Manhattan Real Estate - "The Thrill Is Gone"...

Here's a recent article (April 9th) about residential real estate in Manhattan. The downturn is really starting to take its toll in New York. This was almost the last place to get hit (with the exception of Montana, North Dakota, South Dakota, and Wyoming). But the downturn is really starting to get tracktion. Combined with the COMMERCIAL real estate downturn.......and things will likely get kind of ugly in New York City.

Here's a single paragraph from the article:

"The stress is most severe at the high end of the market. There are 350 apartments and town houses for sale in Manhattan with asking prices of more than $10 million, and inventory has been growing. It would take about six years at the current sales rate to absorb all those listings."

That last sentance is a killer. Now......granted......sales WILL pick up EVENTUALLY. But this is likely going to be a "long slog" because much of the financial district in New York is NOT coming back.

Here's another good article, this one about commercial real esate. The author of the article (Jeff Bernstein) is right:

"Stalling tactics! Everywhere I look I see them. The Fed accepting shakier and shakier assets as loan collateral, mortgage forbearance programs and, increasingly, bank loan extensions. In fact, the whole TARP/TALF/PPIP monstrosity embodies it.

The supposition behind all of this activity is that asset values are, somehow, temporarily depressed, true fundamentals are much better than what markets are giving them credit for and ......if we just give everyone a little time, things will work themselves out. Unfortunately, we continue to see evidence that the markets have things more right than wrong."

We'll see how this bear market rally ends up. I think there are two likely scenarios: (1) It started it's roll over Monday....and will continue on to set lower lows this leg down, or (2) it pushes down to the 700 - 760 area......and everybody jumps on the "bull train" because it has "successfully tested" its prior lows (in which case the market wouldn't start to roll over until this summer some time). Either way, it is going to roll over. Right now, we are sitting at a PE of 29 times GAAP earnings for the twelve months ending 12/31/2009.

I just looked at the Standard And Poor's 500 earnings estimates (GAAP) again today, they have dropped to $28.50 for all of 2009, and $35 for all of 2010. Two weeks ago, they were $35 for 2009, and $41.50 for 2010 as reported on this blog. So they have dropped 20% over the past 2 weeks for 2009, and dropped 15% for 2010.

The direction of sentiment AND cash flow push the market.......but eventually earnings will weigh on sentiment.