gekko: Has philly real estate ever dropped 70%? From 97 till now it seems like we grew 70%++ give or take a few shekels.

I don't know.... It still sounds like a sky is falling type mentality to me. The thing that I'm wondering is if the long term effect of this boom will cause inflation or deflation??

Japan needed deflation in order for real estate values to correct by 50% in the 1990's. However, the fed would cut rates in a deflationary cycle (which is what happened in Japan). That would fuel more of rise in prices. Maybe inflation is next pushing the fed rate into the high 8s?

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I am the walrus

19106 and 19107 are two of the premier residential neighborhoods in the country, not just the city. For you to think that any Joe Schmoe should be able to afford 2 bedrooms in the middle of one of those two neighborhoods, you are smoking crack. While prices might be a tad over-inflated, you will never see a 2 bedroom in a quality building for that price again....and neither should you.

I hate to put you in your place. But, a lot of people in this city and this metro can afford 300K. If they couldn't, then you would see condos in your price range in the area that you want more often. 19106, especially Society Hill, has always been affluent (post Edmund Bacon). The people who live there aren't over-extended financially and I wouldn't expect a bunch of people to all of a sudden lose their shirts or to be willing to take a drastically lower price than the current market demands. If anything, prices in those zipcodes have accelerated of late, especially in older buildings, perhaps making up ground in prices between the old and new. Until 9 or so months ago, you could still get a one bedroom in the Society Hill Towers for less than $250,000 (on occasion). I'm not sure that's the case anymore.

It doesn't take a lot of income to afford that sort of mortgage. There are a lot of young professionals, dinks, and empty nesters who want to be where you want to be and are willing to sacrifice space for convenience. Hell, a lot of them are probably in a position to pay cash. Hence, the high price per square foot. Also, I'll venture a guess and say that most of them are secure financially and many probably make more money than you. They'll buy their condo, get on with their lives, and you can continue to sit on the sidelines.

Sure, don't overpay. However, with your list of demands, you are more likely going to have to live on the fringes of Center City rather than in it.

Bah. Lots more supply than demand. Lots more inventory sitting on the market. Lots more invesntory coming to market. Inventory glut is here. Just check your MLS.

Lots of people squeaked in and leveraged themselves. Lots of people bought with ARMs and Interest-Only and spent beyond their means. Many people may have decent incomes but they are living paycheck to paycheck. They might make $200k/year or more but they spend every penny of it or more. They can't pay cash and they are not financially secure but they "bought" their overpriced condo and they drive around their big expensive leased vehicle but they simply want to LOOK like a millionaire but they surely are not. Everyone wants to keep up with the Joneses. I know these people and they are my friends and associates and I see them everyday. CC Condos are sitting flat right now because of denial. LOOK AT ALL OF THE INVENTORY. The developers, flippers, and speculators are in denial. They don't want to leave any money on the table so they are hanging on to their wishing prices. But the ice is now melting right underneath their feet. This thing is going to get ugly.

http://money.cnn.com/2007/03/26/news...ion=2007032612

i agree with 3d & Brown, though i wish gekko were right. i guess time will tell. i'd love for all the mkts to tank so i can stock up on some real estate and securities. i just don't see it happening any time soon. if the real estate mkt went down to the levels gekko is talking about ('97 + 3.5%), I'd own blocks in some of the most desirable neighborhoods. But there's nothing unique about me or my financial situation.

The NYT ran an article wondering "who are these super rich people everywhere" that have drive up real estate to ionospheric levels in Manhattan. The 2MM+ apartments are going to wealthy immigrants, however the 900K to 1.9MMs are winding up in rather non-stereotypical people... the corporate mom and corporate dad.

A middle-management couple with 7-15 years experience, usually white, usually with one child seems to be the biggest boom in ex-suburbanite buyers in the Manhattan market scene. A $300K/yr household can easily handle a $1,000,000 mortgage even at a standard 30/yr fixed at 6.5%, yielding a monthly housing payment of $6,320.68.

Assuming after taxes, benefits and retirement contributions are taken out, this average Manhattan family has about $13,000.00 a month to spend, $6,320.68 going to the housing payment. An expense easily paid.

So... what makes things so unaffordable for say... a single reverse commuter with a 105K salary, getting a 6.8% note and buying a $220K condo in Philadelphia? And hey, that single person could go house-poor and use the extra money for more retirement payments or by a new pair of Adidas every week--assuming the same theoretical person doesn't drive a car.

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Buh-bye.

i can't really take any of the articles too seriously. it seems that their prognosis on the real estate market is optimistic one day, and pessimistic the next. it all depends on which "expert" they decide to quote. also, they often tend to speak about the housing trends on a national level. i've yet to see an article that talks in depth about our local situation.

so far, it does seem that people with great incomes have little to worry about in this market (or any market, for that matter.) seems like it's the middle class, marginal, and working class folks, especially the ones who were counting on a refinance or the first-timers, that should be most concerned... and even then, they aren't the people who are trying to buy in center city. they're in a completely different, more affordable market, and for all i know, those properties are moving.

it does seem to me, however, that sellers do seem to be asking too much for some of the properties in center city and its fringes, and that the "for sale" signs in my neighborhood have been hanging out too long. looks like the sellers are holding on to their prices and are optimistic... and so are the buyers who are waiting for the sellers to come down...

you say that now but in the midst of a big correction your fear of further declines would probably prevent you from buying blocks and blocks of real estate - even if you had access to the capital. emotionally, it's hard to step in and buy when markets hit their true "bottom". true bottoms happen when everyone is puking up that asset class (real estate or stocks or bonds or gold or whatever) and nobody wants it and everyone tells you what a bad investment it is and every newspaper and magazine proclaims "how bad the X market is". we are FAR from that point in real estate but rest assured that it will happen as it happens eventually with every deep market cycle - especially given how deep this one was. Markets cycle from manias to disgust. it takes huge balls to buy at the "bottom" when you don't know it's the bottom.

Good luck.

you're right ... nobody rings a bell when a security hits its bottom or top. i've done quite well predicting bottoms... it's the "top" i find more difficult to predict. i usually sell for a bit less than what i could have.. but i've come to learn that as long as i take a decent gain, that's all that matters (the biggest, most recent balls-out purchases i've made were MRK and Ford -- i've done very well with both)

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