New York

New special investment vehicles, SIVs, invented on Wall Street to produce a record volume of home mortgages are beginning to haunt Manhattan's pricey real estate market. New York City has been battered by Wall Street's implosion as thousands of jobs have been slashed in the last year. More job losses are on the way, which will severely impact Manhattan real estate.

It'll take a while to have a major effect on Manhattan. Housing values will deflate over at least the next three years as the Big Apple joins the majority of the nation with falling prices as a result of the credit crisis.

Manhattan apartment prices are in perilous shape, having tripled in the past decade. The Big Apple is about to take a big fall in housing prices. Tens of thousands of jobs lost on Wall Street have produced a heavy increase in real estate listings. Sales of homes and apartments are beginning to flatten and housing deflation is going to hit Manhattan in a big way. Housing Predictor now forecasts a total of just 3.8% appreciation for the year, which has already occured. The shift to a deflating market is just beginning to materialize.

City	Forecast
Manhattan	3.8%
Long Island	−  8.8%
Albany	−  6.4%
Rochester	3.1%
Glen Falls	3.8%
Buffalo	−  6.9%
Syracuse	2.1%

In the boroughs outside Manhattan the housing markets have long been slower, but then again they are not anchored by Manhattan. In Queens, foreclosures have nearly doubled in the last year, and the rest of the boroughs are deflating.

The stock market and other financial markets have been volatile since summer when the first wing of the credit crisis hit with the subprime debacle. The markets will take until probably late in 2008, perhaps later to realize how many billions in losses have occurred, which over time will weaken Manhattan's housing market further.

Back down on Long Island foreclosures are increasing. The surge in alternative conventional mortgages and subprime loans led to the increase and is pulling the housing market's prices downward. Sales activity has been light and will remain that way through 2008 as average home prices deflate a forecast 8.8%.

Up state in Albany, in the state's capitol the housing market has slowed, and real estate prices are deflating. The market boomed with the rest of the nation only to have its bubble burst.

Huge property taxes and costly schooling have made buying in Albany a very expensive proposition. New York has some of the highest property taxes in the nation, and Albany will see further erosion in its market through 2008, forecast to deflate 6.4% on the average home.

In Glen Falls, where $1-million condos are a popular commodity the market has turned more than swank. This town was regarded as "Hometown USA" back in the 40's but the city has changed, surging with appreciation. But as times change so do real estate markets, and Glen Falls is in for a slight slow down in 2008, appreciating just 3.8% on average.

In Buffalo the housing market has also slowed with an increase in foreclosures. The market is turning into one of the best buyers markets in the state with lower home prices. Buffalo is forecast by Housing Predictor to depreciate further in 2008 at 6.9%.

In Rochester the opposite case exists. The housing market never saw double digit appreciation and is now witnessing steady sales activity. Rochester may not see anything like a boom in 2008, but at least the market will see healthy growth, a rare exception for New York outside of Manhattan.

Look for Rochester home prices to appreciate an average of 3.1% across the board in 2008.

In Syracuse, where home prices are some of the more affordable in the state, jobs have been more resilient with a growing economy. Prices have risen during the last three years almost equally each year, and will see a slight slow down in 2008 at only 2.1% in appreciation.