Bloomberg takes a dim view of the jumbo house market. In case you’re wondering, that would include just abut everything in Greenwich north of $1 million. As I’ve hinted here before, that’s the part of our market that’s bloated, still swelling and not moving.
“Tighter lending standards and the lack of cheap financing for these borrowers continue to be key issues,” the New York- based analysts wrote, referring to “jumbo” mortgages. That’s after so-called interest-only and option adjustable-rate loans were a “major driver” of soaring values, they said.
“Currently, we have national home prices bottoming in 2011,” they said. “However, prices for more expensive homes may not bottom out until 2012, and ultimately result in peak-to- trough declines in excess of 60 percent (compared to 40 percent nationally).”
For What It's Worth 
Yep……My partners are saying the same thing……so many defaults and too many houses…good article in todays WSJ about how appraisals also being effected downward by foreclosures- shortsales and plain reality in the market place…how do you get a mortgage if the appraisal “is what it is” (You can’t make this stuff up anymore!!!)
We will buy in 2011 start looking in 2010…can’t wait!
But Cramer says we have hit the bottem, and it’s time to buy! Boy, there’s a great indicator that we’ve got a lot more to go.
Saw Blankfein has his old UES apt on mkt for $15MM; and IIRC also trying to unload his Hamptons house for ?$13MM; will be interesting to see when/price at which his stuff trades
Billionaire Paulson calls bottom in housing market
John Paulson is starting a new private equity fund to invest in residential and commercial real estate. John Paulson — who seems to be in the news every day now for whatever it is he’s going long on — sees value in prime, jumbo mortgages.
Billionaire guru Zell says housing will stabilize this summer.
I’ll take the analysis of a couple of guys who actually know what they are talking about. Sure, the surplus of spec homes will take a while to work through the system but the rest of the Greenwich market is stabilizing and will be fine.
Buyers are going to miss the boat on historically low interest rates and will be kicking themselves in 2011.
Paulson’s PE fund for RE is puny vs his total ~$30Bn AUM
And high-end RE is arguably a rather different game than foreclosed tract homes in inland LA
Besides, not many guys accurately play both a bubble pop and a recovery…even billionaires like Paulson….and may want to analyze if Zell is still a billionaire these days
Billionaires are much like tech VCs…a relative small percentage of smart, well-timed bets and prudent risk management hugely offset a litany of poor and/or ill-timed bets
I think there will likely be a bottom in the housing market for many parts of the country pre-2011 (e.g., California, Arizona, Florida and other parts of the country which have already suffered significant pain). All areas will not stabilize at the same time. I’m betting (as are many others) that NYC, Boston and other cities on the eastern seaboard have a significant way to go before housing hits bottom in those areas. Put another way, I don’t think Zell and Paulson will be buying real estate in NYC, Boston or Greenwich anytime soon. They’ll be focused on areas where the affordability index has already hit multi-year highs (and where there is plenty of product to pick-off, even now).
To all Fountain readers:
As crazy as this sounds, I suspect that in the latter part of 4Q and early January, we will be reading articles and having conversations about how surprising “Wall Street” compensation will/has been. No, I am not suggesting we will be back at 2005-06 levels, but much higher than many may think right now. And no, it will not be uniformly even, but dispersed enough that there will be more money around than the end-of-days types are predicting.
Did you note the number of banks that repaid TARP to get out from under the govt’s thumb (sorta)? Tah relieves much stress on compensation.
Doesn’t a stock market rally and wider trading spreads drive up comp?
Many hedge funds are up nicely this year so that could flow through to comp (yes, I understand the concept of high water marks, etc but not all funds have to make up down 30% in 2008).
How does this all translate into anything affecting Greenwich RE prices? I don’t know but I am just suggesting that things may not be as dire as many of you readers think/hope.
From your lips to Bernake’s ear, Krazy. I was perfectly happy selling huge houses for crazy prices and look forward to resuming the separation of eager young Wall Streeters from their cash. Hey, they’ve got to spend it somewhere!
Look what I found;
Friday, March 18, 2005
“Wall Streeters
At the risk of offending my core clientele, the worst offenders of the “bid to lose” game are Wall Streeters who are convinced, all evidence to the contrary, that the market will soon drop and fear that they’ll look like chumps for paying anything close to the asking price. I made a comfortable living for a decade inflicting financial punishment on these people for pushing high-tech stock companies on widows and orphans as “can’t miss” investment opportunities. Had I limited my practice to suing real estate agents who recommended Greenwich real estate as a good investment I’d have starved. Greenwich real estate appreciated 24% last year and has been going steadily up since approximately 1880. So when somebody who thought that companies with no earnings were worth fifty times the market value of General Motors now tells me that he’s too smart to buy Greenwich real estate, I don’t necessarily listen.”
So it was you that caused the boom and now it’s your bust.
And what did you say about GM?
Whatever, you are infallible to me.
Wow. Well there it is in all its glory – listen to me at your peril. Talk about drinking the Kool Aid. I must have just spent a long weekend with a difficult client.