What's the real price of real estate now?

Discussion in 'Economics' started by NTB, Oct 9, 2008.

  1. NTB


    Where is the real bid in real estate now? That market can't react as fast as the others. How about NYC real estate? -30% from a month or 2 ago? I wonder where the real market is now.
  2. I suspect it'll go down as well.............not many americans can afford to buy a house if they don't get loans
  3. my friend just picked up some for 30% off already reduced price. I would say the market is about to fall more.
  4. Real Estate buddy can't find a buyer at $1 million for a home that transacted at $1.7 million less than two years ago in the Hamptons. Distressed seller.

    "Nothing is moving"
  5. pitz


    Corporate bonds are 10%+.

    RE lending, especially in this environment, should be at a premium to corporate lending. So say the rate is 12% for debt.

    Equity probably, in this environment, costs 20%.

    So the blended cost of capital is likely in the 15% range.

    That means a building (such as a house) will have to return the cost of capital, in order for such a business deal to make sense.

    So, from current levels, I'd say the real estate market has dropped 80% in the past few weeks.

    Of course, much of it is 'no bid' ('no bid' might very well mean $0), but unless the government manages to induce inflation ASAP, pretty much every leveraged owner is on their way to default as the economy shuts down.

    IMHO, we'd all be better off paying $300/barrel for oil in the next few years, than we would be with complete industrial collapse. $300/barrel oil would be far more orderly and would let the market move capital and savings towards the market participants that build/own energy infrastructure, and would encourage inventory builds, instead of just collapsing all industrial production (and all the war/disease/civil unrest that causes)..
  6. MattF


    wrong market.

    either that or go 800K and you might find someone...
  7. dve250


    I think the only real way to get your money's worth is to buy the land and build the house yourself. Or do as much as you can and sub-contract out the rest. The actual replacement value is what it should be worth but the cost to pay a builder to build is probably way too high.
  8. We just sold a house here in Houston last week. Didn't get top dollar, but we did ok. At closing, the title agent said she's doing sales, but most were short sales. The mtg lady said she's writing loans and funding sales all day every day.
    Life goes on.
    #10     Oct 10, 2008