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View Full Version : An interesting concept transported from real estate to economies



c1ue
02-04-09, 07:37 AM
http://www.urbandigs.com/2009/02/how_big_was_the_big_apple_bubb.html?ref=patrick.ne t



What does this mean for the future of "emerging" neighborhoods? It is hard to say. I am on record saying that recently heavily developed areas like Harlem, Long Island City and Williamsburgh will get hit hard as prices reset to drive absorption of all the new supply. In emerging neighborhoods with less of a surplus of new supply, I would still expect volatility on the downside to correspond with the volatility on the upside and therefore a deeper decline than in stable neighborhoods, but it may not be quite as bad as in over-built areas.

This is somewhat in line with the iTulip mentioned 'bullseye' concept of real estate values...

The idea is simple: areas with the most supply experienced the most volatility to the upside when times were good, and are now experiencing the most downside as times turn bad.

Of course the question is what is supply in the national economic sense?

If supply is credit - then clearly the suffering in emerging markets is going to be far worse than most developed nations. Because the relative 'supply' was far higher even if the notional amounts were much lower.

If the supply is instead growth, a similar argument might also be made except for the fact that growth in several developed areas was clearly way over trendline due to bubbles.

Hrmp!

touchring
02-04-09, 11:33 AM
http://www.urbandigs.com/2009/02/how_big_was_the_big_apple_bubb.html?ref=patrick.ne t



This is somewhat in line with the iTulip mentioned 'bullseye' concept of real estate values...

The idea is simple: areas with the most supply experienced the most volatility to the upside when times were good, and are now experiencing the most downside as times turn bad.

Of course the question is what is supply in the national economic sense?

If supply is credit - then clearly the suffering in emerging markets is going to be far worse than most developed nations. Because the relative 'supply' was far higher even if the notional amounts were much lower.

If the supply is instead growth, a similar argument might also be made except for the fact that growth in several developed areas was clearly way over trendline due to bubbles.

Hrmp!


Depends on which emerging economies, Hong Kong, Singapore, South Korea and Japan just experienced severe recession not very long ago in 2003-2004. Real estate didn't rise the 550% in Harlem or the 1000% in Washington Heights since 2004 as it has been nice of you to inform us. :D

In Singapore, banks don't give more than 10-year mortgages to people over the age of 50, rarely loans out more than 80% and require original copies of the IRAS and bank statements.

The credit excesses in many emerging economies are definitely lower than what has been experienced in NYC.

Based on what i've seen, American real estate can lose another 3-4 trillion before hitting bottom. So is Obama going to prepare another 3 trillion in TARP?