represent? I think it falls somewhere between pestilence and the oceans turning to blood. Or maybe that’s world war III.
Socketsite’s a lot more fun when looking at actual properties, rather than reading the musings of armchair economists.
anono
not true, co-ops (which require an extensive approval process) have been falling in prices. The NYC median has been buoyed by new condo’s that, like the rest of the country, have relied on ‘affordability products’ like I/O loans for people to afford.
I find it very telling that the one segment of NYC housing that has stuck with traditional lending standards has not been rising but has actually fallen back.
No, the the price psf for coops in NY has not fallen in absolute terms, but yes, the $ psf for condos has gone up, because (aside from one major project on Central Park)all new construction has been condo. New construction in NYC also benefits from subtantial, but temporary, tax abatements. When rates on those “affordability” products reset and those tax abatements run out, check back in.