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Saturday, March 7, 2009
Manhattan Real Estate Will Decline in Value to 50% of Market Peak
According to this New York Times article, Looking for Bottom in N.Y. Real Estate, Manhattan real estate prices hav already fallen by 25% according to some people involved in New York real estate. In the summer of 2008 I told my wife that the Manhattan real estate market would collapse since it was absurdly over valued combined with the beginning of the financial meltdown layoffs. I believe that prices will end up being 50% or less of the previous market peak.
Posted by Halting Foreclosures
Labels: decline, foreclosures, manhattan, market, Real estate
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I agree with your assessments of the US economy and what led to the current situation. However, more debt is necessary to prevent the situation from worsening. Our economy has been based on tomorrow's money for a while. Now tomorrow is today and we don't have any money because we spent it yesterday. The economy must contract to the appropriate size. Since we have created debt obligations based on good times the debt will likely go unpaid and the banks will suffer further. The government must spend money on infrastructure and many other b.s. projects to try to make up for the jobs that have/will be lost. Without government to pick up the slack, the job losses would spread further due to decreased demand and the cycle would continue.ReplyDelete
Thank you for your comment. Please see my US Treasury plan in an earlier post for a less costly solution to the problem which does not entail taking more on debt. My view is that government cannot create jobs. It only incurs future obligations (that we will have to repay) in exchange for short term "jobs". It would be far cheaper just to give people money. Also, the funding for the infrastructure jobs will not help the economy much. Most projects will not start for 2-3 years and the ones that are shovel ready are only funded about 40% by Obama's plan. Where are the states going to get the additional money to pay the costs? Beyond that the stimulus plan only pays for the government jobs for 2-3 years leaving the states with a huge unbudgeted burden when the federal money runs out.ReplyDelete
My greater concern is the general anti-business approach taken by the Obama administration with goals of expanding unions and government control. That will further compound an already tough situation.