Why didn't New York City real estate prices go down in 2008?

ironchef said:
The Harvard economist John Kenneth Galbraith had a famous quote in a book he authored back in 1990: There are two factors contributing to euphoria (bubbles): The first is the extreme brevity of financial memory, and the second is the specious association of money and intelligence.

Ten years is a life time in financial market.

You have Fed QE, CD interest rate of 0.1%, mortgage rate of 3% (8% prior to crash), practically free money after tax and inflation. So, a few early birds, who could, borrowed. The herd then followed. And the cycle started all over again.

You substitute stock market for houses, the effect is the same.

Now you understand why many of the recent ET posts are predicting a crash.
More...

The problem is some of you are really bad at identifying what truly is a bubble.
 
fredgraph.png
 
ironchef said:
Yes, I am one of them.

I agree, there are no real estate bubbles in NYC, San Francisco, LA, Vancouver or Toronto.
More...
I have been waiting to buy a house on the Peninsula in the Bay Area since I first moved there in 1998. Which was clearly a bubble when it came to real estate. And despite being very familiar with the real estate market there and closely monitoring it now for 20 years! it's still "clearly a bubble" and has never gone down, only leveled out it's rate of increase for short periods of time. So yes, the real estate market there is absurd and clearly unsustainable....except that it's sustainable for an appreciable enough portion of the human lifespan that it's functionally the same and being sustainable for my purposes. Remember, "Markets can remain irrational longer than you can remain solvent."
 
You must log in or register to reply here.
Back
Top