NEW YORK CITY HOME SALES DROP WORSE THAN AUTOS

HERE'S a headline to di gest if you own a Big Apple apartment: "Drop in New York Real Estate Sales Worse than Auto Industry's."

Yes, read it and weep: Quarterly sales reports from Halstead Property and Brown Harris Stevens show a 58 percent dip in sales in Manhattan in the first three months of the year -- far worse than even the car industry's 45 percent plunge.

Message to the Obama White House: where's the bailout for legions of suffering New York City real estate brokers?

All kidding aside, it's worth noting that this week, while investors at the corner of Wall and Broad streets were celebrating the 22 percent rise in the Dow Jones industrial average since March 9, a few miles north brokers and apartment owners were finding themselves adjusting to a brutal real-estate bear market, one that has now squarely landed on the banks of the Hudson. And that raises the multi-trillion-dollar question: Can stocks continue to rise, even if the housing market still has far further to fall?

This week, the latest Case-Shiller home index numbers posted their worst declines yet -- with every major city posting hefty double-digit drops in the first quarter -- a considerable feat, considering that prices have already plunged an unprecedented 29 percent, on average, since peaking in 2006.

In New York prices were off 16.6 percent in the last three months.

The quick freeze in the tri-state real-estate market since Lehman Brothers' collapse shows the impact of mass layoffs on home sales and prices.

Listen to what David Rosenberg, the North American economist for Merrill Lynch had to say, because he's been spot-on about the severity of this housing implosion all along: "We desperately need to see housing prices stabilize to put in a definitive bottom [in the stock market]."

Unfortunately, he sees little on the horizon to make him sanguine on the home front anytime soon. "Looking ahead, we believe that the bottom in housing is still several quarters away and there is at least another 15 percent downside potential," adding that prices may not stabilize for three years.

Which brings us back to Wall Street's spring fever, and what many believe is the start of a new bull market for stocks. Perhaps so, but given the fact that housing led us into this mess, it's a fair bet that it will take a tangible upturn in real estate to bring us out of it. Real-estate cycles can be painfully long--often spanning a decade or more from peak to trough. If so, New York, we're just getting started.

Source: New York Post 1 May 2009