Thursday, June 18, 2009

Deutsche Bank Projecting A 40% Decline In NY Housing Prices

After the good folks in the Deutsche Bank securitization group anticipated a 47% drop in NY housing prices in March, they have released an updated report discussing the future pain in the top 10 MSA, and the biggest outlier by a big margin, once again, is the New York-White Plains-Wayne NY-NJ MSAD. With a 40% drop in prices still to come, if in the market to sell some real estate, you may want to do it as soon as possible before potential buyers realize how much cheaper they can get that 2 bedroom TriBeCa loft for.

Summary from the DB report:
(1) while home sales activity has picked up in some regions, much of it reflects clearing of distressed inventory and is accompanied by falling prices. Over the last several months, many MSAs reached their all time highs in affordability, helped by low mortgage rates. Unfortunately, affordability is no longer the driving issue in the housing market and we believe prices still have a ways to fall in many areas before home prices reach their trough. The bottom is closer but we are not there yet.

(2) For the US we are now projection a further 14% decline from 1Q09 this compares to the 16.5% current to trough decline we published our last outlook in March '09.

(3) Affordability no longer an issue in most of the Top 10 MSAs in the US but factors such as unemployment, distressed inventory and home price momentum are combining to still result in quite negative current to trough outlooks in some large MSAs.

(4) In NY prices still have to drop an additional 32% from 1Q09 levels just to restore affordability to its historic high (1998) but including model risk factors beyond just affordability we are projecting a 40.6% decline from 1Q09 (vs 47.4% in March ).

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