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This is the current state of the real estate market.
NSFW for violence and language.
Got this from NYM
In this week’s New York magazine, real estate editor Jhoanna Robledo explains why those neighborhoods that never see a downtown are seeing a downturn:
To the numbers, then. One excellent indicator of a neighborhood’s situation in the near future is how many closings are taking place there, because it measures both activity and ease of sale. And according to data compiled by the team at StreetEasy.com, between April and June the number of closings dipped 77.9 percent in Tribeca, compared with the same period last year. Three other well-established neighborhoods were also high up in the pack: 52.7 percent in the West Village , 44 percent in Carnegie Hill, and 50.8 percent on the Upper West Side .
And what of the supposedly riskier areas? They’re not doing great, but they’re not showing anything like those Tribeca numbers. Williamsburg is down 49.2 percent; Long Island City is at 24.8 percent. Newer StreetEasy data, from July and August, show the same trend. (By another, slightly less authoritative measure—the number of self-reported deals going into contract— Clinton , East Harlem, and Williamsburg actually saw their activity rise in the second quarter.) The takeaway: “On a macro level, you hear that prime locations are always a safety play,” says Miller. “But that only means they’re less volatile. It doesn’t mean they’re protected.”
One of the first principles I learned in real estate is that everything rises in a high tide. An example of an application of this applies to residential home buying is buying the worst property in the best area. For instance in a place like Scarsdale, instead buying in the rich areas, you buy a house in Edgewood by the border of Eastchester. Basically you are hedging your bets by buying a smaller house in that area because even though it is a cheaper and you might be required to put in more money in renovations, but your equity will definitely go up during a bubble and you won't get hurt as bad when the market drops which is happening now. As Jonathan Miller has stated, living in a pricey area does not protect you but gives you less volatility.
You could probably buy a bigger house in a less pricey area of Westchester, but I can guarantee that your equity is going to get destroyed during a downturn, which is one of the reasons why we are getting carpet bombed with foreclosures because people bought homes they could not really afford and that those homes were over priced in the first place.
This is just another indication that we still have to ride this out.