Originally Posted by 3rd&Brown

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.

Originally Posted by Malloy

gekko: Say someone bought a 3br in Roxborough for $230k. Comps were in the 200-260 range based on condition. This home for $230k was mint, new kitchen.bathroom etc.

You are saying that homes are going to depreciate and fall below comps of say, 2006. How far will they drop?

Originally Posted by gekko

Malloy - of course it's never dropped 70%. What's your point? I'm not calling for a 70% correction. Anything over 1997 prices + 3.5% annual growth is too much to offer in my opinion. 3.5% is the long-term historical mean. Do the math.

Also - it's Arithmetic on the way down and geometric on the way up. If you lose 50 percent in a down market you need to then GAIN 100% in order to recoup your initial investment and break even.

$300,000 -50% = $150,000
$150,000 +50% = $225,000
$150,000 +100% = $300,000

An equivalent upside % does not offset an equivalent downside %.

Originally Posted by BigH

Gekko,
your analysis is flawed because the 3.5% historical is too low. You shoud see what the historical mean including the boom post 1997 and then calculate the STD. That would be a most realistic estimate of the downturn.

I've mentioned this before (and mean this sincerely): I don't you realize what would happen to the world economy if housing corrected by as much you claim. We are talking a depression (not recession).

Originally Posted by gekko

how much did it sell for pre-1997? find that number and add in a 3.5% annual inflation rate. that's fair market value in my opinion.

Originally Posted by gekko

3.5% is the historical mean which includes the post 1997 boom according to Yale Professor Robert Shiller in his book "Irrational Exuberance".

http://www.amazon.com/Irrational-Exu.../dp/0691050627

depression? no - where are you pulling this out of? What's your source? sounds like conjecture to me or an attempt to justify your purchase in that "it can never happen". depression is a little over-dramatic.

recession? perhaps - but it won't be the first nor the last if it happens. this is simply a market cycle. your problem (along with a lot of newbies) is that you are too young and youve never seen a down market cycle - but you will.

Originally Posted by Malloy

1997, $150k or so. (hopefully a realtor who is familiar witht the Rox market can chime in)

You are calling for that $250k home to drop ~$50k? When will this happen, 2009?

Originally Posted by BigH

you are right about that. I graduated college in 2003. The only downturn I experienced was a bad job market for grads in 2003 (unemployment was above 6%)